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2020Plan Gas 2020-2024

November 17, 2020
Oil & Gas - Administrative & Regulatory Law

 

 

On November 16, 2020, Decree 892/2020 was published in the Official Gazette, by means of which the Federal Government of Argentina (i) declared of public interest and as a key concern the promotion of natural gas production, and (ii) approved, and instructed the Secretariat of Energy to implement, the "Plan for the Promotion of the Production of Argentine Natural Gas-Supply and Demand Scheme" (the "Plan Gas 2020-2024"). The most relevant aspects of the new Gas Plan 2020-2024 are detailed below.
  • The Gas Plan 2020-2024 will be implemented through direct contracts between gas producers, on the one hand, and gas distributors and/or sub-distributors (to satisfy priority demand) and CAMMESA (the Wholesale Electricity Market Administrator, to satisfy demand of thermal power plants), on the other. Such contracts (i) will be awarded and negotiated through, and (ii) the price of gas in the point of entry into the transportation system (PIST for its acronym in Spanish) will arise from, an auction, tender and/or similar procedure to be designed by the Secretariat of Energy.
  • It shall have an initial duration of 4 years, which may be extended by the Secretariat of Energy for additional periods of 1 year based on its analysis of the gas market, demand volumes and investment possibilities in infrastructure. For off-shore projects, a longer term of up to 8 years may be contemplated.
  • It shall be for a total volume of 70,000,000 m3 per day for the 365 days of each year of the Gas Plan 2020-2024 duration (distributed as follows (i) Austral Basin 20MMm3/d, (ii) Neuquina Basin 47.2MMm3/d , and (iii) Northwest Basin 2.8MMm3/d), and certain additional volumes for the winter seasonal period of each of the 4 years.
  • Producers shall present an investment plan to reach the committed injection volumes and be bound to achieve a production curve per basin that guarantees the maintenance and/or increase of current levels of production.  
  • Participating producing companies may be offered preferential conditions for exports under firm condition for up to a total volume of 11,000,000 m3 per day, to be committed exclusively during the non-winter period. The benefits for exports will apply both to the export of natural gas through pipelines and to its liquefaction in the country and subsequent export as LNG.
  • The Federal Government may assume on a monthly basis payment of a portion of the price of natural gas in the PIST, in order to mitigate the impact of the cost of natural gas to be transferred to end users.
  • The Argentine Central Bank must establish appropriate mechanisms to guarantee the repatriation of direct investments and their respective returns and/or the payment of principal and interest of foreign financings, provided that such funds have been entered into to the country through the Argentine Foreign Exchange Market as from the entry into force of the decree, and are used to finance projects under Plan Gas 2020-2024.
  • The decree repeals Resolution No. 80 dated April 4, 2017 of the former Ministry of Energy and Mining, and Resolution No. 175 dated April 4, 2019 of the former Secretariat of Government for Energy, dependent of the former Ministry of Finance. The Secretariat of Energy shall complement this Plan Gas 2020-2024 with the stimulus programs provided in the aforementioned regulations.

For any further question please contact: Rodríguez Galli, Javier S. – Zocca, Juan Antonio.

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