Argentina's Pampa to invest $550 million in Vaca Muerta shale push next year

AÑELO, Argentina (Reuters) – Pampa Energía, the third largest gas producer in Argentina’s Neuquén basin, will invest $550 million in 2023 to increase its unconventional production from the huge Vaca Muerta shale formation, the firm’s president Marcelo Mindlin said.

FILE PHOTO: Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in the Patagonian province of Neuquen, Argentina, January 21, 2019. REUTERS/Agustin Marcarian

Vaca Muerta, the world’s second largest shale gas reserve and fourth for shale oil, is crucial for Argentina to reduce its reliance on pricey energy imports and build up an export sector that can cut a deep deficit and bring in much-needed dollars.

The government has launched a plan to stimulate gas production, is building a major new pipeline from Vaca Muerta to Buenos Aires to boost transport capacity and is seeking investment to build up liquefied natural gas (LNG) terminals.

“All the potential that we talked about in Vaca Muerta is already beginning to materialize,” Mindlin told reporters at the firm’s site in Argentina’s barren Patagonian south.

The company will invest “not only in wells, but also by importing a fracture set because for the amount of activity that is going to take place in Vaca Muerta, the fracture sets that we have in the country today are not enough,” he added.

Pampa has raised production from one million cubic meters (m3) per day in 2016 when it bought Petrobras Argentina, to 7 million m3 in 2021. This year it upped that to 11 million m3 and targets 15 million m3 per day in 2023, Mindlin said.

Mindlin, also a major shareholder of local construction company Sacde, which is involved in building part of the first section of the planned new gas pipeline, said he was confident the first stage would be completed on time by June 2023.

With the first stage, the country will increase its gas transportation capacity by 11 million m3 per day.

“By producing 11 million cubic meters more, instead of importing it, we will be saving next year from $2.5-$3 billion,” he said. The country is expected to have an energy trade deficit of some $6 billion this year.

(This story has been corrected in paragraph 8 to say Mindlin is a major shareholder, not President, of construction firm Sacde)

Reporting by Eliana Raszewski Editing by Nicholas Misculin and Mark Potter

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