Argentina's Vaca Muerta Shale Play Sees Record Oil and Gas Production Despite Near-Term Slowdown

Argentina's Vaca Muerta shale play is experiencing a near-term slowdown in drilling activity due to lower international oil prices and company spending cuts. However, the long-term prospects for the play remain intact, with estimated recoverable resources of 16 billion barrels of oil and 308 trillion cubic feet of natural gas. Production has risen 26% for oil and 16% for gas year-on-year in Q1 2025.

Argentina's Vaca Muerta shale play is experiencing a near-term slowdown in drilling activity due to lower international oil prices and company spending cuts. Despite this temporary setback, the long-term prospects for the play remain intact, with estimated recoverable resources of 16 billion barrels of oil and 308 trillion cubic feet of natural gas. Production has risen 26% for oil and 16% for gas year-on-year in Q1 2025 [1].

YPF, the country's largest energy producer, and other major players such as Equinor and TotalEnergies have confirmed their commitment to Vaca Muerta, despite the current slowdown. YPF's CEO, Horacio Marin, recently stated that the company is pulling out a few fracking crews due to the slowdown from international partners, but he remains optimistic about the medium and long-term prospects of the shale play [1].

The slowdown is part of a broader trend of reduced spending in the industry, as companies adjust to lower oil prices. However, the recent acquisition of TotalEnergies' shale assets by YPF for $500 million suggests a strategic repositioning of the market players [2]. This deal includes two blocks in a less developed area of the formation, representing a significant move for YPF to consolidate its position in the basin.

Argentina is also actively pursuing a bold, multi-phase national LNG export strategy, leveraging the strong oil gains from Vaca Muerta to become a pivotal player in global gas supply. The country has several LNG export projects in the works, with YPF signing agreements with international majors Shell and Eni to develop the Argentina LNG project [1].

While the near-term slowdown in drilling activity is a concern, the long-term potential of Vaca Muerta remains robust. The basin's low production costs and Argentina's policy reforms make it an attractive investment destination. However, investors should remain patient and monitor the successful execution of key infrastructure projects like the Vaca Muerta Sur (VMOS) pipeline, which could face delays or cost overruns.

References:
[1] https://oilprice.com/Energy/Energy-General/Vaca-Muerta-Shrugs-Off-Frac-Cuts-With-Record-Oil-and-Gas-Gains.html
[2] https://www.ainvest.com/news/ypf-compra-activos-de-shale-de-total-en-vaca-muerta-por-500-millones-2508-97/