Argentina is Experiencing an Oil Boom, with Bright Spots and Shadows — Global Issues
BUENOS AIRES, Mar 19 (IPS) – For about three years now, Argentines have been hearing almost every month that oil production is breaking new records. Looking ahead, the country is projected to become a major global supplier of what remains the most sought-after energy source.
These developments, presented as hopeful news for an economy that has been in deep crisis for at least 12 years – with a decline in per capita GDP, worsening income distribution, and rising poverty – nonetheless raise many questions.
Critics question the distribution of economic benefits, the population’s access to energy, the expansion’s environmental and social impact, and the virtual abandonment of the country’s climate goals and commitments.
The so-called Neuquén Basin, in the country’s southwest, is the epicenter of an oil activity expansion that sectors of academia and environmental and social organizations describe as overly aggressive.
“In the last 10 years, exploration began in agricultural areas. Since 2012, 3,300 oil wells have been drilled, 440 of which were completed in 2024. Over 500 wells are planned for 2025,” researcher Agustín González told IPS.
González, an agronomist and professor at the National University of Comahue, which has campuses in Neuquén and Río Negro – two provinces in the Patagonian basin where the Vaca Muerta geological formation is located – highlighted the impact of this expansion.
This field, which sparked the hopes of Argentine politicians and businessmen in 2011 when the U.S. Energy Administration classified it as one of the world’s largest reserves of shale gas and oil, is finally beginning to yield results, sometimes at the expense of other sectors.
Shale hydrocarbons are extracted using a technique called hydraulic fracturing, or fracking, and González warns that its widespread use is causing significant impacts in a traditionally agricultural region known for its high-quality fruit production.
Impact on Local Communities
“Fracking is extremely violent. It uses 30,000 liters of water per well, mixed with over 60 chemicals and high-powered pumps to fracture the rock. It has nothing to do with conventional oil activity,” González explained.
“Fracking affects all nearby land uses. When it is done near a river, a farm, or a populated area, it puts them at risk,” added González, who is part of a joint research group on the environmental and social impact of Vaca Muerta, involving the University of Comahue and the Stockholm Environment Institute.
“The development of fracking must be balanced with the protection of natural resources, food production, and social equity, establishing a robust regulatory framework to prevent irreversible damage to ecosystems, agricultural areas, and local communities,” warns a study published last December by this group of researchers.
However, this does not seem to be the best time to discuss these issues in Argentina, where far-right President Javier Milei has downgraded the Ministry of Environment to a minor department under the Secretariat of Tourism and has completely rejected not only the climate agenda but also the strengthening of the state’s role as a regulator of productive and industrial activities.
“The government has defunded the Renewable Energy Development Fund (Foder) and outright closed the distributed energy fund,” Matías Cena Trebucq, an economist at the non-governmental Environment and Natural Resources Foundation (Farn), told IPS.
The expert added that “while previous governments had a debated focus on natural gas as a transition fuel, the Milei administration is now fully committed to fossil fuels and has eliminated any reference to a path toward clean energy.”
In 2015, the Argentine Congress passed a law setting a goal for 20% of the country’s electricity consumption to come from renewable sources by December 2025. In 2024, the sector grew due to older projects coming online, reaching 15% of generation, but it is unlikely to continue growing without state support.
Positive Balance
Thanks to recent trends, Argentina achieved a positive energy trade balance in 2024 for the first time in 13 years, with exports exceeding imports by US$5.668 billion.
Exports of fuels and energy grew by 22.3% last year compared to the previous year, reaching $9.677 billion, accounting for 12.1% of the country’s total exports, according to official data.
The main explanation for these figures lies in the expansion of fracking in Vaca Muerta, which contributed 54.9% of all oil production and 50.1% of gas nationwide. In December alone, Vaca Muerta produced 446,900 barrels of crude oil (159 liters each), 27% more than in the same month of 2023.
Conventional oil and gas production, on the other hand, continues to decline due to the depletion of the San Jorge Gulf Basin in the Patagonian province of Chubut, which was traditionally the country’s main oil-producing region.
Total production in 2024 was 256,268,454 barrels of oil, 11% more than in 2023. This marks four consecutive years of growth, driven solely by unconventional oil from Vaca Muerta.
Due to the potential of this geological formation, various studies circulating in the sector suggest that Argentina is on track to reach US$30 billion in annual oil exports by 2030 and position itself as a global supplier.
“The Argentine oil industry has advanced over the last 15 years, regardless of the government in power,” Gerardo Rabinovich, vice president of the non-governmental Argentine Institute of Energy (IAE) General Mosconi, told IPS.
He added that “today, the benefits are being reaped, the sector will continue to grow, and it is possible that the goal of US$30 billion in exports will be reached before 2030.”
“In 2022, we had an energy trade deficit of US$4 billion, and in 2024, we achieved a surplus of over US$5 billion. That is very important for Argentina,” he added.
However, the flip side of this reality is that, due to the brutal adjustment of public accounts by the Milei government, domestic demand for gasoline and diesel fell by 6.5% and 5%, respectively, compared to 2024, according to an IAE report, said Rabinovich.
“The Milei government has proposed completely liberalizing oil activity, displacing the state, and aligning local prices with global ones,” Fernando Cabrera Christiansen, a researcher at the Southern Oil Observatory, told IPS.
Cabrera, speaking from Neuquén, where he lives, noted that the growth of Argentina’s oil production has not led to greater well-being for a predominantly impoverished population, nor has it made energy cheaper locally.
He emphasized that, while over US$40 billion in investments have flowed into Neuquén in the last decade, according to data from the provincial Undersecretariat of Energy – an amount unmatched by any other region – social indicators remain as alarming as those in the rest of the country.
“The province uses oil royalties to pay public salaries and other current expenses. It is not enough to build infrastructure or provide social benefits. And poverty levels in Neuquén are similar to the national average,” he concluded.
© Inter Press Service (2025) — All Rights Reserved. Original source: Inter Press Service
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