The slump in international oil prices and increased domestic output will reduce Argentina’s energy trade deficit by 16 percent next year to $5.6 billion, the government said on Tuesday, helping to ease strains on the balance of payments.
Argentina is grappling with pressure on its foreign currency reserves after being largely shut out from global debt markets for more than a decade and with tight trade and currency controls stifling investment and stunting exports. “We anticipate a decrease of $1.1 billion in the energy deficit next year to $5.6 billion,” Cabinet Chief Jorge Capitanich told reporters.
Brent crude oil has fallen to a 5-1/2-year low below $57 a barrel because of a global supply glut., Argentina imports oil and natural gas to make up for a shortfall in production which has fallen in past years and an increase in domestic demand. To reverse the energy trade deficit, Argentina is pinning hopes on ramping up production from its vast but barely tapped Vaca Muerta shale formation.
Energy giants Chevron Corp, Petronas and Royal Dutch Shell have made foot-hold investments, but heavy-handed state economic controls have kept them from fully committing.