Camila Fontana: Argentina is making headlines as the country moves from being a net importer of transportation fuels to potentially becoming an exporter. I am Camila Fontana, Deputy Bureau Chief of Argus in Brazil, and my guest today is Flavia Alemi, who covers motor fuels in South America. So, Flavia, welcome.
What triggered this shift?
Flavia Alemi: Well, Camila, it is a combination of structural reforms introduced by President Javier Milei's administration since late 2023. The most impactful was the gradual removal of fuel subsidies. For decades, subsidies kept domestic fuel prices artificially low, which encouraged high consumption and distorted trade flows.
CF: And when subsidies were moved, what happened to demand?
FA: Well, retail prices increased significantly, which curbed demand and reduced smuggling into neighbouring countries like Brazil, Paraguay and Uruguay. Diesel and gasoline sales in Argentina in 2024, which was the first year of Milei's administration, fell 9pc from 2023.
At the same time, sales in Paraguay were up 10pc in the same comparison. This year, official data show demand is up 1pc from 2024, but is still down 8pc compared with 2023. This makes some specialists say that the numbers now show what Argentina's true demand is.
CF: And with domestic sales lower, I am guessing that this also reduced demand for imports, right?
FA: Exactly. Gasoline and diesel imports were down by half in Milei's first year. They went back up in 2025 but are still 25pc lower than 2023.
CF: But subsidies weren't the only factor, right?
FA: Correct. Another key reform was redefining the role of CAMMESA, the state-owned power grid operator.
Historically, CAMMESA coordinated subsidized fuel purchases for thermal plants, which created a steady demand for imported gas oil. Now its mandate is limited to managing the power grid. This change coincided with a pivot toward natural gas from Vaca Muerta for power generation.
CF: Do we have numbers to illustrate that shift?
FA: Yes. Gas oil consumption by thermal plants fell by 56pc from 2023 to 2025, while natural gas use rose by 13pc.
And renewables also played a role. Wind and solar generation have been growing their share in the past years. Their part in Argentina's electrical system went from 14pc in 2023 to reach 18pc by the end of 2025.
CF: We talked a lot about demand, but what about supply? How are refiners preparing for this new scenario?
FA: Well, refiners are operating near full capacity this year and investing heavily to process Medanito crude from Vaca Muerta. YPF invested $600 million in its Lujan de Cuyo refinery, adding a hydrotreating reactor to cut sulfur content in diesel to 10 ppm. Other refineries had planned maintenance this year, which usually improves refining capacity not by a lot, but a bit.
And Pan American Energy's plant is expected to have a big breakthrough in 2029, when a new distillation tower tailored for lighter crudes such as Medanito is planned to be installed.
CF: But what about right now? Are exports already happening in this scenario?
FA: Well, as a matter of fact, yes, although volumes are modest. From January to October 2025, Pan American Energy shipped nearly 30,000m³ of ULSD to Paraguay and over 53,000m³ to Uruguay. YPF and Pampa Energía also exported premium gasoline, which for a country that used to rely on imports, this is a big milestone.
CF: And does this mean Argentina is ready to become a consistent exporter?
FA: Well, not yet, because refining capacity remains limited and there are no current plans for building new refineries, no plans that will consistently increase refining capacity in the country. And the regional markets can only absorb so much.
Export growth would depend on a persistent subdued local demand. And this could change if economic recovery boosts consumption, because historic data show a clear correlation between GDP growth and diesel demand in Argentina. Since the Argentinian economy is expected to grow in the coming years, this could boost internal fuel demand, which could help to reduce surplus product for export.
So, Argentina's energy identity is shifting, but how long this transformation will last is still uncertain.
CF: Thank you, Flavia. Thank you so much for coming back here to Market Talks. Thank you to our listeners.
We'll see you next week.
