Pan American Energy (PAE) has applied for RIGI status for a roughly $1.2 billion tertiary recovery project at Cerro Dragon, the regime's first conventional upstream filing.
Cerro Dragon, in Chubut province in the San Jorge Gulf Basin, has produced oil for more than six decades, and much of the crude still in the rock no longer comes out with water. It is that barrel, the one secondary recovery leaves behind, that PAE, Argentina's largest private oil producer, is targeting under Argentina's Large Investment Incentive Regime (RIGI), with investment of close to $1.2 billion.
The filing was announced on Thursday in Paris, at the headquarters of the Organisation for Economic Co-operation and Development (OECD), during Argentina Week, a three-day government-led investor forum. Attending were Marcos Bulgheroni, PAE's group CEO; Chubut Gov. Ignacio Torres; Economy Minister Luis Caputo; Cabinet Chief Diego Santilli; and Jorge Ávila, secretary-general of Chubut's private oil, gas and renewable energy workers' union. According to the company, it is the first conventional oil production project submitted to the regime. The volumes and peak rates below are PAE's estimates, and the application still has to clear the regime's evaluation committee.
22 Polymer Plants, 100 New Wells, 46 Million Barrels
The plan calls for installing 22 polymer injection plants, drilling 100 producer and injector wells, adapting wells to handle polymer, and working over another 600 producing wells, plus new surface facilities. The plants and the polymer will be supplied by SNF, the French manufacturer with which PAE signed a strategic alliance for the program.
The technique comes into play once primary and secondary recovery have run their course. Polymer raises the viscosity of the injected fluid and pushes toward the producing wells crude that water alone cannot sweep. PAE estimates tertiary recovery can add up to five percentage points to the recovery factor achieved with secondary recovery, a margin that in a mature field is counted in millions of barrels.
Here, the figures are 46 million barrels of oil and 30 billion cubic feet (Bcf) of natural gas in incremental production, with a peak of more than 16,600 barrels of oil equivalent per day (boe/d) above the area's projected output. Of that oil, 18 million barrels would be exported. The rest would supply the domestic market, in particular the refineries that process Escalante crude, the heavy grade typical of the basin.
A Field in Decline: Oil Output Down 9.1% in a Year
The size of the program is clearer against the area's current production. According to the sworn statements PAE files with Argentina's Secretariat of Energy, Cerro Dragon produced about 64,700 barrels per day (bbl/d) of oil and 4.8 million cubic meters per day (MMm³/d) of gas in August, about 92,700 boe/d. A year earlier, in August 2025, oil stood at 71,200 bbl/d: a year-on-year drop of 9.1%, or about 6,500 bbl/d. Since January 2025 the cumulative decline has reached 12.5%.
Against that base, the 16,600 boe/d peak promised by tertiary recovery represents almost 18% of the area's current production. The 600 planned workovers touch about 16% of the 3,800 wells that reported oil in August.
The scale of secondary recovery also shows in the numbers. That same month, about 1,080 injector wells put close to 248,700 m³/d of water into the reservoir, about 24 cubic meters for every cubic meter of oil produced. Polymer works on that injection pattern, replacing part of the water with a more viscous fluid able to drag out the crude that conventional sweep leaves in the rock.
Cerro Dragon still accounts for almost 40% of the oil from the San Jorge Gulf Basin and about a quarter of Argentina's conventional oil. Its share of national output, however, fell from 9.8% in January 2025 to 6.9% in August, because of its own decline and the growth of Vaca Muerta, the shale formation in the Neuquen Basin that now drives Argentine output.
A Plan That Has Grown Since May
The project had an earlier version. In May, at the Economy Ministry in Buenos Aires, PAE had announced it would file for RIGI status for Cerro Dragon with investment of almost $680 million, the same 22 plants, the preparation of about 220 injector wells and about 650 producers, for incremental output of 24 million barrels and a peak of more than 11,300 bbl/d.
The version filed in Paris nearly doubles the oil volume and lifts investment by about 76%, shifts the program's weight toward new drilling, and adds gas and exports to the plan. Measured per incremental barrel of oil, investment falls from about $28.3 to about $26.1.
The link with the French supply chain has a precedent at the field itself. In the first quarter, PAE brought two modular polymer injection plants from France to the San Jorge Gulf Basin, a first physical step in the strategy that is now seeking scale.
Argentina's First Conventional Upstream RIGI
"We are talking about a particular RIGI and this needs to be made clear: it is Argentina's first conventional upstream RIGI," Torres said in Paris. Caputo summed it up in his own way: "It is a tremendous investment."
Bulgheroni focused on barrel economics. "We are focused on seeking new investment horizons at Cerro Dragon that complement the work we have been doing to make the basin more sustainable," he said, adding that entry into the regime "will be decisive in allowing us to implement tertiary recovery techniques in lower-productivity zones." The zones polymer opens up are precisely those that until now did not pay under secondary recovery.
In his presentation, the executive also reviewed the conditions that led to this point: the elimination of the so-called barril criollo, a mechanism that allowed the government to set domestic crude prices; lower import tariffs on polymers; and the competitiveness agreement among the national government, the province, companies and unions. He also tied the investment to the extension of the Cerro Dragon license, which gives the program a long-term horizon.
The application now goes to the regime's evaluation committee, which will have to settle the question Shale24 raised in May: whether a new development is measured by the licensed area or by the technical segment being worked. At Cerro Dragon, the next barrel is in the same rock as ever; what changes is the fluid sent to fetch it.