Argentina Backs Both Fossil Fuels and Renewable Energy

Argentina is becoming an international energy powerhouse by balancing its energy mix of fossil fuels, renewable energy, and critical mineral mining. The South American country has long been known for its oil and gas production, but it now looking towards developing its solar and wind assets. In addition, it has become famous for its strong mining industry, forming part of the lithium triangle, alongside Chile and Bolivia. If Argentina can successfully continue diversifying its energy mix, it could ensure its long-term energy security and support a global green transition through its critical minerals production. Oil and gas production reached close to record highs in 2024, supported by higher output from the Vaca Muerta shale formation, despite the declining output seen in some of its more mature fields. Between January 2021 and September 2024, Argentina’s crude production increased by around 50 percent, while its natural gas output rose by 27 percent, bringing total production to almost its early 2000s peak. if(window.innerWidthADVERTISEMENTfreestar.config.enabled_slots.push({ placementName: "oilprice_medrec_atf", slotId: "oilprice_medrec_atf" });';document.write(write_html);} The U.S. Energy Information Administration (EIA) estimates that Vaca Muerta, in Argentina’s Neuquén province, holds around 308 trillion cubic feet of technically recoverable shale gas and 16 billion barrels of recoverable shale oil and condensate. The South American state ranks in the top five in the world for shale crude oil and natural gas resources. In September, Argentina’s crude output averaged 738,000 bpd, which was 15 percent higher than in September 2023, and the most in any month since 2003 . Meanwhile, the country averaged 5 billion cubic feet per day (Bcf/d) of natural gas output in the first nine months of 2024, 5.2 percent higher than the same period in 2023. In August, Rice University’s Baker Institute for Public Policy in the U.S. announced a new initiative focused on the Argentinian energy sector to encourage more conferences, reports, and workshops. The aim is to bring together leading experts and policymakers to study the country’s energy sector potential, focusing on oil and natural gas exploration and production, energy infrastructure, and the participation of the mining sector in the renewable energy transition, to achieve a multiparty consensus for the optimal development of the country’s energy. In December, Central Puerto, Argentina's leading electricity generator, and the World Bank Group’s International Finance Corporation announced the signing of a deal to carry out feasibility studies for the first electricity transmission line to supply renewable energy to mining companies in the northwest of the country. The total estimated investment of the initiative stands at $600 million, including the development of a high-voltage 140 km line starting at the Puna Transformer Station. “Mining in northwestern Argentina is a strategic sector for the economic growth of our country. In the face of an increasingly demanding international market for critical minerals, essential for the energy transition, this project responds to the need of mining companies to improve their competitiveness through reliable, efficient and economical energy solutions,” said Central Puerto’s CEO Fernando Bonnet. Mining is viewed as a key economic sector for Argentina, as well as vital for the delivery of critical minerals to countries around the globe. Argentina sits in the lithium triangle, alongside Chile and Bolivia, which is thought to hold over 75 percent of the world’s supply of white gold underneath the countries’ salt flats. Lithium powers many of our electronic devices and electric cars used worldwide in the production of lithium-ion batteries. In August, Argentina and the U.S. signed a Memorandum of Understanding to strengthen cooperation on critical minerals, promoting trade and investment in critical mineral resource exploration, extraction, processing, refining, recycling, and recovery. This aligns with U.S. government efforts to strengthen its regional supply chains to counter China’s dominance in the green energy sector and avoid future supply chain disruptions. if(window.innerWidth ADVERTISEMENTfreestar.config.enabled_slots.push({ placementName: "oilprice_medrec_btf", slotId: "oilprice_medrec_btf" });`;document.write(write_html);} Despite the importance of Argentina’s mining industry in providing the critical minerals required for the global green transition, the country’s mining sector currently contributes just 0.7 percent of its GDP. This is far below the 8 to 10 percent contribution seen in Chile and Peru. However, exploration expenditure in Argentina rose by 77.1 percent between 2021 and 2023, from $241 million to $427 million , suggesting its mining sector is undergoing a rapid transformation in response to growing global demand. Argentina also shows huge potential for the development of a strong renewable energy sector, thanks to its favourable conditions. Fossil fuels continue to contribute around 88 percent of the country’s energy consumption? at present. However, the Renewable Energy Law set an ambitious target for 20 percent of Argentina’s electricity to come from renewable sources by 2025. The government also aims to cut greenhouse gas emissions by 27.7 percent by 2030. Developers see significant potential for the expansion of Argentina’s green energy capacity as its geography offers great opportunities for wind generation in the southern region of Patagonia and solar power in the north of the country. There is significant potential to diversify Argentina’s energy mix, to include fossil fuels, renewable energy projects, and critical minerals mining, to strengthen energy security in the coming decades, as well as contribute to a global green transition. However, this will largely depend on how much funding the South American country can attract to strengthen its mining industry and develop new renewable energy projects in prime locations. By Felicity Bradstock for Oilprice.com More Top Reads From Oilprice.com