President Mauricio Macri is pushing to revamp flagging production at Argentina’s massive shale reserves, with companies agreeing on Tuesday to invest as much as $15bn a year in exchange for lower labour costs and extended state subsidies.
The drive to increase investment and productivity in the Vaca Muerta shale deposit in Patagonia, which boasts the second-largest reserves of shale gas in the world, is part of Argentina’s attempt to recover energy self-sufficiency and emulate the shale boom in the US.
Mr Macri proclaimed a “new era” for the country’s languishing energy sector, which will see foreign companies including Chevron, Dow, BP, Shell and Total, as well as Argentina’s state energy company YPF, invest an initial $5bn in 2017, rising to $15bn in subsequent years.
Although once a net exporter of energy, a lack of investment in recent years has seen production plummet, leaving Argentina with a costly energy deficit and a dependence on imports that have placed heavy pressure on fiscal accounts. …