Argentina is nearing a position among South America’s top oil producers due to increased shale drilling in Vaca Muerta, while Colombia faces declining output and reserves due to restrictive policies under President Petro.
Argentina is on the brink of overtaking Colombia as one of South America’s top oil producers, largely due to an increase in shale drilling activities in the Vaca Muerta region. The government of President Javier Milei has implemented pro-business policies that have revitalized the sector, leading to forecasts indicating that Argentina might achieve production levels not seen in two decades. Currently, shale oil accounts for approximately 60% of Argentina’s crude output, bolstered by the inflow of international investments directed towards infrastructure enhancements such as pipelines and ports.
In contrast, Colombia is witnessing a decline in its oil and natural gas reserves, having halved in the last ten years, primarily due to President Gustavo Petro’s restrictions on oil exploration including the halting of hydraulic fracturing initiatives. As a result, Colombia’s oil production investments have decreased for two consecutive years, prompting concerns about their ability to meet national tax revenue targets going forward. This situation has culminated in Colombia potentially facing challenges in maintaining its status within the top three crude producers in the region, as Argentina steadily advances.
The South American oil industry has been dynamic, influenced significantly by various governmental policies and geological advantages. Argentina’s Vaca Muerta shale formation represents one of the largest reserves of shale oil and gas globally. With government incentives and a renewed focus on exploiting these resources, Argentina is poised for substantial growth in oil production. Conversely, Colombia’s current administration has adopted a cautious approach towards fossil fuel exploration, impacting its oil output and reserves negatively, leading to increased vulnerability in its energy sector standing in the region.
In summary, Argentina is on the verge of becoming a leading crude producer in South America, fueled by its shale-drilling initiatives and supportive government policies. Meanwhile, Colombia’s restrictive measures on oil exploration have led to stagnant production and dwindling reserves, placing its status at risk. The shift in positions between these two nations exemplifies the impacts of governmental policies and investment strategies within the volatile energy sector.
Original Source: financialpost.com
