Miguel Galuccio knows shale.
He was a founder of Argentina’s burgeoning boom, leading the first incursions into its heralded oil and gas field known as Vaca Muerta, or dead cow. The shale patch stood idle for nearly a century after its discovery until Galuccio took the reins at state-run YPF SA.
But it wasn’t until Galuccio started his own venture, Vista Energy, that oil really started to flow from the reserves tucked into an arid western edge of Patagonia. And he’s made a fortune in return. Vista’s New York-traded shares are up about 1,400 percent in the past three years, easily beating every other of the roughly 100 global oil drillers worth US$1 billion or more. Galuccio’s 7.9 percent stake is now valued at some US$370 million.
The next chapter — for both Vista and Argentina, with its ambitious industry-wide plans to ramp up crude exports — now lies not just in Galuccio’s hands, he says, but in those of President Javier Milei.
Milei, who’s just months into a four-year term, pledges to go where no Argentine leader has successfully ventured for three decades by deregulating the country’s tightly controlled economy. But his signature legislation, which would stamp his libertarian vision on the economy — including free oil markets — still needs to win approval in congress. And Milei hasn’t yet managed to scrap restrictions on importing equipment and money flows, which are the bane of investors.
At stake are the plans of Argentina’s shale leaders who forecast that daily production of crude alone in Vaca Muerta can reach one million barrels in 2030, about triple what it is today. That’s of no small consequence to a world predicted to consume near-record amounts of the fuel in the years ahead, especially when there are few oil fields left on the planet that can generate that kind of growth.
“If we want to grow to one million barrels, we have to add five rigs every year, and making Argentina even more investable is required to do that,” Galuccio said in an interview at Bloomberg’s headquarters in New York.
Milei — like three straight governments before his that also promoted shale drilling — has a vested interest in unleashing Vaca Muerta since crude is a relatively quick route to bringing extra export revenue to Argentina. Those billions of dollars are vital to turning around an economy that’s headed for its sixth recession in a decade.
But some of Milei’s progress has been slower than investors would like as he contends with high inflation. In particular for shale drillers, barrels of oil in Argentina still fetch less than global benchmarks and capital controls remain in place.
“Milei, on the purely pragmatic grounds of trying to slow inflation, is beginning to moderate or backpedal on his convictions, and that’s a yellow traffic light,” Gadano said. “Continued capital controls mean that, while Vista can still invest its cashflow, it’s very difficult to scale up spending or for other companies to bring in new investments.”
Argentina currently produces more than 350,000 barrels a day of shale oil — it exports one-third — and, during the height of winter demand, the equivalent of another 500,000 barrels of shale and tight gas. That’s just a fraction of what drillers churn out in the prolific Permian Basin in the United States. But it’s been enough to make Galuccio rich.
SOURCE: www.batimes.com.ar