After years of currency chaos and regulatory paralysis that drove oil majors out of Argentina, President Javier Milei has set out to remake the country into a regional energy powerhouse. His sweeping deregulation freed up oil exports, attracted foreign capital, and revived activity in Vaca Muerta, one of the world’s largest shale formations. Yet the path to energy independence remains fragile. Falling oil prices, rising costs, and unfinished infrastructure threaten to stall progress, while the peso’s stability now depends on unprecedented U.S. financial support.
For more than a decade, Argentina’s oil industry was paralyzed by policy mismanagement and financial instability. Oil majors from around the world – once attracted by the promise of the vast Vaca Muerta shale basin – had left the country, discouraged by the impossibility of converting peso-denominated revenues into hard currency. The volatility of Argentina’s national currency, driven by inflation rates that routinely exceeded 200%, made Argentina one of the most challenging environments in the global energy sector. Profits earned in pesos lost value before they could be repatriated, eroding investor confidence and leaving oil producers without tangible profits.
That narrative shifted sharply after President Javier Milei took office in December 2023. His 2024 reform package, built around the ‘Megadecreto’ and ‘Ley de Bases’ (Basic Law), removed restrictions on trade, investment, and foreign-exchange access that had paralyzed the energy sector. The Megadecreto scrapped dozens of controls on oil exports and capital movements, while the Ley de Bases (enacted in July 2024) legally guaranteed free hydrocarbon exports, barred government price interference in domestic fuel markets, and fast-tracked approvals for pipelines, refineries, and ports. Together, the measures formed the backbone of Milei’s liberalization policy, turning Argentina from a country with a heavily regulated energy landscape into potentially Latin America’s most open investment environment.
The intention of the Milei government was to trigger a sustained surge in oil output and exports, transforming Argentina from a marginal self-centred producer into a regional energy exporter. At the core of that ambition lies Vaca Muerta, the country’s most important energy asset and one of the world’s largest shale formations. According to the U.S. Energy Information Administration (EIA), Vaca Muerta holds an estimated 16 billion barrels of technically recoverable shale oil and 308 trillion cubic feet of natural gas. The formation currently accounts for around 65% of Argentina’s total oil production, in large part through operations led by YPF, the state-controlled energy company nationalized from Spain’s Repsol in 2012 under former President Cristina Fernández de Kirchner.
