The rapid expansion of fracking in Argentina’s Vaca Muerta shale formation has revitalized the once-sleepy town of Añelo, driving population growth and local business prosperity. However, the broader national benefits remain uncertain amid persistent economic struggles and infrastructure limitations.
Añelo, located in the Neuquén Province, has seen its population surge by over 60% since 2010, fueled by the oil and gas boom that began in 2014 with the legalization of fracking. The town now hosts thousands of workers daily, transforming its landscape and economy with increased traffic and business opportunities. Local mechanic Fabio Javier Jiménez recalls moving his tyre repair shop to what was then a remote area, only for the town to expand around him as fracking operations intensified.
The Vaca Muerta formation, discovered in 1931, became commercially viable only after fracking was permitted, leading to a joint venture between state-owned YPF and Chevron. Today, it accounts for more than half of Argentina’s oil and gas production, with over 3,000 active wells extracting shale resources efficiently. Fracking involves injecting high-pressure mixtures of water, sand, and chemicals to fracture rock and release trapped hydrocarbons, a method that has proven cost-effective compared to conventional extraction in other parts of the country.
This energy boom has granted Argentina energy self-sufficiency after decades of shortages and imports, and it now exports oil and gas, generating a significant external surplus. Last year, the energy sector saw a $6 billion surplus, providing crucial foreign currency for the economy. Experts note that this turnaround is vital for a nation historically plagued by inflation and debt defaults, though it may not fully resolve deeper structural issues.
Despite these gains, challenges persist. Argentina’s poor credit rating and strict currency controls deter international investment, as companies struggle to repatriate profits. Infrastructure deficits, such as inadequate pipelines, poor roads, and lack of railway connections, also hamper the full potential of Vaca Muerta. The government of President Javier Milei has begun easing some restrictions, but more reforms are needed to attract global players.
Politically, there is broad consensus across parties supporting the industry’s growth, which has marginalized environmental concerns. Groups like Observatorio Petrolero Sur note a loss in public debate against the pro-fracking narrative, with provincial and national legislatures largely favoring exploitation. This unified political stance contrasts with early opposition from environmentalists worried about ecological impacts.
On the ground, residents like mechanic Fabio Javier Jiménez have benefited immensely, with his business expanding from servicing two vehicles a day to twenty, prompting him to open a second branch. Yet, he remains skeptical that oil and gas alone can stabilize Argentina’s volatile economy, reflecting a common sentiment that the boom may not translate into nationwide prosperity.
Ultimately, while Vaca Muerta offers a vital source of foreign currency and energy security, it is not a panacea for Argentina’s deep-seated issues like inflation and debt. The nation must balance this resource wealth with broader economic reforms, including agricultural and mining sector improvements, to ensure sustainable development and avoid over-reliance on a single industry.
