Deep Sea Oil Rig

Argentina will soon start looking for a “2nd Vaca Muerta” in the South Atlantic Ocean.

In April, drilling is scheduled to begin on the first offshore ultra-deepwater well off the coast of the province of Buenos Aires. This is the culmination of three years of a legal battle against environmentalists that went all the way to the Supreme Court and showed a rare instance of agreement across political divides to develop Argentina’s vast energy resources.

According to most estimates, the country could have offshore resources equivalent to those of Vaca Muerta shale play in Patagonia (which interestingly only became unlocked by a similar political consensus back in the day).

The Argerich well is operated by Equinor in partnership with YPF and Shell. It is the first exploratory well in the Argentine Sea following a public tender that was launched in 2019 by the pro-market, center-right government of President Mauricio Macri.

The succeeding Peronist administration of President Alberto Fernández continued with the plan, staunchly defending it in court and in public against fierce criticism from environmentalist groups. The first well will now be drilled under the new libertarian government of President Javier Milei.

“The process we are seeing with offshore is like what we saw with Vaca Muerta following the nationalization of YPF in 2012. That one started with the Kirchners and continued under Macri and Fernandez, although at different speeds,” says our analyst Marcelo J. García. “In the case of offshore, we also see a clear consensus across the spectrum that the country needs to tap these resources.”

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