Argentina’s Vaca Muerta shale basin, once hindered by unfavorable regulations and economic instability, is now showing signs of growth, fueled by pro-business reforms under President Javier Milei. The basin, which currently produces about 440,000 barrels of oil per day, has the potential to reach 1 million barrels daily by 2030. While still small compared to U.S. basins like the Permian, Vaca Muerta holds about 16 billion barrels of recoverable shale oil and gas. Optimism is growing, with shares of leading producers like YPF and Vista Energy seeing significant gains. The key question remains whether the new regulatory environment will be enough to accelerate growth in the shale sector. Jinjoo Lee reports in The Wall Street Journal:
America’s prolific shale basins are running out of their best wells, but Argentina’s Vaca Muerta is just getting started. Will pro-business regulation be enough to start a shale boom there?
Horizontal drilling in the basin took off around a decade ago, but unfavorable regulation—including capital and currency controls, import-export taxes and oil-price interventions, among other things—has hamstrung its growth. High inflation and a wobbly economy were also barriers to attracting capital to the shale patch. Exxon Mobil, for example, agreed to sell its Argentina business last year. Shell and Chevron still retain interests in the basin. […]
Shares of the top two producers in the basin are reflecting the optimism. The stock of the majority-state-owned Argentine oil company YPF has doubled since Milei took office. Shares of Vista Energy, an independent producer founded by a former chief executive officer of YPF, have surged about 50% during the same period.
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