The highest oil production since November 2011 was reached in April

Oil companies have achieved record production levels from their unconventional fields. The epicenter of growth is the Vaca Muerta formation in Neuquén. In April, it achieved unconventional production of 234,000 barrels per day, the highest record in this category.

Between conventional and unconventional, the country reached an average of 578,000 barrels of oil per day by April 2022. This is the highest number since November 2011. At that time, the YPF faced criticism from the Government for low its production level and sharpened its efforts to obtain more oil. This was before the expropriation that took place the following year.

In mid -2021, Vaca Muerta celebrated to exceed 150,000 barrels per day of production. Now it’s almost 50% above that. The Neuquén basin contributes nearly 60% of oil production, followed by the San Jorge basin (Chubut).

With these data, the local oil industry is 12% higher than in the same month of 2021.

The increase in activity in Vaca Muerta is associated with better international oil prices that companies with the ability to export seek to take advantage of. A barrel of oil is at US $ 112. When oil companies sell it to local refiners, they charge less.

In any case, if the local market is well supplied, oil companies usually obtain export permits. The Ministry of Energy allows shipments if local refiners have oil for fuels needed by the domestic market.

There was also an increase in gas production. Approximately 127 million cubic meters per day were obtained in April, a year-on-year increase of 12%. Unconventional production already represents more than half: it reaches approximately 67 million cubic meters per day, an increase of 42% compared to the same month in 2021.

However, companies are limited in the amount of gas they extract from Vaca Muerta. This is because they cannot transfer it to the largest consumption centers. For this reason, between May and September, the country imported foreign gas, at a higher price than paid for domestic gas.

Both the oil companies and the government wait for a solution for this problem in the gas pipeline that will connect Vaca Muerta to Buenos Aires. This is a project that will require US $ 2,000 million. Ieasa, the state -owned company, confident that it will be ready by mid -2023.

The prospects for Vaca Muerta are bringing good spirits to the companies. There they also see the possibility of disposing of 20% of their exports in a “free” way, meaning they can get dollars that they can keep outside, without having to go through the coffers of the Central Bank.

YPF is a leader in oil and gas production. But other companies will benefit more from the “free availability” of dollars in exports, as the state-majority company pours its production into the local market.

The Government is in an operation to attract the energy sector. The Minister of Economy, Martín Guzmán, promises benefits. YPF went to the United States to meet with investors. Lawmakers also encourage incentive projects for the sector.

There is also the shadow of the unions. So far, parity figures have been calm, but higher projections of annual inflation could complicate that panorama.

The economy is excited about LNG exports. European Union countries are reducing gas purchases from Russia (which is cheaper for them) as a way of allowing that country’s invasion of Russia.

If this trend continues, a good opportunity is created for LNG exporters. The United States, Qatar and Australia lead that lot. Argentina can join, but a few steps must be followed. In addition to the gas pipeline, it must move forward with the construction of an LNG regasification terminal, an investment worth billions of dollars.