On December 27, 2023, Argentine President Javier Milei sent to the Congress an omnibus bill (the “Omnibus Bill”). Matters pertaining to hydrocarbons and natural gas are addressed below:

I. Amendments to Law 17,319 on Hydrocarbons

  1. Scope and objectives: The Bill includes the hydrocarbon processing activity as part of the law’s scope, empowering the Executive Branch to grant authorizations for its development. Also, the main objective of the national policy is modified to maximize the income obtained from resources’ exploitation and satisfaction of the hydrocarbon needs of the country.
  2. Free trade: The Executive Branch would no longer have the power to fix prices of the domestic market in any of the production stages (by way of eliminating the so-called domestic barrel). In the case of state-owned companies, these may only trade at arms-length prices. In relation to foreign market permit holders, concessionaires, refiners and/or marketers, these may freely export hydrocarbons and/or their derivatives, and the Executive Branch will regulate its conditions, with the end-goal of promoting free international trade.
  3. Exploration activities: The Bill removes the exclusivity of the superficial examination in areas reserved to state-owned companies and revokes the section that did not allow to begin with such works without prior approval. On the other hand, Section 21 modifies the payment of royalties for hydrocarbons extracted during exploration (previously set on 15%), which will now be agreed in the bidding process.
  4. Investment regime: Concessionaires would no longer be required to ensure that their investments ensure the maximum production of hydrocarbons, and that they are compatible with the adequate and economic exploitation of the field and the observance of criteria that guarantee the adequate conservation of reserves.
  5. Exploitation by foreign legal entities: the Bill overturns the Section that did not allow foreign legal entities to bid for permits and concessions.
  6. Royalties: The exploitation concessionaire would pay a monthly payment to the grantor, to be determined in bidding awarding process. Furthermore, the enforcement authority will have the power to reduce the royalty up to five percent (5%) taking into account the productivity, conditions, and location of the wells. Per the bill, royalties will be the sole income of the provinces (owner of the resources).
  7. Unconventional exploitation: The exploitation concessionaire, within the area of concession, may require the subdivision of the area and the conversion from conventional to unconventional. In addition, the Bill eliminates the five (5) year time-bard applicable to the pilot planning stage, and the possibility to request for ten (10) year extensions.
  8. Replacement of the transport concession: References related to hydrocarbon processing are incorporated to Article 4 regarding transportation. Likewise, the regime of transportation concessions is replaced for an authorization regime.

II. Amendments to Law 24,076 on Natural Gas

  1. Exports and imports: While natural gas imports continue to be authorized without prior approval, exports must be regulated by the Executive Branch.
  2. License Renewal: The Bill extends the term for license renewal, from ten (10) to twenty (20) years.
  3. Transportation, distribution, and stocking: The acquisition, construction, operation and maintenance of new gas storage facilities is allowed.

 

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, Pablo Arrascaeta, Daiana Perrone, Florencia Martínez Trobbiani, Milagros Piñeiro, Rocío Valdez, and/or Victoria Barrueco.