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American Focus > Blog > Economy > Slowing Vaca Muerta oil activity could pose challenge for Argentina’s Milei
Economy

Slowing Vaca Muerta oil activity could pose challenge for Argentina’s Milei

Last updated: October 9, 2025 11:54 am
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Slowing Vaca Muerta oil activity could pose challenge for Argentina’s Milei
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(Corrects spelling in byline)

By Eliana Raszewski

BUENOS AIRES (Reuters) – Activity related to drilling and fracking in Argentina’s Vaca Muerta, recognized as the fourth-largest unconventional oil reserve worldwide, is stabilizing amid declining oil prices and escalating expenses. This deceleration poses a challenge for libertarian President Javier Milei’s political agenda.

The expansive Vaca Muerta formation, situated in western Argentina, contributes 64% of the nation’s oil output, despite only 8% being actively developed.

The success of Vaca Muerta is crucial for Argentina’s economic trajectory and for Milei’s administration, which aims to boost energy exports to enhance the country’s dollar reserves and foster confidence in its currency stability.

A decline in drilling and fracking operations in Vaca Muerta may further complicate matters for Milei, whose approval ratings have fallen amid political controversies and confrontations with the opposition-led Congress. His goal to export $30 billion worth of oil and gas by 2030—effectively doubling Argentina’s current global exports—hangs in the balance.

Significant investments in Vaca Muerta led to record production levels in Argentina, reaching 827,000 barrels daily in August, marking a 15% rise compared to the previous year. However, analysts predict a slowdown shortly. Current benchmark global oil prices hover around $65 per barrel, down from $90 in April 2024.

The count of wells drilled in the Neuquen basin, home to Vaca Muerta, decreased to 55 in July from 67 in June, marking the third successive monthly decline as per the latest figures from Argentine consulting firm AGKC.

Fracking operations, involving the high-pressure injection of water and chemicals to fracture rock, saw a 9% reduction in July compared to June, according to Luciano Fucello, country manager for NCS Multistage, an oilfield services provider.

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During a presentation to oil and gas industry leaders in early September, Daniel González, Argentina’s Secretary of Energy and Mining Coordination, noted that oil production costs in Vaca Muerta are 35% to 40% higher than those in the U.S. Permian basin.

“The market will adjust, and we’ll likely see more sustainable pricing, but for now, only the most efficient will endure,” González added.

Analysts attribute the rising costs to increases in labor, services, utility expenses, and pricier financing options.

DECLINING WELL DRILLING

While the industry anticipated fracking stages would reach 24,000 by 2025, Fucello from NCS Multistage indicated that this estimate might fall short by several thousand.

“At current dollar valuations and interest rates, it is more prudent to keep oil production minimal,” said Ariel Kogan, director at AGKC Consultores.

TAGGED:ActivityArgentinasChallengeMileiMuertaoilposeslowingVaca
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