Argentina's energy resources

Official Name: Argentine Republic.

Summary: Argentina has abundant and diverse energy sources, including oil, natural gas, coal and uranium reserves, hydropower, and wind energy. Argentina is one of three Latin American countries that generate power from nuclear energy.

The massive exploitation of modern energy resources began in Argentina at the beginning of the twentieth century. Oil was discovered in the 1860s, but, because of several bureaucratic barriers, commercial exploitation could not be initiated. In 1907, as the Ministry of Agriculture was drilling for water in the vicinity of Comodoro Rivadavia in the province of Chubut, oil was accidentally discovered. In the following years, opinions about the legal conditions for oil exploitation were divided. One faction favored foreign participation without government intervention, while another faction argued that oil was a strategic resource that should be exclusively exploited by the state. The latter faction prevailed. In 1922, the government created the state-owned Yacimientos Petrolíferos Fiscales (YPF). However, foreign activity in the oil sector was still allowed until the end of the 1940s, when the industry was nationalized. Almost a decade later, in 1958, foreign activity was allowed again, but in 1963, concessions were abolished. YPF preserved a dominant position in the oil sector in the following decades—although foreign activities were permitted in a limited capacity—until 1989, when the sector was definitively opened to private capital and YPF was privatized.

The first natural gas field was discovered in Argentina in 1913. However, gas was used mainly as liquefied petroleum gas (LPG), especially after 1933, when YPF decided to expand its commercialization. In 1946, the Argentine government created Gas del Estado as a monopoly for gas distribution and commercialization. Gas del Estado began almost immediately to build a gas pipeline from Buenos Aires to the oil fields at Comodoro Rivadavia to transport the natural gas. Until that point, the gas was flared. The pipeline, with an extension of 1,605 kilometers, began operations in 1949. A second gas pipeline, the Northern Pipeline, was put into operation in 1960. In the following years, Gas del Estado extended the pipeline network to reach a total length of 21,728 kilometers toward the beginning of the 1990s. This network included two international connections, one with Bolivia and another with Chile built in the 1970s. In the same decade, the two oil crises and important discoveries of gas reserves gave impetus to the natural gas industry. Natural gas had a share of about 52 percent in Argentina’s total energy consumption in 2015.

Electricity was introduced in Buenos Aires and environs in the last 15 years of the 19th century. At the beginning of the twentieth century, and especially after World War I, the power industry, mainly in foreign hands, underwent explosive growth due to the country’s industrialization. Hydropower and imported coal were the main fuels utilized to generate electricity. In 1947, the national government created Agua y Energía Eléctrica (AyE) to generate, distribute, and market electricity. From the 1940s to the 1980s, the Argentine government gained a dominant position in the power sector through its own utilities. Thus, just before reforms of the 1990s were introduced, power generation and transmission were in the hands of four state-owned and two binational utilities. Two of the state-owned utilities, 21 provincial utilities (that is, controlled by provincial governments), and 500 cooperatives carried out power distribution.

The first Argentine—and Latin American—nuclear reactor to generate electricity, Atucha I in the province of Buenos Aires, was put in operation in 1974. A second nuclear power station, Embalse in Córdoba, entered into operation in 1984. Both power stations are run by Nucleoeléctrica Argentina, S.A., a state-owned company. In 1981, construction began on a third nuclear power station, Atucha II, beside Atucha I. However, construction was halted in 1994 and, because of financial problems, the reactor did not go into operation until 2014. By 2022, nuclear energy has an average share of about 5 percent of the total generated electricity.

Argentina runs hydropower facilities with Paraguay (the Yacyretá Power Plant, with an installed capacity of 3.2 gigawatts) and Uruguay (the Salto Grande Power Plant, with an installed capacity of 1,890 megawatts). The Yacyretá Dam has been surrounded by corruption scandals, and several employees of Entidad Binacional Yacyretá (EBY) have been convicted of corruption. The company itself has been taken to the Inter-American Court of Human Rights for violation of the human rights of the settlers from the region where the power plant is located. Plans to build another Argentine-Paraguayan hydroelectric power plant, situated between Itaupú and Yacyretá, the Corpus-Argentina project, have been on hold for decades. The plant would have an installed capacity of 2,880 megawatts. The plan has encountered resistance from inhabitants of the region where the plant would be built. Besides the existing interconnection with Paraguay and Uruguay, the main Argentine power network, the Argentine Interconnection System (SADI in Spanish), is interconnected with the Brazilian and Chilean networks.

The Argentine energy sector was deregulated and opened to private investors at the beginning of the 1990s. Thus, the state-owned gas and oil companies were privatized. The retail gasoline market was opened to free competition; in the gas subsector, upstream activities were also privatized and opened to the market, while downstream activities (distribution and marketing) were declared public services and remained regulated, although private participation is allowed. The power subsector was also reformed. Activities of power generation, transmission, and distribution were separated. Power generators were privatized and are organized in a wholesale market. Transmission companies were also privatized. However, since transmission of electricity is considered a natural monopoly, this activity is under government regulation. Distribution of electricity, also considered a natural monopoly, was also privatized but remained under government regulation.

From 2002 to 2004, the Argentine power and gas markets confronted a severe supply crisis resulting from several flaws in the regulation framework introduced by the reforms in the 1990s combined with a harsh economic, political, and social crisis.

Argentina has an enormous wind energy potential, especially in Patagonia, which is considered one of the regions with the largest onshore wind energy potential worldwide. However, this potential has remained mostly unexploited. Argentina has more than a dozen wind farms in operation with a combined installed capacity of 279 megawatts, but the country had planned to install facilities to add approximately 2,000 megawatts.

By 2022, Argentina produced 3.399 quadrillion Btus annually but consumed 3.447 quadrillion Btus, according to the US Energy Information Administration. Fossil fuels remained the largest electricity generating sector at 65.5 percent of total installed capacity. Hydroelectricity accounted for more than 16 percent, followed by wind at nearly 10 percent.

Despite many plans to increase its capacity for renewable energy sources, the country experienced economic difficulties in the 2010s and a recession in 2018. The global COVID-19 pandemic in 2020 further strained the country and ushered in a change in leadership. Javier Milei, elected president in 2023, immediately eliminated government agencies and attacked some policies and programs. By this time, the energy department had already begun canceling renewable energy projects, including the Adelia Maria wind farm, several solar parks, two biomass projects, and a biogas project.

Bibliography

"Argentina." International Energy Agency, 2023, www.iea.org/countries/argentina. Accessed 29 July 2024.

“Argentina.” U.S. Energy Information Administration, 2022, www.eia.gov/international/overview/country/ARG. Accessed 29 July 2024.

"Argentina Begins to Cancel Renewable Energy Projects." BN Americas, 12 Mar. 2021, www.bnamericas.com/en/features/argentina-begins-to-cancel-renewable-energy-projects. Accessed 1 Aug. 2024.

"Argentina Country Commercial Guide: Renewable Energy." US International Trade Administration, 2 Nov. 2023, www.trade.gov/country-commercial-guides/argentina-renewable-energy. Accessed 1 Aug. 2024.

"Wind in Argentina." World Energy Council, 2016, www.worldenergy.org/data/resources/country/argentina/wind/. Accessed 6 Sept. 2017.