CAMILA FONTANA: The shipment of Argentinian oil to China demonstrates Asia's interest in the production from the Vaca Muerta fields. Argentinian producers plan to expand the export flow of Medanito crude to other markets. I'm Camila Fontana, Deputy Bureau Chief of the Argus Office in Brazil, and today I'm speaking with João Scheller, who covers the South American crude market for the Argus Crude report. João, thank you again for being here. Argentina recently made a shipment of Medanito crude to China. What does this mean about the evolution of this market?
JOÃO SCHELLER: Camila, thank you for having me here again. Well, this first shipment of Medanito crude oil to China is a big milestone because it's the first direct shipment to China. We've had previously Medanito reaching China via Panama storage, so this is a bit different because it goes directly to China.
And also there's another cargo that's a bit different than this one. It's a co-load with Brazilian crude. So Medanito crude in Argentina will be shipped to an STS zone, to a ship-to-ship region, where it would be transferred to a bigger vessel and then taken to China.
So those movements are still very initial, but they suggest interest from Asia for Medanito crude, and that's the hope for the Argentinian oil industry, that Medanito eventually reaches Asia on a more regular basis. But of course, that depends on the progress of the logistical environment in Argentina.
CF: And what are the main logistical barriers, so to speak, that Argentina faces in scaling up Medanito exports?
JS: Rosales port is the current export hub for Medanito. It received its final license after upgrades were completed in the middle of this year. So now it's allowing the loading of Suezmax cargo.
They're bigger vessels compared to the previous Panamaxes and Aframaxes that used to be used in the region. But the port still has draft restrictions limiting just the loading of Suezmaxes, not only to Suezmaxes, but to partial Suezmaxes. You can load in Puerto Rosales today about 800,000 barrels of crude.
So that's a limitation. And of course, it is not compatible with VLCCs, which are very large crude carriers. They are very large vessels, which are preferred for those long-haul shipments to Asia, shipments to China.
So this co-loading we have with Brazilian crude that we mentioned, it's a first attempt to see different possibilities that producers can have to send Medanito to Asia. But it's still very hard to be economically viable without the possibility of loading those bigger vessels. So, first of all, those are the main issues.
And of course, we're talking about China here because we mentioned the hopes of those Argentinian producers to send Medanito to China. But the current market for Medanito is not Asia. It's the U.S., the U.S. West Coast, indeed. The region received about 70pc of all Medanito exports, waterborne exports, in the first half of this year. So the market is still concentrated in the Americas. And we have those developments in Puerto Rosales.
By the way, this already changed the market significantly. Argus has recently launched new freight assessments for Medanito, considering those partially loaded Suezmaxes. And Argus also made a few changes on the price assessment for Medanito, including those changes in the market that affect a little bit pricing of Medanito.
So the market changed a bit. But still, Argentina needs to develop a little bit more of the infrastructure in Vaca Muerta to be able to eventually export crude to different markets.
CF: And what's the plan to overcome infrastructure limitations?
JS: The main project would be the Vaca Muerta Sur, Vaca Muerta South pipeline. That will connect Vaca Muerta fields in Neuquén province to Punta Colorada, which will be a port that will be able to handle those VLCC vessels. So then Argentina will be able to load those bigger cargoes.
And that will be game changer for them. The capacity of this pipeline will start around 200,000 barrels a day next year. And it will reach up to 700,000 barrels a day by 2030.
The project is about 30pc complete already. And it's a consortium that includes big firms such as YPF, Boost Petrol, Chevron, Shell, Tech Petrol. This will be the main plan to overcome those limitations.
CF: What's the current status of production and investments in Vaca Muerta?
JS: Well, Argentina hit a record of 800,000 barrels a day in July 2025. And Vaca Muerta was contributing to that output by 63pc. So Argentina expects to increase even further this production.
In fact, the idea is to reach 1.5 million barrels a day by 2030 with 1 million barrels a day only for export. So investments remain strong. And we have YPF, for instance, the state-controlled company, divesting mature fields to focus on shale. So the production is growing. And it's growing eventually to reach a new status for Medanito.
CF: Are there any risks that could slow down crude expansion in Argentina?
JS: Well, yes. First one is, of course, the logistical infrastructure. The eventual delays in that area could affect the plans for the development of Vaca Muerta. It could also add to that regulatory delays, increase of costs. In fact, we can mention that part of the market it's a bit skeptical that the Vaca Muerta pipeline will be finished in time.
We mentioned that the idea is to start pumping crude in 2026, but some people mentioned 2027, 2028. So that's a point to consider. We also have political and investor stability.
That will be key to sustain the momentum for Argentina. We have Argentina facing economic challenges in the past few years. And the country has been working to attract more foreign investment. That will be also key to develop this market. Another key risk is a bit more macro here, but the global outlook for oil demand over the coming years is also important. OPEC has been gradually unwinding production cuts. There are concerns about rising potential oversupply in the market. So that's something to keep on the radar as it could create the long-term scenario of uncertainty for crude demand. And that, of course, could potentially impact on Medanito.
And as a final reminder, we will discuss the Vaca Muerta developments, the Argentinean crude oil industry, and many other topics at the Argus Energy Forum that will be held in Buenos Aires on the 17th of November. We'll have different panels, we'll be discussing the future of crude oil, fuels, biofuels, natural gas. So I hope the event will be successful.
CF: I'm sure it will. So Buenos Aires, November 17th, right?
JS: That's it.
CF: All right. Thank you to our listeners. Thank you, João. I'll see you next time.
