Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19
Crude Oil Price Fails At Critical Fibonacci Level - 15th May 19
Strong Stock Market Rally Expected - 15th May 19
US China Trade Impasse Threatens US Lithium, Rare Earth Imports - 15th May 19
Gold Mind Reader's Guide to the Global Markets Galaxy: 'Surreal' - 15th May 19
Trade Wars and Other Black Swan Threats to Your Investments - 15th May 19
Our Long-Anticipated Gold Momentum Rally Begins - 15th May 19
Defense Spending Is Recession Proof - Defense Dividend Stocks - 15th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Can Argentina Capitalize On Its Vast Shale Oil Reserves?

Commodities / Shale Oil and Gas Apr 01, 2015 - 10:40 AM GMT

By: OilPrice_Com

Commodities Argentina, once a regional energy leader, is now better known for financial busts and bombastic politicians than hydrocarbons prospects. Still, with a resource potential both vast and untapped, the nation has never been far from energy investors' minds. The question today is just how much Argentina is willing to change and how this plays into a low oil price environment that is already negatively impacting investment elsewhere.


Argentina's deliberate efforts to appease some of its international creditors, combined with an overhaul of the nation's hydrocarbons framework have the potential to lure foreign investors back. The promise of a change of government– and potentially a more market-friendly approach – later this year should add to the country's appeal.

Experts have kept a watchful eye on Argentina ever since the US Energy Information Administration identified the nation as holding the world's second largest shale gas and fourth largest shale oil reserves. This translates to an estimated 802 trillion cubic feet of technically recoverable shale gas and 27 billion barrels of oil.

Yet unlike the production boom unleashed by the shale revolution in the United States, Argentina's vast shale plays have remained comparatively idle.

Politics and economics are largely to blame.

Investor confidence in Argentina has been damaged by heavy-handed nationalist politics, including the nationalization of oil company YPF in 2012. Price caps and export restrictions have added to what many view as a trying business environment.

Exploration and production in Argentina is also expensive. It costs an estimated $11 million per well in Argentina, a figure YPF hopes to bring more into line with international standards of $7 million by the end of the year. Whether this target is feasible remains to be seen.

But in the nation famous for the Albicelestes, things are starting to change. Argentina is making efforts to improve relations with international creditors and agreed to a $5 billion settlement with Spanish company Repsol as compensation for its YPF stake.

Meanwhile, exploration and production in the unconventional fields is slowly picking up. Argentina is one of just four countries to produce commercial quantities of shale oil or gas – joining the US, Canada, and China – and is the only producer in Latin America. Most of this production has come from the Vaca Muerta formation in west-central Argentina.

Argentina's shale fields are currently producing 41,000 barrels of oil equivalent per day from 320 wells. These are important milestones for the nation's oil and gas industry and YPF expects both figures to increase in 2015.

Foreign investors are also trickling back to Argentina. Chevron was the first oil major to take the plunge with a deal worth a potential $15 billion. YPF has also received commitments from DOW Chemical for a potential $188 million and Petronas for a potential $9 billion, both in Vaca Muerta. YPF has also signed preliminary deals with Wintershall and Sinopec.

The Argentine government hopes the overhaul of the national hydrocarbons law will further spur investor activity. Many of the benefits included in Chevron's deal have been carried over, including the ability to export up to 20% of production free of tariffs or sold domestically at international prices. The legislation also caps royalties for oil-producing provinces at 12% and centralizes the bidding process.

Replicating the United States' success was always going to be a tall order. The unique set of factors, including easy access to financial and human capital, technology, know-how and a favorable regulatory and business environment - are not easily reproduced in Argentina or elsewhere.

Argentina is instead seeking to adapt US technology and innovation to increase efficiency and productivity in existing and new wells, with a focus on large-scale drilling and cost reduction.

As for the low price environment, Argentina's subsidized domestic market will shield producers in the short term. Oil prices are set at $77.50 per barrel and natural gas as $7.5 per million British thermal units (MMBtu). Of course, this provides no such protection for exporters.

A new administration will need to address the issues of subsidies as well as boost local production in order to reduce the energy trade deficit that is costing Argentina's government an estimated $6 - 8 billion per year.

In the meantime, excitement around Argentina's energy prospects is welcome and while investors are wise to remain cautious, there are positive signs that the nation's energy ambitions are within reach.

Source: http://oilprice.com/Energy/Energy-General/Can-Argentina-Capitalize-On-Its-Vast-Shale-Reserves.html

By Alexis Arthur for Oilprice.com

© 2015 Copyright OilPrice.com - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

OilPrice.com Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules