Chevron Corp called on Argentina’s government to lower taxes and relax capital controls as it laid out a plan to triple production from the South American country over the next decade.
Oil recovery rates from shale wells in Argentina’s Vaca Muerta formation are 50 percent higher than in the Permian Basin of West Texas and New Mexico, the world’s biggest shale field, but costs are 35 percent greater, Chevron Vice-Chairman Mark Nelson said Wednesday. While Chevron plans to increase Argentinian production to 180,000 barrels a day over the next decade, it would still be less than a fifth of the company’s current output from the Permian.
“There’s nobody really debating the rock,” Nelson said during Chevron’s investor day meeting. “The challenge today would be the overarching cost of doing business in Argentina. The current administration is taking actions in this regard.”
President Javier Milei’s victory in congressional midterm elections bolstered confidence that the Argentine leader can accelerate his market-friendly reforms and boost the country’s burgeoning oil sector. But that will be a major challenge in an economy that for years has been held back by high inflation, a shortage of hard currency and tough controls on how much capital companies and individuals can move out of the country.
“Taxes coming down, the ability to manage people and then the opportunity to bring in the absolute best technology, I think is going to be critical to unlocking Argentina,” Nelson said.
Chevron has the “ability to accelerate” its plans but has “paced it right now to keep up with the reforms” the government is working on, he said.
by Kevin Crowley, Bloomberg
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