Argentina will offer energy companies incentives if they invest 1 billion dollars or more over a five-year period as the country struggles to lift output and pare fuel imports a year after seizing a majority stake at YPF from Spain’s Repsol.
Companies that meet the requirements will be able to sell 20% of production in international markets without paying export taxes and be able to keep export revenue from 20% of output outside of Argentina, according to a decree published in the government’s official gazette.
They will also be able to sell oil and natural gas slated for export in the domestic market at international prices if the local supply is insufficient, the government said. Companies that qualify for the plan will also be granted foreign currency access, it said.
Oil companies that benefit from the new regulations will be allowed to renew their concessions for a 25-year period, with a possible 10-year renovation after that.
“It’s necessary to strengthen the promotion of investment destined for the exploration of hydrocarbons” the decree published on Monday.
President Cristina Fernandez is struggling to attract energy investments after nationalizing a 51% stake in YPF from Spain’s Repsol SA so far without compensation in April 2012. YPF, the country’s largest energy producer, is expected to sign a definitive joint venture with US Chevron Corp this week with an initial investment of 1.5 billion dollars to develop oil and gas shale deposits in Vaca Muerta.
Chevron Chief Executive Officer John Watson will travel to Argentina to sign the deal between July 15 and July 16, according to Jorge Sapag, governor of Neuquen province where the Vaca Muerta formation is located, said on June 26.
YPF has also signed preliminary accords with Dow Chemical Co., Bridas Corp., and Corp. America to tap what the US Energy Information Administration says is among the world’s second-largest shale gas reserve and fourth-largest shale oil deposit.
Cristina Fernandez seized Repsol’s majority stake in YPF after the country’s energy deficit ballooned to a record in 2011. This year, Argentina has imported 4.6 billion of fuel and lubricants the year through May, a 30% increase from the same period in 2012, widening the deficit to 2.13 billion in the period.