Countries across the Latin America and Caribbean region have been increasingly pursuing measures that would enhance the competitiveness of their oil and gas sector and speed up production. Brazil, Trinidad and Tobago, Suriname and new oil producer Guyana are aggressively pushing to fast-track exploration and development of their hydrocarbon resources. Now, Argentina is doing likewise, seeking approval of an oil promotion law this year that would increase output and exports of petroleum resources.
According to an S&P Global Platts report, Argentinian Energy Secretary Dario Martinez said on June 16 that a long-awaited bill for promoting investment in the oil industry is in its final stages of drafting and consultation with industry and political leaders, adding that he expects it to speed up oil and natural gas production growth.
“The bill will make it possible for investment to come to Argentina and this brings more production and more activity,” he said in an energy seminar hosted by Diario Rio Negro newspaper.
The key aspects of the bill, he added, are to provide long-term exchange rate and tax stability, as well as incentives for production, investment and exports. These include mechanisms for companies to export increasing amounts of oil and gas under long-term contracts, plus incentives for underground gas storage and the development of the country’s largely untapped offshore acreage.
Martinez said the bill, which was first announced at the end of 2019, has taken time because it is important to achieve a consensus of different political parties as well as companies, unions and governors for it to be successful over time.
At the same event, Omar Gutierrez, the governor of Neuquen, the country’s biggest source of oil and gas and home to much of Vaca Muerta, called on the national government to quickly submit the bill to Congress, saying this will give companies time to factor the shale play into their future investment plans.
A number of companies are betting on Vaca Muerta for production growth. On June 15, Shell said it plans to drill an average 30 wells a year in the play’s oil window to boost output to 42,000 b/d by 2022 from a current 15,000 b/d, helping to fill a new processing plant.
Gutierrez said U.S. oil major ExxonMobil is increasing its processing capacity in Vaca Muerta by 6,000 b/d, while Argentina’s state-backed YPF is adding 117,000 b/d of capacity. Mexico’s Vista Oil & Gas, BP-backed Pan American Energy and London-based Phoenix Global Resources are preparing investments to boost output, he added.
In Guyana, Exxon is about to bring its second development on stream at Liza Phase 2 with the FPSO expected to arrive offshore by September. A third project at Payara is already approved and a fourth at Yellowtail is pending. All told, by 2025 the country’s output is expected to hit 800,000 b/d and will surpass the 1 million b/d milestone by 2027.