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Buenos Aires — Vaca Muerta, the biggest shale play in Argentina, led a year-on-year increase in oil and natural gas production in 2018 in Neuquen, as more companies bet on the resources for growth in the southwestern province.

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Neuquen's Ministry of Energy and Natural Resources said the province's total oil production rose 12.7% on the year to an average of 116,739 b/d in 2018, the highest in seven years, according to a statement late Tuesday.

Crude production reached its highest last year in December, when it averaged 130,388 b/d, it added.

"The growth in oil production in 2018 is explained almost totally by the contribution of Vaca Muerta," the ministry said.

Shale oil output rose 52% year on year in 2018, reaching a peak of 78,189 b/d in December, or 60% of total production that month, the data showed.

The rise in shale oil production along with a 27% increase in tight oil, which accounted for 3% of the province's total crude output, helped to compensate for a 12% decline in conventional production as reserves matured, the ministry added.

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Vaca Muerta, one of the world's biggest shale plays, has attracted global majors like Chevron, ExxonMobil and Shell, many of which started shifting into full development on blocks in the play last year.

This is bolstering estimates for the country's production growth. Argentina's Energy Secretariat has forecast total oil production could double to 1 million b/d in 2023 from 2018.

Loma Campana, a block under development by Chevron and Argentina's state-backed YPF, saw its oil production increase 18% on the year in 2018, taking its share of the province's total oil output to 30%, the ministry said. Output from La Amarga Chica, a project of YPF and Malaysia's Petronas, rose 126%, it added.

GAS PRODUCTION

Gas production in the province hit a 10-year high in 2018, rising 10% on the year to 66.6 million cu m/d.

The increase would have been higher had it not been for a decline in demand for heating fuel during periods of warmer weather, which forced companies to interrupt production at times, the ministry said. Production reached a peak of 69.8 million cu m/d in August, at the height of winter, before declining slightly, the ministry said, without providing raw data on the subsequent months.

The overall growth in production was led by shale gas, which rose 193% on the year in 2018, helping to offset a 19% decline in conventional gas production, the ministry added.

The output of unconventional gas -- including shale and tight -- rose 46% on the year in 2018.

The biggest gain was in Fortin de Piedra, a block under development by Argentina-based Tecpetrol. Its production grew tenfold to 13.8 million cu m/d in December, the ministry said. El Orejano, a project of YPF and Dow Chemical, surged 53% over the same period, it added.

The increase in oil and gas production came as drilling activity surged 11% to 348 wells in 2018 from 314 wells in 2017.

The national Energy Secretariat has estimated that Vaca Muerta could help double the country's gas production to 260 million cu m/d in 2023.

Argentina's total oil production rose 2.1% on the year to 498,271 b/d of crude in 2018, while gas rose 5.3% to 128.8 million cu m/d over the same period, according to the Energy Secretariat.

-- Charles Newbery, newsdesk@spglobal.com

-- Edited by Annie Siebert, newsdesk@spglobal.com