Argentina: Tango is slipping

Argentina has both benefitted and suffered from a protracted low-price environment. The country’s macroeconomic performance is closely linked to its energy economy as seasonal demand spikes impact the national energy trade balance. As a result, successive Argentine governments have been keen to develop the country’s domestic hydrocarbon resources, chief among which is the Vaca Muerta shale oil and gas play. However, the development of the vast play is expensive and record low prices have eroded the commercial viability outlook for a large-scale liquefaction plant necessary to monetise the targeted shale gas surplus. Notably, Argentina’s gas production has once again embarked on a declining trajectory – albeit from elevated year-on-year levels – with domestic demand ramping up as the regional winter season takes hold. The country’s saving grace, however, is the same flush spot market and its prevailing low LNG prices that is plaguing its prospects as a growing LNG exporter.

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