Argentina on track to produce 1 million b/d of crude in 2026 and keep growing

Argentina is on track to produce 1 million b/d of oil this year and sustain rapid growth as more companies apply for federal tax incentives to develop large upstream projects in the Vaca Muerta shale play, Deputy Energy Minister Daniel González said April 14.

"I think that we are going to touch 1 million barrels of oil this year," he said at the AmCham Summit in Buenos Aires.

That would be up 26% from an average of 793,000 b/d in 2025 and also more than the latest figure of 874,000 b/d in February, and would surpass the previous record of 846,950 b/d in 1998, according to Energy Secretariat data.

The fast growth and the new target of 1 million b/d "is a milestone that hadn't been expected a few years ago," said González, a former CEO of state-run YPF, the country's biggest oil producer.

He added that one driver of this growth is Vaca Muerta, one of the world's biggest and best-quality shale formations that is attracting new investment and new players like US-based Continental Resources.

The lure of fiscal benefits

The other driver, he said, is the rollout of tax incentives that provide legal and fiscal stability for investors to bet on long-term developments in the play.

The incentives program, known as RIGI, the Spanish acronym for the Incentives Framework for Large Investments, was launched in August 2024 for infrastructure projects, including pipelines, of more than $200 million. In February, it was expanded to include upstream projects above $600 million, spurring huge interest.

In March, Pampa Energía, Argentina's fifth-biggest gas producer, applied for incentives for a $4.5 billion project to develop a Vaca Muerta oil block with the target of more than doubling production to 45,000 b/d in mid-2027 from 19,000 b/d at the end of 2025. Argentina's Tecpetrol, the third-largest gas producer, subsequently applied for a $2.4 billion project to ramp up oil production to 70,000 b/d by July 2027 at a block in the play

A third company is poised to apply for the incentives, González said, adding that another seven or eight more companies could follow suit before the application deadline in July 2027.

"All the projects are in Vaca Muerta," he said. "All the companies in Vaca Muerta have projects that can apply for RIGI, and I'm certain that they are going to do so."

France's TotalEnergies has said it plans to seek the incentives for a Vaca Muerta project.

Taking more risks

González said one of the benefits of RIGI is that it allows companies to take more risks in their exploration and testing of Vaca Muerta.

"RIGI makes it possible to drill wells or areas of a field that they hadn't planned because the economics were very tight," he said. "RIGI provides incentives that increase the scale of a development. This is very important."

González added that with the deadline in place for applying, this is accelerating decisions to invest in Vaca Muerta.

"We are going to see a very large increase in oil and gas investment over the next 18 months," he said.

Vaca Muerta, in northern Patagonia, is expected to lead Argentina's total oil production to 1.456 million b/d in 2030, according to a forecast by the Argentinian Chamber of Hydrocarbons Exploration and Production, another industry group.