Page 4 - LatAmOil Week 33 2019

LatAmOil COMMENTARY LatAmOil
Events in Argentina raise doubts
about Vaca Muerta’s prospects
Recent developments may force a downward revision in production forecasts for the shale basin
YPF
WHAT:
Enthusiasm about shale projects has generated optimism about Argentina’s economy.
WHY:
This outlook seems overly realistic, given Macri’s grim election prospects, a new fuel price cap
and questions about gas production growth rates.
WHAT NEXT:
Investors’ appetite for new Vaca Muerta projects is likely to diminish.
THE oil and gas sector has given observers of Argentina’s economy reasons for optimism in recent years. New projects in the Vaca Muerta shale basin have pushed production levels up, reducing the country’s dependence on imported fuels and lending support to export-oriented schemes such as Tango LNG. As a result, inter- national oil companies (IOCs) and other poten- tial investors have been showing greater interest.
is is a welcome development, especially in light of the current government’s struggle to re-orient the economy towards the market and away from the populist track followed by its immediate predecessor. But these shows of investor enthusiasm may be losing momentum.
The presidency
If so, the change may be related to an apparent shi in Argentina’s political winds.
Since his election in 2015, President Mauricio
Macri has been generally friendly to business and keen on market-oriented initiatives. He has been able to boast of some successes, despite uctuations in the value of the peso and conten- tious negotiations with the International Mon- etary Fund (IMF) on a debt bailout. As recently as mid-July, there were signs that Argentina’s economy was improving and moving out of recession.
Within the last few weeks, though, Mac-
ri’s government has lost momentum. In ation
rates have jumped upwards, while the peso has
lost value against the US dollar, and Argentin-
ians signalled their displeasure in the primary elections held on August 11. ey gave 49.7%
of their votes to the main opposition party’s candidature, headed by presidential candidate Alberto Fernandez and his running mate Cris-
tina Fernandez de Kirchner, while the presi-
dent’s ticket drew only 33.5% of the vote. 
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w w w . N E W S B A S E . c o m Week 33 21•August•2019