Removing Subsidies for Oil Production in Argentina

This case study by the International Institute for Sustainable Development examines Argentina's efforts to reduce fossil fuel production subsidies, specifically focusing on the phase-out of oil production incentives while maintaining support for unconventional gas development in the Vaca Muerta field.

• 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.
• While oil production subsidies were reduced, the government maintained and prioritized support for 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.
• The reform was driven by the need to address a system of generalized subsidies that created fiscal, macroeconomic, and environmental problems. Additionally, a 2018 stand-by agreement with the International Monetary Fund (IMF) for a USD 50 billion loan required a reduction in the fiscal deficit by 3.1 per cent between 2018 and 2021, making energy subsidy reform a key part of that effort.
• Complementary policies included increasing tariffs for electricity and natural gas between 2015 and 2017 by 562 per cent and 223 per cent, respectively. However, the document notes that the USD 780 million saved from oil production subsidies was not formally reallocated to social or environmental purposes, but used to reduce the budget deficit.
• The continued support for gas in the Vaca Muerta field is based on the view that gas is a transition fuel. However, this is contested due to the environmental impacts of hydraulic fracturing ('fracking'), which is associated with 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} }