Argentina’s Surge in Oil Production Threatens Colombia’s Top Three Status in South America

Argentina’s shale drilling boom, supported by President Milei’s policies, is likely to surpass Colombia’s crude production levels, led by the Vaca Muerta region. Colombia, hindered by policy restrictions and declining reserves, struggles to maintain its position in the regional oil market. Brazil remains the largest producer, while Venezuela shows signs of recovery.

A surge in shale oil drilling within Argentina’s Vaca Muerta region positions the nation to potentially surpass Colombia as one of South America’s top three crude oil producers. The current administration, led by President Javier Milei, encourages this momentum through favorable policies. The U.S. Energy Information Administration notes that shale oil comprises approximately 60% of Argentina’s total crude production, a significant increase indicating a return to levels of output not witnessed in over two decades.

Plans are underway for additional drilling rigs to be deployed to Vaca Muerta, with infrastructure enhancements being prioritized as international financing opportunities arise. Conversely, Colombia’s oil sector is struggling, hindered by a sharp decline in natural gas reserves and stagnant crude reserves, a situation exacerbated by President Gustavo Petro’s policies against oil exploration in an effort to mitigate greenhouse gas emissions.

While exploration efforts in Colombia were once poised to utilize hydraulic fracturing to augment reserves, President Petro’s administration halted critical tests post-2022, leading to diminishing investments in drilling activities for two successive years. Consequently, forecasts indicate that Colombia’s oil output may fall short of revenue expectations aimed at achieving governmental taxation goals.

In contrast, Brazil maintains its position as South America’s largest crude producer, yielding over 3 million barrels per day, with Venezuela’s output beginning to recover from a previous decline, now placing it second in regional production rankings.

Argentina’s oil production landscape has evolved significantly, primarily due to the extensive shale resources found in the Vaca Muerta formation. The recent wave of drilling efforts stems from a variety of governmental reforms aimed at attracting investment and stimulating growth within the oil sector. In contrast, Colombia’s oil industry faces challenges, including depletion of gas reserves and stagnation in crude production, often attributed to shifts in policy under President Gustavo Petro. The competition for top oil producer status in South America has intensified, highlighting contrasting approaches from both nations.

In conclusion, Argentina is on the cusp of enhancing its position as a leading crude oil producer in South America, fueled by an aggressive shale drilling campaign and governmental support. Meanwhile, Colombia’s oil sector grapples with declining investment and production challenges due to policy shifts aimed at environmental sustainability. As these dynamics unfold, Argentina appears poised to overtake Colombia in the regional rankings, amplifying the competitive nature of South America’s oil industry.

Original Source: financialpost.com