September 30, 2025 [Oil Price]- Argentina’s federal government, for over a decade, has hungrily eyed the vast hydrocarbon potential of the Vaca Muerta (dead cow in Spanish) shale formation in Neuquén Province. It was in 2011 that the Peronist government of Cristina Fernández de Kirchner seized 51% of YPF from Spanish energy major Repsol, provoking a major backlash from financial markets and Big Oil. Despite the considerable negativity surrounding YPF’s nationalization, it was the catalyst that saw the driller emerge as a driving force for the successful exploitation of the Vaca Muerta.
Since the development of the Vaca Muerta began in earnest over a decade ago, shale oil and gas production has soared ever higher, regularly hitting record highs over the last two years. Government data for August 2025 shows Argentina lifted a record 816,144 barrels of crude oil per day, which was 65% weighted to shale oil, and 5.5 billion cubic feet of natural gas, 67% weighted to shale gas. Overall, oil output for that month soared 1.4% compared to July 2025 and by nearly 15% year over year. Natural gas production declined by over 2% month over month and only rose a modest 3% year over year. This notable increase in petroleum output firmly secures Argentina’s place as the fourth largest crude oil producer in Latin America, behind OPEC member Venezuela and ahead of Colombia.
It is Argentina’s considerable unconventional hydrocarbon potential that is driving soaring production. According to government data for August 2025, shale oil production surged by a whopping 30% year-over-year to 530,057 barrels per day. This is not only a new unconventional petroleum production record, but saw shale oil comprise 65% of all crude oil lifted in Argentina, the highest ratio yet. Disappointingly, August 2025 shale gas production declined, falling by a modest 1.6% month over month to 3.7 billion cubic feet per day, although this was still 3% higher year over year. The volume of shale gas accounted for 67% of all natural gas produced by Argentina, the highest proportion ever.
Analysts initially compared the Vaca Muerta to the Eagle Ford Shale; however, drilling results, shale thickness, reservoir pressure, and well productivity now reveal that the formation’s characteristics correlate more closely with those of the prolific Permian Basin. Indeed, it is believed that Vaca Muerta’s well productivity surpasses that of major U.S. shale plays, including the Permian. According to industry consultancy Rystad Energy, a typical well in the Vaca Muerta generally provides one-year cumulative production of around 30 barrels per foot drilled. This is double the production of the Permian, Delaware, and Midland shales, which produce between 15 barrels and 23 barrels per foot, while wells in the Bakken and Eagle Ford flow 17 to 18 barrels per foot during the first year. Drilling and other operational costs in the Vaca Muerta are higher than those in more mature U.S. shale plays but are offset by superior well productivity. As a result, the Vaca Muerta’s average breakeven price, estimated to be $36 per barrel, is comparable to U.S. shale basins.
A shortage of critical infrastructure, notably pipelines and storage, is weighing on takeaway capacity, production growth and breakeven prices, but this will improve as crucial infrastructure is built out in South America’s largest shale play. There are currently several infrastructure projects under development. Pampa Energía, the Vaca Muerta’s third largest oil producer, is investing $426 million to develop a 45,000 barrel per day treatment plant at its wholly owned and operated Rincón de Aranda shale oilfield. The company reported strong growth in shale oil and gas production for the second quarter of 2025. Pampa Energia expects further growth as additional wells, as well as infrastructure, come online.
A pivotal piece of infrastructure currently under construction is the $3 billion Vaca Muerta South pipeline. The facility will connect the Vaca Muerta to an oil terminal on Argentina’s Atlantic Coast, boosting not only takeaway capacity from the shale formation but also the country’s energy exports. It is anticipated that the pipeline will commence operation during 2027 with an initial capacity of 180,000 barrels per day. This will increase through later extensions to 550,000 barrels per day and eventually 700,000 barrels per day. The pipeline is being built by a consortium comprised of Argentina’s national oil company YPF, Pampa Energia, Chevron, Shell and Vista Energy, all of which are major unconventional hydrocarbon producers operating in the Vaca Muerta.
For these reasons, the Vaca Muerta is attracting considerable interest from foreign energy companies, even Big Oil. Global energy supermajor Chevron stated in an August 2025 media release: “It expects Vaca Muerta to play a larger role in its portfolio in the coming years.” The Big Oil company went on to assert that production from its petroleum acreage in the Vaca Muerta will more than double by the end of the decade, growing from 442,000 barrels per day in 2024 to one million barrels per day by 2030.
The latest numbers suggest that Vaca Muerta is shaping up as Buenos Aires’ long-awaited economic silver bullet. Growing shale oil and gas production is boosting exports, fixing a problematic balance of trade. Indeed, oil and gas are now Buenos Aires’ second-largest export, generating $8.5 billion, which is slightly less than half of the $18.6 billion made by soybeans in 2024, representing 11% of all export earnings that year. These developments place Argentina on the cusp of becoming a South American energy powerhouse. The economic benefits this will deliver, coupled with President Javier Milei’s reforms, will give Argentina’s crisis-prone economy —the third-largest in Latin America —a solid boost.
