NEUQUEN, June 9, 2025 (Reuters) — Argentina's Vaca Muerta shale formation produced a record 700,000 barrels of oil equivalent per day in May, according to data released Tuesday by the Energy Secretariat, making Argentina the fourth-largest shale producer globally.
The milestone, up from 450,000 boe/day when Milei took office in December 2023, reflects the combined impact of regulatory reforms, foreign investment commitments, and a sustained drilling campaign that has added 147 new wells in the past 12 months.
"Vaca Muerta is no longer a promise — it's a reality," Milei said at a ceremony inaugurating a new YPF-Chevron joint production facility in the Loma Campana field.
Chevron committed $1.2 billion to new drilling programs in Vaca Muerta in March. ExxonMobil followed with an $800 million expansion of its Bajo del Choique development, and Shell announced $450 million for additional well pads at its Sierra Chata concession.
The boom has created 28,000 direct jobs in Neuquen Province, where unemployment has fallen from 8.4% to 4.1% in 18 months.
Mapuche communities have raised concerns about land rights and environmental damage. The Indigenous Association of Neuquen Territories filed a lawsuit in April seeking to block drilling on lands they claim were never properly ceded to the Argentine state.
Each hydraulic fracturing operation requires between 10 and 15 million liters of water, most of it drawn from the Neuquen River basin. The Neuquen provincial environmental agency approved 89 new drilling permits in the first quarter of 2025, up from 31 in the same period last year.
The federal government has responded with a $200 million infrastructure program aimed at mitigating the boom's side effects, including water recycling facilities and road improvements.
For global energy markets, Vaca Muerta's rise adds a new source of non-OPEC supply at a time when geopolitical tensions have disrupted flows from Russia and the Middle East. Analysts project that Argentina could export 500,000 barrels per day by 2030.
Export infrastructure remains a bottleneck. Argentina currently lacks sufficient pipeline capacity to move Vaca Muerta crude to Atlantic ports for international shipment. The government has announced plans for a $1.2 billion pipeline expansion, but construction has been delayed by financing disputes and environmental permitting challenges.
The shale boom has also reshaped Argentina's trade balance. Energy imports, which consumed $12 billion in foreign exchange in 2022, have fallen to $3 billion as domestic production replaces purchased volumes. The Energy Secretariat projects that Argentina could achieve net energy exports by 2028 if current production trends continue.
