Argentina's 'Dead Cow' Hydrocarbon Province Set to Come Alive
The recent change in government in Argentina represents a major opportunity for the country to achieve the inward investment it needs to develop its oil and gas resources, including its vast Vaca Muerta shale gas play. That was the message Rigzone heard at the British-Argentine Chamber of Commerce's annual conference, which was held this week at the Law Society in London.
On November 22, Argentina elected Mauricio Macri of the center-right political party Propuesta Republicana (PRO) as its new president.
Dr Diego Guelar, a veteran Argentine diplomat who currently serves as Secretary of International Relations for the PRO party, told delegates to the BACC annual meeting that Argentina had "been looking backwards for a long time – I would say decades, not only the last 12 years". But he added that the change in government would mean a stronger engagement with countries and other entities that want to do business with Argentina.
"Specifically in the energy field, as you know, we have the Vaca Muerta [which means] the 'Dead Cow'. And, sure, it's going to be an extremely alive cow in a short period of time. A lot of investment is going to arrive in Argentina," Cuelar said.
Oil sector analysts at consultancy firm Wood Mackenzie recently released research in which they said that production from the Vaca Muerta is expected to double by 2018, with "a marked ramp-up" occurring by 2020. Wood Mac estimates that some $1.2 billion will be spent in the region by companies preparing to fully develop the Vaca Muerta shale.
Also speaking at the BACC conference was Dr Nicolás Mallo Huergo, chairman of Andes Energia – which has licenses covering 250,000 acres of the Vaca Muerta.
On the sidelines of the conference, Mallo Huergo told Rigzone:
"This new government represents a big, positive change for the industry because what they want to do is open the international market and bring foreign investors into the [oil and gas] sector."
Mallo Huergo said that the new government will be mindful of formulating and sticking to "very clear and transparent" rules for companies seeking to do business in Argentina. Macri's government is also expected to allow companies and individuals to bring in and take out US dollars without restrictions, which should also lead to the end of a bizarre state of affairs, which has existed in Argentina for the past few years, in which exchange rates vary significantly depending upon where and with whom money is changed.
"So, the government is going take some measures in which you will feel that you have all the necessary comfort to be able to do your investment," Mallo Huergo explained.
Andes Energia's most important project at the moment is the Chachahuen license, which it is developing in collaboration with state oil firm YPF. Mallo Huergo said that to date there have been some 150 wells drilled on Chachahuen and there are a further 30-to-40 development wells planned there in the near future.
"We have other projects on the same block, as well as on different blocks, that we are not developing today because we have financial limitations. But we expect that, with this new administration, all of these restrictions are going to disappear. That will allow us to increase our production, develop our different projects and, of course, since there are going to be different players for sure from abroad, there will also be more business opportunities – such as doing permit partnerships," Mallo Huergo said.
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