The Government announced on Tuesday the launch of a New Regime of Access to Foreign Currency for the Incremental Production of Hydrocarbonswhich will allow the operating companies to access a greater volume of foreign currency in the free exchange market for an equivalent to 20% of the additional injection they achieve in oil and 30% in natural gas projects in all basins, with respect to to existing levels in 2021.
The measure -which will be formalized by means of a Decree- was presented this Tuesday by President Alberto Fernández, the Minister of Economy, Martín Guzmán; the Secretary of Energy, Darío Martínez; and the president of the Central Bank, Miguel Pesce, in a ceremony held at the Government House Bicentennial Museum, with the participation of the directors of the main oil companies.
“The doomsayers said that Argentina was on the way to an energy collapse, but YPF and the rest of the producers do not stop growing”Alberto Fernandez
The initiative provides for the creation of a Foreign Exchange Access Regime for the Incremental Production of Oil and Natural Gas, as well as a Regime for the Promotion of Employment, Work and the Development of Regional and National Suppliers, with which it seeks to contribute key measures to increase the scale of production and use the new transportation capacity of the Néstor Kirchner gas pipeline and private infrastructure works.
The President stated during the ceremony that Argentina has “a unique opportunity” to develop its energy potential in terms of production, regional development, fiscal balance and exportsby assuring that the country has “everything that the world demands today in terms of energy”.
“The doomsayers said that Argentina was on the way to an energy collapse, but YPF and the rest of the producers do not stop growing,” said the head of state, in addition to noting that thanks to the Gas.Ar Plan some US$ 6,000 were saved millions in fluid that previously had to be imported.
After his tour of Spain, France and Germany, Fernández highlighted the interest of the governments of those countries in counting on Argentina as a supplier of natural gas, for which he recommended “paying attention to the liquefaction plant” that allows its transfer by sea “to put it into operation as soon as possible”.
“We are going to send Congress a law that establishes the conditions under which we promote the creation of these plants, so that everyone is certain of what the future will be like in their investments,” the President stated.
This new scheme is committed to unlocking key upstream investments (exploration and production) for the development of the sector and the supply of the Néstor Kirchner gas pipeline once the work is finished.
access to foreign exchange may be used to pay capital and interest on commercial or financial liabilities abroadincluding liabilities with non-resident related companies, profits and dividends, and repatriation of direct investments of non-residents.
To this end, “the Incremental Benefited Production Volume (VPIB) and the Incremental Benefited Injection Volume (VIIB) are established at 20% of the incremental production of crude oil and 30% of the incremental production of natural gas that each beneficiary has obtained.”
In the standard, incremental production (injection) is defined as the difference between the effective production of the last 12 months and the baseline defined as the volume obtained by each company in 2021.
In addition, additional percentages will be obtained for the coverage of the domestic market, the reversal of the technical decline, the incremental production in low-productivity wells, the contracting of local companies for special services, and the investment.
In the presentation of the measures, Guzmán assured that the new regime aims to “resolve limitations and bottlenecks” derived from Argentina’s problems in the external sector.
This was expressed in the announcement made of the new regime that seeks to encourage increased oil and gas production by making access to the foreign exchange market more flexible for companies in the sector.
In this way, it is expected that, with the facilitation of access to foreign currency, oil and gas producing companies are guaranteed “access to special equipment, so that they can count on the elements needed to produce”with the purpose of “generating greater added value with federal growth”.
Guzmán stressed that the implementation of the announced regimes will allow “to generate a greater flow of foreign currency, so that there are more dollars and to be able to create more work” by promoting “the transformational role of energy.”
Guzmán announced “a special regime of access to foreign currency for the production of hydrocarbons”
In this sense, he indicated that the country will be able to count on “conditions of greater competitiveness in the entire productive structure”while the sectors demanding foreign currency will have “the capacity to generate more work” and, from the macroeconomic point of view, “greater exchange rate stability and reduction of subsidies will be achieved, which will strengthen us fiscally and will make the state to underpin economic recovery.
After the presentation, the head of the Techint Group, Paolo Roccaconsidered the Government’s announcement to support hydrocarbon production “very positive” and said that, considering the conflict in Europe, it is important that “Argentina assumes the responsibility it has in the world to develop its energy resources and contribute to replacing the supply of Energy”.
In a similar vein, the president of YPF, Paul Gonzalezevaluated that the new regime will contribute to the growth of “an industry that has been experiencing a great recovery, and this decision will allow a greater incentive to investments in the area and consequently in production, as well as to overcome limitations and bottlenecks” .