Shell is set to increase its oil production in Argentina’s Vaca Muerta shale formation by 5,000 barrels per day (bpd), aiming to reach 50,000 bpd by the year’s end, as confirmed by its Chief Executive on Tuesday.
Ricardo Rodriguez, the CEO of Shell in Argentina, made this announcement during an oil and gas conference in Buenos Aires.
He acknowledged that the company faces challenges, including limitations on investment and macroeconomic pressures, which are deterring them from expanding their operations in Vaca Muerta.
Report this ad Currently, Shell holds the position of the second-largest crude oil producer in Vaca Muerta, trailing behind Argentina’s state-run oil company, YPF.
Rodriguez emphasized the exceptional quality of Vaca Muerta and expressed Shell’s desire to invest more than the current annual budget of $500 million.
However, he also noted that restrictions on accessing foreign currency and Argentine price regulations have prompted caution when deciding where to allocate additional investments.
Rodriguez stated, “To invest more, we have to have conditions that justify increased investment.”
In August, Argentina implemented measures to freeze the domestic crude oil price, fixing it at $56 per barrel until the end of October to combat triple-digit inflation. The country continues to maintain stringent exchange controls in an effort to address its limited foreign currency reserves.
“We do not have a free market price for Argentina, unlike my colleagues in Brazil or Mexico,” Rodriguez pointed out, highlighting the significant competitiveness gap this creates.
Vaca Muerta boasts the world’s second-largest shale gas reserves and the fourth-largest shale oil reserves. The formation plays a pivotal role in Argentina’s aspirations to become a prominent energy exporter, including its plans to ship liquefied natural gas (LNG).