2022 has been a year of uncertainty for the economic sector, especially due to the invasion of Russia to Ukrainewhich has unleashed consequences to world levelincluding an energy crisis in which several countries face high prices in the hydrocarbons and, of course, the shortage of this type of product in certain regions of the world.
Both oil and gas increased its price compared to the end of the first quarter of the year (5.4% and 5.6% respectively), derived largely from the sanctions on Russia for the export of these supplies.
The relatively low supply of hydrocarbons, mainly due to the low productive wells In response to the negative economic impact of Covid-19 of 2020, coupled with the rapid recovery of global demand for these, prompted oil companies to increase drilling equipment under contract, which anticipates an increase in oil and gas production in the medium term.
The scarcity of hydrocarbons from Russia generates unknowns about who is going to replace this supply at the international level, which represents an opportunity for the Argentina to become a strategic ally for energy supply.
The country has one of the most promising oil and gas fields, Dead cowa first-class geological formation in terms hydrocarbons, located in Neuquén.
And it is that only in 2020 more than two thirds of the production of oil and gas in Argentina It came mainly from conventional resources from the Neuquén and San Jorge Gulf basins.
However, some of these fields are already relatively mature and are in decline, leading to declining production levels. This trend could be reversed by taking advantage of the unconventional oil and gas resources found in the Neuquén basin, which includes the formation of Dead cow.
Although Argentina is on the right track, it is advancing on complex projects and needs state-of-the-art technology, and it will take several years before it enters the production phase.
Additionally, today there are significant bottleneck in the infrastructure for the evacuation of the production of the productive zones in the south towards the zones of high consumption, and even, export in the north. This prevents companies from producing larger quantities.
Therefore, it is important to continue with public and private investment in the development of this deposit. And this will require the implementation of public policies that encourage foreign investment in drilling, but also in primary infrastructure, such as the Nestor Kirchner gas pipeline; and in secondary, such as access roads and production plants for drilling consumables, among others.
Argentina has the most favorable natural characteristics through its coasts, its immense productive lands and a subsoil rich in all kinds of resources. The intelligent development of the resources of Dead cow It will present all the possibilities for Argentina to become a success story and a world reference in the hydrocarbon sector.
By Miguel Peleteiro, Managing Director and Leader of the Oil and Gas Corporate Finance practice in the Americas for Kroll.
by Miguel Peleteiro*
