Argentina said to consider extending oil investment incentives
BUENOS AIRES, Argentina (Bloomberg) -- Argentina is considering extending tax incentives put in place last year to attract investment in the energy industry as the government begins to discuss a new oil law with provinces, two officials said.
The proposal offers energy companies that invest $250 million over a five-year period the ability to sell 20% of production in international markets without paying export taxes and the ability to keep some export revenue outside the country, said two provincial officials briefed on a meeting between governors and President Cristina Fernandez de Kirchner yesterday, June 9. The measure would lower the target for the incentives from $1 billion published in a decree last year.
The incentives will be included in the rewriting of a 1967 oil bill that will also offer oil companies 35-year licenses to exploit the world’s second-biggest shale gas reserves and fourth-biggest shale oil reserves, the officials, who aren’t authorized to speak publicly as talks are private, said. Governors of 10 provinces with oil and natural gas reserves agreed yesterday to analyze the draft presented by Economy Minister Axel Kicillof and Legal Secretary Carlos Zannini to return with recommendations for a final bill on June 16, Cabinet Chief Jorge Capitanich told reporters June 10.
“Argentina needs to boost investments in the oil sector and must have an updated law with unified taxes, royalties and environmental standards,” Capitanich said. “The bill will surely be sent to the Senate soon for discussion.”
The new bill will seek to end political tensions derived from unclear rules governing the country’s nascent shale boom and lure more investors to Vaca Muerta, a Belgium-sized formation in the country’s southwest where companies from Chevron Corp. to Exxon Mobil Corp. are drilling wells.
The decree to create incentives for investments of $1 billion over five-years was published the day before Chevron signed a final JV agreement with state-run energy company YPF SA.