Argentina’s Vaca Muerta shale formation has delivered a standout performance in the first quarter of 2025, with oil output surging 26 per cent and gas production rising 16 per cent year-on-year, according to Rystad Energy estimates.
This robust growth is accelerating Argentina’s shift away from its traditional reliance on gas imports and moving the nation closer to energy self-sufficiency, while also laying the groundwork for a major push into global LNG markets.
Oil production from Vaca Muerta surpassed 447,000 barrels per day (bpd) in March, up from 354,000 bpd a year earlier.
The gains were led by state-owned YPF, with additional support from independents including Vista Energy, Pluspetrol, and Phoenix Global Resources.
Despite the strong output, the basin is showing early signs of a slowdown in drilling activity.
The number of new oil wells increased only marginally — 76 were brought online in the fourth quarter of 2024 and 79 in the first quarter of 2025 — a trend attributed to saturated pipeline takeaway capacity.
This constraint is expected to ease with the Oldelval Duplicar expansion coming online in April.
“Vaca Muerta’s strong oil gains are no surprise anymore as its track record speaks for itself. However, what we’re seeing now is that gas is stealing the spotlight,” said Radhika Bansal, Vice President, Upstream Research, Rystad Energy.
“Dry gas production hit 2.1 billion cubic feet per day (Bcfd) in the first quarter of 2025, rising 13 per cent quarter-on-quarter and 16 per cent year-on-year.
“These strong figures are positioning Argentina on the global stage.
“To leverage this momentum, the country is actively pursuing a bold, multi-phase national LNG export strategy, meaning Argentina could soon become a pivotal player in global gas supply, significantly reshaping markets and energy geopolitics.”
A cornerstone of Argentina’s LNG export ambitions is the Southern Energy LNG project, which will deploy two floating LNG (FLNG) vessels — Hilli Episeyo and MK II — supplied by Golar LNG.
Positioned off the coast of Rio Negro province, these units will collectively offer an export capacity of six million tonnes per annum (Mtpa).
The final investment decision for MK II is expected by the third quarter of 2025, with first production from Hilli Episeyo slated for late 2027 and MK II projected to come online by the end of 2028.
In parallel, YPF is leading additional large-scale LNG developments.
The second phase, ARGFLNG 2, is a partnership with Shell (which joined in late 2024) and is expected to reach a capacity of 10 Mtpa.
The third phase, ARGFLNG 3, with Eni as a potential strategic partner, could add another 12 Mtpa. Rystad Energy analysis suggests these FLNG projects could reach full capacity by the late 2030s, forming the backbone of a unified national LNG export strategy.
Supporting these LNG efforts, the Vaca Muerta Oil Sur (VMOS) pipeline project is set to begin operations in 2027, creating a direct link between the Neuquen Basin and the Atlantic Coast via Punta Colorada port.
This corridor is expected to alleviate inland bottlenecks and reinforce Vaca Muerta’s long-term viability as a global energy hub.
The first quarter of 2025 also marked a surge in upstream merger and acquisition activity in Vaca Muerta, accounting for 43 per cent of total Latin American upstream deal value for the period.
Strategic positioning continues to evolve, highlighted by Norwegian energy major Equinor reversing its earlier decision to exit the shale play.
The end of monetary restrictions, improved infrastructure, and enhanced export viability prompted Equinor to remain in the region — a move seen as a turning point that reaffirms international confidence in Argentina’s shale resurgence.
With record production, ambitious LNG export plans, and renewed international investment, Vaca Muerta is not only powering Argentina’s path to energy self-sufficiency but is also positioning the country as a potential heavyweight in global energy markets.
