How do you view Argentina's current situation regarding its natural resources?
Argentina is a country rich in natural resources, from agriculture and cattle to oil, gas, and offshore resources. Despite this abundance, the country faces significant challenges in turning its wealth into value. Argentina has exceptional solar radiation in the northwest and some of the world's best wind energy potential in Patagonia, yet these resources are not fully leveraged. That’s mean that we have an opportunity there. The country's natural wealth should be its strength, but the lack of a clear strategy and efficient resource management has hindered progress. We know that the government is on facilitating the free market and creating an environment where businesses can thrive and we think that is the correct path because a key aspect of the current government's policies is to position the energy sector as one of the pillars of the country's growth.
One of the critical challenges is Argentina's history of economic interventionism, which has left the country with a market that is still heavily influenced by state decisions. Transitioning to a more open, market-driven economy will take time, but the long-term goal should be creating a country attractive to international investors. However, for that to happen, the government must demonstrate, through real actions, that it is committed to free market policies and long-term stability.
What role do international investments play in unlocking Argentina's potential, especially in Vaca Muerta?
International investments are crucial for unlocking the full potential of Vaca Muerta, Argentina’s major oil and gas resource. Significant investments, five times more than what is currently invested, are necessary to significantly boost production. Without such investments, Argentina will struggle to grow its energy sector at the pace required. TotalEnergies, like other companies in the sector, focuses on structural and organic growth rather than opportunistic investments aimed at short-term profit. For Vaca Muerta to reach its full potential, Argentina must prove it can create an environment that assures investors of a stable return on their investments and free movements of cash-in and cash-out.
Argentina must work to re-build investor´s confidence in the country and demonstrate its ability to honor contracts and fulfill financial commitments. The key to attracting large-scale international investments is ensuring the country’s long-term economic stability, including improving its financial systems and creating a regulatory environment that supports sustainable business growth.
How do you view Argentina's energy infrastructure and its challenges in scaling up production?
Argentina’s energy infrastructure currently faces serious challenges that must be addressed to scale up production. In particular, the country struggles with available capacity in oil and gas pipelines and terminals. The infrastructure needed to support the expansion of Vaca Muerta’s production is already saturated, particularly in terms of transportation and treatment capacity. For Argentina to realize its energy potential, the country needs to invest heavily in building new infrastructure, which will require a significant amount of capital and trust in the system. Some infrastructure projects are in progress or planned and they will have to be materialized to allow new production could come from Vaca Muerta fields.
Moreover, gas production faces additional challenges because it requires gas pipelines expansions to reach regional markets and/or specialized export terminals, such as LNG facilities, to convert gas into a liquid form for shipping to LNG markets. Developing such infrastructure is costly and involves a long payback period. Building new infrastructure is crucial for increasing production, but it can only happen if investors believe in the stability and reliability of Argentina's financial system and government long term policies.
Given the current situation, what is Argentina’s future in the global energy market?
Argentina has immense potential to become a major player in the global energy market, but realizing this potential depends on overcoming significant hurdles. The country has world-class oil and gas fields, some of the best in the world. However, Argentina must build the necessary infrastructure and establish trust with investors to compete effectively on the global stage. The country’s ability to compete with established oil and gas producing nations will depend on its ability to reduce production costs and enhance its infrastructure.
In the global market, oil prices fluctuate based on supply and demand. Argentina must navigate these fluctuations while ensuring that it can produce and export oil efficiently. The country may also be an actor in the growing global demand for natural gas. However, as the market for gas becomes more competitive, Argentina will need to offer attractive prices and reliable supply to stand out.
What is your perspective on the role of renewable energy in Argentina's future energy matrix?
Renewable energy will undoubtedly play a significant role in Argentina’s future energy matrix, but it will need to coexist with traditional energy sources like natural gas. Currently, Argentina’s renewable energy sector is growing, with significant investments in solar energy and wind projects. TotalEnergies currently has ~300 MW of renewable energy projects already in operation in Argentina, 5 wind and solar plants and 1 wind project under construction in Tierra del Fuego for our own electricity consumption in our producing plants. We are committed to further developing and investing in new renewable energy projects, in line with our global ambitions to reach 100 GW of installed renewable energy capacity by 2030.
However, renewables are intermittent by nature, relying on wind or solar which can make them less reliable in meeting demand. This is where natural gas plays an essential role as a backup energy source, ensuring a steady supply when renewable energy is not available. The transition to a greener energy matrix will take time and requires significant investments in both renewables and the infrastructure to support them. Argentina must develop a balanced energy mix, integrating renewables into the grid while continuing to rely on gas for stability. While the potential for renewables in Argentina is immense, the country must also ensure that its energy infrastructure can handle this growth.
How do you compare Argentina’s energy sector with other countries where TotalEnergies operates, such as Suriname?
There are key differences between Argentina and other countries like Suriname in terms of their energy sectors. The main difference is that Argentina has over 100 years of history in hydrocarbon development and in Suriname, oil has only recently been discovered. The country’s small size and stable regulatory environment make it easier to execute projects rapidly. On the other hand, Argentina’s larger and more complex regulatory and economic landscape presents more challenges. Decisions in Argentina are often slower.
What gives you hope for Argentina’s future in the energy sector?
Despite the challenges, TotalEnergies remains optimistic about Argentina’s potential. The company has been operating in the country for 45 years, experiencing many ups and downs, including many periods of instability and economic crises. However, the company’s long-term commitment to Argentina reflects a belief in its potential. TotalEnergies sees the country’s natural resources, particularly its oil and gas resources, as valuable assets that can drive growth. The key to unlocking this potential is creating a stable and transparent environment for investment and ensuring that all stakeholders, including the government and the private sector, work towards a common goal.
While the road ahead may be challenging, Argentina’s resources and geographical advantages provide a solid foundation for future growth. The country’s energy sector has the potential to thrive, but it will require collaboration, strategic planning, and long-term commitment to overcome the structural issues that have hindered its development in the past.
