“Viva la libertad, carajo,” or “Long live freedom, damn it,” was a campaign rallying cry of Javier Milei, and a sentiment he repeated Sunday night upon being declared victor in a second runoff election for the presidency of Argentina. Milei, 53, a former economist and congressman, vows “a limited government, respect for private property and free trade. The model of decadence has come to an end. There is no way back.”
Known for his unruly mop of hair and four giant mastiff dogs, Milei in a previous life was frontman for a Rolling Stones cover band called Everest. On the campaign trail he sang La Traviata while wearing a yellow and black superhero suit as General AnCap, after Anarchist-Capitalism, as he calls his movement.
This hero of free markets has referred to fellow Argentinian Pope Francis as a “communist turd” and is keen to expand private gun ownership. His favorite prop is a chainsaw that he fires up and waves around to demonstrate his determination to slice and dice Argentina’s legendary regulatory apparatus and welfare state, where just six million private sector workers support 20 million government employees and pensioners.
“Today begins the reconstruction of Argentina,” he said. “Today begins the end of Argentina’s decline. Today ends the impoverishing model of the omnipresent state, which only benefits some while the majority suffers.”
He intends to eliminate export taxes, especially on Argentina’s big agriculture products like soybeans and beef, and is keen to “dynamite” the Argentinian Central Bank, which he says is the worst in the world and a primary cause of the country’s 140% annual inflation rate. To avoid another International Monetary Fund bailout (which happened most recently in 2018 to the tune of $57 billion) he wants to abandon the peso and dollarize.
But the biggest impact of a Milei presidency is likely to be the rise of a powerhouse energy industry. Shares in Argentina’s semi-nationalized oil champion Yacimientos Petrolíferos Fiscales, or YPF, jumped 25% on Monday on Milei’s victory and anticipation of renewed enthusiasm to drill, baby, drill.
“YPF must be an instrument for the transition, while the economic imbalances are corrected,” said Milei in June. The company posted $3 billion in net profit last year, and Milei aims to fully privatize it.
Argentina produces about 600,000 barrels per day of oil. According to Oswald Clint, analyst at Bernstein Research, it could pump far more from a prodigious untapped energy endowment, including the world’s second-largest shale gas basin called Vaca Muerta (Dead Cow) on 9 million acres in Patagonia. Similar to the Eagle Ford or Permian fields in Texas, Vaca Muerta potentially holds 300 trillion cubic feet of natural gas, and is less than 10% developed. Already expectations are so great for Vaca Muerta gas that YPF and Malaysia’s Petronas are developing a $10 billion LNG export terminal.
The big guys like ChevronCVX
, BP, Total and Equinor are there too, and have already been drilling in Argentina, both onshore and offshore, where the geology underneath the waters of the Atlantic is analogous to that thousands of miles away in the west African country of Namibia (the landmasses were connected many millions of years ago). Recent exploratory drilling in Namibia resulted in big oil finds, which Big Oil hopes to repeat in Argentina. ExxonMobilXOM
earlier this year announced it was reviewing its half a million aces in Argentina for possible divestiture; Milei’s ascension may persuade them to stay.
It’s early days, but one of the biggest potential individual winners in an Argentina oil boom is likely to be Marcos Marcelo Mindlin, 59, chairman and 17% owner of publicly traded Pampa Energia (NYSE: PAM), a leader in power generation, wind farms and petrochemicals. Pampa produces 50,000 barrels of oil per day and says it has the land to drill 2,200 wells. Pampa shares were up 18% on Monday after Milei’s victory, boosting the value of Mindlin’s stake to more than $400 million.
There’s pressure to perform. Milei intends to cut $12 billion in annual energy subsidies, end price controls, fuel shortages, and ensure Argentina no longer has to import natural gas from its neighbors ($5 billion last year).
To be sure, Argentina has more going for it than just fossil fuels. Analyst Clint sees the potential for 300 gigawatts of onshore wind turbine operations, and there’s some 30 mining projects in the works to tap the world’s third-largest lithium reserves.
Even though Milei says he doesn’t believe human activities can cause climate change, this is an all-of-the-above kind of guy. As he said in a presidential debate, “As a libertarian liberal I deeply believe in international trade and its opening. Basically, those countries that are more open to the world have per capita income nine times higher than those that are closed. I also believe that the State should not interfere in trade relations: it has no reason to interfere and say with whom I should trade and with whom I should not.”
Unmarried with no kids and estranged from his own parents, Milei is now dating comedienne Fatima Florez, who rose to popularity a decade ago for her impersonations of then-President Cristina Fernandez de Kirchner.
There’s plenty to make fun of about Milei, who has claimed to have engaged a medium to help him communicate telepathically with his late dog Conan (d. 2017). According to Milei’s biographer, it was Conan who revealed to Milei his mission to become president.
Milei has tried his best to replace his best friend, and now keeps four English mastiffs, all clones of Conan, and named after free-market economists like Rothbard and Milton Friedman. To reverse decades of statist, Peronist rule of Argentina, he’ll need advice from all of them.