Argentina cannot fully realize its shale oil potential unless the political leadership of the country devises a clearer energy framework, an industry executive has said, as reported by Bloomberg.
"What we need is to create a macroeconomic and political energy framework that allows us to fully develop our resources," Miguel Galuccio, chief executive of Vista Energy, told Bloomberg TV. "For that I would concentrate on two things: FX controls and clearer domestic crude pricing."
For years, Argentina has been betting big on boosting oil and gas production at its largest shale play, Vaca Muerta in the Neuquen province. Vaca Muerta-Spanish for 'dead cow'-has been dubbed the Argentine Permian, although its geologic properties have been compared more appropriately to the Eagle Ford.
The Vaca Muerta play holds the world's second-largest shale gas reserves as well as substantial oil reserves. The recoverable resources consist of 16 billion barrels of oil and 308 trillion cubic feet of natural gas but developing them has proved to be quite tricky.
From the lack of infrastructure to the constant economic crises that Argentine has been experiencing and strict forex controls enforced by successive governments, challenges have remained significant despite the growing interest of the oil industry in developing the resources of the "Dead Cow" play.
As a result, instead of exporting oil and gas, Argentina is importing substantial volumes of LNG that are costing it billions of dollars. It is producing gas from the Vaca Muerta play, meanwhile, but has no infrastructure to send it overseas.
According to Galuccio, with the right legislative framework, the country could export half a million barrels of crude oil annually. Yet he is hopeful that progress will be made whoever wins the elections scheduled for later this year.
"The importance of Vaca Muerta for the country is not under debate from the different political parties," he noted.
By Charles Kennedy for Oilprice.com
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