At a glance: Shell’s Argentina oil assets

Some industry observers say that the actions of European major Shell speak volumes about how attractive – or unattractive – a country is as an upstream investment destination. 

In Argentina, Shell has been present for 110 years and today controls or has a working interest in 11 hydrocarbons areas.

Focused on the Vaca Muerta unconventional hydrocarbons formation, Shell is the country’s fifth-biggest oil producer, with a 5% market share, according to July operator data in a report published by local consultancy Economía & Energía.

In terms of the outlook, Shell’s Argentina chief Germán Burmeister recently said production should climb 40% next year to 70,000b/d and that average annual outlay of up to US$600 million could grow if capital controls are eased. 

For capital controls to be fully scrapped, allowing the repatriation of profits, more progress on foreign currency reserves accumulation and the fight against inflation, among other advances, would likely be needed.

Burmeister also referred to the federal government's Rigi investment incentives regime, which encompasses projects including midstream projects and upstream gas initiatives geared to the export market.

In terms of offshore, Shell was recently given the environmental green light to shoot 3D seismic at Argentina Norte basin blocks CAN-107 and CAN-109. The project was submitted by TGS Investments, which operates in Argentina as Nopec Geophysical.

The government is working to ease state control over the hydrocarbons sector. The industry, investing in midstream and upstream with eyes fixed firmly on the export market, is awaiting secondary legislation, the fine print, governing the implementation of President Javier Milei’s economic reform law. 

According to federal energy department operator data, Shell oil production – nearly all shale – has been trending up since at least 2019. 

Nationally, oil production stands at around 690,000b/d, with No. 1 producer YPF accounting for 321,000b/d, according to Economía & Energía operator data.

Among Argentina's smallest gas producers, Shell logged around 563,300m3/d gas in June, all shale, according to the federal energy department. Nationally, gas production is around 150Mm3/d (million cubic meters).

SHELL ASSETS IN ARGENTINA 

Shell has onshore and offshore upstream assets along with midstream infrastructure.

Onshore operated

Cruz de Lorena (Shell 90%, GyP 10%)
Sierras Blancas (Shell 90%, GyP 10%)
Coirón Amargo Oeste (Shell 90%, GyP 10%)
Bajada de Añelo (Shell 50%, YPF 50%)

Onshore non-operated

La Escalonada (Shell 45%, partners Total Austral and GyP)
Rincón de la Ceniza (Shell 45%, partners Total Austral and GyP)
Bandurria Sur (Shell 30%, partners YPF and Equinor)
Acambuco (Shell 22.5%, partners Pan American Energy, YPF, Vista Energy and Pluspetrol)

Deepwater operated

CAN-107 and CAN-109 (Shell 60%, partner Qatar Energy)

Deepwater non-operated

CAN-100 (Shell 30%, partners Equinor and YPF)

Onshore midstream

In 2016 Shell opened a 12,000b/d early production facility at the Sierras Blancas acreage in Neuquén province, to process crude from the block as well as Cruz de Lorena and Coirón Amargo.

In 2021, this was joined by a central processing facility, adding 30,000b/d of capacity for the three areas.

Shell has a 60% stake in the 104km Sierras Blancas-Allen oil pipeline, which carries oil from Sierras Blancas to a storage station operated by midstream firm Oldelval in Allen, Río Negro province, adding 20,000m3/d (125,796b/d) capacity to the transport system.

According to information on Shell’s website, a 15,000b/d early production facility in Bajada de Añelo, which can also handle 2Mm3/d gas, is in the construction phase.