Removing Subsidies for Oil Production in Argentina

Argentina reduced direct budgetary transfers to oil producers, resulting in estimated savings of USD 780 million in 2017. While oil subsidies were cut to reduce the fiscal deficit and meet International Monetary Fund (IMF) loan conditions, the government maintained and prioritised subsidies for unconventional gas production in the Vaca Muerta field, viewing gas as a transition fuel. These reforms were accompanied by significant increases in electricity and natural gas tariffs for residential and commercial users.

• Argentina achieved estimated savings of at least USD 780 million in 2017 by reducing direct budget transfers to oil producers. The value of these incentives dropped from USD 914 million in 2016 to USD 134 million in 2017.
• The reform was driven by the need to address a system of generalized subsidies that created fiscal and macroeconomic problems, and was further motivated by a USD 50 billion stand-by agreement with the International Monetary Fund (IMF). A condition of this loan was to reduce the fiscal deficit by 3.1 per cent between 2018 and 2021, totaling approximately USD 19.3 billion.
• While oil production subsidies were cut, the government prioritised the production of unconventional gas to attract investment to the Vaca Muerta field. The 'Gas Plan' represented 17.3 per cent of public spending for 2018, guaranteeing eligible producers a purchase price of USD 7.50 million BTU in 2018, decreasing to USD 6 million BTU by 2021.
• Complementary policies included sharp increases in energy tariffs between 2015 and 2017, with electricity rates rising by 562 per cent and gas rates by 223 per cent. Additionally, subsidies for vulnerable groups were reduced, affecting approximately 4.2 million people.
• The government considers gas a transition fuel toward renewable energies, but the use of hydraulic fracturing ('fracking') in Vaca Muerta is criticised for environmental impacts, including water pollution and significant greenhouse gas emissions.

APA

International Institute for Sustainable Development (n.d.). Removing Subsidies for Oil Production in Argentina. https://www.iisd.org/system/files/publications/stories-g20-argentina-en.pdf

Chicago

International Institute for Sustainable Development. Removing Subsidies for Oil Production in Argentina. n.d. https://www.iisd.org/system/files/publications/stories-g20-argentina-en.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Removing Subsidies for Oil Production in Argentina |url=https://www.iisd.org/system/files/publications/stories-g20-argentina-en.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndremoving, author = {{International Institute for Sustainable Development}}, title = {{Removing Subsidies for Oil Production in Argentina}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/publications/stories-g20-argentina-en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }