Argentina's Tenuous Partnership with Chevron

Argentina took a small step toward regaining its status as a self-sufficient natural gas producer June 4 by unfreezing Chevron's assets in the country. The government recently secured an initial investment commitment from Chevron to drill for hydrocarbons in the Vaca Muerta shale deposit in the Neuquen basin — the most promising unconventional play in Latin America — but the freeze, ordered by a court in November 2012, remains in place, continuing to undermine the future of the partnership.

By releasing Chevron's assets, Argentina has made a gesture of good faith while proving its willingness to drive a hard bargain with one of the largest corporations in the world. Ultimately, the government's goal is to increase Argentine oil and natural gas production in order to satisfy domestic demand and begin exporting. The next step for Argentina is to demonstrate its ability to cooperate with Chevron while seeking additional outside investment, though the difficulty of doing so means that YPF, the national oil company, will remain the primary force in Argentine oil and natural gas for the foreseeable future.