Argentina’s Vaca Muerta shale formation has “enormous potential” and natural gas will form an important part of energy strategy in post-coronavirus Argentina, according to Dr. Javier Papa, Argentina’s undersecretary of energy planning at the Energy Secretariat. 

Argentina rig count

Speaking at the “Insights for defining Latin America’s regional energy agenda for a Post-Covid-19 era” virtual event organized by the International Energy Agency (IEA) and La Organización Latinoamericana de Energía (OLADE), Papa pointed out the prominence of natural gas in the country’s energy mix.

“It’s important to say that natural gas in Argentina is the biggest energy resource in terms of national supply, accounting for 58% of total energy,” he said, adding that the Vaca Muerta shale formation has had results similar to “the best plays” in the United States. 

But only 4% of Vaca Muerta has been developed on a commercial scale, “which gives us an enormous potential in hydrocarbons.”

Natural gas is a “key part of the energy transition” in Argentina, Papa said, reducing other more contaminating inputs in the energy system.

As for what the nation has done from an energy perspective to bolster the economy during the coronavirus pandemic, Papa highlighted frozen utility rates through the end of the year, along with a law making it impossible to cut off gas and electricity to users also through year-end.

Papa said the nation instituted a $45/bbl price floor for oil producers to try to motivate new exploration and production, and the secretariat is in the process of “elaboration” on a new gas plan.

Natural gas production in Argentina fell by 14.1% year/year in August to 124.1 million cubic meters/day (MMm3/d), or 4.38 Bcf/d, a downward trend that has been seen in the country for months now.

Production from Vaca Muerta in August fell year/year to 1.14 Bcf/d from 1.26 Bcf/d. Production was essentially flat compared to July.

Calling natural gas “a key part” of the energy transition in Argentina, Papa said he hoped that helped by the new gas scheme, next year natural gas production levels would return to pre-pandemic levels. He said he hoped additional natural gas exports to neighbors would “strengthen regional integration.” 

In late August, Darío Martínez took over from Sergio Lanziani as the Energy Secretary, the top position in the energy sector. He was recently in discussions with his counterpart in Brazil over the possibility of a natural gas pipeline from Vaca Muerta to southern Brazil.

Speaking at the same event, IEA head Fatih Birol said that “many countries in the region use oil and gas revenues as an additional boost for the economy. We believe oil and natural gas can play a very important role” in the response to the coronavirus.

“We all use masks, which is a product of the petrochemical industry, we all use hand sanitizer, which is a product of the petchem industry,” Birol said. “We think natural gas has an important role to play in the region as an affordable fuel in particular in the industrial sector where you need high temperatures and also to support the increasing share of solar and wind.

“All fuels and technologies need to be used for a sustainable recovery.”