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IEEFA Argentina: Vaca Muerta development stalled?

April 29, 2019
Tom Sanzillo and Kathy Hipple

The provincial government that controls most of Vaca Muerta, the vast oil and gas reserves in the northern Patagonia area of Argentina, is facing a problem: How to get companies with concessions to actually start serious development.

Vaca Muerta Map

Companies are supposed to use the first five years—the pilot phase–of their 35-year concessions to develop major investment plans so they can prepare to launch into full development.

Of the 34 concessions, 13 have pilot periods that end over the next two years. But 8 of these 13 have not yet announced plans for increased investment and development. And it is unclear if there will be actual follow-through from some of those who have put forward such plans.

The provincial government of Neuquén Province has demanded that operators reveal their plans for full development within the next two weeks as required under the Hydrocarbons Law.

Of 13 concessions, 8 have not announced development plans

The provincial government is urging these operators to move into an “intensive phase of production,” according to a report in Rio Negro. Since many of the initial fracking concessions were awarded in 2014 and 2015, their initial five-year pilot stage is soon ending. During the next “post-pilot” phase, companies must, by law, define their plans for development.  On average, concessions are awarded for 35 years; once the pilot stage has ended, concessions will last an additional 30 years.

Among the 13 concessions with pilot phases that will end between 2019 and 2021, many have not announced plans for full developments. These include:

  • Bajada de Añelo (Shell and YPF)
  • La Escalonada (Total and Shell)
  • Rincón de la Ceniza (Total and Shell)
  • La Ribera I and II (YPF)
  • Pampa de las Yeguas I (YPF and ExxonMobil)
  • Lindero Atravesado (PAE and YPF)
  • Bandurria Centro (PAE)
  • Bandurria Norte (Wintershall).


Some of these projects have seen almost no investment since the concessions were originally awarded, and show minimal investment plans for 2018.  La Escalonada (Total and Shell), for example, declared an investment plan of less than US$1 million for 2018. (Actual investments made in 2018 have not yet been reported by the government). The La Escalonada project also produced no gas or oil in 2018.

YPF and ExxonMobil, after spending US$50 million between 2014 and 2017, declared no planned investments for the Pampa de las Yeguas I concession in 2018.

On the other hand, some of the 13 concessions that have pilot projects expiring within the next two years have announced stepped-up investment plans including:  

  • La Amarga Chica (YPF and Petronas)
  • Bandurria Sur (YPF and Schlumberger),
  • Sierras Blancas, (Shell)
  • Cruz de Lorena (Shell)
  • Coirón Amargo Sur Oeste (Shell).

The exact language in the 2014 Hydrocarbon legislation that opened up Vaca Muerta to exploration and development is somewhat unclear, which could potentially allow many companies to use their investments as “real estate speculation,” leaving their productive potential undeveloped for decades.

Because there is a gray area about what level of activity is required to extend the concession beyond the pilot phase, the provincial government appears to be treading lightly. 

According to Alejandro Moteiro, the Minister of Energy of Neuquén Province, “If a company is not going to invest, what we are proposing is that they open their areas to other interested companies.”

How the government and companies decide to move forward will provide a good indicator of Argentina’s ability to meet the ambitious production goals set forth in its Energy Plan.

13 Vaca Muerta Concessions Set to Expire between 2019 and 2021
Concession Operators Invested: 2014-2017, in US$ millions 2018 Investment Plans, in US$ millions
Bajada de Añelo Shell and YPF     78 129
La Escalonada Total and Shell     89     0.6
Rincón de la Ceniza Total and Shell   308   83
La Ribera I and II YPF     66   81
Pampa de las Yeguas I YPF and Exxon     50   0
Lindero Atravesado (Occidental & Oriental) PAE and YPF 1239   42
Bandurria Centro PAE   152 124
Bandurria Norte Wintershall     49   18
La Amarga Chica YPF and Petronas   357 244
Bandurria Sur YPF and Schlumberger     72 207
Sierras Blancas Shell   163   37
Cruz de Lorena Shell   192   18
Coirón Amargo Sur Oeste Shell     13   32

Tom Sanzillo ([email protected]) is IEEFA’s director of finance.

Kathy Hipple ([email protected]) is a financial analyst at IEEFA.



IEEFA Argentina: Setbacks in plan to use Vaca Muerta oil and gas reserves to kickstart economy

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Financial Risks Cloud Development of Argentina’s Vaca Muerta Oil and Gas Reserves

Tom Sanzillo

Tom Sanzillo is Director of Financial Analysis for IEEFA. He has produced influential studies on the oil, gas, petrochemical and coal sectors in the U.S. and internationally, including company and credit analyses, facility development, oil and gas reserves, stock and commodity market analysis, and public and private financial structures. He also examines such areas as community and shareholder activism, institutional investment, public subsidies and Puerto Rico’s energy economics.

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Kathy Hipple

Former IEEFA Financial Analyst Kathy Hipple is a founding partner of Noosphere Marketing and the finance professor at Bard’s MBA for Sustainability. She worked for 10 years with international institutional clients at Merrill Lynch and then served as CEO of Ambassador Media.

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