Protests and civil dissent are once again sweeping across Latin America, a region infamous for its political instability and economic inequality. While the Colombian security crisis is threatening Conflict-Torn Country’s Oil Industry, Argentina’s Oil Sector Recovers After Health Workers Strike blockade lifted in the province of Neuquén at the end of last month. In early April 2021, striking healthcare workers demanding higher wages as they dealt with Argentina’s COVID-19 crisis blocked the vast Vaca Muerta shale oil and gas field in Neuquén. This province is at the heart of Argentina’s hydrocarbon sector – pumping over a third of Argentina’s total crude oil production and half of its natural gas. Neuquen contains the vast Vaca Muerta shale formation, recognized as the world’s second largest shale gas deposit, containing 16 billion barrels of oil and 308 trillion feet of recoverable natural gas. EIA valued that only about 4% of the shale oil and gas field is developed, while S&P Platts believe that less than 10% of the Vaca Muerta is in large-scale development. This lack of development prevents the formation of shale from reach your potential despite the start of exploration, development and production activities almost ten years ago. Before the roadblocks, Argentina government data (Spanish) showed that the production of crude oil and natural gas increased steadily. Oil production in March 2021 averaged 496,871 barrels per day, 12% more than a month earlier, but 4% less than the same month in 2020. Natural gas production fell by 0 .06% month over month and nearly 10% year over year to 719,966 barrels of oil equivalent per day.
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The blockades have prevented fuel and other supplies from reaching oil industry operations in Vaca Muerta, which Buenos Aires is seen as a quick fix to Argentina’s chronic economic problems, slow development and from production. There were signs that before the strike by healthcare workers, oil industry operations in Vaca Muerta were returning to pre-pandemic levels. Data S&P Global Platts shows that in March 2021 there were 733 fracturing stages, which was a new record surpassing the March 2019 peak of 712 and 7% more than the 685 stages reported a month earlier. As health workers lifted the blockades, there are signs that they have had a marked impact on operations in Vaca Muerta and Argentina’s economically crucial hydrocarbon production.
Although Buenos Aires has yet to release April 2021 data on the oil industry, hydrocarbon production in Latin America’s third-largest economy is expected to decline that month due to lockdowns mounted by workers in health. According to oil industry estimates, reported by Argus Media, the roadblocks shut down 45 drills and cost the industry at least $ 25 million. The Last Baker Hughes number of rigs, which is a reliable de facto indicator of oil industry activity, shows that there were 33 platforms operational at the end of April 2021, six less than a month earlier. This is the lowest number of rigs since December 2020, illustrating the impact of health worker roadblocks on oil industry operations in Vaca Muerta. This indicates that hydrocarbon production for April 2021 will decline from the first three months of the year when it averaged just over 1.2 million barrels of oil equivalent per day. These events will only slow down the development of Vaca Muerta which the national government considers a panacea for Argentina’s myriad of economic afflictions.
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Before the pandemic and the latest political turmoil in Argentina, the oil industry was alarmed by the victory of Peronist Alberto Fernandez as president in 2019. It was feared that under a Peronist president there would be a return to harsh regulation, in one country which is perpetual interference in the energy markets, and this oil nationalism would reappear. In response to growing concerns in the oil industry, which were amplified by the fall in oil prices of March 2020 and the COVID-19 pandemic, Buenos Aires focused on regulatory reform favorable to the economically crucial industry. . This is particularly important in light of the Debt crisis National oil company YPF faced earlier this year due to sovereign debt default and its restructuring in 2020. President Fernandez announced in a statement. speech at congress (Spanish) earlier this year that his government focused on reforming the energy sector, which aims to attract urgent additional investment and boost production as well as exports. In mid-April 2021, Argentina’s energy minister said the government was drafting a bill to introduce new incentives for oil companies, which would ultimately lead to increased oil and gas production. natural. According to the minister, this bill was to be submitted to Congress at the beginning of May 2021. Among the proposals considered were the establishment of a floor and ceiling price for oil, which would reduce the impact of the fall in prices on companies. energy operating in Argentina while avoiding an oil bull. tumultuous economic growth market.
There are signs that Argentina’s burgeoning oil boom is gaining momentum, especially with Brent trading at $ 67 a barrel – well above the Vaca Muerta average. break-even price from $ 45 to $ 50 per barrel. The recent crisis that halted operations in Vaca Muerta, which was only a short-term issue affecting April 2021 production, appears to have come to an end. As long as oil prices remain high, exploration and development activities as well as production will continue to grow.
By Matthew Smith for Oil Octobers
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