Argentina energy doubts mount as Vaca Muerta stalls

Significance

On December 15, President Alberto Fernandez's government awarded supply contracts under the Gas.Ar plan, seeking to address short-term supply challenges and energy trade balance concerns. The government’s initial plan to prioritise development of the Vaca Muerta unconventional hydrocarbons reserves appears to have been shelved.

Impacts

• The shift in priority from renewable energy to hydrocarbons development may prove to be misguided.
• Vaca Muerta may be overtaken by the global focus on renewable energy and climate concerns.
• Shifting economic and trade policies and renewed tariff freezes risk deterring investment in the hydrocarbons sector.
• The cost of subsidies may prove unsustainable amid fiscal constraints and competing spending priorities.