Continuing a discussion begun in 2015 on the key elements facing the energy sector in Argentina, the Institute of the Americas convened an Energy Roundtable on March 21 in Buenos Aires.
The Roundtable counted three high-level discussion panels and was attended by over 75 representatives from industry, government, and academia. The panels at the Roundtable featured optimistic and robust discussion of Argentina’s energy sector, but particularly the structural adjustments and reforms enacted by the Macri administration.
The efforts to “normalize” the sector are beginning to pay dividends with an improved fiscal outlook and institutional and market credibility. A series of regional integration projects and energy exchanges with neighboring countries, ones that were but dots and lines on a power point slide just 2-3 years ago, are now a reality.
But amid the optimism and positive outlook, there were words of caution. Of greatest concern for all segments of the energy sector are the impacts of stubbornly high costs and inflation, elements that have and will continue to impede competitiveness but particularly the development of the highly-touted Vaca Muerta unconventional play in the country.
Beyond managing labor costs, the topic of how to boost a more competitive oil and gas sector focused on the need to greatly expand not just the number and capabilities of service and equipment providers, but also to exponentially increase the amount of operators in the country’s oil patch. One panelist persuasively argued that an increase on the order of ten times the current number of market participants is required to develop a competitive oil and gas ecosystem; a growth in not just majors, but all manner of companies and expertise.
The profound transformation of the global energy sector is clearly being felt in Argentina panelists concurred. Indeed, the country’s renewable energy auctions were oversubscribed and highlighted as an important step. However, panelists tended to agree that the adoption of key tenets of the energy transition are moving slowly with deployment of renewables hindered by financing and the country’s boom-bust and default legacy, while significant advances on storage and electrification of the transport sector seem farther off in Argentina.