Investment in Argentina's Vaca Muerta shale formation will almost double this year as rising crude exports encourage producers to turn up the taps, but the outlay is still shy of pre-pandemic levels.
This year the country's premier shale play will attract $3.8bn in investment, with 70pc earmarked for oil projects and 30pc for natural gas, said Omar Gutierrez, governor of the southwestern province of Neuquen where most of the formation is located.
This compares to $2bn in the pandemic year of 2020, with 80pc for oil and 20pc for gas.
"We are recovering what was not able to be carried out last year," Gutierrez said.
Vaca Muerta drew $4.4bn in investment in 2019, before Covid-19 restrictions suppressed global oil demand and curbed upstream activity.
By the end of 2021, Neuquen production, including conventional wells, is expected to jump to 235,000 b/d, up by 47pc from December 2020, Gutierrez said.
In the first four months of this year, 6.3pc of the province's oil production, or a total of 1.377mn bl, was exported, according to Gutierrez.
Seven companies sold crude abroad during the January-April period: Shell, Norway's Equinor, Malaysia's state-controlled Petronas, Latin American independent Vista, and domestic firms Pampa, Pluspetrol and Tecpetrol.
"Exports from Vaca Muerta are a reality and a necessity," Gutierrez said on a webinar this week.
A new 30,000 b/d oil treatment plant that Shell inaugurated on its Vaca Muerta acreage this week was the first of several new ones in the Neuquen basin.
Argentina's state-controlled YPF will complete various projects over the next few months that will boost its processing capacity by 117,000 b/d, while ExxonMobil will increase its capacity by 6,000 b/d.
The rising output is accentuating the need to grow midstream capacity. The existing Oldelval pipeline that connects Vaca Muerta to Puerto Rosales in Buenos Aires province has a capacity of 260,000 b/d, close to the production level expected by the end of the year.
That makes it imperative to begin work to restart the 100,000 b/d Otasa pipeline to Chile, Gutierrez said. Once the project begins, it could take as long as a year and a half for the pipeline, which needs to operate at a minimum 30pc capacity, to be operational.
"It is very likely we are going to need to use that pipeline next year," Gutierrez said.
The 265mi (426km) Trans-Andean pipeline known as Otasa runs from Puesto Hernandez in Neuquen to Chilean state-owned Enap's 116,000 b/d Bio Bio refinery in Talcahuano. Enap holds a 36.25pc stake in the line while YPF holds 36pc and Unocal Argentina, a Chevron subsidiary, holds 27.75pc.
