Reshaping Argentina’s oil and gas landscape

September 2025 | SPOTLIGHT | SECTOR ANALYSIS

Financier Worldwide Magazine

September 2025 Issue

For at least the past two decades, Argentina’s oil and gas sector has remained in the spotlight. Between 2004 and 2012, it faced significant challenges due to public policies that undermined its development. From 2012 onwards, however, successive governments – regardless of political orientation – have fostered the sector in various ways.

This suggests the existence of a consistent state policy that transcends changes in government. There is broad political consensus that the hydrocarbon sector must be developed.

In recent years, the energy sector has presented a dual challenge: it has been viewed both as a major contributor to Argentina’s macroeconomic hurdles and as a potential solution to them. The country’s reliance on costly energy imports was a key driver of the fiscal deficit. Achieving energy self-sufficiency and restoring Argentina’s role as an energy exporter has therefore been seen as a means to reduce the deficit, strengthen the Central Bank’s reserves and support economic recovery.

During the past two years, the oil and gas landscape has undergone significant transformation. Argentina is currently experiencing a reconfiguration of its energy sector, reshaping the domestic environment and potentially altering its position in the global energy market. These changes are driven by both internal and external factors.

Among the domestic drivers, geology plays a central role. The Vaca Muerta basin contains world-class shale resources, placing Argentina among the countries with the greatest potential for unconventional hydrocarbon development. Recent increases in production and progress in infrastructure to address bottlenecks are also noteworthy. According to the International Monetary Fund’s staff report for Argentina published in April 2025, the energy trade surplus reached nearly $6bn in 2024, reversing the deficits of the previous decade.

This surplus was driven by increased exports resulting from an oversupply of oil and natural gas from Vaca Muerta, the elimination of natural gas imports and the partial substitution of liquid natural gas (LNG) imports. The outlook for both the short and medium term is increasingly positive. Infrastructure developments, such as the gas pipeline connecting Vaca Muerta with consumption and export terminals, and the reversal of the northern gas pipeline enabling exports to Bolivia and Brazil, have further supported this shift.

Legal and regulatory changes have also begun to influence the industry. Experts have noted that, in order to attract investment in oil and gas amid a fragile macroeconomic context and reduce regulatory uncertainty, it was necessary to insulate major oil and gas infrastructure projects from broader macroeconomic risks.

The regulatory response was the introduction of the Incentive Regime for Large Investments (RIGI) in 2024. This framework offers tax, customs and foreign exchange benefits, along with guarantees and stability for approved projects. Two major projects of this industry have already been approved under RIGI: a floating LNG plant and an oil export pipeline.

Further amendments to the legal framework, including provisions for long term firm natural gas and LNG export permits, have also strengthened the outlook for export-oriented projects. Argentina is aiming to position itself as a large scale, long term energy exporter.

Another factor reshaping the domestic landscape is the strategic plan implemented by the state-run energy company YPF in the upstream sector. The Andes Project focuses on unconventional resources in Vaca Muerta and involves divestment from conventional assets. This has opened opportunities for both established and emerging – though generally smaller – players to enter the market for mature fields.

Other major companies are also withdrawing, creating space for new, primarily domestic, actors to enter the production segment. The emphasis on unconventional reservoirs is also shaping midstream strategies, including LNG projects and the expansion of pipeline infrastructure to facilitate exports via the Atlantic Ocean.

A further sign of renewed dynamism in the sector is the number of upstream asset transactions completed at attractive prices over the past two years, with additional deals currently underway. The unconventional boom is also drawing in companies from other segments, such as service providers and commodity traders, which are now leaning toward the production business. Smaller service companies are consolidating to offer integrated solutions, allowing producers to work with a single counterpart.

The concentration of activity in Vaca Muerta presents challenges for other stakeholders, including service companies, subcontractors, trade unions, employees and provincial governments, all of which are directly affected by the evolving market structure.

On the macroeconomic front, gradual stabilisation is in progress, although significant challenges remain. Measures have been introduced to reduce the fiscal deficit and progressively ease foreign exchange restrictions, primarily for individuals but not yet fully for companies. These reforms are influencing the broader economy and investment climate. A substantial portion of the fiscal deficit was previously attributable to LNG imports by ship and natural gas imports from Bolivia, both of which are now being reduced or eliminated.

Turning to the external factors reshaping the domestic energy landscape, two key developments stand out.

The first is geopolitical volatility. From a global perspective, the energy sector is at a crossroads. Ongoing geopolitical shifts – particularly the conflicts between Russia and Ukraine and in the Middle East – are redefining energy flows both regionally and globally. These developments have placed the global energy scenario at the forefront of strategic discussions. It is now essential to reassess where energy supply originates and how it is likely to evolve in the coming years. Western countries are seeking to secure reliable sources of energy, and in this context, Latin America has gained renewed strategic importance. Argentina could play a significant role in the global energy map, provided it achieves macroeconomic stability, restores investor confidence and continues to develop its infrastructure.

Despite external price volatility, the economics of Vaca Muerta wells remain highly attractive, even at current oil price levels. Large scale energy integration projects are under consideration, including initiatives for Argentina to supply natural gas to the Brazilian market. The reversal of the northern gas pipeline is a step in this direction. Recently approved RIGI projects, along with others under evaluation, also support this strategy.

The second factor is the global energy transition. This shift requires a strategic rethink by all stakeholders. Traditional oil and gas companies are increasingly diversifying into alternative energy sources. The global trend appears to favour energy diversification over a strict transition, suggesting that both fossil fuels and renewables should be developed and deployed according to the specific needs and realities of each country and region.

Within this context, Argentina faces several challenges. The most pressing is access to financing. The country currently lacks access to international capital markets, although some local energy companies have successfully issued bonds abroad at relatively favourable rates, given the prevailing country risk. In addition, certain bank loans have been provided for domestic projects, such as the Vaca Muerta Sur oil pipeline, which falls under the RIGI framework. However, the market continues to seek stronger signals of stability, particularly in light of Argentina’s classification as a standalone market by Morgan Stanley Capital International in June 2025.

The upcoming mid-term elections in October may also influence investor sentiment. Infrastructure remains a constraint. Although progress has been made, further development is required. The pace of the energy transition must also be carefully monitored to ensure Argentina does not miss its window of opportunity.

Argentina’s oil and gas sector is gaining momentum. Some players are exiting the market, others are entering, and some are adapting their strategies. Companies that had previously withdrawn are now considering a return. Whether this trend consolidates will depend on the development of further projects and the country’s ability to position itself as a large scale energy exporter.

Agustina Ranieri is a lawyer at Marval O’Farrell Mairal. She can be contacted at +54 (11) 4310 0100 or by email: amr@marval.com.

Agustina Ranieri

Marval O’Farrell Mairal