Argentina's Mendoza province plans to boost oil production by 3%-4% in 2021

Buenos Aires — Mendoza, the fourth-largest oil province in Argentina, has set a target to boost crude production by up to 4% in 2021 due to a government incentives program to put wells back into operation after a slump in 2020 activity, an official said.

Production will increase between 3% and 4% in 2021, according to a statement late March 24 by Emilio Guinazu, the deputy secretary of hydrocarbons in the western province. Guinazu made the comments on a visit to Puesto Pozo Cercado Oriental, a block operated by Argentina's Petrolera Aconcagua Energia that has accessed the incentives program.

Mendoza is providing tax credits equivalent to 40% of the investment to put 150 wells back into production after they were shut-in in 2020 because of a plunge in oil demand and prices during a March-November lockdown from the coronavirus pandemic. Companies have agreed to invest about $17.4 million to revive the wells.

Mendoza produced an average of 56,000 b/d in December 2020, down 15.4% from 66,225 b/d in the year-ago period, according to data from the Argentina Oil and Gas Institute, or IAPG, an industry group.

The results have been "excellent," Guinazu said, saying that Petrolera Aconcagua has vowed to put 30 wells back into production at Puesto Pozo Cercado Oriental to double the block's output.

The block was producing 233 b/d in January, a recovery from as low as 164 b/d in May 2020, when the country's oil output fell to its lowest during the lockdown, according to IAPG data.

Mendoza has potential for increasing output of shale oil from Vaca Muerta, one of the world's biggest shale plays, in its south, and also from heavy oil resources in other parts of the province.