Argentina is nearing a position to surpass Colombia in crude oil production due to a shale drilling boom in the Vaca Muerta region. This transformation is driven by the policies of President Javier Milei, fostering international investment and productivity. Meanwhile, Colombia struggles with declining reserves and reduced exploration activity due to governmental policies favoring environmental concerns.
Argentina is on the cusp of surpassing Colombia to become one of South America’s top three crude oil producers, fueled by an acceleration in shale drilling activities within the Vaca Muerta region. This surge in production is attributed to favorable policies established by the administration of President Javier Milei. As a result, shale oil now represents approximately 60% of Argentina’s crude output, positioning the nation to achieve production figures not seen in over two decades, according to data from the U.S. Energy Information Administration.
The anticipated increase in drilling activity is set to be bolstered by the introduction of additional rigs to the Vaca Muerta area in the coming year. Furthermore, infrastructure development initiatives are gaining traction as Milei’s reforms open avenues for international investment in essential projects such as pipelines and ports. In contrast, Colombia is facing significant challenges in its oil and gas sector. With natural gas reserves diminished by 50% over the last decade and stagnant crude reserves, the country has seen declining investments in drilling since the ascension of President Gustavo Petro, who has prioritized environmental concerns over fossil fuel exploration.
Despite seeking alternatives to replenish its reserves through hydraulic fracturing—similar to the methods employed in Vaca Muerta—Petro has opted to halt two major fracking tests since taking office, leading to setbacks in Colombia’s hydrocarbon exploration efforts. The downturn in drilling investments has persisted for a second year, with industry forecasts suggesting that oil production may fall short of generating adequate tax revenue for the Colombian government.
The dynamics of the oil industry in South America are shifting, with Argentina’s Vaca Muerta shale region becoming a focal point of increased production potential. Supported by government reforms aimed at attracting foreign investment and enhancing production capabilities, Argentina is set to leverage its shale resources. In contrast, Colombia’s oil sector has been hindered by a decline in exploration and investment, largely due to governmental policies that discourage fossil fuel extraction in favor of environmental initiatives, resulting in a significant decrease in both oil and gas reserves.
In summary, Argentina is rapidly advancing towards overtaking Colombia as a leading oil producer in South America, driven by robust growth in shale production and supportive governmental reforms. Conversely, Colombia’s oil and gas industry faces a critical downturn due to significantly reduced investments and a shift in policy under President Gustavo Petro. Unless these trends are addressed, Colombia may continue to witness a decline in its energy sector, while Argentina capitalizes on its developmental momentum in oil production.
Original Source: financialpost.com
