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The Argentine Gas and Oil Market
Natural gas and oil constitute the main energy sources in the national primary energy matrix. The following table illustrates their shares as of December 31, 2021, as there is no available information for the year 2022 as of the date of 2022 Annual Report’s release:
| Type of Energy | Million ton of oil equivalent | % |
| Natural Gas | 38.5 | 51.8% |
| Oil | 23.5 | 31.6% |
| Hydro | 2.2 | 2.9% |
| Nuclear | 2.8 | 3.8% |
| Coal | 1.2 | 1.6% |
| Renewables | 1.4 | 1.9% |
| Others | 4.7 | 6.3% |
| Total | 74.4 | 100% |
Note: All figures have been subject to rounding, so figures shown as totals may not sum. Source: The former Government Secretariat of Energy (‘SGE’).
Natural gas
In 2022, total gross natural gas production amounted to 133 million m3 per day,7% higher than in 2021. This variation is mainly due to Plan Gas.Ar at the Neuquina Basin (+11.1 million m3/day), and a slight increase at the Golfo San Jorge Basin (+0.4 million m3/day), partially offset by the decline in the Austral and Noroeste Basins (-3 million m3 per day).
Although total demand recorded a 2% year-on-year increase, there was again a deficit in local supply, evidenced since 2003. Therefore, the Federal Government resorted to natural gas imports and alternative fossil fuels. In 2021, Bolivia’s supply averaged 11 million m3 per day (-18% vs. 2021) and seaborne LNG (liquefied natural gas) at the ports of Escobar and Bahía Blanca recorded 6 million m3 per day (-35% vs. 2021). On the other side, natural gas exports grew by 121% vs. 2021, to a total of 5 million m3 per day, representing 4% of the total domestic production in 2022.
Based on the last annual information published by the SE, as of December 31, 2021, the country’s total natural gas reserves and resources amounted to 1,620 billion m3, 47% higher than in 2020. 26% of them were proven reserves, and 72% of total reserves were unconventional.
Oil
In 2022, total oil production increasd by 13% vs. 2021, to 93 thousand m3 per day, mainly due to theupward trend in international reference prices. Moreover, in 2022, no oil imports were recorded for the second consecutive year. Additionally, in 2022 oil exports amounted to 17 thousand m3 per day, a volume 44% higher than in 2021. This volume represented 18% of the total domestic production in 2022.
As of December 31, 2021, the country’s oil reserves and resources totaled 1,518 million m3, an 82% increase vs. 2020, of which 30% were proven reserves and 60% are classified as unconventional.
On October 29, 2014, the National Congress enacted Law No. 27,007, amending Hydrocarbons Law No. 17,319. This law considers new industry drilling techniques, introduces changes to terms and extensions of exploration permits and exploitation concessions, levies and royalty rates, and incorporates concepts for on and off-shore unconventional exploration and exploitation, and a promotion regime under Executive Order No. 929/13.
Unconventional hydrocarbons exploitation
The concept of ‘Hydrocarbons Unconventional Exploitation Concession’ created by Executive Order No. 929/13 was given legal status. This term is defined as the extraction of liquid and/or gaseous hydrocarbons by unconventional stimulation techniques applied in reservoirs situated in geological formations of schist rock or slate (shale gas or shale oil), tight sands, tight gas, tight oil, coal bed methane and/or deposits characterized, in general, by the presence of low permeability rocks.
Holders of hydrocarbon exploration permits and/or exploitation concessions may request an unconventional exploitation concession to the enforcement authority under the following terms:
- The exploitation concessionaire may request, within its block, the subdivision of the existing block into new hydrocarbon unconventional exploitation blocks and the granting of a hydrocarbon unconventional exploitation concession. This request will be based on developing a pilot plan aiming at the commercial exploitation of the discovered reservoir according to acceptable technical and economic criteria.
- Holders of a hydrocarbon unconventional exploitation concession also holding a preexisting and adjacent exploitation concession may request both blocks’ unification as a single hydrocarbon unconventional exploitation concession, provided they duly demonstrate the geological continuity of these blocks. This request should be based on the development of a pilot plan.
Terms for concessions and permits
The terms for the exploration permits will be established in each call for tenders issued by the enforcement authority according to the exploration’s purpose (conventional or unconventional):
i. Conventional exploration: the basic term is divided into two periods of up to three years each, plus an optional extension of up to five years, reducing exploration permits’ maximum term from fourteen to eleven years;
ii. Unconventional exploration: the basic term is divided into two periods of four years each, plus an optional extension of up to five years, that is, up to a maximum of 13 years; and
iii. On and off-shore exploration: the basic term is divided into two periods of three years each, plus an optional extension of one year each.
Upon the expiration of the basic term’s first period, the permit holder will decide whether to continue exploring the block or reverse it back in whole to the Government. The whole originally granted block may be kept if the obligations arising from the permit have been appropriately met. If the exploration permit’s holder exercises the right of extension at the expiration of the basic term, the reversal will be limited to 50% of the remaining block.
Exploitation concessions will be granted for the following terms, which will be computed as from the granting resolution’s date:
i. Conventional exploitation concession: 25 years;
ii. Unconventional exploitation concession: 35 years; and
iii. On and off-shore exploitation concession: 30 years.
Moreover, the holder may, with a minimum one-year notice before the concession’s expiration, request indefinite extensions for a 10-year term each, provided it has adequately met its obligations as exploitation concessionaire, hydrocarbons are produced in said block, and an investment plan consistent with the concession’s development is submitted.
Awarding of blocks
Law No. 27,007 proposes a standard tender form to be drafted by the SE (Secretariat of Energy) and the provincial authorities, to which all tenders called by the law’s enforcement authority will conform. It also introduces a specific criterion for awarding permits and concessions by incorporating the specific parameter of ‘greater investment or exploration activity’ as a tie-breaker, at the PEN (National Executive Branch or Poder Ejecutivo Nacional) or the Provincial Executive Branch’s duly supported discretion, as applicable.
Levy and royalties
Levy
Law No. 27,007 has set the levy values per km2 or fraction to be paid annually and in advance by the permit holder. The exploitation permit will amount to AR$4,500. In contrast, the following values will apply for the exploration permit: AR$250 in the first period and AR$1,000 in the second period of the basic term; and AR$17,500 during the first year of the extension, with a 25% annual cumulative increase.
The amount payable for the basic term’s second period and the extension period may be readjusted by offsetting it with actual investments until reaching 10% of the levy per km2 applicable for the period.
On September 26, 2019, the Province of Neuquén published new levy values per km2 or fraction effective for this province from 2020. The exploitation levy was set at AR$22,410, and the exploration levy, AR$1,245 for the first period, AR$4,980 for the second period, AR$7,470 for the third period, and AR$87,150 for the extension period (Executive Order No. 2032/19).
From 2021, PEN Executive Order No. 771/20 set a maximum levy in AR$ equivalent to a certain volume of oil at the average domestic market price(1), at the Argentine National Bank (Banco de la Nación Argentina)’s exchange rate effective on the last business day before payment. This scheme is applicable nationwide (including the Province of Neuquén, which adhered to it through Provincial Executive Order No. 1656/20). The exploitation concession amounts to 8.28 barrels, whereas the exploration permit equals 0.46 barrels in the basic term’s first period and 1.84 barrels in the second period; and 32.22 barrels during the extension period.
Note: (1) Corresponding to the first semester of the year prior to settlement.
Royalties
Royalties are defined as the only revenue the jurisdictions holding title to the hydrocarbons will collect from hydrocarbon production in their capacity as grantors. The percentage the exploitation concessionaire should pay monthly to the grantor as royalty continues to be 12% of the proceeds from liquid hydrocarbons extracted at wellhead. Natural gas production will bear a like percentage of the value of extracted and used volumes, payable monthly. In case of extension, up an additional royalty of up to 3% vs. the royalty payable at the first extension will apply, limited to an 18% rate.
The PEN or the Provincial Executive Branch, as applicable, acting in its capacity as granting authority, may reduce by up to 25% the royalties applicable to the hydrocarbons production for a term of 10 years after the conclusion of the pilot project in favor of companies requesting a hydrocarbon unconventional exploitation concession within 36 months from Law No. 27,007’s effective date.
Extension bond
For exploitation concession extensions, Law No. 27,007 empowers the enforcement authority to establish the payment of an extension bond, capped by the amount resulting from multiplying the remaining proven reserves at the expiration of the concession by 2% of the average basin price applicable to the specific hydrocarbon during a term of 2 years before the extension grant.
Exploitation bond
The enforcement authority may establish the payment of an exploitation bond, capped by the amount resulting from multiplying the remaining proven reserves associated with the exploitation of conventional hydrocarbons at the expiration of the granted concession by 2% of the average basin price applicable to the specific hydrocarbons for the two years before the granting of the unconventional hydrocarbon exploitation concession.
Transportation concessions
Transportation concessions (so far granted for 35 years) are now awarded for the same term as the originating exploitation concession, with the possibility of receiving subsequent extensions up to 10 years each. Thus, transportation concessions originating in a conventional exploitation concession will have a basic 25-year term. In contrast, an unconventional exploitation concession will have a basic 35-year term, each plus any granted extension term. After these terms expire, the facilities will be transferred back to the Federal or Provincial Government, as applicable, by operation of law and without charges or encumbrances.
Uniform legislation
Law No. 27,007 provides for non-binding commitments between the Federal Government and the provinces:
i. It contemplates uniform environmental legislation primarily aiming to apply the best environmental management practices to hydrocarbon exploration, exploitation, and/or transportation activities.
ii. It provides for the adoption of a uniform fiscal treatment promoting the development of hydrocarbon activities in their corresponding territories based on the following guidelines:
- The gross receipts tax rate applicable to the extraction of hydrocarbons will not exceed 3%;
- The freezing of the current stamp tax rate and the commitment not to charge with it any financial contracts executed to structure investment projects, guarantee and/or warrant investments; and
- The provinces and their municipalities commit not to impose new taxes —or increase the existing ones— on permit and concession holders. Exceptions are service compensation rates, improvement contributions and general tax increases.
Unconventional hydrocarbons exploitation concession (CENCH) in the Province of Neuquén
Given the special features of unconventional reservoirs due to their low permeability and the productivity reached over the last few years, the Ministry of Energy and Natural Resources of the Province of Neuquén set certain parameters for granting CENCH in this province, instrumented through Resolutions No. 53/20 (July 2020) and No. 142/21 (November 2021), later ratified by Provincial Executive Order No. 2183/21 (December 2021).
Companies may request a CENCH based on a development project comprising a Pilot Plan for up to five years to demonstrate its technical and economic feasibility, with parameters additional to the national regulation regarding operation, actual productivity assessments, costs and investment.
Once the CENCH request is filed, if it includes a surface larger than the pilot area, the payment of a block extension bond is incorporated. Its value will be associated with the resources expected to be recovered in the extended block, considering the basin’s average price over the last two years.
While the CENCH is in effect, holders should annually submit continuous development plans and investment commitments to be executed during the concession period, considering that commitments for the following year will be deemed firm.
| Encouragement programs for the increase in domestic natural gas production |
| Plan Gas.Ar
On November 16, 2020, Plan Gas.Ar was created to promote the production of Argentine natural gas and manage the impact of gas cost on the Priority Demand’s tariff through the tender of long-term supply agreements (Necessity and Urgency Decree or Decreto de Necesidad y Urgencia No. 892/20). Beneficiaries of Unconventional Plan Gas opting to participate in this program should previously file their waiver. Originally, the term for onshore production was four years, with an additional four years for off-shore production, computable from January 2021. Later, PEN Executive Order No. 730/22, issued on November 4, 2022, extended the term until December 31, 2028 for the 70 million m3/day base volume already awarded under rounds 1 and 3. Agreements are executed between producers (as sellers) and CAMMESA (Compañía Administradora del Mercado Mayorista Eléctrico or the Argentine Wholesale Electricity Market Clearing Company), gas distributors and ENARSA (Energía Argentina S.A.) (as purchasers), with a 100% daily DoP and a 75% monthly ToP for CAMMESA and quarterly ToP for gas distributors and ENARSA. Moreover, the awarded price is adjusted by the following factors: 0.82 in the summer period (October – April), and 1.25 (May -September) for the base volume and 1.30 for the additional volume in the winter period. Regarding purchasers, CAMMESA and ENARSA will pay the awarded price, whereas gas distributors will pay the price set in the effective tariff scheme, and the Federal Government will offset the difference. Moreover, the Federal Government created a system to secure the compensation payment based on tax credit certificates, notwithstanding other applicable mechanisms.
Rounds 1, 2 and 3 In December 2020, round 1 was awarded for an annual base volume(1) of 67.4 million m3/day at US$3.5/MBTU, and an additional winter volume of 3.6 million m3/day at US$4.7/MBTU (Resolutions No. 391/20 and 447/20 from the SE (Secretariat of Energy)). Pampa was awarded a base volume of 4.9 million m3/day at US$3.6/MBTU and an additional winter volume of 1.0 million m3/day at US$4.7/BTU. Round 2 was awarded on March 8, 2021, with an increasing daily DoP and a 75% quarterly ToP, for a base winter volume of 3.3 million m3/day at US$4.7/MBTU from June 2021 (SE Resolution No. 169/21). Pampa was awarded 0.8 million m3/day at US$4.7/MBTU. Round 3 was awarded on November 10, 2021 for an annual base volume of 3 million m3/day at US$3.43/MBTU (SE Resolution No. 1091/21) from May 2022. Pampa was awarded 2 million m3/day at US$3.347/MBTU. Note: (1) 49.0 million m3/day is from the Neuquina Basin. Round 1’s base volume represents 70% of the total production commitment (96.3 million m3/day), and the remaining 30% is sold at market price.
Rounds 4 and 5 Under Transport.Ar program to increase gas transportation capacity, on December 22, 2022, rounds 4 (Neuquina Basin) and 5 (Austral Basin) were awarded (SE Resolution No. 860/22). Rounds 4.1 and 5.1 extended a large part of the annual base volume until December 2028. Pampa managed to extend both rounds under the original conditions (for a total of 6.9 million m3/day). Round 4.2 awarded new flat and winter peak volumes until December 2028. Awardees may limit up to 30% of the volume committed with ENARSA for industrial customers and/or CNG, subject to SE’s approval. Under this round, Pampa was awarded a 4.8 million m3/day flat volume at US$3.485/MBTU, deliverable from July 2023. Finally, round 5.2 awarded the incremental winter volume for the 2023 – 2028 period. The customer is CAMMESA, with an 80% daily DoP and monthly ToP. |
| Foreign exchange access regime for incremental hydrocarbon production |
| PEN Executive Order No. 277/22, issued on May 27, 2022, created the foreign exchange access regime (Mercado Único y Libre de Cambios) for incremental oil and gas production vs. 2021, among other measures. It aims to promote and increase added value in the hydrocarbon activity value chain. Access to the MULC will be granted to make principal and interest payments of commercial or financial liabilities abroad, including liabilities with non-resident affiliates and/or earnings and dividends for closed and audited balance sheets and/or the repatriation of direct investments by non-residents.
For natural gas, the benefit equals 30% of the incremental injection valued at the weighted average price of national exports over the last 12 months, net of export duties. This price may not be lower than Plan Gas.Ar’s weighted average awarded price or higher than twice that value. For oil, the benefit equals 20% of the quarterly incremental production at the average Brent quotation defined by the enforcement authority over the last 12 months, net of export duties and adjusted based on the crude oil quality. The benefit percentage may be increased in both cases based on the situations contemplated in the respective provisions (i.e., domestic market coverage and whether the technical decline could be counterbalanced). Moreover, benefits may be transferred to direct suppliers, associated third parties and/or operators holding concessions. On February 9, 2023, Pampa applied to opt into both systems, requesting the benefits for the third and fourth quarters of 2022. As of this date, the SE (Secretariat of Energy) has not rendered its decision in this respect. |
| Natural gas for the residential segment |
| Priority Demand and CEE (Emergency Executive Committee or Comité Ejecutivo de Emergencia)
In June 2016, criteria were established to secure Priority Demand’s supply through the CEE in case of operational emergencies that may affect its regular operation (Resolution No. 89/16 of the MEyM (former Ministry of Energy and Mining), as amended). In June 2017, the procedure for administering dispatch in the CEE was approved (Resolution No. 4502/17 of ENARGAS (National Gas Regulatory Entity or Ente Nacional Regulador del Gas)). If the CEE does not reach an agreement, ENARGAS defines the required supply considering each producer’s available quantities, deducting the amounts previously contracted to meet the Priority Demand, with a progressive allocation until matching the proportional quota of each producer/importer in the Priority Demand.
Natural gas price within the PIST (Transportation System Entry Point) As from January 2021, gas volumes for the priority demand are contracted under Plan Gas.Ar. Gas distributors must pay the price stated in the tariff scheme in force, and the difference with the Plan Gas.Ar awarded price is offset by the Federal Government. In turn, ENARSA must pay 100% of Plan Gas.Ar’s awarded price. |
| Natural gas for power generation |
| As from December 30, 2019, fuel supply for power plants was again centralized in CAMMESA (except for generators with PPA (Power Purchase Agreements) under Energía Plus and Resolution No. 287/17 of the SEE (Subsecretariat of Electric Energy)). Since then, CAMMESA has launched successive calls, on an interruptible basis, to cover its monthly consumption. Moreover, since 2021, most gas for CAMMESA has been supplied under Plan Gas.Ar. Generators covered by Energía Plus and SEE Resolution No. 287/17 PPA have the option to assign the natural gas operation and transportation to CAMMESA. Pampa adhered to this scheme.
It is worth mentioning that since 2021, new reference prices at the PIST have been set for production not covered by Plan Gas.Ar (Resolution No. 354/20 from the SE (Secretariat of Energy)) at US$2.3/MBTU in the off-peak period (October – April) and US$3.5/MBTU in the winter period (May – September) for the Neuquina Basin. Therefore, in addition to Plan Gas.Ar, CAMMESA continued launching calls with a maximum price equivalent to that awarded under Plan Gas.Ar, and with a 30% DoP clause for the other maximum prices mentioned above. However, the involved volume is not significant. |
| Natural gas export |
| On April 27, 2021, the new procedure was regulated to authorize natural gas exports (Resolution No. 360/21 from the SE (Secretariat of Energy)). This procedure contemplated exports on a firm and preferential basis for Plan Gas.Ar awardees during the summer period, extendable to the winter period in case of oversupply at a specific basin, with the prior approval of the applicable authority.
PEN Executive Order No. 730/22, issued on November 4, 2022, allows firm exports even in winter, prioritizing producers with the most competitive prices and/or contributing the largest volume under Plan Gas.Ar, once the domestic market is fully supplied. Therefore, on November 16, 2022, SE Res. No. 774/22 was issued, which superseded SE Res. No. 360/21 and provided, among other measures, that: (i) no producer may export more than 30% of the national authorized export quota or 50% of the committed delivery under Plan Gas.Ar; (ii) there are basin quotas for firm exports, assigned based on the higher volume (45%) and price (55%) tendered; (iii) the exported volume will be deductible from the Plan Gas.Ar commitment only in the summer period; and (iv) the minimum price will be the higher of a Brent percentage determined by the enforcement authority and the Plan Gas.Ar price with the adjustment factor. In the summer period, quotas are 9 million m3/day in the Neuquina Basin and 2 million m3/day in the Austral Basin for the October 2023 – April 2024 period. Producers under Plan Gas.Ar will have priority in the allocation of the first 4 million m3/day in the Neuquina Basin and 2 million m3/day in the Austral Basin for the October 2023 – April 2024 and October – December 2024 periods. For the winter period, a 3 million m3/day quota was set for the Neuquina basin during May – June 2023, to be apportioned among round 4.2’s awardees. Additionally, 3 million m3/day may be granted in the Neuquina Basin as from July 2023, but on an interruptible basis. Pampa is cleared to export gas to Chile on a firm basis for a maximum volume of 1.5 million m3/day (Oct-21 – Apr-22), 1.22 million m3/day (Jan-22 – Apr-22), 1.5 million m3/day (Oct-1-22 – May-1-23) and 1.31 million m3/day (May-1-23 – Jul-1-23). Besides, it makes exports to Chile, Brazil and Uruguay on an interruptible and/or spot basis, provided they are authorized by the enforcement authority. It is worth highlighting that a natural gas export duty has been in effect since May 2020. PEN Executive Order No. 488/20, issued on May 19, 2020, established an export duty exemption as long as the international Brent price was equal to or below US$45/bbl. The rate would rise gradually in line with the international reference price until reaching 8%, the cap to be recognized when Brent equals or exceeds US$60/bbl. In 2022, the rate remained at 8%. |
| Natural gas for CNG (compressed natural gas) |
| Following the abrogation of Resolution No. 80/17 from MEyM (Former Ministry of Energy and Mining), the Plan Gas.Ar program does not secure natural gas supply for CNG. CNG is currently traded privately, without price regulation. |
Crude oil commercialization in the domestic market
As of this date, there is no reference price for the sale of crude oil in the domestic market. However, local refining companies are validating prices below the export parity.
Crude oil export
Like natural gas exports, there has been a crude oil export duty in effect since May 2020. Executive Order No. 488/20 of the PEN (National Executive Branch or Poder Ejecutivo Nacional) of May 19, 2020, set an export duty exemption as long as the Brent international price is equal to or below US$45/bbl. The rate would rise gradually in line with the international reference price until reaching 8%, the cap to be recognized when Brent equals or exceeds US$60/bbl. In 2022, this rate remained at 8%.
The Solidarity Law and its supplementary provisions, which entered into effect on December 23, 2019, provided that gas transportation tariffs under federal jurisdiction would remain unchanged for up to 450 days or until new transitory tariff schemes were in effect. It also vested the PEN with the power to begin an extraordinary review of the current RTI (Revisión Tarifaria Integral or Comprehensive Tariff Review). Moreover, on December 17, 2020, Necessity and Urgency Decree (or Decreto de Necesidad y Urgencia) No. 1020/20 was published, starting the RTI renegotiation for a term not exceeding two years from its publication. This term was extended for a year under PEN Executive Order No. 815/22 issued on December 6, 2022.
Through PEN Executive Order No. 91/22 and ENARGAS (Ente Nacional Regulador del Gas) Resolution No. 60/22, issued on February 2022, a 60% transitionary update vs. April 2019 tariff schemes was granted effective from March 2022. Among other conditions, this update did not establish a mandatory investments plan, and determined the prohibition of distributing dividends, early canceling financial and commercial debts taken on with shareholders, acquiring other companies or granting loans.
Finally, the public hearing was held on January 4, 2023, where a 135% increase vs. March 2022 tariff schemes, effective from February 2023, was requested. As of this date, TGS is awaiting ENARGAS’ answer.
Presidente Néstor Kirchner gas pipeline
Under Resolution No. 67/22 issued on February 7, 2022, the SE (Secretariat of Energy) created the Transport.Ar Producción Nacional program, declaring the construction of Presidente Néstor Kirchner’s gas pipeline of public interest and its supplementary works as a strategic project.
Moreover, PEN Executive Order No. 76/22, issued on February 11, 2022, granted ENARSA a 35-year concession for this gas pipeline and created the FONDESGAS (Fondo de Desarrollo Gasífero Argentino) trust, with ENARSA as the trustor and beneficiary, and BICE (Banco de Inversión y Comercio Exterior S.A.) as the trustee.
Stage I will connect the town of Tratayén, Province of Neuquén, with the city of Salliqueló, Province of Buenos Aires, contributing an initial 11 million m3/day transportation capacity, expandable to 21 million m3/day with supplementary works. In addition, Stage II will connect the City of Salliqueló with the City of San Jerónimo, Province of Santa Fe, increasing capacity to 44 million m3/day.
If a call for tenders is launched, TGS will evaluate the suitability of participating in its operation and maintenance.
Household Gas Bottles’ Program and Propane for Grids Agreement
The Household Gas Bottles’ Program supplying LPG for gas bottles at subsidized prices (Executive Order No. 470/15 of the PEN (National Executive Branch or Poder Ejecutivo Nacional), as amended) and the Propane for Grids Agreement are in force.
To guarantee supply to low-income residential users, the Household Gas Bottles’ Program provides a defined LPG quota to fractionation companies at a maximum reference price. The maximum reference price for butane and propane producers under this program is shown below:
| Period | AR$/ton | SE Resolution No. | Period | AR$/ton | SE Resolution No. | |
| Until Apr-21-2022 | 12,626.60 | 249/21 | Sep-2022 – Nov-2022 | 18,375.49 | 609/22 | |
| Until Jun-30-2022 | 15,152.00 | 270/22 | Dec-2022 | 26,800.80 | 861/22 | |
| Jul-2022 | 16,667.11 | 609/22 | Jan-2023 | 29,481.00 | 15/23 | |
| Aug-2022 | 17,500.47 | 609/22 | From Feb-2023 | 32,429.00 | 62/23 |
Moreover, on August 25, 2021, Resolution No. 809/21 from SE (Secretariat of Energy), as amended, provided (among other measures) transitory economic assistance recognizing 20% of the August 2021 – December 2022 billing of LPG sales under the Household Gas Bottles’ Program. Given the circumstances, participation in this program forces TGS to produce and sell LPG at prices ostensibly lower than market prices, which entails adopting the necessary mechanisms to minimize its negative impact.
Regarding the Agreement for the Supply of Propane Gas for Undiluted Propane Gas Distribution Grids (‘Propane for Grids Agreement’), on June 23, 2022, TGS executed its 19th extension, effective until December 31, 2022. This agreement stipulated a compensation for participants, payable by the Federal Government, and calculated as the difference between the sales price under such agreement and the export parity published monthly by the SE, although with significant delays in collection terms.
Export duty
As with hydrocarbon exports, a propane, butane and LPG export duty has been in effect since May 2020. PEN Executive Order No. 488/20 of May 19, 2020, established an export duty exemption as long as the Brent international price is equal to or below US$45/bbl. The rate would rise gradually in line with the international reference price until reaching 8%, the cap to be recognized when Brent equals or exceeds US$60/bbl. In 2022, the rate remained at 8%.
In June 2016, OldelVal (Oleoductos del Valle S.A.) requested to the MEyM (former Ministry of Energy and Mining) the performance of the RTI (Integral Tariff Review) to update tariffs for a maintenance and investment plan that may secure the integrity, efficiency and reliability of the facilities and transportation service. Consequently, on March 10, 2017, a new US$-denominated tariff scheme was published, providing for an average 34% increase, effective as from March 2017 (MEyM Res. No. 49/17).
On September 14, 2022, Resolution No. 643/22 from the SE (Secretariat of Energy) granted an extension of the transportation concession for the main oil pipelines providing access to Allen and the Allen – Puerto Rosales oil pipeline and its respective expansion, called Medanito-Puesto Hernández, for a term of 10 years as from November 14, 2027. Therefore, the concession term will expire on November 14, 2037.
Besides, in 2022 OldelVal launched a call for tenders to award and hire the firm transportation service for the Allen – Puerto Rosales oil pipeline tranche corresponding to the Duplicar Project, for a total 50,000 m3/day capacity, under contracts that will be effective until the concession termination. Pampa has been awarded 1,002 m3/day.