Vaca Muerta remains insulated from Venezuela’s crisis: why the impact on Argentina would be limited

Recent developments in Venezuela have raised expectations of a possible reshaping of the global energy market. For Argentina, however, the direct economic impact would be limited in the short term.

Bilateral trade with Venezuela is currently marginal and does not represent a relevant transmission channel. The main potential effect is concentrated in international oil prices, a key variable for the profitability of unconventional development in Vaca Muerta.

The expectation of a future recovery in Venezuelan production, even if it is a gradual process conditioned by the need for investment and operational improvements, introduces additional pressure on crude prices. However, even in the face of a change in direction in Venezuela, the recovery of its energy industry will be long and complex, as it requires time, capital, and significant effort to rebuild operational capabilities and infrastructure. In a context where the barrel is already below USD 60, this factor makes it necessary to more carefully assess the sensitivity of shale projects to lower price scenarios.

Other elements that hinder a recovery of Venezuela’s oil sector include the deterioration of its infrastructure, the shortage of qualified personnel due to mass emigration, and a low international price environment that limits the profitability of many of its fields.

On the other hand, Vaca Muerta’s productive structure has shown significant gains in efficiency and cost reductions, with increasingly competitive breakeven levels. This supports the viability of development even under more demanding price assumptions, albeit with a more selective pace of expansion, prioritizing higher-productivity areas and projects with stronger logistical and contractual conditions.

Ariel Bosio, Vice President and Co-founder of the Argentine-Texas Chamber of Commerce, in an interview with Forbes magazine, emphasized that the change in Venezuela’s policy shift “does not change Argentina’s direction.” “New competition will constantly emerge. Oil and gas exist in many countries and all will try to monetize them. Argentina’s challenge is to create the conditions for profitability and work on competitiveness. In the end, it is not only Venezuela; the United States is doubling its LNG export capacity over the next five years,” he added.

In this context, the recent evolution of Argentina’s country risk is a relevant offsetting factor. In recent days, JP Morgan’s indicator fell below the 500-basis-point threshold and stood at around 494, its lowest level in more than seven years. This compression reflects a rise in sovereign bond prices, the accumulation of reserves by the Central Bank of Argentina, and a more favorable international environment for emerging-market assets.

The decline in country risk directly improves financing conditions for infrastructure and energy projects by reducing the cost of capital and expanding access to external credit. For the hydrocarbons sector, this factor is particularly relevant, as it helps at least partially offset a less favorable international price scenario.

Venezuela’s political transition introduces a new factor into the global energy market balance, without constituting a systemic risk for the Argentine economy. In this context, greater efficiency in the unconventional sector, improved financial conditions, and a regional environment perceived as more predictable reinforce a view of limited impact and, at the same time, open a strategic opportunity. If the country succeeds in consolidating long-term rules, accelerating evacuation infrastructure, and sustaining competitiveness, Vaca Muerta can position itself as one of the most attractive energy assets in the region and a structural source of growth, investment, and foreign-currency generation.