export, dollars and tax exemption

As detailed by the Ministry of Energy in charge of Dario Martinez, the rule that will begin to be debated in the Senate next week has eight main objectives:

  1. Increase the Production and Industrialization of Hydrocarbons
  2. Scale Exports of Oil and Natural Gas
  3. Increase the inflow of foreign currency and strengthen the BCRA’s reserves
  4. Incorporate National and Regional Added Value Guarantee self-sufficiency
  5. Promote Regional Development
  6. Strengthen Provincial Finances due to higher Royalties and Tax Income
  7. Promote the Gender Perspective within the Hydrocarbon sector
  8. Promote Energy Sustainability Plans

“In a world and a global economy where uncertainty prevails, the Law for the Promotion of Hydrocarbon Investments brings predictability, stability and clear rules”stressed from the energy portfolio.

The law translates that predictability into the 20-year validity of the incentives or differential tax, tariff and exchange treatments, highlighting the “federal tax stability” that this measure entails.

What are the incentives for companies to invest?

Among the benefits are the guaranteed export from 20% to 50% of the incremental production of each company, scaling based on:

  • Growth of Total National Production
  • Participation of each company in the coverage of the domestic market
  • Reversal of the decline in conventional production of each company
  • Increase in your own production
  • Proportion of idle wells put into production by contracting small companies
  • regional

But there will also be free availability of dollars in the foreign exchange market of up to 50% of the guaranteed export, which scales according to:

  • Participation of each company in the coverage of the domestic market
  • Proportion of idle wells put into production by contracting small regional companies

Likewise, the law provides for a reduction of Income Tax to encourage business associativity, which will be accessed by the partial transfer of participation in a concession area to a new partner.

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Kindness: Argenports

The project proposes an institutionalization of the Gas.Ar Plan in force for 20 more years with certain conditions, which will allow:

  • Minimum contract of 3 years
  • Predictability in Price
  • Marketed Volumes Guarantee
  • Firm Exports
  • Free availability of foreign currency of 50% of Exports
  • Income Tax Exemption for Partial Assignment
  • of participation in a concession area

Benefits for special projects

The law also incorporates a Regime for Special Projects to promote privileged investments of small companies, in Marginal Areas, in basins with productive decline, in industrialization at source and for exploration and exploitation of conventional areas. For the preparation and approval of these projects, the direct participation of the hydrocarbon producing provinces will be requested.

The benefits for special projects will be tax, tariff and exchange rates.

  • First, it promotes a accelerated amortization Income Tax and VAT refund on investments associated with the project.
  • Second there will be up to 40% tariff reduction import for goods not produced in the country
  • Thirdly, the access to the Single Market and Free of Changes for up to 25% over four years of the currencies actually received to finance the project.

What are considered special projects?

Exploration and Seismic for Conventional Exploitation

  • Minimum Investment: USD 6 MM
  • Maximum term: 3 years

Refining and industrialization of Hydrocarbons in the basin of origin

  • Minimum Investment: USD 10 MM
  • Maximum term: 3 years

Underground gas storage, or port infrastructure for export, transportation, or improvement or expansion of the existing one

  • Minimum Investment: USD 30 MM
  • Maximum term: 3 years

LNG: medium investments in treatment, liquefaction, commercialization, mobile or stationary storage, transportation, use and manufacture of equipment

  • Minimum Investment: USD 50 MM
  • Maximum term: 3 years

Exploitation of Oil or Natural Gas of Conventional origin or with secondary and / or tertiary recovery

  • Min. Investment: USD 100 MM
  • Maximum term: 4 years

Industrialization, separation, fractionation, treatment, storage, transportation and / or refining of Hydrocarbons and derivatives

  • Min. Investment: USD 300 MM
  • Maximum term: 5 years

Exploitation of non-conventional origin for the production of Natural Gas and Petroleum

  • Minimum Investment: USD 300 MM per year
  • Minimum Duration: 5 years

Joint Oil and Gas production projects

  • Minimum Investment: USD 200 MM per year
  • Minimum Duration: 5 years

Large HC transportation, storage and industrialization infrastructure projects that use Natural Gas as raw material for their industrial process

  • Min. Investment: USD 1200 MM
  • Maximum term: 5 years

Investment projects in offshore basins

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More benefits for sustainability and gender perspective

The law has a chapter on energy sustainability, which implies that projects that have an approved energy sustainability plan may increase the above incentives by up to 10%, and another on gender perspective, which enables a fund to award undergraduate scholarships for careers related to the hydrocarbon activity and reduction of employer contributions for companies that incorporate the Gender Perspective in the composition of their managerial, technical and professional staff.

Promotion of employment and national industry

With the aim of increasing the National Added Value the law creates a Regime for the Promotion of Employment, Work and the Development of Regional and National Suppliers of the Hydrocarbon Industry.

This regime will be of mandatory compliance and measurable goals, with increasing plans for incorporation of SMEs and regional and national companies in supply chains and plans use of industrial goods and National Technology.

In addition there will be a regime of hiring preference for regional and national companies and a open and participatory control and monitoring mechanism together with unions, provincial authorities and business chambers.

SMEs

The bill sent to Congress provides for the underground storage concession, which until now was not regulated, with the modification of law 17,319, so that the provinces can make concessions for underground storage of hydrocarbons.

At the same time, it modifies Law 23,966 of Taxes on Liquid Fuels (ICL) to establish the tax as percentage rates of the price of liquid fuels.

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