Argentina's Río Negro province has approved Pan American Energy's (PAE) private initiative to explore the Cinco Saltos Sur area for unconventional hydrocarbons.
The project entails drilling a well at least 3,000 metres deep with a 2,000-metre horizontal branch during the initial exploratory period. PAE has committed to an initial investment of 1,700 Work Units, equivalent to $8.5mn, to be executed over the first three years across three distinct phases: preliminary work, drilling operations, and comprehensive technical-economic evaluation.
'This approval is part of a sustained policy to promote the development of Vaca Muerta in Río Negro territory. It allows us to advance into new areas that until now have not been considered in exploratory projects,' hydrocarbons secretary Mariela Moya stated, as reported by Vaca Muerta News.
The 252km2 Cinco Saltos Sur block includes part of Lake Pellegrini and represents largely untapped territory for modern unconventional exploration, with the only recorded drilling activity dating back to 1979. The area's potential has been assessed based on geological information and technical background from neighbouring projects, including Mata Mora and existing permits in Confluencia Norte, Confluencia Sur, and Cinco Saltos Norte.
If initial exploration results prove positive, the development phase could expand dramatically to include up to 147 horizontal wells, potentially transforming the local economy and energy production landscape. The provincial government has established stringent environmental and water protection requirements overseen by the Ministry of Environment and the Provincial Water Department, mandating comprehensive water risk studies, environmental sensitivity assessments, and detailed contingency planning protocols.
The decree authorises National and International Public Competition No. 01/25 while granting PAE first refusal rights to match the best offer during the competitive bidding process, ensuring the company's initial investment and technical expertise are recognised.
This strategic initiative comes as neighbouring Neuquén province continues to benefit substantially from Vaca Muerta development, with oil output reaching a record 468,680 barrels per day in May—an impressive 95% originating from the prolific shale formation. Furthermore, PAE’s exploration could work to offset the output slump caused by a 48-hour strike by the Private Oil and Gas Union of Río Negro, Neuquén, and La Pampa.
The success of PAE’s exploration initiative will be crucial for Argentina's broader energy strategy and President Milei's economic development objectives, particularly as the country seeks to maximise hydrocarbon exports and attract foreign investment in its critical energy sector.
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