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Chauvco quickly became one of the top 30 oil companies in Canada. Rising costs in Canada, as well as diminishing oil and gas reserves, led Chauvco to consider investing in other countries. In 1992, Chauvco purchased an interest in an Argentine oil and gas block that was being privatized. Chauvco''s success in Argentina depended on the country''s future political stability and the continuance of government policies. Prior to the 1989 election of Carlos Menem, Argentina experienced decades of political and economic instability. The government of Argentina nationalized many businesses and imposed detailed regulations throughout the economy - a set of policies that led to low growth, budget and trade deficits, hyperinflation, and currency devaluation. Whether Menem''s reforms could achieve long-term success remained to be seen. The case presents a lengthy list of difficulties that Chauvco encountered, as well as some positive aspects of the environment of business. Chauvco entered a joint venture partnership initially and then developed an independent set of operations. By 1995, Chauvco had to decide in what proportions it should divide its future investments between Canada, Argentina and other countries, and what criteria it should use in evaluating investment opportunities.