After receiving the Senate's approval on 14 October, The Chamber of Deputies gave its final approval to new regulations that will govern the hydrocarbons sector in Argentina. The Government believes that the reform will be key in developing unconventional and offshore deposits, which had not been legislated for to date.
The aim of the new regulations will be to attract foreign investment in the exploration, exploitation and production of the country's huge oil reserves.
1. New provisions
The main new elements brought in by the reform are:
- New duration of concessions. Concessions are extended and differentiated depending on the type of exploitation carried out:
- 35 years in the case of concessions for the exploitation of unconventional resources
- 30 years for offshore operations
- 25 years in the case of inshore conventional resources
- A single model has been established for national tenders: A single national tender model has been created for all oil-producing regions. Concessions will be awarded to the bidder that commits the highest investment. Provincial governments will continue to administer and manage tenders in accordance with the law.
- New regime governing royalties: Provincial government royalties are set at 12% and may be increased by 3% for every concession extension up to a maximum 18%. Extensions may be awarded every 10 years to companies that meet agreed investment requirements.
- Companies that invest US$ 250 million or more over a period of five years are exempted from paying export taxes over up to 20% of their production.
- Removal of the practice of acarreo during the development phase in protected areas reserved for state companies: state companies can no longer participate in shared-risk public-private concessions without having invested in the development phase from the outset.
One of the primary deposits that is expected to benefit from the new regulation is Vaca Muerta, which has huge unconventional reserves and will require equally huge investment.