Argentina Energy Roundtable

On May 16-17, we are pleased to relaunch our in-person Argentina Energy Roundtable, an annual event held online the last two years. It is a timely moment to assess the country’s energy outlook, policy proposals and project developments. The domestic discussions occur as the world has been increasingly gripped by major economic and political upheaval, with the energy sector at the center and underscoring the inherent volatility of our global markets. 

Argentina began the year by completing negotiations with the International Monetary Fund (IMF). The agreement was subsequently approved by a large congressional majority, including the support of different political forces and some dissidents within the ruling coalition. The deal added to encouraging forecasts for continuation of the economic recovery begun last year. However, the effects of the conflict between Russia and Ukraine on commodity prices – both energy and food – could alter Argentina’s trade balance and economic development in different ways, depending on the rules that the government imposes and the global reality.

The Vaca Muerta shale formation has experienced a resurgence in terms of drilling and production. Natural gas continues to play a key role in the national energy sector. Gas prices at auctions are already more than 50% below the Henry Hub price reference, pointing to the feasibility of undertaking large-scale exports via Liquefied Natural Gas (LNG). In this sense, the conflict in Europe has shown the importance of diversifying international LNG supply sources, boosting interest in liquefaction plants in Argentina. These developments have urgently brought to the forefront the issue of infrastructure and how to move an ever-increasing number of molecules to consumers. To address this challenge, the construction of a new gas pipeline from Neuquén to reach the heart of future demand is in full swing and is expected to be completed by the winter of 2023.

At the end of 2021, renewable energy reached a record participation in the country’s energy matrix and continues to be an essential piece on the path to decarbonization. The exceptional conditions for wind generation in Patagonia and solar generation in the Northwest would allow, if the country managed to reduce the cost of capital, not only to meet the commitments from Glasgow, but also for Argentina to become an important player in global efforts to mitigate climate change through the production and export of hydrogen.

Additionally, a law to promote sustainable mobility is being debated. Argentina, together with Chile and Bolivia, constitute the so-called lithium triangle, with the world’s largest reserves of this critical mineral for batteries and electrification. Argentina, in cooperation with neighboring countries, could become a global manufacturing hub for batteries and electric vehicles, the demand for which will grow exponentially in the coming years.