In a US$1.1 billion transaction, Norway’s Equinor abandons its onshore assets in Argentina after 8 years in the country, while Vista Energy (founded just in 2017) consolidates itself as the new power in Argentine shale. The operation reveals a global trend: multinationals are withdrawing from onshore to bet on offshore.
Chris Golden, Equinor’s vice president for Argentina, put it unambiguously: this decision ‘sharpens our focus’ in the country, which now concentrates exclusively on offshore opportunities where the Norwegian company can leverage its global offshore expertise.
Equinor’s strategic withdrawal
When Equinor announced the sale of its onshore assets in Vaca Muerta, many interpreted it as a loss of faith in the potential of the Argentine field. Nothing could be further from the truth.
The Norwegian oil company, which recently cut its investment in renewables by 50% to refocus on hydrocarbons, is not abandoning oil; it is rearranging its global board.
Equinor is not the only multinational betting on the Argentine sea: Shell, ExxonMobil and TotalEnergies maintain or are evaluating offshore blocks in the Austral and Malvinas basins.
Vista Energy: The rise of the 7-year-old Argentinean colossus
Vista Energy, led by Miguel Galuccio (former CEO of YPF that transformed that state-owned company), is starring in one of the most impressive business stories in the Latin American energy sector.
The company has gone from being an emerging company to an aggressive consolidator of assets in Vaca Muerta. With this acquisition of Equinor, Vista not only adds 26,500 barrels per day of production, but also reinforces its position as the most efficient local player operating in one of the largest unconventional fields in the world.
While Exxon, Petronas and Total have sold or reduced onshore positions in Argentina in the last two years, Vista Energy is going in the opposite direction, betting that the immediate future of Argentine shale will be dominated by specialized regional operators.
The actual price of the transaction and its unique structure
The initial US$550 million cash payment represents only half of the transaction, supplemented by Vista Energy shares whose value will fluctuate with the company’s stock market performance.
But the most interesting element is the contingent payments linked to two critical variables: the effective production of the assets for five years and the international price of Brent oil.
Industry analysts estimate that if Brent remains above US$80 a barrel and production grows as planned, Equinor could receive an additional US$200-300 million over the next five years, bringing the real value of the transaction to US$1.3-1.4 billion.
Offshore vs Onshore: The new global oil geography
The sale of Equinor in Vaca Muerta is one more chapter in a tectonic reconfiguration of the global oil industry that is going unnoticed by many observers.
Oil majors (ExxonMobil, Shell, BP, TotalEnergies, Equinor) are systematically abandoning onshore assets in emerging markets to concentrate capital in three types of projects: deepwater offshore, liquefied natural gas (LNG) and low-cost assets in stable jurisdictions.
Argentina, despite the potential of Vaca Muerta, faces three structural challenges that keep multinationals away from onshore: exchange rate volatility, restrictions on the movement of capital and provincial regulatory complexity.
Source: https://www.equinor.com/