Huge shale gas reserves are laying the foundations of pipeline and LNG exports out of Argentina, which could make South America’s second-largest economy a major force in regional and global gas supply.
Argentina has the resource base—the vast unconventional reserves in the Vaca Muerta shale basin in the Neuquen province. But it needs to build up infrastructure to ship the gas from supply centers to interstate regional pipelines and planned LNG export facilities. Argentina also needs to continue with the market reforms launched by business-friendly president Javier Milei to attract foreign investment and reverse decades of investors shunning the country due to economic and fiscal instability.
On its quest to become an LNG exporter, the country will also face stiff competition from the world’s biggest LNG exporters who have low cost of supply.
Argentina could see its natural gas production peak at 180 million cubic feet per day (Mmcd) by 2040 under a base-case scenario, with the potential to reach as high as 270 Mmcd if the country successfully develops all its planned LNG export projects, Wood Mackenzie said in its latest outlook on the country’s gas and power markets.
Key to the jump in gas supply will be the unconventional fields in Vaca Muerta.’
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“With Bolivian exports set to cease by the end of this decade, Argentina is strategically positioned to become the leading regional supplier,” said Javier Toro, Senior Research Manager at Wood Mackenzie.
“At the same time, Argentina has a real opportunity to establish itself as a credible LNG exporter on the world stage.”
Vaca Muerta Shale Output Soars
Oil and gas production in Vaca Muerta has jumped in recent months and the country is now looking at the next step of the resource boom—exporting its huge hydrocarbon resources.
Vaca Muerta—Spanish for ‘dead cow’—has been dubbed the Argentinian Permian, although its geologic properties have been compared more appropriately to the Eagle Ford.
The shale play is estimated to hold recoverable resources consisting of 16 billion barrels of oil and 308 trillion cubic feet of natural gas. Those numbers make the Vaca Muerta the world’s second-largest shale gas deposit and the fourth-biggest shale oil resource.
In the first quarter of 2025, Vaca Muerta built on last year’s strong production performance, with oil output surging 26% and gas production rising 16% year-on-year, Rystad Energy has estimated.
Gas Export Opportunities
Argentina is already interconnected via pipelines with Chile, Uruguay, and Bolivia. The northern pipeline flows have been recently reversed, allowing Argentina to deliver gas to Brazil through existing Bolivian infrastructure. Argentina could also boost pipeline gas exports by extending a connection from Uruguaiana to Porto Alegre and into Brazil’s integrated transport system, Wood Mackenzie reckons.
Argentina has several LNG export projects in the works. Domestic energy company YPF has signed agreements with international majors Shell and Eni to enter the project development of the Argentina LNG project, which includes gas production from Vaca Muerta gas blocks and its transportation through pipelines. These pipelines will extend 580 kilometers (360 miles) to a processing and liquefaction terminal to be built in Sierra Grande, Rio Negro, on the Atlantic coast.
Argentina has already taken final investment decision (FID) on a floating liquefaction facility with a capacity of up to 2.5 million tonnes per annum (Mtpa). It is also evaluating an additional 3.5 Mtpa unit under the Southern Energy consortium consisting of Pan American Energy, Pampa, Harbour Energy, YPF, and Golar.
If all planned LNG projects proceed, Argentina could be exporting up to 28 Mtpa of LNG by 2035, according to Wood Mackenzie.
Infrastructure and Cost Challenges
Despite the huge resources and initial commitments from foreign majors, Argentina’s LNG export future is not guaranteed. The country needs billions of U.S. dollars of investment in midstream infrastructure to carry the gas from the Vaca Muerta fields to export facilities.
“For LNG development, Argentina needs dedicated pipelines to liquefaction facilities and scaled upstream production capacity,” WoodMac says.
Interest in Argentina’s top shale play has increased since Milei took office a year and a half ago.
But the new government has also announced an end to state financing for pipelines and other infrastructure projects. So companies have to rely on private investment and tax breaks and other incentives in the new free-market approach to the economy.
Argentina could be a major gas exporter if it maintains the reforms momentum.
Milei’s government has enacted new legislation, the so-called Large Investment Incentive Regime – or RIGI, by its Spanish initials – offering tax breaks and other incentives for major investors in the South American country.
Argentina’s market deregulation efforts are expected to raise the energy investments in the country by about $2.5 billion to $15 billion in 2025, officials have said.
As a result, international companies are not shunning Argentina anymore and are exploring mergers and acquisitions (M&A) opportunities, including in the energy sector.
Still, the cost of supply and ability to compete on the global LNG market with prices would also be crucial to Argentina’s gas export potential.
By Tsvetana Paraskova for Oilprice.com
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