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Global Traditional Energy Resources

Argentina is the largest producer of natural gas in South America.1 According to the U.S. Energy Information Agency (“EIA”), Argentina has an estimated 802 trillion cubic feet (tcf) of technically recoverable shale gas and 3,244 tcf of risked gas in-place.2 Its estimated technically recoverable resources are second only to China.3 The majority of the recoverable shale gas reserves are in the Neuquén Basin.4 The Golfo San Jorge and Austral-Magallanes basins could also become significant areas of production.5

Argentina EIA/ARI Shale Gas/Oil Assessment EIA Report at V-1.

Argentina’s shale reservoirs have been said to have similar characteristics to formations in North America, and have attracted significant foreign interest and investment since at least 2011.6 These investments have generally targeted the Vaca Muerta formation in the Neuquén Basin, which some experts have opined could be the “best oil and gas shale opportunity outside of the U.S. and Canada,” not only in terms of the quantity of resources, but also their geologic quality.7

Foreign investment is crucial because YPF, Argentina’s renationalized energy company, estimated it would need more than $200 billion to fully exploit the Vaca Muerta.8 Although the 2012 renationalization of YPF created uncertainty for private investors,9 a significant joint venture between YPF and Chevron announced in 2013 demonstrates that private investors remain willing to invest in the country, and in the Vaca Muerta in particular.10 In 2013, Argentina changed its export tax regime to guarantee an average oil price of $70 per barrel, which has helped maintain foreign investment and production activity in the face of uncertain prices on the global market.11 In January 2017, Argentina extended its price support for producers until 2021 and guaranteed them $55 per barrel for Medanito crude and $7.50 per million BTUs.12 Also in January 2017, Argentina struck an agreement with labor unions to help reduce producers’ labor costs, although its implementation has been uneven and subject to ongoing negotiations between producers and unions.13

In late 2015, Argentina underwent a political transition from the presidency of Christina Kirchner to that of Mauricio Macri.14 President Macri has pursued a center-right platform of deregulatory policies, including easing certain import restrictions, deregulating the peso, and reducing subsidies to the utility sector.15 These policies may benefit oil and gas producers, who have faced equipment shortages and price controls.16 The Argentine government’s current policy “is aimed at regaining self-sufficiency in hydrocarbons supply.”17 President Macri has successfully won foreign investment in Argentina’s energy sector.18 In December 2015, for example, YPF and Dow Argentina announced that they would invest $500 million to explore for and produce shale gas in Argentina.19 In addition, in April 2017 Total announced it would invest $500 million to produce shale gas in Argentina20 while Shell announced it would invest $300 million.21 In July 2017, BP, Total, and Wintershall signed an investment agreement to jointly invest $1.15 billion in the Vaca Muerta.22

Several characteristics make Argentina a good candidate for shale development. Many of the country’s shale resources are located far from urban areas.23 There are “no serious security risks,” “a reasonably well-educated workforce,” and infrastructure to support shale development in place.24 Operational risks have decreased in recent years,25 and operational costs have declined as well. For example, in May 2017 Shell indicated it had reduced its per-well costs from $35 million in 2012 to less than $10 million, including one well it drilled for only $5 million.26 Partly as a result, commercial production is well underway in Argentina.27 and by some estimates is poised for significant growth in the coming years. For instance, the International Energy Agency has estimated that oil production from fracking in Argentina will more than triple from 2018-2023 to 110,000 barrels a day.28

Nonetheless, the shale industry has also faced setbacks in Argentina. While some have characterized opposition from environmental groups as “unlikely to pose a serious obstacle” to shale development in Argentina,29 instances of protests have been reported. In one such incident, police used tear gas and rubber bullets to dispel “thousands of demonstrators.”30 Additionally, at least one Argentinian court has ordered the cessation of shale operations at a particular site due to concerns of groundwater contamination. The April 2015 ruling related to a YPF site in Chubut,31 one of Argentina’s southernmost provinces encompassing some of the San Jorge basin.

Finally, some operators—particularly Argentina’s small-scale shale producers—continue to cite challenges such as lack of financing, high operational costs, and a lack of infrastructure.32

Statutory and Regulatory Framework

Argentine provinces own the natural resources, including hydrocarbons, within their territories.33 However, federal law governs matters regarding hydrocarbons, including permitting and concessions.34 Ley No 17,319 is the main legislation governing hydrocarbon exploration and production.35 It vested complete control in the federal government to manage concessions and regulate oil and gas exploration and production, and continues to govern those concessions granted by the federal government.36 In 1992, Ley No 24,145 split control over oil and gas between the federal government and the provinces.37 Since 1992, provinces have administered the granting, administration, and control of exploration permits and concessions within their territories.38 Projects generally require the preparation of an environmental impact statement, which requires a public hearing.39

The Ministerio de Planificación Federal, Inversión Pública y Servicios (Ministry of Federal Planning, Public Investment, and Services) oversees the oil and gas sector at the federal level.40 The Ministry oversees the Secretaria de Energía, which is the primary federal regulator of the oil and gas sector and is charged with enforcing federal laws related to hydrocarbons. The Ente Nacional Regulador del Gas (ENARGAS) regulates natural gas distribution and transportation, which are under exclusive federal jurisdiction in Argentina, under Ley No 24,076.41 Each oil-producing province also has its own agency charged with regulating upstream oil and gas activities.42

On October 31, 2014, President Kirchner signed into law Ley No 27,007, a sweeping amendment of the country’s hydrocarbon laws aimed principally at unconventional resources.43 The amendment established centralized, nationwide rules for royalties and concessions, which the provinces previously controlled; removed a cap of five exploration permits per company; and extended concession periods depending on the type of oil and gas resources being developed.44 Concessionaires may now develop onshore conventional resources for 25 years, offshore resources for 30, and unconventional resources such as shale for 35 years.45 The government may extend those periods for up to 10 years upon application of the concessionaire. In addition, the new law lowered the investments required to qualify for export tax breaks to $250 million, and capped the royalties due to provincial governments at a unified national rate of 12%.46 Finally, the law allows concessionaries to sell, free from export taxes, 20% of their conventional exploitation, 20% of their unconventional exploitation, and 60% of their offshore drilling exploitation.47

Last updated September 2018

1 EIA, Argentina – Overview (Mar. 2016),

2 EIA, Technically Recoverable Shale Oil and Shale Gas Resources:  An Assessment of 137 Shale Formations in 41 Countries Outside the United States I-7 (June 2013), (“USEIA Report”).

3 Id.

4 Id. at V-1.

5 EIA Report, supra note 2, at V-2.

6 ExxonMobil, Americas Petrogas to Explore Argentina Shale, Rigzone (Aug. 30, 2011),

7 Benedict Mander, Argentina Aims to Join Shale Trailblazers, Financial Times (Sept. 7, 2015),

8 Hugh Bronstein & Malena Castaldi, UPDATE 3-Argentina’s Vaca Muerta Shale Output Rises to 45,000 bpd, REUTERS (Apr. 9, 2015),

9 Felicia Graham, IEA: Argentina Nationalization ‘Clouds Investment Climate’, OIL DIPLOMACY (May 15, 2012).

10 Hugh Bronstein & Eliana Raszewski, Argentina Cuts Shale Drilling Costs But No New Joint Ventures Expected, REUTERS (Aug. 6, 2015,

11Argentina Cuts Oil Export Tax as it Seeks to Lure Investment, REUTERS (Jan. 7, 2013),; Argentina Confident Patagonia’s Shale Formation Foreign Interest Remains Strong, MERCOPRESS (May 26, 2016),

12 Juliana Castilla, Argentina’s YPF Says Technology Lowering its Shale Costs, REUTERS.COM (June 23, 2017),

13 Juliana Castilla, Troubled Labor Pact Raises Obstacle to Argentina Shale Development, REUTERS.COM (March 26, 2018),

14 Taos Turner, New Argentine President Mauricio Macri Moves Fast to Reverse Kirchner’s Policies, WALL ST. J. (Dec. 15, 2015).





19 Taos Turner, YPF, Dow to Invest $500M in Argentina Shale in 2016, WALL ST. J. (Dec. 15, 2015).

20 Francois de Beaupuy, Total Will Invest $500 Million to Produce Shale Gas in Argentina, BLOOMBERG.COM (April 27, 2017).

21 Justin Jacobs, Argentina Looks to Recapture Vaca Muerta Shale Momentum, PETROLEUMECONOMIST.COM (April 26, 2017),

22 Tsvetana Paraskova, BP, Total, TYP to Invest $1.15B in Argentina’s Vaca Muerta Shale, OILPRICE.COM (July 19, 2017).

23 Mander, supra note 7.


25 Newbery, supra note 19.

26 Sarah Kent and Taos Turner, Big Oil Gets in Early on Argentina Shale, THE WALL STREET JOURNAL (May 4, 2017),

27 Mander, supra note 7.

28 Sarah Kent, Oil Industry Tries to Take the Fracking Boom Global, The Wall Street Journal (June 19, 2018),

29 Mander, supra note 7.

30 Simon Romero & Clifford Krauss, An Odd Alliance in Patagonia, N.Y. TIMES (Oct. 21, 2013),

31 Carlos Guajardo, Por un Fallo Judicial, YPF Deberá Suspender la Actividad en un Pozo de Chubut, CLARÍN (Apr. 14, 2015),

32 Juliana Castilla, Argentina’s shale potential hit as small firms struggle for funds, REUTERS (June 19, 2018),

33 International Bar Association, supra note 15, at 10.





38 International Bar Association, supra note 15, at 10.

39Id. at 9.

40Id. at 11.



43 Ken Parks, Argentine House Passes Law to Boost Shale Investment, WALL ST. J. (Oct. 30, 2014),; see also Hidrocarburos: Ley 27.007 (Ley Nº 17.319 Modificación), Oct. 29, 2014,

44Argentina: New Hydrocarbon Law (2014), Measure #8267, GLOBAL TRADE ALERT (Feb. 14, 2015),