Analysts say that the Vaca Muerta shale is a major factor in Argentina's move towards energy independence.

Rystad Energy analysts stated on Tuesday that the shale gas formation of Vaca Muerta in Argentina will produce a large amount of oil and gas by the first quarter 2025, which is driving the nation to achieve energy independence and its ambitious plans to become a major exporter for liquefied gas.

Vaca Muerta is a huge unconventional oil reserve that Argentina needs to boost its economy and reduce costly imports. Rystad estimates show that oil production in Argentina increased by 26% on an annual basis to over 447,000 barrels a day in March.

Rystad reported that new drilling was only marginally up, in part because existing pipelines could not handle the additional volume. This constraint is expected to be eased by an April pipeline extension.

Dry gas production - natural gases primarily made up of methane, after heavy liquids and water have been removed - jumped 16% in the first quarter.

Radhika Bansal, of Rystad Energy said that "Gas has stolen the spotlight", noting Argentina could "soon become a key player in global supply of gas."

Rystad stated that the burgeoning production is crucial to Argentina's plans to meet LNG demands abroad.

Southern Energy LNG is one of the initiatives underway. It plans to build two floating LNG vessels, each with a combined capacity of 6 million metric tonnes per year, and the first production should be available in late 2027.

Rystad projects that the full capacity of these larger projects will be reached by late 2030s.

Equinor, a Norwegian energy company, reversed its decision to leave Vaca Muerta. Rystad cited improved infrastructure and export viability as reasons for the change.

Rystad argued that Vaca Muerta was attracting large investments. In the first quarter of this year, the merger and acquisition transactions in the formation accounted 43% of the total upstream oil and gas exploration, production and transactional deals across Latin America. (Reporting and editing by Bill Berkrot.)

(source: Reuters)