Argentina is poised to overtake Colombia as one of the top three crude oil producers in South America due to a shale-drilling surge, chiefly in the Vaca Muerta region. Government support under President Javier Milei has accelerated production, while Colombia faces declines due to restrictive policies under President Gustavo Petro. Significant investments in Argentine drilling are expected to continue, contrasting with Colombia’s stagnation in the oil sector.
Argentina is on the brink of overtaking Colombia regarding crude oil production due to a significant surge in shale drilling activity. The Vaca Muerta shale region has become the focal point of this boom, fueled by the pro-business initiatives of President Javier Milei’s administration. Recent statistics reveal that shale oil constitutes approximately 60% of Argentina’s crude output, placing the country on a trajectory to achieve production levels not seen for over two decades, as per the US Energy Information Administration. Further drilling activities are anticipated in the upcoming year, emphasizing the government’s commitment to enhancing infrastructure for the oil sector, attracting international investment for necessary pipelines and ports.
In contrast, Colombia faces a downturn in its oil and gas industry, as President Gustavo Petro’s policies have derailed potential exploration efforts, particularly hydraulic fracturing. With natural gas reserves having diminished significantly since the previous decade and stagnation in crude reserves, Colombia’s production struggles are expected to negatively impact government revenue from the sector. While it is important to note recent offshore discoveries, declines in investment indicate that Colombia’s production will not meet tax revenue expectations in 2024.
Regionally, Brazil remains the largest crude producer, with Venezuela’s output recovering slightly from earlier declines. Argentina’s rise in oil production could reshuffle the hierarchy within South America, positioning the country among the top three crude producers, potentially surpassing Colombia shortly.
The article discusses the current state of oil production dynamics in South America, particularly focusing on Argentina’s rise as a crude oil producer due to its shale developments. The Vaca Muerta region, known for its rich shale resources, is witnessing increased drilling activity that aligns with favorable governmental policies under President Javier Milei. This resurgence in Argentina’s oil production contrasts sharply with Colombia’s stagnant output, attributed to the political landscape under President Gustavo Petro, who has curbed exploration initiatives in consideration of environmental policies. The article highlights how these contrasting approaches influence the regional oil production landscape.
Argentina’s accelerating shale production places it in a strategic position to challenge Colombia’s status in the oil production hierarchy of South America. The commitment of the Argentine government to support the oil sector through infrastructure investments may fortify its growth trajectory. Conversely, Colombia’s decline in investments and the consequences of its restrictive energy policies are likely to limit its oil production capabilities moving forward. This shift represents a significant transformation in the South American oil industry, thereby reshaping its competitive landscape.
Original Source: financialpost.com
