In the last 15 years, Oil production in South America has been dominated by three countries: Brazil, Venezuela and Colombia. The vast reserves of crude oil in these areas and the attractiveness of its extraction with prices above 70 euros were more than enough for the three countries to dominate this market sine die at a regional level. However, in a few years the situation has changed radically. The emergence of small Guyana (it did not produce oil until 2019) and the revolution of the largest unconventional crude oil field in South America (Vaca Muerta, in Argentina) are about to cause a real transformation in the ranking of producing countries in this region. The first change will occur in a matter of days or months, at most. Argentina is a handful of barrels of oil away from surpassing Colombia in production for the first time in more than 15 years.
What results More surprising is that this surprise is going to be driven by a single oil field. A site that had gone somewhat unnoticed until about a year ago. Although its potential was well known, the companies that had been working in Vaca Muerta had not been able to intensively squeeze their resources due to a series of obstacles related to the different governments of Argentina and their legislation. NowVaca Muerta is more alive than ever and already produces more than 400,000 barrels of crude oil per day, raising Argentina’s total production to 738,000 barrels per day.about to reach 760,000 in Colombia, which in recent years has occupied third place in crude oil production in South America, only behind Venezuela and Brazil.
Production in Venezuela has recently revived and according to the latest data is about to reach one million barrels per day. Despite this improvement, it is worth remembering that Venezuela is the country with the most proven oil reserves in the world, more than 300,000 million barrels. But the complexities of extracting this type of heavy crude oil, more than questionable management and sanctions from countries like the US have led the country’s production to the current point of mediocrity. The US, which has proven reserves of less than 40 billion barrelsproduces more than 13 million barrels per day. That is, with 10% of all the oil that Venezuela has, the US produces 13 times more crude oil every day. Above Venezuela, Brazil appears in South America, with a production of around 3 million barrels per day.
The bypass from Argentina to Colombia is imminentbut it began to take shape years ago. Colombia has been suffering for some time from a decline in its crude oil production due to the depletion of its main deposits and government measures against the granting of new licenses. The latter has come from the hand of President Gustavo Petro. Paradoxical that with that last name he is the president most hostile to the oil industry.
At the same time that Colombia is moving away from oil, Argentina has begun to take advantage of its great opportunity. In 2021, something began to change little by little. This field has gone from being practically ‘dead’ to producing oil in large and increasing quantities. This is the very short-term history of the Vaca Muerta field, the field with the most unconventional crude oil (shale oil)and largest in all of South America. This field could turn Argentina into a new engine of oil supply in South America that helps offset production cuts by the OPEC cartel. as published by the US Energy Agency (EIA) in an interesting analysis a few days ago, a hypothesis that had already been launched by other market agents such as the experts at Energy Intelligence (EI), an energy data center based in New York.
The Energy Agency itself in its monthly report published this Thursday He announced that the surprise is imminent. The crude oil production forecast for Argentina in 2025 stands at 830,000 barrels on average, compared to 790,000 for Colombia, so they assume that the advance will probably occur in the first part of 2025 given the stagnation of the Colombian production and the boom in Vaca Muerta.
Oil and gas production at peaks
“Argentina’s crude oil and natural gas production is approaching all-time highs, driven by increased production from the Vaca Muerta shale formation, which is offsetting declining production from conventional oil and gas fields. natural. From January 2021 to September 2024, crude oil production in Argentina increased by 50% and natural gas production increased by 27%, raising production of both fuels close to the records set in the early 2000s,” according to the report published by the EIA.
With all of the above, in September 2024 (the latest official data), production averaged 738,000 barrels per day (b/d) of crude oil in Argentina, 15% more than in September 2023 and the largest amount in any month since 2003. In September, oil produced in the Vaca Muerta formation represented 58% of the country’s total production, according to SESCO.
In Argentina, an average of 5,000 million cubic feet per day (Bcf/d) of natural gas was produced during the first nine months of 2024, 5.2% more than in the same period of 2023. In August, the production of natural gas averaged 5.4 Bcf/d, the most of any month in 21 years. The Vaca Muerta formation represents more than 70% of Argentina’s natural gas production, reaching 74% (3.8 Bcf/d) in September 2024.
After the awakening of domestic production, Argentina’s export ‘dream’ now arrives, which would allow the country to increase its gross dollar reserves to continue closing the exchange gap (something it is almost achieving) and thus be able to lift the stocks. so that the peso exchange rate fluctuates completely freely. Vaca Muerta’s oil and gas revenues are going to be fundamental to this. This part will depend, in part, on expanding the infrastructure surrounding Vaca Muerta, something that is expensive and time-consuming. However, the first steps have already begun to resolve this bottleneck.
The measures adopted by the Government of Javier Milei in terms of legal security and investment incentives are bearing fruit. For example, Tecpetrol announced this Thursday that it will invest close to $2 billion in Vaca Muerta in 2025 and is analyzing entering the Large Investment Incentive Regime (RIGI) announced by the Milei Government. The Techint Group oil company plans to increase its production to reach 70,000 barrels per day by mid-2027.
Within the framework of Techint’s ProPymes 2024 Seminar, Ricardo Markous, CEO of Tecpetrol, said that “now we are concentrating more on oil. Today we have a production of 20,000 barrels, Our project is to reach 100,000 barrels“. In the best of cases, it is estimated that Vaca Muerta could reach almost 2 million barrels per day by 2030.
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