RIO DE JANEIRO, BRAZIL – “We have everything that the world demands today in energy matters”, said Argentine President Alberto Fernández, in a ceremony he headed at the Executive’s headquarters, in which he announced the creation of a special regime of access to foreign currency for hydrocarbon producing companies.
On May 24, the Argentine government announced the creation of a special regime of access to foreign currency for hydrocarbon producing companies to boost investments in the oil and gas sector.
The measure, implemented through a decree, will allow access to foreign currency in the foreign exchange market to companies that increase their oil and gas supply by an amount equivalent to a percentage of such increase. Thus, they will be able to use those dollars to pay capital and interest on commercial or financial liabilities abroad, including liabilities with non-resident related companies, pay profits and dividends, and repatriate direct investments of non-residents.
“We have everything that the world demands today in energy matters”, said the Argentine President, Alberto Fernández, in a ceremony he headed at the Executive’s headquarters, together with the Minister of Economy, Martín Guzmán; the Secretary of Energy, Darío Martínez; the President of the Central Bank, Miguel Pesce; the Minister of Productive Development, Matías Kulfas, and the presence of businessmen, trade unionists and governors of producing provinces.
“We are taking a significant step to give you, those who invest in hydrocarbon production, the necessary certainties to move forward” and “to have the resources to bring machinery and what you need to develop the task,” said the President.
This measure relaxes the exchange restrictions applied by Argentina to manage the shortage of foreign currency, which hinders the access to dollars for imports, the payment of debts, and the remittance of profits abroad, and which Pesce acknowledged generates “anger” in the private sector.
According to Pesce, it also gives access to foreign currency to the energy sector, which represents 30% of the increase in imports. For oil producers, the access to foreign currency will be equivalent to 20% of the incremental production, defined as the difference between the effective production of the last twelve months and the volume obtained by each company in 2021. For gas producers, access to dollars will be equivalent to 30% of the incremental injection of natural gas.
Companies will be able to obtain additional percentages for coverage of the domestic market, reversal of technical decline, incremental production in low productivity wells, contracting of local special services companies and investment.
This relaxation seeks to solve “limitations and bottlenecks” in the sector and allow companies to access special equipment to boost incremental production, explained Guzmán. Also, to encourage investments with dollar inflows from abroad.
Argentina has a buried treasure in Vaca Muerta, the world’s second-largest unconventional gas reserve, but it requires heavy investments for the massive development of that formation and, in addition, gas transportation and liquefaction infrastructure that will allow it to turn its dream of being a world-class player into a reality.
Despite its enormous gas reserves, Argentina needs to import natural gas from Bolivia and liquefied natural gas (LNG) from various parts of the world to supply domestic demand, particularly in the winter, at an enormous financial cost to the State, increased by high international prices, at a time when the country is going through substantial macroeconomic imbalances.
With information from EFE