“Each country has its own specific technical and commercial barriers,” said Emma Wild, head of the energy exploration and production advisory team at the consulting firm KPMG, who estimates that the commercialization of shale reserves could take up to 10 years in some countries. “Developers need to overcome a number of obstacles to create a viable shale industry,” she said.
Still, despite the potential problems, many governments are offering lucrative subsidies to entice global energy companies to invest.
Argentina, for example, passed laws last year allowing foreign companies to export 20 percent of their shale production tax free after the fifth year of development. Shale gas deposits in Argentina’s Vaca Muerta rock formation at the foot of the Andes are estimated to be among the largest in the world.
That has led to investment by several global players. Chevron, for example, agreed to spend $1.6 billion this year alongside Argentina’s nationalized energy company YPF to develop local oil and gas reserves. That comes on top of a previous $1.24 billion investment from the U.S. energy giant. Royal Dutch Shell also is expected to invest around $500 million this year in the Argentine region as it hunts for unconventional energy reserves.