Argentina has shown a steady increase in oil production over the past three years. The monthly record-breaking figures are presented as a promising development for a country that has been grappling with a prolonged economic crisis. However, despite the rise in production, the societal impacts, environmental consequences, and inequalities in energy access continue to be topics of public debate.
At the center of this production boom lies Vaca Muerta, located on the border between the provinces of Neuquén and Río Negro in the Patagonia region. This area is considered one of the richest shale gas and shale oil reserves in the world. In 2011, the United States (USA) Energy Information Administration classified this region as one of the largest reserves globally.[1] This classification created a new window of opportunity for energy policymakers in Argentina. It is observed that a significant portion of this potential has begun to be realized as of 2024. Only in that year, 440 new wells were drilled, with plans laid out for over 500 additional ones.[2]
This rise in production has become possible largely due to the spread of hydraulic fracturing technology. However, it would be prudent not to overlook the environmental impacts this method may cause. Particularly in this fertile and sensitive agricultural region, hydraulic fracturing operations require approximately 30,000 liters of water, over 60 chemical substances, and high-pressure equipment per well.[3] The proximity of these activities to agricultural lands, water resources, and residential areas raises concerns about their long-term social and ecological effects.
These developments in the Vaca Muerta field have also brought about a crucial transformation in Argentina’s energy trade balance. As of 2024, the country has recorded a trade surplus in energy exports for the first time in 13 years. Oil and natural gas exports increased by 22.3%, reaching 9.7 billion USD and accounting for 12% of total exports.[4] Vaca Muerta contributed approximately 55% of the country’s oil production and 50% of its gas production, making it the primary source of this surplus.[5] This increase in output not only compensates for the decline in conventional resources but also strengthens Argentina’s position in the global energy market.
However, it is evident that economic growth does not always translate into improved social welfare. Despite investments exceeding 40 billion USD in Neuquén over the past decade, there has been no significant improvement in local living conditions. A large share of regional revenues is allocated to public employee salaries and administrative expenses, while limited resources are directed toward infrastructure and social development projects. This situation highlights the need for a more holistic and long-term development approach.
Meanwhile, a notable shift in the country’s environmental policies has also taken place. The current administration under President Javier Milei has downgraded the Ministry of Environment to a sub-secretariat, signaling an institutional downsizing. [6] Public funding for renewable energy has been reduced, and some support programs have been completely terminated. This approach jeopardizes Argentina’s 2015 renewable energy target, which aims for 20% of electricity generation to come from renewable sources by 2025. Although the share of renewable resources in total electricity production reached 15% in 2024, the lack of new investments concern that this rate will not be sustainable.[7]
The transformation in the energy sector is also affecting pricing policies. With domestic prices being indexed to global ones, fuel is becoming increasingly inaccessible for local consumers. According to 2024 data, gasoline consumption decreased by 6.5% and diesel consumption by 5%.[8] This indicates that the increase in energy production has not been reflected in favorable terms for domestic consumers.
This rise of energy production in Argentina influences not only its domestic economic dynamics but also the geopolitical balance in South America. Possible scenarios of competition or cooperation in the field of energy with regional countries such as Brazil, Chile, and Bolivia have the potential to reshape Argentina’s foreign policy. These steps toward energy independence could enable Argentina as a more strategic actor both regionally and globally. In this context, the Vaca Muerta field is not only an economic asset but also a geopolitical instrument expanding Argentina’s diplomatic maneuverability.
The recent increase in fossil fuel production in Argentina stands out as a development that must be carefully considered within the context of international climate change commitments. Although there is no direct legal contradiction between the large-scale hydrocarbon activities in Vaca Muerta and the emission reduction targets defined under the Paris Agreement, some concerns arise regarding the overall sustainability of the country’s environmental policies. In particular, the slowdown in renewable energy investments and institutional weakening in environmental regulation may hinder Argentina’s ability to achieve its long-term climate goals. In this respect, how the economic gains from energy production are balanced with environmental responsibilities forms a critical area of assessment in terms of Argentina’s sustainable development vision.
In conclusion, Argentina’s transformation in the energy sector offers significant opportunities for economic growth but also brings with it complex social, environmental, and political responsibilities. While the production activities in Vaca Muerta strengthen the country’s position in the global energy market, it is essential to critically assess how well this progress aligns with long-term sustainability principles. Promoting social welfare, minimizing environmental impacts, and building an energy policy aligned with international commitments are crucial not only for preserving current gains but also for paving the way toward a more balanced and inclusive path of development. Rethinking energy strategies from a multidimensional perspective is of critical importance for constructing a more resilient, equitable, and environmentally harmonious future for the country.
[1] Gutman, Daniel. “Argentina Is Experiencing an Oil Boom, with Bright Spots and Shadows.” Global Issues, https://www.globalissues.org/news/2025/03/19/39364, (Date Accessed: 22.03.2025).
[2] Ibid.
[3] Ibid.
[4] Ibid.
[5] Ibid.
[6] Phillips, Tom. “‘Making Argentina Great Again’? What a Year under a Climate-Change Denying President Has Done for the Country.” The Guardian, https://www.theguardian.com/global-development/2024/dec/11/argentina-javier-milei-what-a-year-under-a-climate-change-denying-president-has-done-for-the-country, (Date Accessed: 22.03.2025).
[7] Clarín Economía. “Las energías renovables representan el 15% del consumo de los argentinos, pero ahora necesitan inversiones.” Clarín, https://www.clarin.com/economia/energias-renovables-representan-15-consumo-argentinos-ahora-necesitan-inversiones_0_FOzAUNH17Q.html, (Date Accessed: 22.03.2025).
