Argentina’s Shale Boom Propels It Past Colombia in Oil Output
- Rapid growth in Vaca Muerta shale oil has pushed Argentina’s crude output to near-record levels, making it the region’s fourth-largest producer.
- While oil production continues to surge, natural gas output has declined due to infrastructure constraints, maintenance, and weaker prices.
- YPF’s low-cost shale operations and aggressive investment plans position it as the primary driver of Argentina’s long-term hydrocarbon expansion.
Argentina, in a surprise development, overtook Colombia to become South America’s fourth-largest oil producer. The country is undergoing a once-in-a-generation unconventional hydrocarbon boom, which began with Buenos Aires nationalizing integrated energy major YPF in 2012. Since then, Argentina’s oil and natural gas output has kept soaring higher, regularly hitting new monthly highs as volumes of shale oil and gas production grow. It is Argentina’s national oil company, YPF, which is at the forefront of the boom with it responsible for this strong production growth.
For November 2025, Argentina’s crude oil production, despite falling from the October 2025 record of 849,646 barrels per day to 844,386 barrels per day, was still an impressive 12.5% higher than a year earlier. This was the first month out of the last six where output did not rise to a new record high. Rapidly growing shale oil production in the Vaca Muerta shale, Spanish for Dead Cow, is driving Argentina’s stunning production growth. For November 2025, shale oil output hit a new monthly record of 578,461 barrels per day, a 30.68% year over year increase, which saw it responsible for 68.51% Argentina’s total production.
Natural gas production, however, continues to decline. Output dropped 7% year over year to 4.2 billion cubic feet per day, the lowest level since December 2023. This represents a sharp drop from the record 5.7 billion cubic feet per day pumped for July 2025. It is rising shale gas output from the Vaca Muerta which is responsible for the solid growth of Argentina’s natural gas production over the last five years. For November 2025, shale gas production fell 1% year over year to 2.7 billion cubic feet daily, which despite being significantly less than the record 3.8 billion cubic feet per day reported for July 2025, still comprised 65% of Argentina’s total gas production.
Since July 2025, a combination of well maintenance, reduced drilling activity due to weaker spot prices, and a lack of infrastructure, notably storage and pipeline facilities, which is impacting takeaway capacity, are weighing on output. Indeed, the lack of pipeline and other transportation infrastructure has long been viewed as a key constraint with the potential to impact production in the Vaca Muerta. Although the increasingly prolific shale formation and Argentina’s national oil company YPF will be responsible for further production growth.
The 8.6-million-acre Vaca Muerta is a massive shale formation, roughly the size of Switzerland, located in the Neuquén Basin in northern Patagonia. It is among the world’s largest unconventional hydrocarbon resources and is frequently compared to the prolific Eagle Ford and Permian shales. The Vaca Muerta is estimated to contain 16 billion barrels of light tight oil and 308 trillion cubic feet of tight gas, making it the world’s fourth-largest unconventional oil and second-largest unconventional gas reserve. According to analysts, characteristics such as superior shale thickness, greater quantities of biological material, higher reservoir pressures, and increased well productivity make the Vaca Muerta superior to major U.S. shale plays.
After a decade of development, the Vaca Muerta is responsible for 69% of Argentina’s oil production and 65% of the country's natural gas output. With less than a tenth of the formation under development, there is tremendous production growth ahead. By the end of the decade, Argentina’s crude oil output is expected to hit at least 1 million barrels per day, with some analysts forecasting 1.5 million barrels per day by 2030. This is a massive increase over the 787,395 barrels per day lifted for the first 11 months of 2025. Natural gas output is expected to surpass 6 billion cubic feet per day by 2030, driven by the Vaca Muerta’s rising shale gas production.
It is national oil company YPF and its unconventional hydrocarbon acreage in the Vaca Muerta that will be responsible for most of the expansion of Argentina’s hydrocarbon output. The integrated energy major, which was nationalized by President Cristina Fernández de Kirchner in April 2012, holds the most acreage in the Vaca Muerta, controlling 2.9 million gross acres. YPF, after being the first energy company to start developing conventional energy assets in the Vaca Muerta, is the largest shale oil and gas producer in the formation. This first-mover status is delivering a tremendous windfall for the energy company.
During November 2025, YPF lifted 397,420 barrels of crude oil and 936 million cubic feet of natural gas per day. This amounts to 47% and 22% respectively of Argentina’s total oil and gas production respectively, making the national oil company the country’s largest hydrocarbon producer. For the same period, YPF lifted 315,937 barrels of shale oil and 725,716 million cubic feet of natural gas per day. This represents 79.5% and 77.5%, respectively, of the energy company’s oil and natural gas production for November 2025.
YPF is focused on developing the Vaca Muerta with plans to become a pure shale oil and gas producer. The company plans to achieve this by divesting higher-cost mature conventional oilfields while investing tremendous sums of capital to develop its Vaca Muerta acreage. Between 2025 and 2030, YPF plans to invest $36 billion with annual capital expenditure peaking at $6.8 billion during 2029. This will give YPF’s reserves and production a solid lift. By the end of 2024, the energy company held just over 1 billion barrels of proven reserves, of which 78% or 854 million barrels are unconventional oil located in the Vaca Muerta.
YPF’s shale acreage is proving to be particularly profitable. For the third quarter of 2025, Argentina’s national oil company reported low lifting costs averaging $8.80 per barrel, with the company only spending $4.60 per barrel to lift oil from its Vaca Muerta acreage. Those numbers underscore just how profitable YPF’s upstream shale oil operations are, even in the current difficult operating environment impacted by weaker oil prices. CEO Horacio Marín believes YPF can sustain profitable operations even if prices drop to $40 or $45 per barrel. In an interview with Infobae, he stated: “We made ourselves resilient at less than $40 a barrel, and at $45 we can develop all of Vaca Muerta.”
It will be YPF which will be responsible for Argentina’s unconventional oil and gas production soaring higher. Forecasts vary, but analysts believe the country will be lifting 1 million to 1.5 million barrels per day by 2030, while natural gas output is expected to exceed 6 billion cubic feet per day. This will deliver a generous economic windfall for Argentina with the country emerging as a net energy exporter during 2024, a year when the economically crisis-riven country reported its largest energy surplus in nearly two decades.
By Matthew Smith for Oilprice.com
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