(Reuters) – Argentina is on track to hit record oil output this year from its massive shale deposits, which are already responsible for record natural gas production, a key local official said on Tuesday, amid a national push to grow domestic energy supplies.
Located in western Neuquen province, the Vaca Muerta shale formation is the world’s second-largest shale gas reserve and the fourth-biggest for shale oil, and holds the promise of helping Argentina lessen its roughly 20% dependence on costly foreign natural gas imports.
Neuquen Governor Omar Gutierrez told reporters during an event in Buenos Aires that Vaca Muerta currently produces a record 91 million cubic meters per day (3.2 billion cubic feet per day) of natural gas. He added that by December oil output from the prolific shale play will exceed 308,000 barrels per day.
Vaca Muerta’s growing production has allowed Argentina to reduce energy imports in value terms by $4 billion during the Southern Hemisphere’s winter, said Gutierrez, due to the substitution of cheaper domestic gas supplies.
The governor added that the value of Vaca Muerta’s oil exports will likely reach $2 billion this year, or five times more than shipments last year.
A major new natural gas pipeline aims to connect Vaca Murta’s surging supply with populous Buenos Aires province, home to the nation’s capital, with construction on the first phase of the pipeline set to begin in October.
The project aims to boost gas transport capacity from Vaca Muerta by 11 million cubic meters per day and generate savings of some $2.2 billion in imports in 2023, according to official estimates.