Argentina is having serious difficulties developing a massive oil and gas deposit in it’s famed Vaca Muerta (Dead Cow) formation. While the region is geologically difficult to access and process, it is not geology alone that stands in the way. Argentina’s continuous flouting of international capital markets (defaulted twice in 12 years!) and penchant for nationalizing major assets after significant foreign investment all serve to keep potential investors away.

This may all become irrelevant, however. Vaca Muerta is said to rival Eagle Ford, one of the largest deposits in production in the United States. It is production enabled by the likes of Eagle Ford and the regulatory and business environment created by the American government that may stifle any ambitions the Argentine government may have. So long as gas and oil prices remain low, American civil institutions are more reliable than Argentine institutions, and capital costs remain high, there may be little reason for foreign investors to spend significant amounts of time and money into developing Vaca Muerta.

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Argentina’s Brilliant, Terrible, Very Unclear Energy Future

Meanwhile, the boom in U.S. and Canadian production has given oil companies safe, attractive places to invest. At the same time, oil prices are slumping, which means that expensive, hard-to-develop projects like Vaca Muerta risk becoming uneconomical — even if the government maintains a stable energy policy for years to come.

“The biggest impediment could simply be the cost of doing business there,” said Walter Molano, managing partner at BCP Securities and author of In the Land of Silver, a history of Argentina’s economic development. Argentina lacks many of the advantages that drove the U.S. fracking boom, from private mineral rights and a stable legal regime to a spate of small, nimble oil companies and plentiful energy infrastructure.