Elections Series – Illuminating Argentina’s Energy Future

Photo of panelists and the Casa Rosada Featured Image: Dennis Jarvis / Flickr / CC BY-SA 2.0 DEED

On November 19, Argentina turned to the ballot box to elect Javier Milei, an avowed libertarian, for president. Milei, set to take office on December 10, will face challenges such as soaring inflation, severe drought, and depleted international reserves. In the wake of this pivotal election, the Inter-American Dialogue convened a group of experts on November 21 as part of the event Elections Series - Illuminating Argentina's Energy Future to weigh in on energy policy under a Milei administration. Panelists discussed how Milei could harness the vast mineral and energy potential of Argentina in a responsible and sustainable manner while balancing energy security, macroeconomic stability, and environmental stewardship amidst the economic and climate crises.  

To open the panel, the Minister of Energy and Natural Resources for the province of Neuquén, Alejandro Monteiro, delivered a keynote address that covered the present and future of hydrocarbon exploitation in his province, the role of the provincial government, and the relationship with the federal Argentine government. Neuquén is home to the Vaca Muerta formation, an expansive deposit of oil and natural gas in western Argentina.  

Monteiro began by outlining how the expansion into Vaca Muerta reversed Argentina’s slowing oil and gas yields. Without Vaca Muerta, Argentina’s oil and gas production would have declined from a peak in 2004; however, the Vaca Muerta’s exploitation has allowed Argentina to exponentially grow its hydrocarbon output. Such production has led to Argentina being able to substitute US$20 billion in hydrocarbon imports and reap US$47 million in foreign investment. The minister indicated that Vaca Muerta is poised to continue expanding, as less than 10 percent of potential gas and oil wells are currently tapped, and existing wells’ average productivity improves year after year.  

Monteiro further explained Neuquén’s goal to double Vaca Muerta’s production by 2030 and the steps the provincial government must take to achieve this outcome. First, developing export infrastructure is an ongoing priority; second, Neuquén seeks to utilize existing Bolivian gas pipelines to carry Argentine gas to export markets in Chile, Uruguay, and Brazil; third, the province needs to double its amount of exploration equipment to continue gas and oil well expansion.  

Finally, Monteiro explained how the provincial government could best cooperate with Milei’s administration. Above all, he expressed the absolute necessity for Milei to foster predictability and stability in the Argentine economy to encourage foreign investment. As natural resources fall under the purview of the provinces per the Argentine constitution, Monteiro’s government has strived to ensure a stable fiscal and legislative environment to facilitate resource extraction, which in his view is missing at the federal level. The minister also expressed optimism for a rapid development of Vaca Muerta under Milei, which could in turn shore up Argentina’s foreign currency reserves and stabilize the country’s economy. On Neuquén’s end, the minister underscored the government’s commitment to serve as a go-between among private corporations and the federal government on issues related to Vaca Muerta. He argued that Vaca Muerta can fund Argentina’s energy transition in the short term and hoped that the Milei administration promotes a carbon neutral development.  

Transitioning to a non-governmental perspective, panelists began by expressing some reasons for optimism about Argentina’s future, even amidst its crises. Liliana Díaz, senior director for climate and biodiversity at APCO Worldwide highlighted Argentina’s strong history as a center of ambitious policy innovation, citing the innovative development of YPF, its attunement to the need to change policy directions and re-define business models to achieve its goals, an example it has set for other countries in the Americas. Similarly, Juan Cruz Diaz of Cefeidas Group echoed these statements, expressing optimism for future Argentine development rooted in the lithium mining boom by citing consensus in Argentina over the need to harness mining and extractive industries as wealth generators. Liliana Diaz applauded Argentina’s commitment to enlarging its export market and finding the right policy recipe to unlock the wealth and potential that lithium and Vaca Muerta could provide.  

However, panelists agreed that despite reasons for optimism, there are serious challenges that Milei and Argentina need to address to claw its way out of its economic crisis. Focusing on the big picture, Diaz cited how Argentine policies have, over the years, turned away from their innovative history and become reactive and myopic, choosing to sacrifice long-term benefit for short-term fixes. She and Cruz Diaz cited Argentina’s maladaptive foreign exchange controls, export taxes, pricing structures, and infrastructure investments as specific policy challenges the country needs to address. According to Cruz Diaz, the elimination of foreign exchange controls can produce more cash inflow and buoy investment in sectors like fossil fuel extraction and lithium mining.  

From a different perspective, Gabriel Blanco, the director of the Renewable Energies and Technologies for Sustainable Development program at the National University of Central Buenos Aires underscored how Argentine energy, extraction, and environmental policy will head further in the wrong direction under Milei. According to Blanco, Argentina’s fossil fuel-based energy system will increasingly rely on both money and technology that Argentina does not have, undermining the country’s energy security. He also voiced dissent against Argentina’s predominant development paradigm, expounding the inefficacy of extractivism in creating long-term sustainable growth, especially for the 40 percent of Argentines who live below the poverty line. In the context of a global climate crisis and a national economic crisis, Blanco found Milei’s idea of deepening reliance on hydrocarbons disconcerting and insisted that talk of furthering Argentina’s extractive economic model needed, at minimum, to also incorporate policies to safeguard the environment and communities from the harm that extractive industry causes. 

Other panelists agreed with Blanco’s assessment of Milei’s environmental stance, proffering that Milei’s denial of climate change could lead to missed opportunities. Diaz cited Brazil under Bolsonaro as an example of how climate denialism harms countries in the long run and emphasized that Argentina could supply other nations with low-emissions fuels like green hydrogen. Guillermo Diaz Cornejo, director general of the environment for the Municipality of Córdoba, agreed, expressing that large-scale renewables projects that could have shored up Argentine energy will probably be discarded under Milei.  

Considering Argentina’s political realities, panelists agreed that Milei’s avenues to affect drastic change will be limited in the short term. Cruz Diaz pointed to Milei’s large margin of victory as a strong mandate, yet emphasized the country’s honeymoon period will be short and that what he accomplishes in his first 100 days will indicate his political savvy. Diaz Cornejo strongly emphasized how Milei’s congressional minority will necessitate cooperation with both coalitions like Cambiemos and at least 5 Peronist senators. Given his reliance on Cambiemos and their contrasting priorities, Diaz Cornejo predicts that Milei’s reforms will likely come as multiple small bills rather than one single grand reform. 

Finally, with regards to foreign policy, while excited by the potential rapprochement with the US, panelists hoped that Milei would soften his tone about key countries like Brazil and China. While Milei pledged to not do business with ‘communists’ like Lula and Xi, Cruz Diaz underlined how critical these countries were to the Argentine economy. As a result, he and Diaz Cornejo expected that relations with these countries will continue as-is given their centrality to Argentina and the necessity of pragmatism.  



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