A huge oil discovery by the Spanish company Repsol has sharply boosted Argentina's potential to cash in on energy and could eventually attract an infusion of investment to exploit the shale oil.
Experts said Tuesday the find is very promising, but it is unclear how much time and investment may be needed to capitalise on the oil beneath the rocky, barren plains of Patagonia.
The company said the discovery includes 927 million barrels of recoverable oil and natural gas, of which 741 million barrels is oil.
Shares in Repsol YPF SA soared a day after the find was announced, rising 6.3 per cent by the close of trading in Madrid and climbing 6.0 per cent in afternoon trading in New York.
Former Argentine Energy Minister Jorge Lapena said it's a "spectacular announcement" but that the reserves have yet to be proven, and that studies on economic feasibility and environmental impact still need to be carried out.
"There's still a long path to go from resources to reserves, and then to put them into production," Lapena told reporters. He said the find, if proven, appears to represent about 40 per cent of Argentina's reserves.
Though potentially a game-changer for Argentina, the find is small compared to Brazil's recent deep-sea oil discoveries, which experts have estimated could represent as much as 55 billion barrels.
Venezuela, South America's largest oil exporter, has a whopping 296.5 billion barrels in proven crude reserves.
Still, for Argentina the find could lead to an eventual increase in oil output, and other areas remain to be explored.
"It must be proven first of all that they're commercially exploitable reserves, that's to say the economic feasibility," said Daniel Bosque, editor of the Argentina-based website Enernews.
Jason Schenker, an energy analyst and president of Austin, Texas-based Prestige Economics LLC, said such oil discoveries "will be critical to meet rising global oil demand".
"A significant oil find at current price levels is very positive for firms that can verify their size and extract them efficiently," Schenker said. "Now, the questions will be: How quickly can this oil be brought into production ... and at what price?"
Those are questions that Repsol isn't immediately ready to answer with specifics.
But Kristian Rix, a Repsol spokesman in Madrid, said that because 15 vertical wells have already been drilled in the area and are producing 5,000 barrels a day of shale oil, "the development of this is uncomplicated from our point of view".
"It's a producing region, so all the infrastructure is there already, so putting new wells on line is very fast," Rix said in a telephone interview Tuesday.
He said that while it's typical in the industry to have a lag time of five to seven years between exploration and production, "this is clearly not the case here, because we're already producing from wells". He said it's too soon to comment on projected investment or how long it could take.
"We are still at a very intense exploration stage," Rix said.
He said the oil would be extracted by hydraulic fracturing, or 'fracking', the technique that involves injecting water, sand and chemicals at high pressure to force out the fuel. It's not yet clear which water sources would be used in that process.
The shale oil was discovered in the arid 'Vaca Muerta', or 'Dead Cow', basin of Neuquen province in northern Patagonia, a region of treeless plains dotted with dry brush where there are two nearby lakes.
Repsol YPF owns oil rights to 12,000 square kilometres (4,600 square miles) of the basin, but like other oil companies, has just begun to search them. The discovery came while exploring an area of just 428 square kilometres (165 square miles) known as 'Loma la Lata Norte'.
The company now plans to expand its drilling in a nearby area of about the same size that shows similar potential, Rix said.
Repsol YPF SA is based in Spain but operates in more than 30 countries around the world. As of Monday, Argentina is home to two-thirds of the three billion barrels of oil deposits that the company considers recoverable, up from half.