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Latino Daily News

Sunday July 27, 2014

National Government, Provinces at Odds Over New Energy Legislation in Argentina

The Argentine government’s decision to push for a new Hydrocarbons Law to spur investment in this sector has sparked a hidden fight with the provinces, the true owners of the underground oil and gas.

Informal discussion of the bill, which - if approved - would replace a 1967 law, began two months ago with a push from the state-run YPF petroleum company.

The bill, the first draft of which was released several days ago, seeks to foster investment in exploration and exploitation, which Argentina urgently needs to alleviate its energy supply problems, given that development of the huge reserves of non-conventional hydrocarbons at Vaca Muerta will require heavy funding.

In fact, among the 40 articles in the first draft prepared by President Cristina Fernandez’s administration is a new “investment promotion regime to exploit hydrocarbons.”

But to foster investment, the proposal includes changes that several of the governors of Argentina’s 10 petroleum provinces have received with disdain.

The draft legislation cuts the provinces’ income from royalties and taxes and limits the participation of provincial petroleum firms.

The local specialized press has reported on the tensions the proposed changes have sparked among the Fernandez administration, YPF and the governors.

So far, the discontent has been expressed in meetings behind closed doors, but some people are already beginning to publicly express their anger.

The government is also pushing for changes in the role that the state-run provincial oil companies play in the projects undertaken by private firms.

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