Additionally, Argentina is gaining prominence in the mining sector, particularly as a key player in the lithium triangle, which includes Chile and Bolivia. By successfully diversifying its energy resources, Argentina has the potential to secure its long-term energy future while contributing to the global transition towards greener technologies through its production of essential minerals.
In 2024, oil and gas production in Argentina approached record levels, driven by increased output from the Vaca Muerta shale formation, despite a decline in some older fields. From January 2021 to September 2024, crude oil production surged by approximately 50 percent, while natural gas production rose by 27 percent, nearly reaching the production levels seen in the early 2000s.
According to the U.S. Energy Information Administration (EIA), the Vaca Muerta formation in Neuquén province is estimated to contain around 308 trillion cubic feet of technically recoverable shale gas and 16 billion barrels of recoverable shale oil and condensate.
Argentina ranks among the top five countries globally for shale oil and natural gas resources. In September, the country’s crude oil production averaged 738,000 barrels per day (bpd), marking a 15 percent increase compared to September 2023, and the highest monthly output since 2003. Additionally, during the first nine months of 2024, Argentina's natural gas production averaged 5 billion cubic feet per day (Bcf/d), reflecting a 5.2 percent increase over the same period in 2023.
In August, the Baker Institute for Public Policy at Rice University in the United States launched a new initiative aimed at enhancing the Argentinian energy sector. This initiative seeks to promote a series of conferences, reports, and workshops that will convene top experts and policymakers to explore the potential of the country's energy landscape. The focus will be on oil and natural gas exploration and production, energy infrastructure, and the role of the mining sector in the transition to renewable energy, with the goal of achieving a multiparty consensus for the effective development of Argentina's energy resources.
In December, Central Puerto, the foremost electricity generator in Argentina, partnered with the International Finance Corporation of the World Bank Group to sign an agreement for feasibility studies on the first electricity transmission line intended to deliver renewable energy to mining operations in the northwest region of the country. The initiative is projected to require a total investment of $600 million, which includes the construction of a high-voltage transmission line spanning 140 kilometers, beginning at the Puna Transformer Station.
"Mining in northwestern Argentina is a crucial sector for our nation's economic development. Given the growing global demand for critical minerals vital for the energy transition, this project addresses the necessity for mining companies to enhance their competitiveness by providing reliable, efficient, and cost-effective energy solutions," stated Fernando Bonnet, CEO of Central Puerto.
Argentina is recognized as a crucial player in the mining industry, essential for supplying critical minerals to the international market. The country is part of the lithium triangle, which includes Chile and Bolivia, and is believed to contain over 75 percent of the global supply of lithium, often referred to as "white gold," located beneath its salt flats. Lithium is integral to the functioning of numerous electronic devices and electric vehicles worldwide, as it is a key component in lithium-ion batteries.
In August, Argentina and the United States formalized a Memorandum of Understanding aimed at enhancing collaboration on critical minerals. This agreement seeks to foster trade and investment in various aspects of mineral resource management, including exploration, extraction, processing, refining, recycling, and recovery. This initiative is part of the U.S. government's strategy to bolster regional supply chains and mitigate China's influence in the green energy sector, thereby reducing the risk of future supply chain interruptions.
Despite the significance of Argentina's mining sector in supporting the global transition to green energy, it currently accounts for only 0.7 percent of the nation's GDP, a stark contrast to the 8 to 10 percent contribution seen in neighboring Chile and Peru. Nevertheless, investment in exploration within Argentina surged by 77.1 percent from 2021 to 2023, increasing from $241 million to $427 million, indicating a swift evolution in its mining industry in response to rising global demand.
Argentina possesses considerable potential for establishing a robust renewable energy sector, attributed to its advantageous conditions. Currently, fossil fuels account for approximately 88 percent of the nation's energy consumption.
The Renewable Energy Law has set an ambitious goal for 20 percent of Argentina's electricity to be sourced from renewable energy by 2025. Additionally, the government aims to reduce greenhouse gas emissions by 27.7 percent by 2030. Developers recognize significant opportunities for expanding Argentina's green energy capacity, particularly due to the favorable geography for wind energy in the southern Patagonia region and solar energy in the northern areas.
There is a substantial opportunity to diversify Argentina's energy portfolio by incorporating fossil fuels, renewable energy initiatives, and critical minerals mining, thereby enhancing energy security in the coming decades and contributing to a global green transition. However, the success of these efforts will largely hinge on the ability of the South American nation to attract sufficient investment to bolster its mining sector and advance new renewable energy projects in optimal locations.