Argentina is positioning itself as a significant player in the global oil market, driven by the substantial hydrocarbon reserves of the Vaca Muerta shale formation. By 2024, Argentina’s gross domestic product is projected to reach $632 billion, making it the second largest economy in South America and the third in Latin America. Recent data indicates that the country’s shale oil production reached an all-time high in June 2025, despite an overall decline in petroleum output. Concurrently, natural gas production hit record levels, bolstered by strong performance in conventional fields.
The Vaca Muerta formation, covering approximately 8.6 million acres in the Neuquén Basin, has emerged as one of the leading unconventional hydrocarbon formations worldwide. Although discovered in 1927, its potential was not fully recognized until 2011, when estimates revealed recoverable resources of 16 billion barrels of shale oil and 308 trillion cubic feet of shale gas. These figures place Vaca Muerta among the top five shale formations globally, comparable to the U.S. Permian Basin.
Official reports show that in June 2025, Argentina averaged 771,888 barrels of crude oil production per day, with over 62% derived from shale oil, marking a significant increase from previous months. This output reflects a 3.32% month-over-month rise and a remarkable 16.79% increase compared to June 2024. As a result, Argentina surpassed Colombia, becoming Latin America’s fourth-largest oil producer.
Natural gas production also surged, reaching 5.6 billion cubic feet per day in June 2025, a 7.5% increase from May and 7.59% higher year-over-year. This achievement is particularly notable given the decline in shale gas production, which fell by 13.31% month-over-month. Notably, shale gas constituted only 52% of total natural gas production, a decrease from previous levels where it had exceeded 60%.
Despite a drop in the number of active drilling rigs—from 50 in June 2024 to 42—Argentina’s hydrocarbon output continues to climb. This is attributed to improved operational efficiency and the performance of mature conventional oil and gas fields across the provinces of Río Negro, La Pampa, and Mendoza.
Investment and Infrastructure Development
The Neuquén Basin has become Argentina’s largest hydrocarbon-producing region, contributing 72% of the nation’s oil and 73.5% of its natural gas production in June 2025. The growth trajectory is expected to continue, with an estimated $9 billion in petroleum investments earmarked for Neuquén in 2025, primarily targeting the Vaca Muerta formation. The national oil company, YPF, is a key player in this expansion, leading investment initiatives and production efforts.
YPF is set to invest approximately $3.6 billion in upstream assets as part of a broader $36 billion investment plan spanning from 2025 to 2030. The company forecasts net shale oil production to reach 470,000 barrels per day by 2030, significantly higher than the 122,000 barrels produced in 2024.
Infrastructure developments are pivotal to this growth. The completion of the Perito Moreno gas pipeline in August 2023 increased natural gas takeaway capacity to 900 million cubic feet per day. Future expansions aim to raise this capacity to 1.4 billion cubic feet per day by 2027. Additionally, the construction of the Vaca Muerta Sur Oil Pipeline will connect key oil fields to export facilities, further enhancing production capabilities.
Future Outlook
The Vaca Muerta formation continues to exceed expectations, with Argentina’s hydrocarbon output expected to rise further as critical infrastructure becomes operational. President Javier Milei has implemented pro-business reforms aimed at stabilizing the economy, which could further stimulate investment in the sector. The low lifting costs—approximately $5 per barrel—combined with plans to relax capital controls by early 2026, make Argentina an attractive destination for oil investment.
As the country solidifies its position as South America’s third-largest oil producer, the future of Argentina’s oil industry looks promising, with the Vaca Muerta shale formation at the forefront of this transformation.
