Oil rally can boost Argentina's shale industry, Vista CEO says

Higher oil prices stemming from the war in Iran could boost capital expenditure in Argentina’s thriving shale patch where production is already accelerating, Vista Energy SAB Chief Executive Officer Miguel Galuccio said in an interview. 

Even before oil rose back to US$100 a barrel Thursday, crude drillers in Argentina were poised to ramp up production this year to a level that would put the country inside the top 20 globally. Those plans, drafted prior to the conflict, accounted for Brent to be around US$65. That’s why Galuccio, who leads Argentina’s second biggest shale oil company, thinks investments and exports may move even quicker.

“We have a lot of elasticity: We drill a pad of four wells in four months,” he said in a Bloomberg Television interview. “So if we push a button today because we have more capex because the oil price is higher, in four months we’ll be delivering more to the world.”

Galuccio clarified that it’s still too early to say whether Vista will update its investment guidance for the year, which stands at US$1.5 billion to US$1.6 billion. 

Vista’s US-listed shares are up about 27 percent so far this year and trade near an all-time high at US$62. 

Argentina’s shale revolution is at a turning point with construction underway of an oil pipeline from the middle of Patagonia to the Atlantic coast projected to be ready by early 2027. The so-called VMOS project would increase daily shipments of Argentina’s light crude by 180,000 barrels and eventually have capacity for more than 700,000.

That may at least start to put Argentina on traders’ radars at a time when Middle Eastern supply volumes are uncertain.

“The most important thing is how we recover energy security,” Galuccio said. “Where is the rest of the oil going to come from? And I think Argentina has a role as a new player at the global scale.”

The next chapter for the shale patch, known locally as Vaca Muerta, may feature a migration of US shale companies that are running out of prime Tier 1 acreage in the Permian Basin.

Continental Resources Inc. became the first US shale independent to invest late last year, lured by the free-market policies of President Javier Milei, and more fracking fleets are also arriving. Galuccio said a bigger wave of entrants that would increase scale and reduce costs is crucial.

“We’ve been blessed by the rock,” he said. “But to accelerate, we need more capital, we need more oil service providers, more product providers, more competition.”