Natural gas exports on a firm basis to Chile
On August 21st, 2019, Disposition No. 168/2019 issued by the Under-Secretary of Hydrocarbons (the “Disposition” and the “Undersecretary”), which depends of the Ministry of Treasury, has been published in the Official Gazette. The Disposition has:
- Approved the terms and conditions applicable for gas exports on a firm basis to Chile (the “Regime”);
- Established that the Regime will be applicable for exports comprised within September 15th, 2019-March 15th, 2020 (the “Exports Period”);
- Determined a maximum capacity of ten million cubic meters (10,000,000 m3/d) for daily exports under the Regime; and
- Foreseen the Republic of Chile as destination of natural gas exports under the Regime, framed within the Economic Complementation Agreement executed between Argentina and Chile.
The Disposition has been issued within the framework of: (i) Resolution No. 104/2018 (“Resolution 104”) issued by the former Ministry of Energy, which foreseen the so-called “Authorization Procedure for Natural Gas Exports”, and (ii) Resolution No. 417/2019 (“Resolution 417”) issued by the Secretary of Governmental Energy (the “SGE”).
Resolution 417 defined the export methods available and in turn further delegated in the Undersecretary the implementation of the Energy Substitution Mechanism applicable to natural gas exports on a firm basis.
Since the issuance of the Disposition, applicants willing to export gas under the Regime shall comply with the provisions set forth in Resolutions 104 and 417, and the Disposition, which most relevant aspects are outlined below.
Moreover, the Disposition also contains the necessary guidelines for the Energy Substitution Mechanisms applicable to exports under the Regime.
Finally, the Disposition establishes September 6th, 2019 as deadline for submission of applications.
- Scope
As indicated before, the Disposition approves the natural gas exports on a firm basis procedure, for the Exports Period, to the Republic of Chile.
- Available volumes to export scheduled by exploitation zone
| Zones | Available Volume | Export Pipeline |
| Northwest | 1 MMm3/d | Norandino and Atacama |
| Central - west | 6,5 MMm3/d | GasAndes and Pacífico |
| South | 2,5 MMm3/d | Methanex |
- Applicable procedure
The authorization for gas export will be granted by the Undersecretary which shall analyze whether the applicants comply with the requirements established in the Disposition and Resolutions No. 104 and 417. For those purposes, applicants must verify all requirements mandated in the aforementioned regulations and the procedure established in the annex attached to the Disposition.
Should the applicant already have a prior authorization for the Exports Period but not on a firm basis, such authorization may be converted into a firm one, either partially or totally.
The application must be submitted through an online platform named “Plataforma de Trámites a Distancia” (TAD) and comply with the following requirements:
(i) File a summary of the envisaged operation which includes: (a) the source and destination of the exported gas; (b) daily and total, maximum and scheduled volume quantities; (c) projected price in the node on which the gas is delivered into the transportation grid and adjustment formula, if applicable; (d) tenor of the exports; (e) export nodes on which the gas will be exported outside Argentina into Chile; (f) price of gas at such locations; (g) final destination of the exported gas;
(ii) Indicate whether the exported gas will be allocated to residential, industrial or electricity generation purposes; and
(iii) File an affidavit of both the selling and gas off-taker regarding the use of gas exported.
- Application deadline
The deadline to submit any application for exports under the Regime expires on September 6th, 2019, 16:00 hours (Buenos Aires time).
- Assessment and award
Applications will be analyzed by the Undersecretary. For those purposes, the Undersecretary will consider the provisions foreseen in Resolution No. 104 (supply and gas demand; gas production; transportation) and such assessment will be carried out in accordance with Sub-Annex B of the Disposition.
Said Sub-Annex B establishes that the award of export volumes will be divided by zone, in accordance with a performance index for each applicant and its application, integrated with (i) historic production performance; (ii) historic export performance; (iii) current performance and, (iv) tenor of the required exports.
This performance index will act as ordinating factor upon which the applicants will be organized decreasingly in accordance with their obtained score (“Initial Share”).
Further, each one will be assigned with the minimum between the Initial Share and the maximum daily required capacity, except that such minimum volume falls below the minimum value applied (CMO), which determines no volume assignation.
If further to such allocation, there is still remaining volume to be assigned, the surplus will be distributed in decreasing order.
- Energy Substitution Mechanism
If the Wholesale Electricity Market (“WEM”) demands a larger amount of imported natural gas, GNL, carbon, fuel oil and/or gasoil, and such incremental amount is borne by the Federal State, the Energy Substitution Mechanism provided in the Disposition shall apply, which considers the following:
- Exporters must bear incremental amounts faced by the Federal State as described above.
- Such compensation fee will be determined by CAMMESA once the period of application has elapsed.
- The maximum value of such compensation nominated in US Dollars per million BTU (USD/MMBTU) will be established by the SGE.
- Other relevant aspects
- The authorization cannot be assigned nor transferred by the applicant.
- If the assigned volumes cannot be achieved, the exporter must inform such circumstance to the Under-Secretary which shall thereafter inform former applicants not awarded with an authorization of this nature for purposes of reallocation.
- If such obligation is not upheld by the exporter, the Regime stipulates a penalization in an amount equal to those volumes not subject to export. Failure to pay this penalty prevents the penalized party to request further authorizations during a 24-month term.
At TRS&M we are available to provide clarifications or further information of any matter addressed above. If you need any assistance, please do not hesitate to contact either Nicolás Eliaschev or Javier Constanzó.
Incorporation and authorization by the Argentine Securities Exchange Commission of Bancor Fondos S.G.F.C.I.S.A.U. as fund manager and Banco de la Provincia de Córdoba S.A. as custodian
Deal counsel in the incorporation and authorization by the Argentine Securities Exchange Commission (Comisión Nacional de Valores) of Bancor Fondos S.G.F.C.I.S.A.U. as fund manager and Banco de la Provincia de Córdoba S.A. as custodian, and the creation of their first open-end funds “Champaquí Ahorro Pesos”, “Champaquí Ahorro Dólares”, “Champaquí Ahorro Mixto”, “Champaquí Liquidez” and “Champaquí Estratégico”.
FIU - New LA / FT Prevention Guidelines for Credit Card Operators
On July 29, 2019 the Financial Information Unit (“FIU”) issued Resolution No. 76/2019 (the “Resolution”), establishing the guidelines for preventing money laundering and terrorist financing (“ML/TF”), which shall be applicable to all operators in the credit and purchasing card sector, as well as to travelers checks issuers.
The Resolution adopted guidelines similar to those previously established by FIU Resolution No. 30-E/2017, applicable to financial institutions. Consequently, credit and purchasing card operators, and travelers checks issuers, must develop a self-assessment risk system, in compliance with the risk factors and risk mitigation determined by the Resolution. They shall also comply with the “know your client’s profile policy” as well as be in possession of detailed records reflecting a deep knowledge and profile of their clients.
Additionally, the obliged subjects shall (i) maintain a procedures manual in order to prevent ML/TF, as well as with appointing a compliance officer; and (ii) provide the requiring clients all their information and documentation concerning their identification and the origin of the funds.
Regarding to its enforcement, the Resolution establishes a progressive implementation schedule, starting on December 31, 2019, so as to complete with all requirements on February 28, 2020.
Finally, within 10 days of publication of the Resolution, the obliged subjects must report the FIU with the appointment of a person responsible to address urgent matters.
For further information, please do not hesitate to contact Eugenia Pracchia or compliance@trsym.com.
Public Tender for the Construction of the Gas Del Centro Natural Gas Transportation System
By means of Resolution No. 437/19 (the “Resolution”), the Secretary of Government of Energy (the “SGE”) has called for a public bidding procedure for purposes of awarding a new natural gas transport license (the “License”). This new infrastructure project entails the design and construction of a natural gas pipeline that will: (i) connect a facility located in the Neuquén’s Subzone with another facility located in the city of Salliqueló, Province of Buenos Aires; and (ii) interconnect the Salliqueló’s facility with TGN’s gas transportation system in a spot near the city of San Nicolás, Province of Buenos Aires. This new transportation system has been officially named as Transporte Gas del Centro (the “Project”).
The Resolution also approved the definitive version of the bidding terms and conditions (the “Terms and Conditions”) and its annexes. Finally, the Resolution scheduled the submission of bids date on September 12th, 2019.
Below are the Terms and Conditions’ most important aspects:
(a) Required Works
The Project includes:
(1) Phase 1: construction of 570 km of a 36 inch pipeline with an initial capacity of 15 MMm3/day of natural gas (9.300 kcal/m3) and a future minimum capacity of 40 MMm3/day, which will connect a gas facility located near Tratayén, Neuquén, with a facility located near to the city of Saliquelló, Buenos Aires (“Phase 1”); and
(2) Phase 2: construction of 470 km of a 30 inch pipeline with a minimum capacity of 20 MMm3/day of natural gas (9,300 kcal/m3) which will connect the facility located near city of Saliquello, Buenos Aires with a gas pipeline located near the city of San Nicolás de los Arroyos, Buenos Aires (the “Phase 2”).
(b) Schedule (main milestones and occurrence expected time pursuant to the Terms and Conditions)
| Milestone | Expected Date |
| Consultation Period | Until August 29th |
| Publishing by the SGE of circular letters (amendment and clarification) | Until September 5th |
| Bids’ Submission | September 12th |
| Offers’ Opening | September 12th |
| Offers Assessment | September 26th |
| Bids’ Qualification | October 3rd |
| Economic Offer’s Opening | October 8th |
| Award Date | October 21st |
| Execution of the License | November 20th |
Additionally, the following milestones, regarding the execution of the works, are scheduled (terms shall begin on the License’s execution date):
| Milestone | Phase 1 | Phase 2 |
| Presentation of the final project | 2 months | 42 months |
| Financial Close | 6 months | N/A |
| Partial Operation | 18 months | N/A |
| Commercial Operation | 24 months | 60 months |
(c) Economic Offer: CAMMESA’s Transportation Agreement
Bidders must bid a monthly fee regarding the CAMMESA’s Transportation Agreement (as this term is defined below) for the contracted Phase 1’s transport capacity corresponding to 10 MMm3/day. The bidder proposing the lower amount shall be awarded.
Jointly with the execution of the License, the awardee shall execute the Offer Letter attached as Annex IV of the Terms and Conditions (“CAMMESA’s Transportation Agreement”).
(d) Financing provided by ANSES’ Guarantee
Fund Pursuant to the Terms and Conditions, the awardee is entitled to apply for a financing facility from ANSES’ Guarantee Fund. Main terms of the financing conditions are summarized below:
(1) Validity Term of the Financing Commitment¸ the first one to occur between:
- Fourteen (14) months since the execution of the Commitment Letter by and between the ANSES and the SGE; or
- Ten (10) months since the awarding date.
(2) Type of Titles: Securities issued under the Argentine Offer Public Regime.
(3) Maximum Amount: US Dollars four hundred million (USD 400,000,000).
(4) Securities’ Maturity: fourteen (14) years.
(5) Interest Rate: Linked to (i) sovereign yields for similar maturity terms; and (ii) Project’s risk.
For further information, please do not hesitate to contact either Nicolás Eliaschev or Javier Constanzó.
Natural Gas Exports: Regulatory Updates
On July 26, 2019, Resolution No. 417/19 (the “Resolution”), issued by the Secretary of Government of Energy of the Ministry of Treasury has been published in the Official Gazette with important implications regarding natural gas exports. This Resolution approves a new procedure that must be complied with by those interested in exporting natural gas.
The Resolution revokes prior Resolution No. 104/18 issued by the former Ministry of Energy on August 22, 2018.
This Resolution also entrusts the Undersecretary of Hydrocarbons and Fuels to: (i) enact the applicable framework that shall rule mechanisms for energy substitution for natural gas exports on a firm basis - notwithstanding Resolution’s applicability until such mechanisms are enacted-, and (ii) the elaboration and further approval of the mechanisms applicable for natural gas exports which shall apply upon shortage of natural gas in the local market.
The Resolution’s most relevant aspects are outlined below:
- Type of authorizations: The Resolution foresees four (4) kinds of authorizations:
- Firm or uninterruptible: natural gas purchase agreements which contemplate delivery and reception of gas by the contracting parties that are mandatory and cannot be carved-out except for force majeure events;
- Interruptible: natural gas purchase agreements which do not contain mandatory delivery and/or reception provisions which bind the contracting parties;
- Operational exchanges: agreements executed for purposes of attending operational requirements (back-up fuel) and/or emergency scenarios and others of similar nature, to the extent the enforcement authority requires the exporting party to reimport equal amounts of natural gas (or equivalent electricity quantities) within twelve (12) months as of the first event of exportation;
- Assistance agreements: for providing support to neighboring countries under critical situations and/or declared states of emergency. The exporter shall not be required to import equivalent volumes of the exported natural gas nor its equivalent in power. These exports are excluded from the procedure provided in the Resolution.
- Simplification of the procedure to request the authorization: The export filing request shall be made digitally through an online remote platform.
- Unconventional natural gas: The volume of exported natural gas produced by a project benefited from the Government’s Incentive Program will be offset from the project’s total production, prior to the determination of the project’s Included Production volumes. Former Resolution No. 104/18 provided that exported gas could not be employed within the Government’s Incentive Program approved for unconventional gas.
For further information, please do not hesitate to contact either Nicolás Eliaschev or Javier Constanzó.
KfW IPEX-Bank grants a portfolio project finance facility for the development and construction of the wind farms Chubut Norte III and Chubut Norte IV
KfW IPEX-Bank grants to Genneia Vientos Sudamericanos S.A. and Genneia Vientos Patagónicos S.A, two special purpose vehicles fully owned by Genneia S.A., a joint facility worth US$ 131,550,636 under a non-recourse portfolio project finance structure under the RenovAr programme, for the development and construction of the wind farms Chubut Norte III and Chubut Norte IV (which will be located in the Chubut province), totaling 140.88 MW of combined generation capacity.
Relevant News on the Renewable Energy Sector
On July 11th, 2019, Decree No. 476 (the “Decree”) of the National Executive was published in the Official Gazette, with relevant news regarding the renewable energy regime.
The Decree has partially amended Decree No. 531/2016 (regulating) Laws No. 26,190 and No. 27,191. Most relevant aspects of the Decree are summarized below:
- Simplification of the process to obtain the Inclusion Certificate
The Secretary of Government of Energy—in its capacity as enforcement authority of the renewable energy regime—is empowered to: (i) analyze and approve the renewable projects that may apply for the Inclusion Certificate; and (ii) grant, to each of the approved projects, amounts requested as tax benefits, without the prior intervention of the Secretary of Treasury. In addition, the Decree eliminates the Ministry of Treasury’s intervention which is now no longer required.
- Execution of Power Purchase Agreements (“PPAs”) with public-owned entities
The Decree entitles CAMMESA (Wholesale Electric Market Management Company) to enter into PPAs with public-owned entities (either national, provincial and/or City of Buenos Aires’ owned). Prior the Decree, such entities were allowed to execute PPAs with CAMMESA insofar they participated in public tender procedures. The Decree now allows them to execute PPAs without participating in those procedures, to the extent that the following requirements are met: (i) the generation facility is owned by such public entities; (ii) those projects are able to access better financing conditions in comparison with the ones that the Federal or Provincial State could access to; and (iii) the investment projects have a relevant impact in local development.
Assignment, transfer or subcontracting of the PPAs are forbidden.
The agreed price under the PPA must be in line with those arising from public tendering called by the Secretary of Government of Energy, which implies that these agreements must be entered on a market condition basis.
As of this measure, public-owned entities are now eligible to enter into PPAs: (i) within the term market (approved by Resolution No. 281/17), and/or (ii) directly with CAMMESA, either directly (based on the Decree) or after being selected as such after a competitive procedure is carried out.
- Expectations for the Round 4 of the RenovAr Program
Senior officers of the Secretary of Government of Energy have announced that they are working in the design of the future Round 4 of the RenovAr Program, which is expected to be officially launched on November 2019.
Unlike the other rounds of the RenovAr Program, this new round is believed to require the bidders, in addition to their generation projects, the execution of works for the extension of the transmission capacity of some main lines of the Argentine electricity sector.
For further information, please do not hesitate to contact either Nicolás Eliaschev, Javier Constanzó or Juan Pablo Filippini.
Vaca Muerta: The Contracting Process for the Construction of an Essential Natural Gas Pipeline has Begun
On July 10th, 2019, Decree No. 465 (the “Decree”), issued by President Macri, has been published in the Official Gazette. By means of the Decree, the Secretary of Government of Energy (the “SGE”) has been instructed to call a public national and international tender with the purpose of awarding a new natural gas transport license for a new facility. This new infrastructure project entails the design and construction of a natural gas pipeline that will connect the Neuquén’s Subzone with the cities of Salliqueló and San Nicolás, both located in the province of Buenos Aires.
Pursuant to the Decree, the new transport license shall include a special regime lasting 17 years as from commercial operation date. The main terms of this special regime are summarized below:
- The licensee’s remuneration shall be freely negotiated with the users of the gas pipeline;
- The licensee’s remuneration shall not impact in the natural gas residential end users’ rates;
- The terms and conditions of the tender to be called by the SGE shall provide a partial award of pipeline’s capacity. The remaining capacity shall be assigned through public tenders, in compliance with the applicable regulations.
Finally, the Decree provides that Law No. 24,076 -that rules natural gas’ transportation and distribution-, shall be the project’s legal framework, instead of the Law No. 17,319 -that recognizes the operating concessionaire’s right to transport its hydrocarbons-. However, as long as the special regime remains effective, Law No. 24,076, Title IX, Chapter I provisions to the extent they contradict the Decree, shall not be applicable.
For further information, please do not hesitate to contact either Nicolás Eliaschev, Javier Constanzó or Juan Pablo Filippini.
20 Minute Insight
📺 👉🏼 Our partner Nicolás Eliaschev was interviewed by Jamie Dowswell, Programme Director of AIREC, about the outlook for Argentina's Renewable Energy Sector for this year.
Ensenada de Barragán thermal power plant sale
Integración Energética Argentina S.A. (“IEASA”), undertook the National and International Public Bid No. CTEB 02/2019 (the “Public Bid”) by means of which the “Ensenada de Barragán” power plant was sold and transferred, according to the terms and conditions disposed by Decree No. 882/2017 of the Executive Branch and Resolution No. 11-E/2018. As a result of the Public Bid, IEASA awarded to YPF S.A. and Pampa Cogeneración S.A., as sponsors of CT Barragán S.A.