Argentina has suspended policies and incentives aimed at accelerating hydrocarbon production from the Vaca Muerta shale play due to the international context, low oil and gas demand and collapsing prices. The government maintains discussions with oil and gas producers and is considering support measures, such as setting a minimum oil reference price for local producers at US$45/bbl, with the objective to increase domestic production and to limit imports. In early April 2020, the tender for the construction of the first section of a 15 mcm/d (5.5 bcm/year) gas pipeline between Tratayén in the Vaca Muerta gas formation (Neuquén province) and Salliquelo (Buenos Aires) (worth US$800m) was postponed for the third time, as no bid was submitted.
Argentina bets on the Vaca Muerta field to improve domestic energy supply and begin natural gas exports. According to the government, the play could lead to a doubling of the country’s oil production, to more than 1.1 mbl/d and to an increase in crude exports to 0.5 mbl/d. However, gas drilling has been stopped since August 2019; the covid-19 pandemic and the fall in oil prices have degraded the economic viability of gas production in this area and decreasing investments are expected to cut gas production in 2020 and 2021.