US President Donald Trump has kicked off his second term with a bold announcement: declaring an energy emergency to combat inflation, lower fuel costs, and revitalise domestic energy production. Under the slogan "drill, baby, drill," Trump aims to reverse the climate policies of his predecessor, Joe Biden, and ramp up oil and gas output. This move is set to reshape the global energy landscape, presenting both risks and opportunities for the development of Vaca Muerta, Argentina’s crown jewel of hydrocarbon resources.
Argentina, home to the vast Vaca Muerta formation, has the potential to become a significant player in the global energy market. Projections suggest that the country could export over $30 billion annually in hydrocarbons by 2030, a figure comparable to the revenue from a strong agricultural season.
Currently, the nation’s oil production has reached historic highs, exceeding 750,000 barrels per day in 2024, with 438,000 barrels sourced from Vaca Muerta. This growth is bolstered by initiatives such as the “Vaca Muerta Sur” project, a $3 billion investment designed to transport 750,000 barrels per day to export terminals in Río Negro starting in 2027.
However, Trump’s energy emergency and the potential surge in US production could disrupt the global price equilibrium. Alejandro Einstoss of the Instituto Argentino de la Energía General Mosconi highlights that as long as international oil prices remain around $70 per barrel, Argentina’s operations will stay profitable. “An additional one million barrels per day from the US would not drastically change the outlook, but we must closely monitor OPEC's actions,” said Einstoss.
The LNG market faces more complex challenges. As the world’s largest LNG producer, the US seeks to dominate the European market, complicating Argentina’s aspirations. Daniel Montamat, director of Montamat & Asociados, warns that increased US exports could depress international prices, undermining Argentina’s competitiveness.
“Reaching Asian markets with Argentine LNG is more strategically sound, as competing with the US in Europe is difficult due to transport and production costs. However, securing contracts in the coming years will be crucial to ensure investment and stability,” Montamat added.
Despite the challenges, Vaca Muerta remains a cornerstone of Argentina’s energy strategy. With the world’s second-largest shale gas reserves and fourth-largest shale oil reserves, the country holds a unique opportunity before the energy transition diminishes global demand for fossil fuels.
Horacio Marín, president of YPF, emphasises that Vaca Muerta’s potential revenues could alleviate Argentina’s long-standing foreign exchange issues. Ongoing projects aim to capitalise on these resources, while Asian markets are being explored as primary destinations for Argentine LNG.
Trump’s decision to declare an energy emergency creates a mixed outlook for Argentina. While increased US production could exert downward pressure on prices, it also presents an opportunity for Argentina to strengthen its commercial ties with alternative markets in Asia.
In this scenario, the continued development of infrastructure, market diversification, and adaptability to an evolving global energy landscape will be critical for Argentina to establish itself as a key player in hydrocarbons. Coordination between public and private sectors, coupled with strategic investments, will be essential to transform challenges into opportunities.
