(Petroleum Economist) The government was relying on Vaca Muerta to solve its financial problems. But another default looms as Covid-19 disrupts growth plans
Argentina’s shale industry, like its US counterpart, is facing possible financial ruin. Plunging oil prices have reduced production in the Vaca Muerta basin to a trickle, while lockdown of facility workers is further slowing operations.

And the threat of widespread job losses and potential bankruptcies is disastrous timing for a government desperately needing oil revenues to stave off a ninth national default.

State oil company YPF is particularly feeling the effects. The firm has been the leading driver of growth in the Vaca Muerta basin, working in collaboration with several international joint partners including Malaysian state oil firm Petronas and Chevron.

Diminished physical demand, resulting from the Covid-19 pandemic, is compounding low oil prices and forcing YPF into significant production cuts. “YPF has slashed its budget and activity in order to preserve cash,” says Muhammed Ghulam, senior associate at US bank Raymond James. “The company has started to shut-in production, including a 50pc cut at its flagship Loma Campana project.”