The discovery of shale gas in Vaca Muerta, in Argentine Patagonia, was the greatest promise of progress for the region in recent decades, repositioning the country as a major global player. But with the passing of time, the dream has faded.
“We were told that the area was going to be populated, that we would be given work and education,” complain members of the Campo Maripe Mapuche community, who are also denouncing the lack of job offers, the serious violations of their lands and the irreversible damage to the environment.
It is on these grounds that in July 2015 they not only initiated legal proceedings but also held protests and roadblocks obstructing the production of some 10,000 barrels of oil at the Loma Campana field.
Less than a year ago, Darío Díaz, the mayor of Añelo – the nearest town – promised rapid change. It is still nowhere in sight. “I am an accountant who was suddenly confronted with his town being at the heart of the oil of the future… I have to take planes to the United States to tour oil cities I knew nothing about,” Díaz told Equal Times.
But the wait is frustrating and the 4,000 inhabitants who were told they would enjoy a situation similar to that of Dubai are losing faith in the potential benefits.
Díaz, however, is forecasting a population of 30,000 inhabitants in 2030.
Añelo currently has just one kindergarten and the long-established inhabitants are wondering what lies ahead, especially in light of the problems they are already experiencing, such as the rise in crime related to drugs and prostitution.
The oil company workers live in prefabricated huts, like Cristian Parra, one of the heads of the drilling team, who can see the machines from his home. He is at the company’s disposal 24 hours a day, and is happy with the situation, but he does not invest his money in the area or buy from the local businesses.
The region’s development depends on “long-term investment in shale gas extraction”, economist Miguel Capurro tells Equal Times.
Capital flight
Whilst some are looking to the value of local development, others are looking outward. “The problem came from Sinopec (China) and Total (France). The first deactivated its three exploration teams and left around a hundred operatives out of work. The second halved the number of exploration systems in the area,” Díaz told the local radio station, in an attempt to explain the situation.
Complaints are still being voiced and responsibility is being passed on for this geological formation covering 30,000 square kilometres, of which 12,000 has been assigned to the state oil company Yacimientos Petrolíferos Fiscales (YPF).
In 2012, the Argentinian state expropriated a 51 per cent stake in YPF, held by the Spanish group Repsol. With little machinery of its own, “there is no way Argentina, through YPF, can explore and exploit the whole Vaca Muerta basin on its own,” says Capurro.
That is why YPF decided to drill 161 wells in partnership with the US oil company Chevron, according to an official press release published by the state company. It is a figure that does not come close to being able to cover even local consumption.
The low extraction levels are adding to the employment problem. The “thousands of new jobs” supposed to be created have amounted to very few. The skilled labour, moreover, has been brought in from outside, not from the provinces where the deposits lie (Neuquén, Río Negro and Mendoza).
In August 2015, the oil multinational Shell won a 35-year concession on the Sierras Blancas and Cruz de Lorena blocs, spanning 325 square kilometres.
An added concern is the fall in world oil prices. In spite of this, in Argentina, the price of fuel has increased by 130 per cent since 2012.
As oil prices continue to fall, many are wondering how long the boom will last in Vaca Muerta, given the risk of investors looking more towards traditional markets such as the Gulf countries or Venezuela.
Whilst the local people and the experts contradict each other, for now, the wealth being generated in Vaca Muerta is only benefiting a select few.
