Argentina offers one of the most promising but complex energy markets in Latin America. With rich oil and gas reserves, especially in Vaca Muerta, and underexplored offshore potential, it provides significant opportunities for international investors. Yet, success in Argentina requires careful navigation of politics, regulations, and market volatility.

In order to provide the client with insights in which they could have full confidence for their decision-making process, we deployed a team of highly experienced locally based enquiry specialists, each with knowledge of the sector and their own high-level political and sectoral contacts. Our in-country agents were at all times backed up by our office-based researchers to provide background contextual research for their lines of enquiry.

Altogether, the in-country team spoke to some 36 relevant sources in search of answers to the framing questions.

Analysing and reporting

Once the background research and in-country enquiries were complete, our in-office corporate intelligence team collated and analysed all the findings, identified any areas requiring further investigation or clarification, and, after receiving answers to their follow-up questions from the in-country team, put together their report for the client.

Key findings

Our findings were delivered in a fully assessed 40-page report including an executive summary followed by a detailed assessment of all 19 ‘framing questions’ backed up by extensive evidence from interviews with well-placed industry and political sources. Key findings included:

Power at the national level is highly concentrated in the president. As a former senior official in the Ministry of Energy told: “The federal executive branch is just one man, and the ministers only hold delegated power – they have to follow the guidelines set by the president. Sometimes efforts are made to pass off the executive as a more collegial outfit, but this is usually for the purpose of blaming ministers for mistakes and relieving the president of some responsibility.”

The centre of gravity lies with the cabinet chief and his main men. We were told: “When one minister challenged this inner circle, he lost his job.”

Provincial governments, and governors in particular, play an important role. A political insider noted: “This administration has a fluid relationship with the governors, characterised by pragmatism on both sides, and this has allowed it to effectively advance its agenda so far.”

The technical capacity within ministries is generally strong. However, the vice president of corporate affairs at a major Argentine oil company told us “Key decisions are mostly handed down from on high”. The biggest gripe from the lower echelons of government is “excessive” oversight from the cabinet chief.

The opposition is acting responsibly over the economy, but this could change, a source close to the presidency noted, if the public mood changes. “If the pressure from their support base rises strongly, they have less room to cooperate with the government.”

The administration has demonstrated its ability to deliver on policy goals.

Oil sector policy will be largely unaffected by the election outcome. An independent industry analyst told us: “Unlike in some other countries in Latin America, there is broad consensus across the political spectrum that Argentina should promote its oil sector.”

For onshore projects, the real power lies with the provinces; for offshore it is with the federal government.

Developing Vaca Muerta is the priority for the government. An energy-sector economist with close ties to the government said: “The government’s main concern, almost its only interest, hinges on developing the Vaca Muerta non-conventional hydrocarbon formation.”

After Vaca Muerta, offshore is the next frontier.

The government sees international investment and the participation of foreign companies as key drivers. A former Minister of Energy told us: “Domestic savings account for very little, so heavy foreign investment is needed.”

For both this administration and its predecessors, the economy outranks the environment. An industry insider said: “Energy policy is closely linked to the broader economic goals of most Argentine administrations and is prioritised above environmental concerns.” The head of an Argentine conglomerate added: “The government is interested in the expansion of the oil industry, and the next administration probably will be, too. They aren’t going to make a fuss about environmental issues. Everyone has seen the oil industry as one of the means and highways to growth and development.”

Environmental issues are not expected to greatly hamper offshore development. The former Minister of Energy quoted above told us: “Environmental authority over the sea is handled at a national level, and no obstructive interference is expected.”

Concession contracts are stable.

The YPF-Repsol controversy was a one-off. As a veteran political observer put it: “The fact is that YPF’s case in the oil and gas sector was unique in terms of the salience of the argument for reclaiming a historical national asset.”

There is no discrimination against foreign investment (even the Kirchner administration sought to attract foreign investment in the oil sector), but likewise there are no special benefits. The vice-president of corporate affairs at one of Argentina’s leading oil and gas companies told us: “All leading stakeholders in the sector, including the national government, provincial governments, trade unions, and the general public, support foreign investment.”

Most local players have less access to capital and so need partners. However, locals have the advantage of knowing how Argentina works, and some have good relations with the administration.

Local SMEs are favoured in government-run procurement processes.

There are more than 100 domestic equipment manufacturers and services providers.

The local work force is relatively skilled in the sector, however labour costs and regulation are a big challenge.

Lobbying is important. The head of an Argentine conglomerate told us: “Lobbying is a big deal, especially when you go outside the city of Buenos Aires and to the provinces.”

Corruption is an ever-present concern, but it is more of a factor in the construction industry than in the oil sector, particularly offshore.

The public is generally positive about the oil and gas industry.

Environmentalists are mostly concerned about fracking and mining.

With offshore, it is the fishing industry that is most concerned about potentially adverse consequences. However, as one industry insider put it, “while the fishing industry has good lobbying power, and this could create some tension, it is not going to be enough to stop offshore drilling.”

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