The problem, industry analysts say, is not that the shale deposits are hard to access. The government's energy policies, they say, are keeping investors away.
Argentina is rated to have the largest shale oil and gas deposits, outside the United States, in the Western Hemisphere. Latest research data indicate Argentina may be the world's fourth-largest oil-rich shale owner, after Russia, China and the United States.
That would make Argentina potentially wealthy for posterity, self-sufficient in its own energy needs and a major exporter. But Argentine President Cristina Fernandez has struck fear in the investor community with a spate of nationalizations and a toughening of government policy toward international investors.
Fernandez seized Repsol's Argentine unit YPF in May 2012 and ruled out any compensation against the Spanish major's claims of a $10 billion loss. The expropriation, Fernandez said, was a punitive measure in response to what her government saw as Repsol's unwillingness to invest more in developing Argentine energy industry.
A year later, Buenos Aires is sending signals to Repsol it wants to talk, and even offer compensation. What's more, Fernandez wants Repsol to invest in shale energy development.
Historical ties and reported interventions by Spanish King Juan Carlos have ensured tempers don't fly and Repsol's early threats of retaliation are moderated by calls for reconciliation. But Repsol remains circumspect about investing again in Argentina.
Other investors have been wary, too, or have sought watertight contracts to seek guarantees for their investments. Whether Argentina can develop its shale deposits soon remains far from clear.
The largest Argentine shale reserves are located in the Vaca Muerta formation in the Neuquen basin in the west of the country, at the northern end of Patagonia. The shale-rich region borders the provinces of Mendoza to the north and Rio Negro to the southeast, and Chile to the west.
Increased U.S. energy self-sufficiency and growth of fracking projects across the United States have spurred Argentina to try to speed up development of the Vaca Muerta formation.
Argentina may contain technically recoverable shale oil reserves of 27 billion barrels, the U.S. Energy Information Administration said in a report.
"Argentina has world-class shale gas and shale oil potential -- possibly the most prospective outside of North America -- primarily within the Neuquen Basin," the EIA study said. "Additional shale resource potential exists in three other untested sedimentary basins."
Argentine shale gas resources that can be recovered with present technologies may be at least 802 trillion cubic feet, IEA said.
Despite exploration by several energy majors -- including Apache, EOG, Exxon-Mobil, Total and YPF -- Argentina's shale industry remains in an early stage of commercial production, the IEA study noted.
Chevron is in an advanced stage of collaboration with nationalized YPF, despite Repsol warnings of reprisals, and Norway's Statoil may also become involved despite controversies surrounding Argentina's confrontation with Repsol over the YPF takeover.
While Chevron observers say the company seems confident of keeping close tabs on Fernandez and nationalization, Statoil has remained tight-lipped.
Repsol is considering an Argentine olive branch -- a non-cash compensation offer likely to include Spanish participation in a future shale development project.
Since Argentina seized YPF in May 2012, Repsol has pursued several legal claims challenging the Argentine government takeover.
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