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Argentina’s shale potential takes hit

BUENOS AIRES

Small shale producers, which powered development of the sector in the United States, are struggling to break into Argentina due to financing difficulties and lack of infrastructure, analysts and industry sources say.

The Vaca Muerta deposit, located in western Argentina, is a Belgium-sized play regarded as the world’s second-largest shale gas development. Successive governments in Argentina have targeted Vaca Muerta as the means of reversing its energy deficit but its development has been hindered by lack of infrastructure.

Juan Jose Aranguren, who was replaced as Argentina’s energy minister, said last week the investment by small- and medium-sized companies was essential to reduce costs at Vaca Muerta to unlock Argentina’s shale potential.

Last year, ExxonMobil Corp, BP unit Pan American Energy, Wintershall Holding, Total and Equinor, formerly known as Statoil, announced investments in Vaca Muerta.

Despite efforts by the national government and the regional government of Neuquen, one of the states spanned by Vaca Muerta, few small shale firms have been willing to invest.

Retama Argentina and Vista Oil are the only two small firms with their own independent operations in Vaca Muerta.

Even if the returns are enormous, at the end of the day, the startup costs in Vaca Muerta are very high,




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