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Argentine oil authorities said to begin federal bill discussions

PABLO GONZALEZ

BUENOS AIRES, Argentina (Bloomberg) -- Argentine authorities agreed to start talks to rewrite a 1967 hydrocarbons law to determine how revenue from the world’s second-biggest shale gas reserves should be split between the federal government and provinces, three officials briefed on the matter said.

Governors of 10 provinces with oil and natural gas reserves will sign an accord with President Cristina Fernandez de Kirchner on June 9 that sets a framework for discussion including proposed rules on shale resources, according to the provincial officials, who aren’t authorized to speak publicly.

A draft of the accord, a copy of which was obtained by Bloomberg News, contains items to unify income taxes, royalties and the granting and renewal of shale licenses. While the provinces are prepared to discuss new federal regulations, they will resist attempts to reduce taxes and the participation of provincial companies in projects, the officials said.

The bill would 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 south that contains the world’s fourth-biggest shale oil reserves and second-largest shale gas reserves.

Chubut Governor Martin Buzzi, who heads a committee of the 10 provinces, and Neuquen Governor Jorge Sapag weren’t available to comment, their respective assistants said. Horacio Mizrahi, spokesman for federal Planning Minister Julio De Vido, didn’t reply to an email and calls seeking comment. Presidential spokesman Alfredo Scoccimarro wasn’t available to comment, an assistant said by phone.

The provinces of Neuquen, Mendoza and Chubut had resisted the federalization of licensing processes, officials said last month. Now all 10 governors are in agreement that shale concessions should be granted for a 35-year period, as established in a 2013 decree, as part of a single federal system in which ownership is retained by the provinces, the three officials said this week.

The provincial authorities will fight attempts by state-owned YPF SA to cap royalties at 12% and reduce the rights of province-owned energy companies to participate in JVs, the officials said.

The local government take in some provinces is a deterrent to investments, YPF CEO Miguel Galuccio said on May 21. Mariano Gibaut, a YPF spokesman in Buenos Aires, declined to comment.

Chubut, home to the D-129 shale formation in which YPF started production last month, charges royalties of 15% to YPF, 15.4% to Pan American Energy LLC and 16% to Tecpetrol SA, Chubut Oil Minister Ezquiel Cufre said in a telephone interview from Buenos Aires.

“We won’t reduce those royalties,” Cufre said, declining to comment when asked if he would support the federal bill.

The governors are scheduled to sign the framework accord with President Fernandez, who seized a controlling stake in YPF from Spain’s Repsol SA in 2012, June 9 at 6 p.m. at the presidential residence Olivos in Buenos Aires province, the officials said.

06/06/2014

 

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