The development of Vaca Muerta oil reserves,1 one of the largest shale gas and oil deposits in the world, combined with production incentives, tax exemptions, labor concessions, and other supportive government policies, is adding significant value to the country’s trade balance, and is expected to further boost the domestic economy in the medium term.
Argentina’s mining and energy sector represents 4% of the country’s economy (in gross domestic product terms), while crude oil and natural gas extraction and related activities alone stand out with gross value added of US$20.2 billion, representing 3.4% of GDP.2 The Argentinian economy depends quite heavily on its agricultural, oil and gas, and mining sectors—which together represent almost 70% of Argentina’s exports.3
This trend is expected to continue, especially due to growth in at least two of those three sectors. During 2024, Argentina’s exports reached a total amount of US$79.7 billion, with oil and gas contributing US$8.53 billion, or 11% of the total, according to the National Institute of Statistics and Census of Argentina (figure 1). In the last decade, however, the sector experienced a phase of negative trade balance due to low investments and trade controls that weighed heavily on local production—a trend that changed in 2024. Now, the sector is expected to see significant growth, in the new year and beyond.4
If it continues down the road of exponential growth, by 2030, the energy sector will become the largest contributor to exports in Argentina (figure 2).5 The mining sector is also expected to grow significantly due to tax incentives.6 While lithium exports totaled US$612 million, in 2024, copper production was practically nonexistent. Both production and export of these minerals are expected to grow steadily through 2030, due to large projected investments,7 many coming from the Incentive Regime for Large Investments (more on the regime later in the piece).
Argentina’s energy sector exports are benefiting the country in numerous and significant ways. For further details, refer to Deloitte’s Argentina economic outlook from November 2024.
The increased trade balance surplus in 2024 of US$18.899 million,8 driven by higher energy exports and lower imports (attributable to reduced energy imports and lower economic activity), has enabled Argentina to pay off its external debt to creditors and will support the repayment of its obligations to the International Monetary Fund.
This, in turn, has enhanced the nation’s creditworthiness and financial stability. Thanks to the consolidation of the fiscal surplus and the initial results of the current economic program, the country risk fell from 2,500 basis points in mid-November 2023 to below 600 basis points at the end of 2024.9
Furthermore, the growth in energy exports and foreign investment in this sector is contributing to an increased supply of foreign currency. This influx assists the government in stabilizing the exchange rate and alleviating inflationary pressures. Inflation dropped from 211% at the end of 2023 to 118% at the end of 2024 and is expected to decrease to 21% by the end of 2025.10
Efforts to reduce inflation are supported by the elimination of the fiscal deficit (a surplus of 0.3% of GDP in 2024 compared with a deficit of 4.6% in 2023), alongside measures to anchor inflation expectations by maintaining a predictable exchange-rate trajectory. Such reductions in inflation are crucial for the overall economic health of Argentina. Stability in these areas is key to fostering a more predictable economic environment, which can, in turn, encourage investment and growth. The reduction in inflation also improves the purchasing power of the population and enhances overall economic well-being.
Moreover, the expansion of the energy sector11 is contributing to an increase in overall economic activity, which is essential for job creation and the improvement of living standards. As the sector grows, it should generate a ripple effect throughout the economy, stimulating growth in various other sectors and creating widespread economic benefits. This interconnected growth underscores the critical role of the energy sector in driving Argentina’s economic development and prosperity.
Vaca Muerta is the world’s second-largest shale gas and fourth-largest shale oil reserve. It’s located in the Neuquén basin, spanning the provinces of Neuquén, Río Negro, La Pampa, and Mendoza—an area of around 30,000 square kilometers (figure 3).
Vaca Muerta oil production began to shape up in 2010, primarily driven by investments from the state-owned company YPF (in Spanish, Yacimientos Petrolíferos Fiscales; in English, “fiscal oilfields”).
In 2013, YPF signed agreements with Chevron and Dow for unconventional exploration and exploitation in Vaca Muerta.12 By 2014, shale oil production in the Neuquén Basin started to increase significantly. The high quality of Vaca Muerta shale, along with production incentives, tax exemptions, and labor concessions, has helped reduce operational costs and improve efficiency.
In 2019, various companies shifted their strategies, increasing oil production at the expense of gas due to ease of transportation for oil. By 2024, Neuquén accounted for nearly 68% of the Argentinian oil production,13 enabling a 60% reduction in gas imports within two years and positioning Argentina to be a potential top 20 oil-exporting nation by 2030.14 In 2024, shale oil reserves and tight oil production enabled 54% of the total production in the country—a substantial increase from 18% in 2019.15
Argentina’s oil transportation infrastructure will comprise six pipelines operated by private companies (Trasandino, Vaca Muerta North, Vaca Muerta South, and Oldelval), along with two YPF pipelines.
In May 2023, the Trasandino pipeline was reactivated, connecting Neuquén with Chile, and now has the capacity to export 110,000 barrels per day after being out of operation for 17 years. By October 2024, the construction of the US$250 million Vaca Muerta North pipeline was completed after 18 months, enabling the transport of 160,000 barrels per day and increasing the export utilization of the Trasandino pipeline.
Other projects are also underway, such as the expansion of the Oldelval (Oleoductos del Valle) pipeline, which connects Vaca Muerta with Bahía Blanca. These US$1.2 billion investments will increase the transport capacity from the current 555,000 to 750,000 barrels per day in the first half of 2025.
The US$2.5 billion infrastructure project, developed by several oil companies, has started construction in January of 2025. This includes a pipeline linking Vaca Muerta to Punta Colorada in Río Negro,16 and a storage facility and port terminal at Punta Colorada, which will double Argentina’s oil export capacity. The project is expected to be completed in the second half of 2026, increasing the total capacity to 930,000 barrels per day, with an anticipated increase to 1.5 million barrels per day by 2030 (figure 4).
In 2024, Argentinian production reached 717,100 barrels of crude oil per day, according to the Secretariat of Energy of Argentina. This represents an 11% increase compared with 2023 levels, and is the highest level of production since 2004.17
In this context, the Incentive Regime for Large Investments (RIGI, by its Spanish initials) emerges as a key tool to boost foreign direct investment in the sector in the coming years. By offering 30 years of fiscal stability, as well as customs and exchange incentives, RIGI significantly enhances predictability and improves the business climate for high-growth potential sectors, which could also increase the country’s exports (see “Incentive Regime for Large National and Foreign Investments in the Republic of Argentina (RIGI)”).
The regime applies to investments with a minimum value of US$200 million within the sectors of forestry, industry, tourism, infrastructure, mining, technology, steelmaking, energy, oil, and gas. The primary benefits include fiscal, customs, and exchange aspects.
Investments within RIGI could reach US$30 billion in the energy sector and US$54 billion in total, according to estimates from the Ministry of Economy. Multiple investments have already been incorporated into the regime (Appendix 1), and it is expected that new projects will continue to be added in the short term to exploit the country’s potential in these areas.
With the help of this regime, the oil and gas sector could generate up to US$27 billion in export revenues from oil and gas, equivalent to 30% of 2022 exports by 2030 (figure 10).18 This could help alleviate the country’s balance of payments in the medium term, helped along by positive results from mining and agriculture. It is expected that, by 2027, the country will reach one million barrels of oil produced per day (figure 5).19
Argentina’s gas production is experiencing a remarkable period of growth: In 2024, the country reached historic figures in hydrocarbon production, recording 139.5 million cubic meters per day of gas.20 This represents a year-over-year growth of 5.4% compared with 2023, achieving the highest gas production volume in the last 21 years. Focusing on unconventional resources, Vaca Muerta contributed 54.8% of the country’s total gas production,21 generating 81 million cubic meters per day of gas. The Neuquén Basin alone produced 73% of Argentina’s gas in 2024.22
In 2024, the main Vaca Muerta shale gas areas included Fortín de Piedra by Tecpetrol, which accounted for 12.1% of total production; Aguada Pichana Este by Total Energies (7.1%); Aguada Pichana Oeste by Pan American Energy (5.9%); El Mangrullo by Pampa Energía (5.6%); and La Calera by Pluspetrol (4.8%).
In mid-2023, the first 573 km of the “Perito Moreno” gas pipeline23 were inaugurated, initially transporting 11 million to 14 million cubic meters per day (figure 6). To reach its full capacity, three compressor plants were still needed. In October 2024, the last compressor plant in Salliqueló, Buenos Aires, was inaugurated, increasing the pipeline’s transportation capacity to 23 million cubic meters per day, completing the first stage of the project.
The two-stage project will span 1,070 km to San Jerónimo, Santa Fe. Stage II of the pipeline will complement domestic supply and enable Vaca Muerta shale gas exports to southern Brazil’s industrial belts. The US$2.5 billion tender is expected to be completed by March 2026. Execution and financing will be handled by the private sector. After stage II, capacity would reach 39 million cubic meters per day, representing 25% of total system demand.
Work was underway to reverse the flow of the Northern Gas Pipeline (figure 7) to send gas to the northern parts of the country, which till now received gas from Bolivia.24
The project was finished in October 2024 after the delayed tender was awarded in March 2024. The US$740 million project will transport 19 million cubic meters per day to northern provinces (residents and mining industry) and allow bidirectional gas flow. Argentina will no longer buy gas from Bolivia, which costs the country US$11.4 million per million British thermal units, while production in Argentina usually costs between US$2 million to US$3.5 million per million units.
The CAFI loaned US$540 million for the project,25 which involved developing 122 km of gas pipeline, 62 km of loops to the Northern Gas Pipeline near Ferreyra and Córdoba, and reversing four compressor plants in Córdoba, Santiago del Estero, and Salta. The reversal of the last two compressor plants in the system is still pending, scheduled for March and May of this year.26
As mentioned previously, Argentina reached a production level of 139.5 million cubic meters per day of gas, the highest in the last 21 years, and this trend is expected to continue improving. While Vaca Muerta increases production, Bolivia’s declining gas reserves, which also supply Brazil, cause concern.
Brazil relies heavily on hydroelectric plants, which are affected by climate variability. A 1990s water crisis led to a Bolivia-Brazil gas pipeline, now 60% idle, potentially allowing Argentina to be a supplier. With the prospect of increasing gas exports to Brazil, alternatives include using the Bolivian pipeline network (now available with the reversion of the Northern Gas Pipeline), a new pipeline through Paraguay, or extending the Perito Moreno Gas Pipeline to Uruguaiana, Brazil (after the conclusion of stage II in 2026).
With this expectation, government enabled free competition for gas exports, expanding markets for Vaca Muerta’s gas. After two decades of energy dependence, Argentina is on the path to a significant change, driven by unconventional gas reserves (figure 8).
Investment in oil and gas exploration and exploitation has increased significantly, reaching historic highs in 2023. Most of these investments are concentrated in oil exploitation in the Neuquén basin. In 2024, investment was similar to levels seen in 2023, with strong growth in nonconventional sources, which reached a record 75% of the total (figure 9). According to official estimates, investments in the exploration and production sector could be worth up to US$100 billion by 2030.
In the last decade, the lack of investment in exploration caused a drop in oil and gas production, while demand increased significantly due to a greater need for electricity generation in thermal power plants, driven by subsidized price policies and an increase in residential and industrial consumption.
Between 2011 and 2018, the energy deficit averaged US$4 billion annually, totaling a deficit of US$31.6 billion in this period. In 2022, due to record hydrocarbon imports, an energy deficit of US$4.36 billion was reached, a level which then approached equilibrium in 2023.
The Perito Moreno Gas Pipeline allowed savings in imports and Vaca Muerta oil and gas production boosted hydrocarbon exports, which resulted in the country having an energy trade balance surplus in 2024, the highest surplus in 18 years (figure 10).27
The Central Bank of the Argentine Republic proposes a scenario of stabilization of energy imports, thanks to the greater transportation capacity of gas pipelines throughout the country, and a greater dynamism in exports, which would reach US$29.6 billion by 2030. This way, the energy surplus would reach US$25.6 billion by the same year.
Growth in Argentina’s oil and gas exports, together with greater dynamism in mining due to increased copper and lithium extraction, is helping to improve the trade balance of the country and will boost the same over the next five years.
The current account reached an average deficit of US$6.5 billion between 2006 and 2023. If the scenario proposed by the central bank—one with a strong increase in the goods trade balance driven by higher energy exports—materializes, Argentina’s current account could maintain the surplus reached in 2024 for at least the next few years (figure 11).