Argentina’s massive shale gas reserves form the foundation for building export capacity through pipelines and LNG terminals — a transformation that could position the second-largest economy in South America as both a regional and global gas powerhouse.

The country holds the necessary resource base, notably the vast unconventional reserves in the Vaca Muerta shale formation in Neuquén Province. However, it must develop the infrastructure to transport gas from production zones to regional pipelines and planned export terminals. Additionally, Argentina must continue the market reforms initiated by business-friendly President Javier Milei to attract foreign investment and move past decades of economic instability and investor skepticism.

As it strives to become an LNG exporter, Argentina will face stiff competition from leading global LNG suppliers who enjoy lower production costs.

According to the latest report by Wood Mackenzie on Argentina’s gas and power markets, the country’s natural gas production could peak at 180 million cubic meters per day (Mmcd) by 2040 in a base-case scenario — potentially rising to 270 Mmcd if all planned LNG export projects are realized.

The unconventional gas fields of Vaca Muerta are central to this significant supply growth.

Javier Toro, Director of Research at Wood Mackenzie, stated: “With Bolivia’s exports expected to cease by the end of this decade, Argentina is strategically positioned to become the region’s leading supplier. At the same time, it has a real opportunity to establish itself as a reliable global LNG exporter.”

Vaca Muerta shale output surges

Oil and gas production from Vaca Muerta has seen a sharp rise in recent months, and Argentina is preparing for the next phase of this resource boom: exports.

Vaca Muerta — Spanish for “dead cow” — is often referred to as “Argentina’s Permian,” though geologically it more closely resembles the Eagle Ford formation in the U.S. The basin is estimated to contain 16 billion barrels of oil and 308 trillion cubic feet of recoverable natural gas, making it the second-largest shale gas reserve in the world and the fourth-largest for shale oil.

In Q1 2025, oil output from Vaca Muerta rose 26% year-on-year, while gas production increased 16%, according to Rystad Energy estimates.

Gas export prospects

Argentina is already connected by pipelines to Chile, Uruguay, and Bolivia. Recently, the flow through the Northern Pipeline was reversed, enabling gas exports to Brazil via Bolivia’s existing infrastructure.

Wood Mackenzie sees potential for Argentina to boost pipeline exports by extending the connection from Uruguaiana to Porto Alegre and linking it to Brazil’s integrated transportation system.

Argentina is also advancing several LNG export initiatives. State energy company YPF has signed agreements with Shell and Eni to co-develop the “Argentina LNG” project. This includes gas production from Vaca Muerta blocks, a 580-kilometer pipeline, and a processing and liquefaction facility in Sierra Grande, Río Negro Province, on the Atlantic coast.

The country has already reached a final investment decision (FID) for a floating liquefaction unit with a capacity of up to 2.5 million tonnes per year. It is also considering a second 3.5 million-tonne unit under the “Southern Energy” alliance, which includes Pan American Energy, Pampa, Harbour Energy, YPF, and Golar.

If all proposed projects are completed, Argentina could export 28 million tonnes of LNG per year by 2035, according to Wood Mackenzie.

Infrastructure and cost challenges

Despite its vast reserves and early commitments from global firms, Argentina’s LNG export future remains uncertain. The country needs multibillion-dollar investments in midstream infrastructure to move gas from fields to export terminals.

Wood Mackenzie notes: “To develop LNG projects, Argentina needs dedicated pipelines to liquefaction plants and significant upstream capacity.”

Interest in Vaca Muerta has surged since Javier Milei took office a year and a half ago, but he also halted state financing for infrastructure like pipelines, meaning companies must rely on private capital and incentives such as tax breaks under the new free-market model.

The government estimates that market liberalization efforts will raise energy sector investments to around $15 billion in 2025, up $2.5 billion from previous forecasts.

The recently passed RIGI law (Regime of Incentives for Major Investments) has further drawn investor attention, offering tax exemptions and regulatory facilitation for large-scale projects.

Global energy companies are once again exploring mergers and acquisitions (M\&A) opportunities in Argentina after years of market hesitation.

Still, cost competitiveness in the global LNG market remains a critical factor in determining Argentina’s actual export capacity.

U.S. stock indices declined during Friday trading as the global trade war between the United States and several other nations intensified.

President Donald Trump announced a new 35% tariff on Canada and also threatened to raise tariffs on other countries.

In a post on Truth Social yesterday, Trump said the tariffs on Canada were a response to its failure to cooperate in halting the flow of fentanyl into the United States. He warned that the tariffs could rise further if Canada retaliates.

Trump also told NBC that he plans to impose sweeping tariffs of 15% to 20% on other countries — a rate higher than the current 10% that investors have grown accustomed to in recent months.

Brazilian President Luiz Inácio Lula da Silva said he is seeking a diplomatic resolution to the tariff dispute with the U.S., but pledged to respond in kind if the tariffs are implemented on August 1.

On the trading front, the Dow Jones Industrial Average fell by 0.7% (equivalent to 330 points) to 44,320 points by 16:27 GMT, while the broader S&P 500 index dropped by 0.4% (equivalent to 28 points) to 6,252 points, and the Nasdaq Composite index declined by 0.2% (equivalent to 44 points) to 20,586 points.

Copper prices declined during Friday trading as the U.S. dollar climbed against most major currencies, with investors engaging in profit-taking after the metal’s recent rally.

Trump’s announcement of a 50% tariff on copper imports pushed U.S. copper prices to record highs, but analysts expect those prices to gradually decline in the coming months as traders offload the large stockpiles they had accumulated in anticipation of the tariffs.

The tariff follows a U.S. Commerce Department investigation launched back in February, with early expectations suggesting a 25% duty. However, the mere anticipation led to stockpiling and pushed COMEX copper prices up 25% from January through this past Monday.

On Tuesday, Trump’s announcement sent COMEX copper to an all-time high of $5.6820 per pound — or $12,526 per metric ton — more than $2,920 above the benchmark price on the London Metal Exchange (LME), which stood around $9,600 per ton.

Expected Price Drop as U.S. Demand Slows

Tom Price, an analyst at Panmure Liberum, said: “Once the noise around Trump’s tariffs subsides, we expect U.S. copper prices to fall and converge with global prices, as domestic consumption will be delayed.”

Price noted that U.S. demand for copper is weak, forecasting a 16% drop this year to 1.32 million tons compared to last year. The decline in demand is partly due to uncertainty surrounding tariffs, which has slowed economic growth. Meanwhile, U.S. manufacturing data — a key sector for copper consumption — shows the industry remains in contraction.

Copper Stockpile Surplus in the U.S.

According to Macquarie’s analysis using trade data from January to May and shipping data from June, U.S. copper imports reached around 881,000 metric tons in the first half of the year, while actual demand stood at just 441,000 tons.

This indicates a surplus of 440,000 tons — 107,000 tons in visible COMEX inventories and another 333,000 tons in unreported stockpiles or pre-purchased material embedded in industrial supply chains.

Rising U.S. Inventories vs. Falling London Stocks

A large portion of this surplus has been stored in COMEX warehouses, where copper inventories reached 221,788 short tons (equivalent to 201,203 metric tons) as of July 7 — a surge of over 127,000 short tons, or 135%, since late March when global shipments began arriving at U.S. ports.

In contrast, inventories at the London Metal Exchange have dropped by 66% since mid-February, falling to around 90,000 metric tons by late June — the lowest since August 2023.

Some of the U.S. stockpiles are stored in free trade zones, meaning they haven’t officially entered through customs and can be re-exported more easily. However, copper held in COMEX warehouses under duty-paid status would be more complex — though not impossible — to re-export.

Duncan Hobbs, head of research at Concord Resources, said: “There’s nothing preventing the re-export of copper that’s cleared customs... but it would require a financial incentive, like a drop in the COMEX premium.”

Uncertainty Over Tariff Exemptions Could Weigh on Prices

Another factor that may weaken U.S. copper prices is the potential for certain countries to be exempted from the tariffs, which could erode the COMEX premium, according to industry sources.

Chile is considered a strong candidate for exemption, having accounted for 70% of U.S. copper imports in 2023 — around 646,000 metric tons, according to Trade Data Monitor. The U.S. also maintains a trade surplus with Chile, which could make a political case for exemption.

Citi analysts, including Tom Mulqueen, expect that countries like Canada, Chile, and Mexico may ultimately face a reduced tariff of 25%, as they are deemed “key partners.”

Challenges for Traders Sitting on Expensive Copper

For now, traders who rushed to front-run the tariffs find themselves holding some of the world’s most expensive copper — which may be hard to sell unless the U.S. market maintains its current premium.

On the other hand, the U.S. Dollar Index rose by 0.2% to 97.8 at 16:07 GMT, reaching a high of 97.9 and a low of 97.5.

As for copper trading, September futures were up 0.9% at $5.54 per pound as of 15:55 GMT.