Unlocking Vaca Muerta: Why Industrial Technology and Service Companies Should Pay Attention

The Vaca Muerta shale basin has emerged as one of the most strategically significant energy developments in the world, holding the potential to reshape Argentina’s economic landscape and strengthen global energy supply chains. However, realizing this potential depends not on the size of the resource itself, which is already well established, but on the pace of infrastructure development, the regulatory environment, and the ability to mobilize capital, technology, and services at scale.

This blog provides a summary of the Instituto Argentino del Petróleo y del Gas (IAPG) report, outlining the three development scenarios for Vaca Muerta—low, medium, and high—and examines why this analysis is particularly relevant for industrial technology companies, service providers, and equipment manufacturers operating in the oil and gas sector.

For these companies, understanding the differences between these scenarios is critical. Each represents a distinct level of activity, investment, and demand across the value chain, from drilling and completions to logistics, materials, technology, and workforce development. The medium and high scenarios, in particular, highlight a rapid scale-up of operations, infrastructure, and industrial capacity, creating significant opportunities for foreign companies to supply inputs, deploy technology, finance large-scale projects, and provide specialized services that Argentina currently lacks.

By analyzing these scenarios, technology firms, service companies, and equipment suppliers can position themselves strategically to play a central role in Argentina’s industrial build-out, partnering early with local operators and capturing first-mover advantages as Vaca Muerta moves toward accelerated development.

Low (or “Crisis”) Scenario

Oil: ~783,000 bbl/day | Gas: ~100 MMm³/day

In the low development scenario, Vaca Muerta would produce approximately 783,000 barrels of oil per day and around 100 million cubic meters of natural gas per day. This case assumes a more conservative growth path where Argentina faces infrastructure delays, limited investment, and a relatively challenging macroeconomic environment. Under this scenario, there is no major expansion of evacuation or export capacity beyond what is already under construction or planned in the very short term.

Pipeline projects such as the Vaca Muerta Oil Sur (VMOS) expansion remain limited to initial phases, and no significant new LNG (liquefied natural gas) facilities are developed. Drilling and completion activity stays relatively flat, with a modest number of rigs and hydraulic fracturing crews operating compared to Vaca Muerta’s full potential. Export growth is constrained, and much of the production is focused on meeting domestic demand. Essentially, this scenario represents slow development driven by fiscal uncertainty, infrastructure bottlenecks, and limited private sector participation.

Services

• Limited expansion of drilling and completion services, focused on core producing blocks.
• Basic logistics and transportation to support ongoing well operations.
• Maintenance services for existing pipelines, gathering systems, and plants, rather than large-scale new construction.
• Modest engineering and construction activity, mostly for brownfield upgrades.

Products and Materials

• Steady but limited demand for drilling muds, cement, casing and tubing, proppants (sand), and chemicals.
• Sourcing remains a mix of local and imported inputs, with little incentive for major local industrial expansion.
• Aggregate, water, and fuel demand is stable but relatively contained.

Labour

• Workforce demand remains modest, focused on operations and maintenance.
• Fewer drilling rigs and fracturing spreads mean fewer specialized crews are required.
• Labour needs are concentrated in Neuquén province with limited spillover into new regions.

Technology and Equipment

• Predominantly existing rigs and completion fleets are used, with limited investment in new units.
• Technology deployment focuses on operational efficiency, but innovation is slow due to budget constraints.
• Minimal investment in digitalization or automation beyond existing field management systems.

Medium Scenario

Oil: ~1.28 million bbl/day | Gas: ~125 MMm³/day

The medium scenario projects oil production of around 1.28 million barrels per day and natural gas output of approximately 125 million cubic meters per day. This scenario assumes a moderate but coordinated infrastructure build-out, along with steady investment in drilling and completions. Key enabling projects include the advancement of the Vaca Muerta Oil Sur pipeline system and expansions of domestic gas transport capacity, such as incremental extensions of the Néstor Kirchner pipeline and related compressor stations.

In this case, the number of drilling rigs and fracturing crews operating in the basin increases significantly compared to the low scenario, enabling higher well completion rates and a steady ramp-up of production. Some export infrastructure comes online—potentially including early stages of LNG projects and new oil evacuation terminals, allowing Argentina to increase export volumes, particularly to regional markets such as Chile, Brazil, and eventually overseas. This scenario reflects a realistic development path if the country maintains a stable regulatory framework and unlocks moderate levels of investment without necessarily achieving transformational changes.

Services

• Significant increase in drilling, completion, and hydraulic fracturing services to support steady well development.
• Expanded engineering, procurement, and construction (EPC) services for midstream infrastructure such as pipelines and processing plants.
• Growth in logistics services (trucking, rail, water transport), particularly for sand and water.
• More robust environmental and safety services due to larger activity footprint.

Products and Materials

• Large increases in demand for steel (casing, tubing, pipelines), cement, sand, chemicals, power equipment, and aggregates.
• Some local supply chains expand to reduce import dependency, particularly for sand and cement.
• Development of regional storage and distribution hubs for critical inputs.

Labour

• Workforce grows substantially, with more rig crews, completions teams, construction workers, and midstream technicians.
• Increased demand for engineers, geoscientists, logistics planners, and HSE (health, safety, environment) specialists.
• Training and vocational programs need to expand to address skills gaps.

Technology and Equipment

• Modern drilling rigs and high-capacity fracturing fleets are deployed to increase efficiency.
• Horizontal drilling, multi-stage fracking, and real-time monitoring technologies become standard practice.
• Investment begins in digital field management, predictive maintenance, and logistics optimization tools.
• Infrastructure includes expanded gas treatment plants, oil evacuation pipelines (e.g. VMOS), and compressor stations.

High Scenario

Oil: ~1.76 million bbl/day | Gas: ~249 MMm³/day

The high development scenario envisions a major scale-up of activity and infrastructure, with oil production reaching around 1.76 million barrels per day and natural gas output climbing to approximately 249 million cubic meters per day. This scenario assumes full execution of strategic infrastructure projects and a strong, sustained investment environment. The VMOS oil pipeline reaches its Phase III expansion, unlocking additional evacuation capacity to the Atlantic coast for export. Simultaneously, new LNG export terminals are developed, enabling Argentina to become a significant LNG exporter and to monetize its vast shale gas reserves.

This growth path also assumes a major expansion in drilling activity, with a large fleet of rigs and fracturing crews operating continuously, supported by improvements in efficiency and supply chains. Logistics systems for sand, water, and chemicals are scaled to match the increased well completion volumes, and international markets absorb the growing volumes of oil and gas. Regulatory and economic stability are key assumptions in this scenario, along with the ability to attract large amounts of private capital and coordinate public-private infrastructure development. If achieved, this scenario would transform Vaca Muerta into one of the world’s most important unconventional resource hubs, comparable to major U.S. shale basins in scale and export capability.

• Full-scale development of integrated services across the entire value chain.
• Large volumes of drilling, completion, and fracturing services operating simultaneously across multiple blocks.
• Major EPC contracts for oil and gas pipelines, LNG export terminals, power infrastructure, and processing facilities.
• Specialized logistics operators handling high-volume sand, water, chemical, and equipment transport with multimodal systems.
• Growth in environmental services, water recycling, and advanced safety management systems.

Products and Materials

• Demand for steel, cement, sand, chemicals, power infrastructure, and construction materials reaches industrial scale, similar to major U.S. shale basins.
• Local industrial capacity must expand dramatically, particularly for proppants, cement, and pipeline manufacturing, or imports will surge.
• Development of dedicated sand mines, cement plants, and chemical facilities near the basin to reduce transport bottlenecks.
• Massive water handling and storage infrastructure to support high completion activity.

Labour

• Tens of thousands of direct and indirect jobs are created across drilling, completions, midstream, logistics, and industrial supply sectors.
• High demand for skilled labour (engineers, operators, welders, technicians, environmental specialists).
• Local labour markets tighten, requiring significant investment in training, housing, and regional services.
• Service companies scale up staffing, including specialized expertise for LNG and large-scale midstream projects.

Technology and Equipment

• Next-generation drilling rigs, high-volume electric frac fleets, and automated logistics systems are widely deployed.
• Advanced technologies such as AI-driven reservoir modeling, digital twins, remote operations centers, and automated pipeline monitoring are integrated into operations.
• LNG export terminals, Phase III of the VMOS oil pipeline, and expanded high-pressure gas pipelines form the backbone of export infrastructure.
• Significant investment in power generation and grid upgrades to support field operations and LNG plants.

Conclusion

The three development scenarios for Vaca Muerta differ not because of geological uncertainty, the basin’s resource potential is already well proven, but because of the choices Argentina makes on policy, infrastructure development, and investment.

The development of Vaca Muerta represents far more than the exploitation of a vast unconventional hydrocarbon resource. It is, fundamentally, an industrial build-out opportunity on a national scale. As the Instituto Argentino del Petróleo y del Gas (IAPG) and multiple industry studies highlight, Argentina has not yet developed the full technological, industrial, and financial ecosystem required to unlock the medium and, especially, the high development scenarios. This gap creates a strategic opening for foreign companies with the expertise, capital, and capabilities to help bridge these deficiencies.

Those who enter early, during the medium development phase, will be best positioned to secure long-term advantages as the basin moves toward accelerated growth. Argentina’s operators are already forming partnerships with U.S., Canadian, and European service and equipment providers to secure critical inputs and services before supply constraints intensify.

The largest opportunities for foreign companies are in:

• Supplying industrial inputs and technology that Argentina lacks.
• Building and financing infrastructure to enable large-scale production.
• Providing advanced services and operational know-how to increase efficiency.
• Partnering early to shape supply chains and secure long-term contracts.

Argentina’s resource base is proven; the bottlenecks lie in capital, logistics, industrial capacity, and specialized technology, exactly where foreign companies can add the most value.

Ax Legal helps industrial technology, engineering, and service companies to navigate the legal and commercial aspects of operating their business in Latin America. With deep knowledge of the industrial and natural resource sectors, we provide actionable and practical advice to help streamline our clients’ entries into Latin America, improve how they operate in the region, and to protect their interests.

Over the years, our team of legal and commercial advisors have developed a track record of working with companies of all sizes from Australia, Canada, the U.S., and Europe. The one common factor that connects our clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

To better understand how we can support you in the Region, please contact Cody Mcfarlane at cmm@ax.legal