Argentina’s Vaca Muerta shale formation recorded impressive gains in the first quarter of 2025, reinforcing its position as a cornerstone of the nation’s energy strategy. According to estimates from Rystad Energy, oil output rose by 26% year-on-year, while gas production increased by 16%, marking a continued departure from Argentina’s historical reliance on energy imports and advancing its path toward energy self-sufficiency.
In March alone, oil production from Vaca Muerta exceeded 447,000 barrels per day (bpd), up from 354,000 bpd in March 2024. The growth was driven primarily by state-run YPF and supported by key domestic players such as Vista Energy, Pluspetrol, and Phoenix Global Resources. Despite this momentum, signs of a slowdown in drilling activity have emerged. The number of new wells added only modestly, increasing from 76 in the fourth quarter of 2024 to 79 in the first quarter of 2025. Analysts attribute this deceleration partly to saturated takeaway capacity—a limitation expected to ease once the Oldelval Duplicar pipeline expansion begins operations in April.
While oil production remains robust, gas is beginning to outshine it. Dry gas output climbed to 2.1 billion cubic feet per day (Bcfd) in Q1 2025, representing a 13% increase from the previous quarter and a 16% rise year-on-year. This surge is propelling Argentina into a more prominent global role in gas markets.
To capitalize on this momentum, Argentina is pursuing an ambitious, phased strategy for liquefied natural gas (LNG) exports. Central to this plan is the Southern Energy LNG project, which will deploy two floating LNG (FLNG) vessels—Hilli Episeyo and MK II—off the coast of Río Negro province. Provided by Golar LNG, these FLNG units will collectively deliver an export capacity of 6 million tonnes per annum (Mtpa). A final investment decision (FID) for MK II is expected by the third quarter of 2025, with first production from Hilli Episeyo slated for late 2027 and MK II expected online by the end of 2028.
Argentina’s export ambitions extend further. YPF is leading a broader LNG development effort under the multi-phase ARGFLNG project. The second phase, ARGFLNG 2, is a collaboration with Shell, which joined the initiative in late 2024, and aims for a capacity of 10 Mtpa. A third phase, ARGFLNG 3, is under discussion with Italy’s Eni as a potential strategic partner and could add an additional 12 Mtpa. While each phase involves different partners and capacities, they are increasingly viewed as parts of a unified national strategy to transform Argentina into a major global LNG supplier. Rystad Energy projects that these floating LNG ventures could reach full capacity by the late 2030s.
Complementary to the LNG strategy is the Vaca Muerta Oil Sur (VMOS) pipeline, another critical infrastructure investment designed to sustain long-term export capacity. Scheduled to begin operations in 2027, VMOS will connect the Neuquén Basin directly to the Atlantic via Punta Colorada port. This export corridor is expected to ease transportation bottlenecks and enhance the overall viability of Vaca Muerta as a long-term global energy hub.
Strategic investment in the shale play remains strong. In the first quarter of 2025, Vaca Muerta accounted for 43% of the total value of upstream mergers and acquisitions across Latin America. These numbers reflect sustained investor confidence and growing international interest in Argentina’s shale sector.
One of the most notable developments in this regard is the renewed commitment from Norwegian energy major Equinor. Previously set to exit the Vaca Muerta play, the company has reversed its decision in light of improved macroeconomic conditions, including the lifting of capital controls and advancements in infrastructure. Equinor’s reentry into the basin marks a symbolic vote of confidence in Argentina’s energy outlook and underscores the nation’s growing strategic relevance on the global energy map.
As Argentina continues to unlock the full potential of Vaca Muerta through export-oriented infrastructure, favorable investment conditions, and strategic partnerships, it is fast emerging not just as a regional powerhouse, but as a significant force in global energy dynamics.
