5 min read
0 comments
Argentina has discovered one of the largest oil reserves in the world, but economic and environmental challenges are putting everything at risk!
In 2011 the Argentina lived with great anticipation when the oil company YPF, at the time controlled by the Spanish group Repsol, announced the discovery of one of the largest unconventional oil reserves in the world.
The area, located in the Neuquén region, was named after Dead cow and, with an initial estimate of 927 million barrels of oil, looked promising.
The expectation was that the discovery would revolutionize the Argentine energy market and, who knows, make the country more self-sufficient in energy.
- Almost 2 km long and 30 meters wide, the largest wooden structure in the world is inaugurated in Japan
- The 10 most important oil platforms in Brazil: from past to present
- Is your driver's license at risk? PRF issues warning about false suspension scam
- Archaeologists have discovered a 3.300-year-old shipwreck in the Mediterranean Sea
However, what seemed like a great discovery turned into a complex economic and environmental challenge.
Vaca Muerta: a great energy potential
The Vaca Muerta field is mainly formed by shale oil and shale gas, resources that are extracted through the advanced technique of hydraulic fracturing, popularly known as “fracking”.
This technology, although effective in exploring hard-to-reach reserves, generates a series of environmental questions.
Among the main risks are: contamination of water resources, the increase in greenhouse gas emissions and the possibility of small earthquakes occurring in areas close to the fracture zones.
The question of water contamination is one of the most worrying, since large volumes of water are used in the process, and there is a risk that toxic chemicals will be released and reach aquifers.
Furthermore, shale oil exploration can cause public health problems in nearby communities, given the impact on the environment and air pollution.
The shale oil market and Argentina’s challenges
While the Argentina sought to explore Vaca Muerta to become more energy independent, the reality of the unconventional oil market has proven to be more challenging than expected.
Shale oil is lower commercial value than conventional oil, which makes it difficult to achieve the financial return that the country imagined when exploring these reserves.
Most of this oil is used to produce fuel oil, a product with lower profitability in the global market.
Furthermore, predictions that Argentina could become a shale oil exporter have also proven more complicated.
The country faced a series of difficulties in terms of infrastructure to transport the oil extracted from Vaca Muerta to international markets.
The lack of adequate pipelines and the need for heavy investment to modernize internal logistics made exploration more expensive than imagined.
Comparison with Brazilian pre-salt
In a scenario where unconventional oil from Vaca Muerta seemed promising, the Argentina began to face a reality that was difficult to overcome.
While the country was trying to accelerate the exploration of its reserves, Brazil, with its famous pre-salt layer, had already reached the milestone of 5,5 billion barrels of oil in 2023, after 26 years of production.
This number exceeded initial expectations and demonstrated Brazil's ability to explore oil reserves with more advanced technologies and greater profitability.
Brazil, with its pre-salt exploration model, has managed not only increase your production, but also generate billions of dollars in revenue from the export of oil.
Argentina, with Vaca Muerta, saw its initial expectations of economic success dissipate due to high production costs and difficulty in competing with international prices of oil.
The search for alternatives and economic challenges
With the exploration of Vaca Muerta not achieving the expected results, Argentina found itself facing an economic dilemma.
The country was already facing a serious economic crisis, with high inflation and an unstable job market.
The energy sector, which was supposed to be a solution to the country's financial problems, ended up becoming just another one economic burden.
Shale oil exploration, in addition to being expensive, did not produce the economic impact that Argentines expected, which generated frustration.
The Argentine government, aware of the challenges posed by Vaca Muerta, began to invest in alternatives, such as renewable energy, seeking to diversify its energy matrix and reduce dependence on fossil fuels.
However, the transition to cleaner energy sources also faces obstacles, such as the lack of investment in infrastructure and the difficulty of reconciling the modernization of the energy sector with the country's economic difficulties.
The Future of Vaca Muerta
Although Vaca Muerta has demonstrated large oil and gas reserves, the future of exploration is still uncertain.
The region's potential cannot be ignored, but exploiting these reserves faces challenges that go beyond simple oil extraction.
Environmental issues, high production costs and the difficulty of finding a competitive market for shale oil call into question the long-term viability of Vaca Muerta as a solution to Argentina's energy problems.
Still, the region continues to be one of the largest unconventional oil reserves in the world, and Argentina continues to try to overcome economic and environmental obstacles.
It remains to be seen whether the country will be able to achieve the desired success or whether, as many experts point out, Vaca Muerta will be yet another discovery without the capacity to transform the national economy in a sustainable and lasting way.
