Neuquén, A Heart of Oil

The biggest city in Patagonia which holds an incredible history of Indigenous people and colonial explorations in the Argentinian republic.

By Sonu Dawadi, Daniel Freire Espin, Saara Kemppainen, Kaisa Lahikainen, Nadin Sadek
The authors are students of Global Development Studies at the University of Helsinki

Neuquén is the largest city in Argentinian Patagonia. The city is also the most important economic hub in Patagonia. Relying heavily on the energy sector, revenue from oil in Vaca Muerta is the main source of income for the city.


The confluence of the Neuquén and lImay rivers, in Patagonia, has shown signs of human occupation for thousands of years. Indigenous communities such as the Mapuches extended their territories here. During the 16th century the “Mapuche acculturation” occurred, a process during which this group extended their influence throughout much of Patagonia. The Ratsrilladas, a series of paths that connected several populations of Indigenous people, were built during this time. By the time the Spanish conquistadores reached Patagonia, several groups were ruled by Loncos.

During the colonial period, Patagonia remained largely unexplored and the Mapuches had not much contact with European invaders. However, with the independence of Argentina, the nation gained interest in effectively controlling more of its territory. To attain this goal, several expeditions were organised. For example, the expedition of Las Rosas in 1833, in which the Argentinians intended to take control of Patagonia, that led to violent confrontations with the Mapuche and the expedition ended in failure. Later, the expedition of La Roca was staged to take the future territory of Neuquén as it had several rastrilladas.

Patagonia was finally controlled by Argentina and many migrants from Buenos Aires arrived. These early settlements were dispersed, and the locality was named Confluencia. Some infrastructure that permitted the connection with the rest of Argentina was built, for example a train station and a telegraph. These constructions made Confluencia more attractive for new settlers, which is why when the province of Neuquén was created, its capital was decided to be established at Confluencia’s site: in 1904, Neuquén is officially founded here.

Economic Composition and Structural Change

In the 1970s a large hydrocarbon field was found in the area. This discovery displaced the existing economic foundation of the city which was mainly based on agriculture, and the city became one of the major fuel producers in Argentina. This ‘oiling of the urban economy’, to use a descriptor in the literature, attracted many multinational oil companies to the city.

But it was not until the 1990s, when Argentina underwent significant structural economic reforms, including privatization and liberalization of many industries, that the ownership structure of the oil industries shifted into private hands. The end of the military dictatorship in 1983 also facilitated this structural adjustment. Until the 1990’s the state owned Yacimientos Petrolíferos Fiscales (YPF) was the main oil provider in Argentina, but after that the country transferred from state owned oil companies to private firms. During this process, YPF was also privatized and in 1998 60% of the company was privately owned.

From 1990 onwards, national and multinational oil companies took more power on the urban economic scene. In 2000s there have been state incentives towards unconventional energy projects, but the hierarchical structure and dependency on existing infrastructure in the energy system restricts involvement of local actors in UEP -market and promotes extractivist practices.

Even more recently, Neuquén’s economy continues to be largely driven by the energy sector. It accounted for some 42 per cent of the city’s 2019 GDP (Gross Domestic Product) (Figure 1). Many national and international companies such as YPF, Tecpetrol, and Pan American Energy, have made substantial investment in exploration and production of oil.

Figure 1. Relative Sector Contribution (%) to Regional GDP, 2019
National Institute of Statistics and Censuses of Argentina (INDEC, 2019)

To this day, Vaca Muerta shale formation is the second largest gas reserve and fourth largest oil in the world. As an oil city, the most pressing problem Neuquén faces is what has been called the ‘energy transition’. It is one of many key issues faced by Neuquén.

Ecocide, Just Transition, and Just Sustainability

Neuquén, like many other cities, faces several issues, such as traffic congestion  and a shortage of adequate housing,  that are considered urban questions. The LUCA project aims to address urban mobility and public transport. More than 3 in 10 persons in Argentina lack adequate housing due to factors such as migration, limited social housing programs, and high land prices worsened by economic crises, inflation, and devaluation. The Neighbourhood projects offers training and financing to improve housing quality and self-management, as well as supervised rentals for families with a history of poor housing conditions. Conflict between the Mapuche nation and the state has also become a significant issue. Legislative improvements and organizations such as the National Institute of Indigenous Affairs and IWGIA have worked to protect the collective and individual rights of Indigenous peoples. The construction of the Nahueve dam has raised concerns among environmental groups and Indigenous communities, highlights a transparent and participatory decision-making process that considers the potential impacts of the dam is necessary to ensure its sustainability. The Neuquén region has several tourism hubs that attract a growing number of both, traditional tourism and lifestyle migrants which is starting to push the urban frontiers.  So, all these problems appear transient.

A more persistent and structural problem is ecocide. Oil and gas companies operating in Argentina’s Vaca Muerta shaleformation are facing allegations of illegal dumping of toxic waste. Environmental groups are calling for stricter regulations and enforcement to prevent further ecocide. The government has launched a public registry to address the issue. Greenpeace activists previously blocked a waste site used by these companies, but this activism did not impact production.

Aerial view of Comarsa’s oil and gas waste storage and treatment facility in the city of Neuquén, Argentina. Credit: Martín Barzilai 

The problems of oil production are not limited to extractivism and environmental degradation. For example, issues regarding oil rents and patronage as well as effects on labor  which have impact on local social realities. Looking at the future, it is clear that oil cities are due to a transition towards green energy alternatives. However, current realities and just transition from oil are affected by the historical and cultural structures. In fact, recent events show the growing numbers of oil export and new investments.

Lack of state and local government regulation in land and real estate development reproduces value systems of a neoliberal market-based approach rather than local values and interests. The impact of unregulated urban planning and development has led to exclusion and gentrification. To address these problems, regulation and planning, that has the collective local interests as a core, could offer solutions. Reproduction of conflicting social imaginaries and institutional violence from hegemonic discourses should be critically observed.

What is at issue is not simply about just transition. At the root, there are deeper questions of just sustainabilities. In Neuquén, inclusive of ecocide remedies, sustainability policies should address social injustices more holistically, beyond the environmental aspects.