- Argentina's Vaca Muerta shale play continues to break production records, cementing its position as the leading shale basin outside the U.S. and driving the country's energy growth.
- The boom remains largely confined to Neuquén province, while much of Argentina continues to struggle with weak growth, high inflation, and declining consumer spending.
- The government hopes Vaca Muerta's success will spill over into the broader economy, but analysts warn that translating energy gains into nationwide growth remains a major challenge.
Argentina’s Vaca Muerta is booming as the key shale province outside the United States has seen record oil and near-record natural gas production in recent months.
Vaca Muerta’s fortunes, however, appear to be confined so far to the area in which the shale patch is located, the province of Neuquén in the western region of Patagonia.
The rest of Argentina continues to struggle with sluggish growth, high inflation, weak consumer spending, and business and mortgage defaults, all the while South America’s second-largest economy continues to pay off its large external debts and loans it had taken on through the years.
Vaca Muerta’s success has boosted Argentina’s energy industry, which has joined agriculture as a key driver of GDP growth. But outside the shale patch, total public consumption and investments have declined year to date, and consumer spending has dropped, too.
Argentina’s President Javier Milei and his government expect the rest of the country to catch up with the Vaca Muerta boom, but little progress has been made so far. Job creation and growth remain a tale of two Argentinas.
What was a predominantly U.S. business until a few years ago, shale exploration and production is now gaining momentum outside North America. And Argentina’s Vaca Muerta is top of the list of oil and gas companies, including U.S. shale giants, as a de-risked basin with proven geology that’s far away from having to rely on the Strait of Hormuz or any other corridor in the Middle East to ship barrels out.
After a slow start earlier this decade, Vaca Muerta is now booming. The latest production figures showed that crude oil output hit an all-time high of 887,227 barrels per day (bpd) in May, up by 19% from a year earlier. Natural gas output also rose to 5.5 billion cubic feet per day, which was just shy of the record 5.7 billion cubic feet daily reported for July 2025. Natural gas production rose by 5.4% in May 2026 from April and 11% from a year earlier.
Vaca Muerta has already made Argentina the fourth-largest oil producer in Latin America—a position that may improve in the future as the government prioritizes the development of the local energy industry, encouraging infrastructure projects aiming to boost the offtake capacity of the Vaca Muerta.
The shale patch has turned Neuquén into a kind of Texas, workers who moved to the province to work for the highest private-sector salary in the country have told Reuters reporter Leila Miller.
Outside the shale patch, it’s the same old Argentina.
The average monthly salary in the oil and gas sector in Neuquén is about $5,600, three times higher than the average $1,800 salary in the capital city Buenos Aires.
“Today we have two Argentinas, one Argentina that grows and another that falls,” Guido Zack, an economist at the Fundar think-tank in Buenos Aires, told Reuters.
The government bets on Vaca Muerta and mining to prop up the overall economy, but companies are folding, and jobs are being lost outside the shale patch, amid weak demand, falling investments, and rising competition in manufacturing due to Milei’s import liberalization policies.
Argentina’s government hopes the shale boom would trickle down into the overall economy. But this will be a challenge, analysts say.
“The challenge is whether the new export sectors can generate enough spillovers for the rest of the economy, and whether they can do so quickly enough,” Fernando Garcia and Lucila Venturi wrote in an article in Economics Observatory.
“Growth is real. The question is whether it can become fast enough, broad enough and visible enough before the political clock runs out next year when elections take place,” the experts said.
