Argentina's Oil Production Set to Overtake Colombia

Argentina is on the brink of becoming one of the top three crude oil producers in South America, thanks to a significant surge in shale drilling activities. The Vaca Muerta shale region, a key area for shale oil production, is experiencing heightened drilling operations.

Government Support and Investment

Much of this growth can be attributed to supportive policies introduced by President Javier Milei’s administration. These business-friendly reforms have not only encouraged local companies but have also attracted international investment, fostering a favorable environment for oil production. Currently, shale oil represents about 60% of Argentina's total crude output and, according to the US Energy Information Administration, the nation is set to achieve production levels that have not been seen in over 20 years.

Future Projections for Shale Drilling

The future looks promising for Argentina as drilling companies plan to bring more rigs into the Vaca Muerta region in the upcoming year. Alongside increased drilling, there are ambitious infrastructure projects underway. These initiatives aim to enhance the country's capability to transport and export oil, supported by the reforms that allow companies to secure international financing for building pipelines and upgrading ports.

Challenges Facing Colombia's Oil Sector

In contrast, Colombia is facing challenges within its oil and gas industry. The country’s natural gas reserves have halved over the past decade, and crude oil reserves have stagnated. President Gustavo Petro’s decision to prioritize environmental issues over oil exploration has led to significant restrictions, including a ban on hydraulic fracturing.

Investment Declines in Colombia

Due to the regulatory environment, investments in Colombia’s drilling sector dropped for a second consecutive year in 2024. This decline is impacting production levels, which are expected to fall short of meeting government revenue targets, according to industry experts.

Comparative Production in South America

Currently, Brazil stands as South America's largest crude oil producer, with production over 3 million barrels per day. Venezuela, historically a major player in the oil sector, saw its output drastically decline under previous governments but has recently begun to recover, placing it back in contention for the second position in oil production in the region.

Argentina, Oil, Colombia