UK supermajor Shell is considering a sale of some or all of its assets in Argentina's Vaca Muerta shale play, with potential valuations in the billions of dollars. This follows the company's recent decision to withdraw from the initial phase of the multibillion-dollar Argentina LNG project.

Vaca Muerta's Resource Potential and Shell's Assets

The Vaca Muerta play is estimated to hold the world's second-largest shale gas and fourth-largest shale oil resources, with vast recoverable volumes. Shell, an early backer since 2012, holds significant interests across multiple blocks in the Neuquen basin. Its operated assets include Cruz de Lorena, Sierras Blancas, Coiron Amargo Suroeste, and Bajada de Anelo. The company also holds non-operated stakes in blocks operated by Total Austral and YPF.

Strategic Shift and LNG Project Withdrawal

Despite the resource potential and increasing external interest in the region, Shell has pulled out of the initial phase of the Argentina LNG project. The company confirmed it participated only in the pre-front-end engineering and design (pre-FEED) stage and elected not to progress further. However, Shell stated it continues to see Argentina as a potentially attractive growth market for LNG export and is exploring expansion options with state-controlled YPF for the Argentina LNG project, which is one of two such projects in the country.

Market Context and Industry Interest

A complete withdrawal by Shell would mark a surprise departure as interest in the Vaca Muerta region is increasing. This interest is driven by concerns that other major shale assets have peaked, with other industry players, like Continental Resources, recently acquiring stakes and calling the region a compelling shale play.