Neuquén wants Vaca Muerta cash to shift away from gas

Argentina’s Neuquén province is aware that Vaca Muerta will not generate profits for ever, so it wants to monetize the shale formation now to help diversify the local economy and develop infrastructure in areas outside the main economic hub around the capital. 

“We have a window of opportunity that will last 25 to 30 years at least,” provincial cabinet chief Juan Luis Ousset said during the annual CAF-Eclac conference in Chilean capital Santiago.  

Neuquén achieved record oil production of 391,570b in February, of which 93% came from Vaca Muerta. Meanwhile, gas production reached 89.4Mm3/d (million cubic meters per day), according to the local energy ministry.

Despite this, Ousset pointed out that around 40% of the local population still lives in poverty and areas outside Confluencia department, which is home to around half of the population and the capital, Neuquén, have poor infrastructure and sparse access to services such as gas, and this also acts as a barrier to investments in Vaca Muerta.

“It's not possible to develop an activity without the basic infrastructure a province needs,” he said.

Ousset resumed the province’s goals regarding the oil and gas formation as monetizing resources, but also providing social sustainability.

“What we want is to accelerate investments and provide a framework that gives legal certainty, but also to channel those resources towards diversifying our economic matrix,” he added. 

On that front, he said that the provincial government recently reached an agreement with oil operators in Vaca Muerta to fund a scholarship program. However, he admitted that some of the other funds that were being channeled towards this objective have been “suspended” amidst the fiscal crackdown enacted by President Javier Milei.

Milei’s austerity measures have also halted thousands of public work projects across the country, and provincial authorities are now asking the federal administration to resume funding for at least some of them.

In the case of Neuquén, Ousset told BNamericas that the province wants funding resumed for a US$234mn road and urban development plan that had been backed by the previous administration.

As an alternative, Santa Fe governor Maximilliano Pularo has proposed that provinces take over some of the halted projects to advance them under a public-private partnership (PPP) model. 

When asked about this possibility, Ousset said that it might not be feasible for smaller provinces. 

“We see that there are some places in which private actors could be interested in carrying out some projects, and some places, as is the case in our province, in which if there isn’t some backing from the State, it would be very difficult for there to be private interest,” he told BNamericas.