Wind of Political Change Blowing in Argentina’s Vaca Muerta?

The heart of Argentina’s oil and natural gas rich Vaca Muerta lies within the borders of the Argentine province of Neuquén, which today produces nearly half (48%) of Argentina’s petroleum and nearly two-thirds (64%) of its natural gas. Since Argentina returned to democracy in 1983, Neuquén has been governed continuously by the Movimiento Popular Neuquino (MPN), with the MPN victorious in 10 straight gubernatorial elections over the past 40 years. This MPN hegemony is however under threat in 2023, as a split within the MPN has opened up the possibility of the party losing a gubernatorial election for the first time in its 60-year history.

Until recently the MPN was divided into three principal factions: one under the leadership of former governor Jorge Sapag (the son and nephew of two of the MPN’s founders) and of the current governor Omar Gutiérrez (who is in his second term and constitutionally barred from running for immediate re-election), one under the leadership of the current (Marcelo Rucci) and former (Guillermo Pereyra) general secretaries of the Vaca Muerta oil and gas workers union, and one under the leadership of former vice governor and current national deputy Rolando “Rolo” Figueroa. Historically, the MPN has resolved its internal differences via intra-party primaries. However, breaking with this tradition, in early October Figueroa left the MPN and announced an independent bid for governor, while the Sapag-Gutiérrez and Pereyra-Rucci wings of the party united behind the candidacy of vice governor Marcos Koopmann.

In the two months since leaving the MPN Figueroa has been steadily increasing his base of support, both via fellow defectors from the MPN as well as from members of the center-right opposition coalition Juntos por el Cambio (JxC) and from members of the Frente de Todos (FdT) of Argentine President Alberto Fernández and Vice President Cristina Fernández de Kirchner. These JxC and FdT Neuquén politicians are rallying behind Figueroa because they believe he provides the best prospect for ending the MPN’s control of the provincial government in Neuquén.

The leadership of two of the four main parties that make up the JxC in Neuquén have endorsed Figueroa, with the full leadership of the Neuquén-based Nuevo Compromiso Neuquino (NCN) backing Figueroa along with a majority of the leadership of former president Mauricio Macri’s Propuesta Republicana (PRO). A minority of the PRO leaders as well as most of the leaders of the Unión Cívica Radical (UCR) in Neuquén continue to support the gubernatorial bid of UCR national deputy Pablo Cervi. Another former JxC coalition member in the province, radio journalist Carlos Eguía, is planning his own bid for governor as the Neuquén standard bearer of the libertarian presidential candidate Javier Milei.

Finally, the FdT remains divided between those who back a candidacy of former Cutral Có mayor and MERCOSUR deputy Ramón Rioseco or of former national deputy and former Argentine energy secretary Darío Martínez, and those who favor an alliance with Figueroa.

The MPN enjoys considerable discretion on when the election for governor and the unicameral provincial legislature’s 35 deputies is held. At present the most likely election date is at some point between April 23 and June 4, the latter the date on which the MPN was founded in 1961.

Neuquén utilizes the plurality formula for its gubernatorial elections (i.e., whichever candidate wins the most votes in a single round becomes governor), providing the MPN with an advantage in the event that multiple credible gubernatorial candidates run in 2023. However, Figueroa’s strong base of support among MPN dissidents combined with his ability to gain support from leaders within both the JxC and FdT raises the prospect of a 2023 political earthquake in the Vaca Muerta.

If this earthquake occurs, it would alter the political status quo in the province which has existed since 2007 under the leadership of Sapag (2007-2015) and Gutiérrez (2015-23), that is during the entirety of the dramatic shale revolution the province and region has experienced. Even if Figueroa (or one of the other opposition candidates if they are victorious) retains the general policy approach of Sapag and Gutiérrez toward the oil and natural gas industry, at the very least new relations and partnerships will need to be developed and established (which would not be the case if Koopmann were elected as governor). This will take time and effort and undoubtedly slow down development in the Vaca Muerta. As a result, this is an election that should be followed closely by the large number of companies with investments or operations, or plans for investments or operations, in Argentina’s Vaca Muerta.

This post originally appeared in the Forbes blog on Dec. 8, 2022.