(Bloomberg) -- A shale-drilling frenzy in Argentina has put the country on the verge of leapfrogging regional rival Colombia as a top-three crude producer in South America.
Drilling activity is accelerating in Argentina’s Vaca Muerta shale region, thanks in large part to policies by the business-friendly government of President Javier Milei. Shale oil now accounts for about 60% of Argentine crude and has put the nation on course to reach production levels unseen in more than 20 years, according to the US Energy Information Administration.
Drillers are expected to bring extra rigs to the Vaca Muerta next year. Ambitious infrastructure plans are also gaining momentum as Milei’s reforms give companies an opportunity to attract international finance for pipelines and ports.
Meanwhile in Colombia, natural gas reserves are half of what they were a decade ago and crude reserves have stagnated as President Gustavo Petro shunned oil exploration in favor of reducing greenhouse-gas emissions.
Colombia’s oil and natural gas industry had been looking to hydraulic fracturing, the same technology used in the Vaca Muerta, to expand reserves. But after taking office in 2022, Petro halted two key fracking tests. To be sure, explorers recently made a significant offshore gas discovery.
Colombian drilling investments in 2024 dropped for a second consecutive year and the declines mean that crude production won’t create enough revenue to meet the government’s tax-revenue targets, according to industry forecasts.
Brazil is by far South America’s biggest daily crude producer at more than 3 million barrels. Venezuela churned out a similar amount at the turn of the century before output nosedived under socialist regimes, but the figures have been inching higher recently, placing it second in the region.