Interventions in the Electricity and Gas Agencies

On March 17th, 2020 Decrees No. 277/2020 and 278/2020 (the “Decrees”) were published in the Official Gazette, which have ordered the intervention of the Electricity Regulatory Authority—in spanish Ente Nacional Regulador de la Electricidad—(“ENRE”) and the Gas Regulatory Authority—in spanish Ente Nacional Regulador del Gas—(“ENARGAS”) and designated Lic. Federico José Basualdo Richards and Lic. Federico Bernal as intervenors.

The Decrees have been enacted in the context of Law No. 27,541 of Social Solidarity and Productive Reactivation, passed by the National Congress, which declared a public emergency in economic, financial, fiscal, administrative, pension market, rates, energy, health care and social matters for a 1-year term, and entrusted the National Executive to intervene the energy and gas agencies.

Such bill also authorized the National Executive to freeze natural gas and electricity rates under federal jurisdiction and to carry out an extraordinary review of the current rate structure of those activities regarded as public utilities, in the terms of Laws No. 24,065 and 24,076 -which foresee the regulatory frameworks applicable to electricity and natural gas-, tending to a reduction in rates during the current 2020 year.

  1. Term of the interventions

The interventions of the ENRE and ENARGAS will remain in force until December 31, 2020.

  1. Powers of the intervenors

The intervenors are entrusted to:

(i) Conduct an audit and a technical, economical and juridical review in order to further assess the current rate structure for transportation and distribution of electricity and gas within the framework of Law No. 27,541, and are in turn enabled to carry out an renegotiation of such rates and/or undertake an extraordinary review, pursuant to Law No. 24,065 and 24,076, as applicable. Should the intervenors detect anomalies in the context of such revision, they shall inform the National Executive, providing all information and corresponding documents, and suggest the actions and measures which may deem necessary.

(ii) Review the public tendering procedures carried out in order to designate the former board members of the ENRE and the ENARGAS and thereafter, initiate a new selection procedure.

  1. Current members of the ENRE and ENARGAS boards discharged

Current board members of such agencies have been discharged by means of the Decrees.

For further information, please contact Nicolás Eliaschev and/or Javier Constanzó.


In the following link, you can access to the publication made by Nicolás Eliaschev regarding certain energy matters of Law No. 27,541.

In the following link, you can access The Firm’s statement on Coronavirus.

News in the Energy Sector: New Remuneration Structure for Legacy Power Generators, Co-generators and Self-generators

Resolution No. 31 issued by the Secretary of Energy (“Resolution 31”) and published in the Official Gazette on February 27, 2020: (i) has repealed former Resolution No. 1/2019 issued by the former Secretary of Renewable Resources and Electricity Market; and (ii) approved a new remuneration structure for legacy power generators, self-generators and co-generators of the Wholesale Electricity Market (“WEM”). The new regime applies to legacy facilities which do not sell their energy under a power purchase agreement (“PPA”).

The purported aim of Resolution 31 is to adjust the remuneration criteria for generators to ensure the sustainability of the WEM under economically reasonable and efficient conditions. To this regard, the resolution states that energy generation costs must be passed through to final users.

The rationale that Resolution 31 invokes as grounds to its issuance is the abrupt change in the exchange rates which negatively impacted the remuneration structure that was stipulated by the former Resolution No. 1/2019.

The most relevant aspects of the Resolution 31 are outlined below:

  1. Scope of Resolution 31

A new remuneration mechanism for conventional and renewable generation, cogeneration and self-generation, operating without a PPA, has been approved, effective as of February 1, 2020.

  1. Remuneration in Argentine pesos

The new remuneration structure, unlike the repealed Resolution 1, provides that the amounts paid to the WEM agents identified above will be nominated and paid in Argentine pesos.

Former Resolution 1 determined that the remuneration of such was calculated in US dollars and the payment was in Argentine pesos, using for its conversion the exchange rate published by the Central Bank of Argentina "Reference Exchange Rate Communication 'A' 3500 (Wholesale)", of the day before the due date of the economic transactions.

  1. Remuneration adjustment mechanism

Remuneration shall be adjusted on a monthly basis according to a formula based on the Index of Consumer Prices (IPC) and the Index of Internal Wholesale Prices (IPIM), both published by INDEC (the Argentine Statistic Agency).

For further information, please do not hesitate to contact either Nicolás Eliaschev and/or Javier Constanzó.

Recent deals in renewables. Where do we go from here?

An update of recent developments and an outlook on what to watch-out for in the coming weeks and months in the Argentine energy landscape

  1. Introduction

Renewables expanded significantly in the past years. Currently total capacity for renewables is 2725 MW, with more than an additional of 1500 MW (est.) under construction or commissioning. Once projects under construction reach COD, Argentina will be on track to meet its renewable energy consumption target for 2020 set out by the law at 12% (target for 2021, stands at 16%, for 2023, at 18% and 2025, 20%).

As of December 10th, 2019, a new Administration was sworn-in and certain questions arose regarding policies to be adopted under the new Government.

In an interview, our Partner Nicolás Eliaschev stressed the bipartisan nature of renewable energy policies and recalled that Law 27,191 which sets out renewable energy policy was sponsored by the Administration in place at the moment (Cristina Fernández de Kirchner) and then implemented by the Macri Administration. Eliaschev argued that the new Government had the opportunity to continue along this path.

  1. Recent positive developments and transactions

Although it may be too early to jump into definitive conclusions, the first signs are encouraging, and the current Administration seems to be committed to continuity in this policy area. Among the positive news for the sector, we point out the closing or signing of relevant project finance transactions where we had the honor to represent the lenders:

  • On December 19th, 2019, KfW Ipex Bank disbursed the first instalment of a facility granted for the development and construction of the wind power projects Chubut Norte III and Chubut Norte IV (respectively owned by SPVs controlled by GENNEIA and PAE), totaling 140.88 MW of combined generation capacity. The deal was signed in July 2019. Our Firm acted as Argentine counsel for KfW Ipex, with a team led by partners Marcelo R. Tavarone and Nicolás Eliaschev.
  • On January 14th, 2020, Luz del León (an SPV controlled by YPF Luz) signed a US$150 million project finance facility with BNP Paribas Fortis SA/NV and United States International Development Finance Corporation (DFC) to finance the development and construction of the Cañadón León wind power project for a total 120 MW of generation capacity, located in the Province of Santa Cruz, Argentina. The transaction is the first non-recourse project financing to build a windfarm that will supply electricity under two types of PPAs: a 20-year PPA with CAMMESA under the RenovAr regime, and a 15-year corporate PPA under the MATER regime, both under Argentina’s renewable energy legal framework. The transaction is also the first non-recourse project financing to be signed after the new Administration led by President Alberto Fernández was sworn in. Our Firm acted as Argentine counsel for BNPP and DFC, with a team led by partners Nicolás Eliaschev and Julieta De Ruggiero.

Another positive development is the continuity of Round 3 of the RenovAr Program. On August 2nd, 2019, the prior Administration awarded PPA for projects totaling 260 MW of capacity and the deadline for PPA execution was set for January 24th, 2020.

  • On December 4th, 2019, our Firm, with a team led by partners Nicolás Eliaschev and Juan Pablo Bove, assisted a successful bidder in the execution of nine PPA totaling 112.5 MW, corresponding to nine wind power projects.
  • On January 24th, 2020, our Firm, with a team led by partners Nicolás Eliaschev and Julián Razumny, assisted a successful bidder in the execution of three PPA totaling 30 MW, corresponding to three solar PV power projects. These PPA where among the first executed under the new Administration.
  1. Challenges
  • Delayed projects

Due to various reasons ranging from financial turbulence experienced by the country to more project-specific issues, certain projects, particularly some of those awarded under the RenovAr 2 round, have either fallen behind schedule or have never started construction. The new Administration has committed to review the existing situation on a project-by-project basis and although it has yet to announce a decision, a variety of possibilities may be considered ranging from term extensions, waivers regarding delays or PPA termination.

The outcome of this review will help to assess the real nature of the existing project pipeline. Some projects facing distress may be revived and others that never started might be terminated.

  • Transmission

Once the pipeline is settled as per the above, the picture of transmission availability will become clearer. As of today, should the whole project pipeline be built, transmission would be scarce. If some projects are cancelled, transmission capacity would be freed-up and new projects targeting the corporate PPA market might be developed.

From a long-term perspective, new transmission infrastructure is required, and the new Administration has publicly announced it as a priority. The question on how such goal will be achieved remains open, with a menu that includes PPP models, a BOT contract approach and public works.

  • Sovereign risk

Currently, the country has initiated the first stages of its foreign debt restructuring, involving both the IMF and private bondholders.

If the issue is overcome in an acceptable way for all the interested parties and Argentina achieves a successful, amicable and fiscally sound arrangement, country risk will be bound to lower, opening opportunities to finance energy infrastructure.

Should that not be the case, infrastructure financing will be probably more challenging and done piecemeal.

  1. And what about Vaca Muerta?

The Government has repeatedly and strongly stated that fully tapping into Vaca Muerta’s potential is a top political priority and has committed to foster and protect hydrocarbon investments. However, currently some uncertainty is being faced due to intervention in fuel prices and the sovereign matters described above.

The Administration has announced that it will send a bill to Congress specifically designed to ring-fence Vaca Muerta from political risk and provide strong guarantees for long-term investments. Although initial drafts that have been made available show positive signs, an official bill is yet to be released and we will thus revisit the matter as soon as such information is officially known.

Another issue to watch-out for is the status of the public tender summoned by the prior Administration for the construction of a natural gas pipeline designed to allow Vaca Muerta to pump further volumes of natural gas and ramp up production. Under the current schedule set out by the prior Government, bids were due on March 31st, 2020. Next steps on this process are yet to be announced.

For further information, please do not hesitate to contact either Nicolás Eliaschev, Marcelo R. Tavarone, Juan Pablo Bove, Julieta De Ruggiero and/or Julián Razumny.

News in the Midstream Sector: Rules for Natural Gas Storage

On November 7th, 2019, Resolution No. 722/2019 issued by the National Gas Regulation Entity (in Spanish, Ente Nacional Regulador del Gas and hereinafter, the “Resolution” and “ENARGAS”, as applicable), has been published in the Official Gazette, which approved the rules for natural gas storage (the “Rules”).

The Resolution has been issued within the framework of: (i) Law No. 24,076 (which contains the main rules for natural gas midstream and downstream), and (ii) its regulatory Decree No. 1,738/1998 (the “Regulatory Decree”), which foresee natural gas storage companies as agents of the natural gas industry.

The key takeaways of the Rules are singled out below:

  1. Scope

The Rules establish the conditions, procedures and requirements that must be complied with by companies willing to own and operate natural gas storage facilities, as well as the requirements that must be met in order to register such facilities under the natural gas storage registry.

Natural gas storage is defined by the Rules in the following terms: “the activity intended to store natural gas in underground or ground level facilities, during a certain period of time, including delivery, storage and further withdrawn, and when applicable, its liquefaction and regasification” and further states that all ancillary activities are comprised therein.

Storage facilities comprised by the Rules are: (i) LNG storage tanks, (ii) CNG and/or in bulk CNG loading and unloading facilities, (iii) LNG regasification and/or liquefaction terminals, (iv) LNG storage “peak shaving” facilities, (v) regasification or liquefaction mobile equipment, (vi) LNG transportation tanks, (vii) underground natural gas storage facilities, and (viii) CNG tanks.

Further, facilities outlined above are also subject to safety regulations and controls that ENARGAS may issue from time to time and must also be operated pursuant to NAG Codes (i.e. applicable local technical codes) and regulations passed by the ENARGAS regarding natural gas storage.

The following facilities are expressly left out from the Rules: (a) facilities aiming to use gas as a fuel for automobile transportation; (b) fuel stations with CNG and/or LNG storage; (c) methane tankers focused on water transportation used to import and export LNG from and towards a storage, regasification or liquefaction facility; (d) hydrocarbon production equipment which run with LNG as fuel, as well as other upstream activities.

The Rules indicate that such facilities must be operated pursuant to the rules, codes and best industry practices, until the ENARGAS issues specific regulation addressing those facilities.

  1. Authorized entities

Companies may carry out natural gas activities insofar a prior authorization issued by the ENARGAS is in place. Such authorization must be issued by the ENARGAS no later than forty-five (45) business days as of the date on which the application is submitted, thereof.

Companies that currently operate natural gas storage facilities are granted with a sixty (60) business day-term in order to begin the registration procedure.

The Rules allow gas transportation and distribution companies to act as natural gas storage agents, whether by their own or throughout a third party or by an affiliate. A separate balance sheet and accounting procedure is required for that end.

Finally, the Rules allow applicants to comply with the requirements set forth therein by way of a Technical Operator (legal entity with experience on administration, management operation and maintenance of natural gas storage facilities, of no less than 5 years).

A Technical Operation Agreement must be entered by and between the applicant and the Technical Operation.

  1. Types of facilities under the Rules

In order to determine the relevant technical requirements for each specific registration, the following categories are established in the Rules:

(i) Large LNG storage: facilities equaling or exceeding 15.000 m3.

(ii) Micro/small LNG storage: facilities of less than 15.000 m3.

(iii) CNG in bulk: facilities which load or unload CNG in bulk or mobile equipment.

(iv) Underground reservoirs: (a) depleted gas reservoirs; (b) salt caverns; (c) water aquifers, and (c) coal bed methane.

  1. Penalty regime

The Regime foresees a penalty regime raging penalties to revocation of the authorization, prior notice and defense by the natural gas storage agent.


At TRSyM we are available to provide clarifications or further information of any matter addressed above. For further information, please do not hesitate to contact either Nicolás Eliaschev or Javier Constanzó.

News in the Upstream Sector: Subsidies to Oil Companies, Biofuel Producers and Provinces

On September 16th, 2019, Resolution No. 552/2019 issued by the Secretary of Governmental Energy (in Spanish, Secretaría de Gobierno de Energía and hereinafter, the “Resolution” and “SGE”, as applicable), under the Ministry of Treasury (in Spanish, Ministerio de Hacienda), was published in the Official Gazette. In summary, the Resolution has approved budgetary transferences in favor of: (i) oil producers, (ii) provinces which act as oil-concession grantors, and (iii) biofuel producers. As further explained below, the bill will be footed by the National Treasury throughout specific budgetary allocations in the 2019 budget law.

The Resolution is enacted in the context of Decree No. 566/2019 (as complemented by Decree No. 601/2019) which enforced fuel price caps by fixing crude prices for the local market until November 13, 2019 (90-day freeze), and by setting the Brent price of US$ 59/bl and currency exchange rate of AR$ 46.69 pesos per US$.

Most relevant aspects of the Resolution are singled out below:

  1. Amounts of the subsidies

Oil producers are entitled to receive subsidies in an amount of 116.10 pesos (approximately US$ 2.06 at the current exchange rate) per barrel delivered to the local market in the month of September pursuant to the following break-down: (i) 88% will be destined to the oil companies, whereas (ii) the remainder 12% to the oil-producing provinces acting as concession grantor.

With regards to biofuel producers which act as beneficiaries under regimes set forth in Laws No. 26,093 and 26,334, these will receive subsidies in an amount equal to 6% of the price established by the SGE for the month of August, to be applied for their local production corresponding to the month of September.

  1. Request by the companies and waivers to be performed

In order to benefit from the Resolution, oil producers as well as the provinces acting as grantors, are requested to waive any and all claims that that these may have regarding Decrees No. 566/19 and 601/19, whether administrative, judiciary and/or an arbitral proceeding, in Argentina or abroad.

Furthermore, such companies must also submit an affidavit providing specific indemnity provisions in favor of the Republic of Argentina against any and all local or foreign administrative, judiciary or arbitral proceedings that may be initiated by those companies, their shareholders, controlling entities and/or affiliates, regarding Decrees No. 566/19 and 601/19.

Waivers of that nature are also mandatory for biofuel producers.

  1. Enforcement authority and budgetary allocations

The Undersecretary of Hydrocarbons and Fuel of the SGE is entrusted with all actions that may be necessary in order to implement the Resolution, and also establishes that the amounts corresponding to the subsidies foreseen in the Resolution will be footed by Treasury funds of the SGE pursuant to the 2019 budget law.

For further information, please do not hesitate to contact either Nicolás Eliaschev or Javier Constanzó.

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:

  1. Approved the terms and conditions applicable for gas exports on a firm basis to Chile (the “Regime”);
  2. Established that the Regime will be applicable for exports comprised within September 15th, 2019-March 15th, 2020 (the “Exports Period”);
  3. Determined a maximum capacity of ten million cubic meters (10,000,000 m3/d) for daily exports under the Regime; and
  4. 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.

  1. 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.

  1. 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
  1. 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.

  1. Application deadline

The deadline to submit any application for exports under the Regime expires on September 6th, 2019, 16:00 hours (Buenos Aires time).

  1. 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.

  1. 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.
  1. 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.

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:

  1. 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.
  1. Simplification of the procedure to request the authorization: The export filing request shall be made digitally through an online remote platform.
  1. 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.

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:

  1. 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.

  1. 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.

  1. 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:

  1. The licensee’s remuneration shall be freely negotiated with the users of the gas pipeline;
  2. The licensee’s remuneration shall not impact in the natural gas residential end users’ rates;
  3. 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.