A key driver of growth has been the development of unconventional reserves, including the Vaca Muerta shale formation, which is located in the provinces of Neuquén, Mendoza and Rio Negro in central Argentina. Vaca Merta is similar in many ways to the most famous geological formations in the U.S.: in terms of carbon content (3–10%), which affects the potential flow rate of wells, it resembles the Bakken formation (4–20%); in formation thickness (50 to 450 m), the Midland formation (45 to 450 m); in occurrence depth (1,700 to 3,500 m), the Barnett formation (1,700 to 3,000 m); and in area (30,000 square meters), the Delaware formation (26,000 square meters).
McKinsey estimates that the break-even point for oil production at Vaca Muerta is $36 per barrel, which is significantly lower than the current price level. Another advantage of Vaca Muerta is low sulfur content in the extracted feedstock (0.5%), which facilitates its processing for the production of light petroleum products (motor gasoline, naphtha and jet fuel), including in countries importing feedstock. Thanks to the development of Vaca Muerta, the share of unconventional reserves in Argentina’s oil production went up from 17% in 2019 to 34% in 2023. Production growth was partly driven by the development of transport infrastructure: 2023 saw the completion of construction of the Vaca Muerta Norte oil pipeline with a capacity of 160,000 bpd for deliveries to the Luján de Cuyo refinery in the province of Mendoza. One of the branches of the Trasandino oil pipeline (intended for deliveries to Chile) runs in the same province; in 2023, it was relaunched after many years of inactivity.
New projects include the construction of the Vaca Muerta Sur pipeline with a capacity of 390,000 bpd, which is meant to be integrated with the country’s largest oil pipeline system, Oldelval, by 2026. The project will make it possible to supply oil to the export port of Puerto Rosales in eastern Argentina, as well as to refineries in the cities of Luján de Cuyo (Mendoza Province), La Plata (Buenos Aires Province) and Plaza Huincul (Neuquén Province).
Argentina is a major oil exporter in the region. According to customs statistics, total oil exports from Argentina in 2023 amounted to 295,000 bpd, of which 46% went to the U.S., 40% to Brazil and Chile, and 4% to Colombia (with all other destinations totaling 10%).
