Chevron Bets on Argentina's Vaca Muerta

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Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--The economic policies implemented by the new government are incentivizing companies like Chevron Corporation's (NYSE:CVX) (San Ramon, California) to continue investing in Argentina.

Mike Wirth, chief executive officer of Chevron, praised the economic policies implemented by new Argentine President Javier Milei to attract investments and help develop Vaca Muerta, one of the world's largest shale reservoirs.

"I'm also really pleased to see the situation of the country improving. We've seen inflation come down significantly, the banking system has stabilized, there's progress towards reducing and removing capital controls. President Milei is a reformer, and he's got a serious agenda that would make the country more investable for foreign investors," said Wirth during the company's financial presentation.

Among the policies implemented by the current administration last year was the Regime for Incentive of Large Investments (RIGI), a new system granting special benefits to companies investing large amounts in the country.

For the hydrocarbon sector, refining, processing or fertilization projects with investments more than US$200 million could be selected for the RIGI, granting companies fiscal and legal benefits. For transport and storage, the minimum investments should be US$300 million, while for exploration and production the number goes up to US$600 million.

Chevron owns the Loma Campana and El Trapial oilfields in Vaca Muerta. Loma Campana is one of Vaca Muerta's largest producing oil fields, with an output average of around 83,000 barrels of oil per day (BBL/d) throughout last year.

In addition to Loma Campana and El Trapial, Chevron is considering other investments in Vaca Muerta, such as the development of midstream capacity with YPF, which is aimed at constructing an oil pipeline and deep export terminal to help ship the reservoir's output.

The pipeline is expected to have an initial capacity of 550,000 BBL/d, with the possibility of expanding it to 700,000 BBL/d.

"We've seen encouraging signs in Argentina in years gone by, and then things moved the other direction. We'll be watching to see if this seems to be a more durable set of reforms and that would certainly be an important signpost for us," highlighted Wirth.

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