The Ministry of Energy and Mining published Resolution
46-E/2017, which created a program to stimulate investments in
natural gas production projects in the Neuquén Basin's
unconventional reservoirs (the "Program").
The Program guarantees the following minimum prices for gas from
unconventional reservoirs sold in the domestic market, starting in
2018 for a period of four years:
The difference between the weighted average price effectively
received by the producer for its gas sales - produced from
conventional or unconventional reservoirs in the Neuquén
Basin and sold in the domestic market - and the guaranteed Minimum
Price under the Program, will be paid by the Republic of Argentina
. The production company included in the Program will receive 88%
of the price difference and the remaining 12% will go directly to
the province, which awarded the concession. This 12% covers the
corresponding royalty on the sale price, which would have been
payable to the province which granted the concession, had the
subsidized price actually been obtained in the free market.
To participate in the Program, producers must make a request to
the Secretariat of Hydrocarbon Resources of the Ministry of Energy
and Mining, informing:
the list of concessions to be
the specific investment plan,
approved by the corresponding Provincial Enforcement Authority, for
its participation in the Program;
a monthly projection of the
volume-weighted average price of total natural gas sales to the
domestic market, including gas from conventional and unconventional
reservoirs during the life of the Program; and
a monthly projection of the
unconventional gas production to be marketed in commercial
condition, that is, excluding the internal consumption in the
Companies that participated in the so-called "Gas Plan
II" (created in 2013 to promote the surplus injection of
natural gas, through a price subsidy), which also participate in
the Program, may receive their benefits immediately, that is,
before January 2018. To provide the 2017 benefits for companies
participating in Gas Plan II, the prices established in the Program
for 2018 will be used as the minimum price.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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