Chevron sees ‘more to be done’ by Milei to boost shale boom

Chevron Corp says President Javier Milei must take more steps to deregulate Argentina’s economy and free up investors from capital controls to make the most out of its burgeoning shale boom.

“We’ve watched the progress that the Milei administration has made with taxes and labor reform and then removing capital constraints,” Mark Nelson, Chevron’s vice-president for oil, said in an interview in New York on the sidelines of a conference on Argentina. “Now, are they where they need to be to ensure that the Vaca Muerta competes on a dollar per dollar basis versus the Permian? It’s on its way. But there’s more to be done.”

To inch closer to the Permian Basin’s costs in the United States, Milei is expanding a programme to attract foreign investments, now including new shale oil projects. Nelson added that he expects Chevron to apply for the so-called RIGI benefits for two of its less developed blocks in the Patagonia shale formation.

Nelson sees Milei continuing to improve the business climate for companies like Chevron, but he emphasised the need for Argentina, a historically volatile economy with pendulum-swing politics, to stay on that track.

“When it comes to the fundamentals, Argentina is advantaged,” Nelson said, referencing the quality of the shale rock, “so long as the policy steps that are taken today are durable.”

Development of the Vaca Muerta basin has come a long way since since Chevron became the first foreign investor there in 2013: Today it produces almost 600,000 barrels a day of crude, a good chunk of it from a Chevron joint venture called Loma Campana.

Under current conditions, Chevron plans to triple its production in the basin over the next decade, Nelson said. It currently produces about 74,000 barrels a day.

Nelson said that at its two relatively undeveloped blocks – Trapial and Narambuena – Chevron expects to apply to Milei’s marquee investor programme RIGI, which has tax breaks and other business-friendly incentives. That would bring down the costs gap to the Permian, which is still wider than Chevron would like at 35 percent.

RIGI also shields companies from future capital controls. Milei has relaxed the controls – and in particular for Chevron he made sure the benefits granted in 2013 finally got implemented.

“The pace of improvement makes it easier for long-term investors to say, ‘yes, I’m willing to take another step,’” Nelson added. “I know they will make more improvements, and it’s why Chevron believes in Argentina.”