Argentina’s Vaca Muerta shale play is experiencing a significant oil and gas boom, signaling the nation’s strategic shift towards liquefied natural gas (LNG) exports.
This growth continues the strong performance seen last year, with Rystad Energy estimating a 26% year-on-year increase in oil output and a 16% rise in gas production during the first quarter of 2025.
Argentina is also exploring future opportunities for gas reserve monetisation and export, supported by investment incentives for infrastructure and storage projects.
Production
In March, oil production from Vaca Muerta exceeded 447,000 barrels per day.
This marks a significant increase from 354,000 barrels per day during the same period last year.
The growth was primarily driven by YPF, the flagship state-owned operator, with additional support from local independent companies including Vista Energy, Pluspetrol, and Phoenix Global Resources, Rystad Energy said.
Though oil production is still robust, the basin is exhibiting indicators of a slowdown, especially in drilling operations, the Norway-based energy consultancy said.
The marginal increase in new oil wells, with 76 brought online last quarter and 79 this quarter, is attributed to saturated takeaway capacity.
This constraint is anticipated to ease once the Oldelval Duplicar expansion becomes operational in April.
Vaca Muerta’s dry gas production reached 2.1 billion cubic feet per day (Bcfd) in the first quarter of 2025, marking a 13% increase from the previous quarter and a 16% rise year-on-year.
Radhika Bansal, vice president, upstream research at Rystad Energy, said in a report:
To leverage this momentum, the country is actively pursuing a bold, multi-phase national LNG export strategy, meaning Argentina could soon become a pivotal player in global gas supply, significantly reshaping markets and energy geopolitics.
Southern Energy LNG project
The Southern Energy LNG project is crucial to Argentina’s aspirations for LNG exports, fueled by consistent and reliable growth from Vaca Muerta.
Utilizing two Golar LNG-supplied floating LNG (FLNG) vessels, the Hilli Episeyo and MK II, the Southern Energy project initiative aims to provide Argentina with a collective export capacity of 6 million tonnes per annum (Mtpa).
These units will be strategically positioned off the coast of Rio Negro province.
The final investment decision (FID) for MK II is expected by Q3 2025.
Following this, Hilli Episeyo is scheduled to begin production in late 2027, and MK II is anticipated to commence operations by the close of 2028.
YPF and Shell partnership
YPF is leading a large-scale, phased project, ARGFLNG 2, in partnership with Shell (who joined in late 2024), to unlock LNG export potential as part of a national effort.
This second phase is expected to reach a capacity of 10 Mtpa.
ARGFLNG 3, the third phase, has the potential to add 12 Mtpa, with Eni as a prospective strategic partner.
YPF and other stakeholders increasingly perceive each phase as integral to a unified LNG export vision, despite the distinct partners and capacities involved in each stage.
Rystad Energy’s analysis suggests that FLNG developments will achieve full capacity by the late 2030s.
Further boosting long-term export growth, the Vaca Muerta Oil Sur (VMOS) pipeline project serves as a crucial complement to these LNG initiatives.
VMOS is set to begin operations in 2027, creating a direct connection between the Neuquen Basin and the Atlantic Coast through the port of Punta Colorada.
“This new corridor is set to alleviate inland bottlenecks and enhance export logistics, significantly reinforcing Vaca Muerta’s long-term viability as a global energy hub,” Rystad said.
Shale remains crucial
The Vaca Muerta shale play continues to draw significant strategic investments, with upstream merger and acquisition activity in the first quarter of 2025 representing a substantial 43% of the total Latin American upstream deal value for the period.
This highlights not only Argentina’s LNG ambitions but also the ongoing appeal of its shale resources.
Strategic positioning in Vaca Muerta continues to evolve, extending beyond mere deal-making.
Meanwhile, Norwegian energy giant Equinor has reversed its earlier decision to exit the shale play and will now remain in the region.
The reversal was driven by the lifting of monetary restrictions and improvements in infrastructure and export viability.
Analysts at Rystad said:
A shift in Equinor’s stance has marked something of a turning point, reaffirming international confidence in Argentina’s shale resurgence.
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