Argentina is laying the groundwork to transition from a net importer of transportation fuels to a net exporter in the coming months, driven by deep structural changes in its energy industry in the past year.
The changes were set in motion largely by President Javier Milei's administration when it took office in late 2023, but it is not yet clear if the net-exporter status will stick, given other changes in fuel supply and demand throughout the region.
The first major driver of this transformation was the gradual removal of fuel subsidies by Milei's administration. For decades, subsidies kept domestic fuel prices artificially low, encouraging high consumption and distorting trade flows. Their rollback pushed retail prices upward, which curbed demand growth and reduced smuggling into neighboring countries such as Brazil, Paraguay and Uruguay.
Retail diesel and gasoline sales in Argentina averaged 290,684 b/d from January-October 2025, according to the latest available government data. That is up by 1pc from the same period in 2024, but down by 8pc from 2023, before Milei took office.
Another critical reform was the redefinition of state-owned power grid operator Cammesa's role. Historically the company coordinated subsidized fuel purchases for thermal power plants throughout the country, creating a steady demand for imported gasoil. By narrowing Cammesa's mandate to focus exclusively on managing the national power grid, Argentina dismantled a key mechanism that sustained liquid fuel imports.
This change coincided with a broader pivot toward natural gas for power generating fuel, sourced from Argentina's Vaca Muerta shale formation, which has become the backbone of the country's energy strategy. Cammesa data shows gasoil consumption by thermal plants fell by 56pc from 2023-2025, while natural gas use rose by 13pc over the same period. Other sources such as fuel oil and coal also had sharp declines during the same period, falling by 82pc and 34pc, respectively.
Renewables played a supporting role. Wind and solar generation accounted for 16pc of Argentina's electricity demand in 2024, up from 14pc in 2023, and are on track to reach roughly 18pc by the end of 2025. Although these figures remain modest compared to natural gas, they signal a gradual diversification of the energy mix that further reduces reliance on liquid fuels for power generation.
Refiners firing on all cylinders
On the supply side, refiners are operating near full capacity and investing heavily to process Medanito crude from Vaca Muerta. YPF, the state-owned oil company, has allocated $600mn to upgrade its 120,000 b/d Lujan de Cuyo refinery during the last three years, adding a hydrotreating reactor to cut sulphur content in diesel to a maximum of 10ppm. The work is part of YPF's New Fuel Specifications project, expected to be finished in 2026.
Lujan de Cuyo, Argentina's second largest refinery, accounting for more than 35pc of YPF's capacity, produced 17,094 b/d of ultra-low sulphur diesel (ULSD) from January-October, up by 3pc from the same period in 2024.
Pan American Energy's 94,350 b/dCampana refinery underwent maintenance from January-February 2025 that improved capacity, but a big breakthrough is expected in 2029 when a new distillation tower tailored for lighter crudes is planned to be installed.
These upgrades position Argentina to compete in regional markets where ULSD and premium gasoline are increasingly in demand.
The results are already visible. From January to October 2025, Pan American Energy shipped nearly 30,000m³ (625 b/d) of ULSD to Paraguay and over 53,000m³ (1,104 b/d) to Uruguay. Pampa Energia sold 8,000m³ (167 b/d) of premium gasoline to Paraguay, while YPF exported 19,000m³ (396 b/d) to Uruguay. These volumes are modest in global terms but significant for a country that, until recently, relied heavily on imports to meet domestic needs.
Despite these gains, Argentina's export ambitions face structural constraints. Refining capacity remains limited, and there are no immediate plans for large-scale expansions. This means export growth will depend on persistently subdued local demand, a condition that could change if economic recovery spurs consumption.
Regional markets also offer finite ability to absorb any surplus Argentinian road fuels. Renewable road fuels are also becoming more attractive across Latin America as alternatives to conventional options.
For now, Argentina appears poised to redefine its energy identity, but the durability of this transformation remains an open question.
