Argentina’s oil and gas market is grappling with falling crude prices and peso appreciation, with impacts on the costs for companies.
Still, “companies already have investments planned for 2025. That’s not going to change,” Martina Gallardo Barreyro, VP and senior credit officer at Moody’s Ratings, told BNamericas. “What is happening in terms of investment plans is not focused on the short term.”
According to Moody’s, sector investments should not change much, considering a Brent price of around US$60/b. Companies operating in the Vaca Muerta formation have achieved efficiencies that allow maintaining the pace of investment while sacrificing some profits.
“Companies have learned to lower costs. They’ve become more efficient through longer lateral wells, and they’ve increased productivity. They’re not in the same situation as a few years ago. So, that has also helped companies cope with lower oil prices,” she said.
On the other hand, companies have healthy balance sheets, with leverage ratios below their ratings.
Although some foreign exchange restrictions remain, the Rigi investment incentives regime has helped lower barriers. However, some companies are in an investment cycle and may prefer to reduce or cancel dividend distributions to be able to keep investing.
According to Gallardo, investment of companies rated by Moody’s amounts to a combined US$4-10bn per year. Most likely, 2025 will see around US$10bn.
Last year, companies were able to obtain financing in the cross-border market, bringing forward their investment needs for this year. “This allowed companies to clear maturities for this intensive capex period,” Gallardo said.
However, the need for financing will continue while access to funds has become more complex due to the international scenario.
In the local market, where investment capacity is limited, corporate placements were positive. “When you look at recent issues, well, the ticket wasn’t that small, and the cost of debt – measured in hard dollars – quite interesting… So, the local market also helps a lot with these needs,” she said.
Also, international banks and financial institutions are engaging in talks with companies to finance specific projects.
“Argentina, during the worst moments of the currency controls, has obtained financing, so it’s certainly likely to happen. We can’t talk about 2026, but so far in the first half of 2025, the visibility we have is that this financing is being negotiated and will likely materialize.”
Rigi
Sector investment benefited from the Rigi regime, which allows access to exchange and tax benefits, and led to the development of midstream projects to transport increased production.
“There are several midstream projects already underway,” Gallardo said. Export-focused projects can also help generate foreign currency for the country.
Among them are Southern Energy‘s LNG project and TGS‘s compression project.
With the two vessels that Southern Energy is due to bring for gas liquefaction, capacity for the next three years is secured. “The outlook for the sector in the coming years is good.”
Gallardo added: “These are relatively quick projects because the first vessel, with the existing capacity, has already been resolved. The second requires an associated gas pipeline, but the capex is relatively low compared to larger projects,” she said.
The project would allow exporting to other markets and increase shipments to existing ones, such as Chile, Brazil and Uruguay.
M&A
Moody’s does not see the need for mergers and acquisitions, but Gallardo emphasized that “if the company needs to optimize capital resources, the time to sell is now. And the time to sell it is also now because there are buyers.”