Shell plans to increase its oil production by 5,000 barrels per day (bpd) in Argentina’s Vaca Muerta shale formation to 50,000 bpd by the end of the year, despite limitations on investments, its general director said.
Ricardo Rodriguez, Shell’s chief executive in Argentina, told an oil and gas conference in Buenos Aires that macroeconomic pressures were also discouraging the company from increasing its investments in the Vaca Muerta shale formation.
Shell is Vaca Muerta’s second largest crude oil producer, behind Argentina’s state-owned oil company YPF.
Rodriguez highlighted the “phenomenal” quality of Vaca Muerta and said the company wanted to invest more than the current $500 million a year.
However, Rodriguez noted that restrictions on access to foreign currencies and price regulations in Argentina have made Shell think twice before deciding where to invest.
“To invest more, the conditions must be met […] for it to make sense,” Rodriguez said.
Argentina decided to freeze the price of crude oil in August, keeping it at $56 a barrel until the end of October, to help curb triple-digit inflation.
Argentina maintains strict foreign exchange controls to try to solve the problem of the country’s scarce foreign currency reserves.