Argentina's Shale Industry Lures International Oil Companies

YPF is hoping to unlock its country’s vast resource potential, and its eyes are squarely on the giant Vaca Muerta formation, said CEO Miguel Galuccio.

“Road blocks in producing oil and gas in the South American country include regulatory and cost issues, as well as problems importing equipment because of high tariffs, and YPF is working hard to remove these obstacles,” said Galuccio.

YPF controls more than a third of the acreage at Vaca Muerta, and it has been aggressively pursuing partnerships, in particular with U.S. companies, to develop the play, YPF executives said.

Argentina energy analysts say that “lawmakers are inclined to write a new energy law in the next two years to establish a solid legal framework to attract investment. Argentina needs to offer some confidence to investors in order to bring capital back to Argentina.”

Argentina’s existing hydrocarbons law was adopted in 1967, when the country didn’t have any offshore or unconventional operations and environmental concerns were less of an issue.

According to environmentalists, fracking uses large amounts of water that must be transported to the fracking site, at significant environmental cost. Potentially carcinogenic chemicals used may escape and contaminate groundwater around the fracking site. Environmental campaigners also say that fracking is used by firms and governments to encourage a reliance on fossil fuels.

“A large amount of wells need to be drilled, which leads to a larger space taken up by the project. Aquifers may be affected due to filtrations of the chemical water used. Companies say these are safe techniques but they don’t provide any concrete evidence,” Hernán Scandizzo, member of Observatorio Petrolero Sur, told the local press.


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