Argentina
province sets conditions for extending E&P contracts
PLATTS
BUENOS
AIRES
Petroleumworld.com
03 15 06
Days after unveiling plans to take over all oil and natural gas
concessions
when they expire in 2015-16, Argentina's top hydrocarbon province,
Neuquen,
Saturday said it wants to grant extensions to producers that meet
conditions
before that to spur E&P.
"The
best way to encourage hydrocarbon exploration and generate a
favorable environment for attracting more investment and creating
genuine jobs
is to extend concessions ahead of time and not at the moment the
original term
ends," Eduardo Carbajo, secretary of energy and mining in
the province, said.
This is a policy that is "in force" in the province,
he said in a statement.
In 2001,
Neuquen extended the concession for Loma La Lata-Sierra Barrosa,
which is operated by Spain's Repsol YPF, to 2027 from 2017, in
line with the
federal hydrocarbon law that allows 10-year extensions. Yet this
policy came
into question in Neuquen in late February, when Governor Jorge
Sobisch, a
presidential candidate for 2007, issued a decree allowing the
province to take
over all federally awarded oil and gas concessions after they
expire in
2015-17.
Hidenesa,
Neuquen's state oil company, is to operate the concessions.
Carbajo, however, said that despite this it would extend concessions
for
companies that "have complied with their contracts and investment
obligations,
and that don't have debt (with Neuquen) and that reach a deal
with the
province via (Hidenesa)."
The province
is claiming millions in royalty debt from many producers. In
February it changed the calculation for the 12% royalty, effective
Mar 1. For
oil, producers must base the payment on West Texas Intermediate
(WTI), the
international reference price used in Argentina. They can no longer
deduct the
25-45% federal export tax from WTI before calculating the royalty.
For gas,
it is now based on the average price of gas imports from
Bolivia "minus fees for compression, treatment and transport"
and no longer on
the lower domestic price.
Analysts
said these policy changes would cut E&P in Neuquen, which
holds
24% of the country's proven oil reserves and 50% of the gas and
which produces 26% of the total production of 665,035 b/d oil
and 50% of the 141.4-mil cu m/d gas.
Producers
in the province include Repsol, Argentina's Capex and
Pluspetrol, Brazil's state-owned Petrobras and the U.S.-based
companies
ChevronTexaco and Apache Corp. By attracting investment, Neuquen
wants to
rebuild oil and gas reserves. They have been declining in recent
years and
this "is turning (Argentina) into an (energy) importing country,
so far of
Bolivian gas and Venezuelan fuel oil and very soon of crude oil,"
Carbajo
said.
--newsdesk@platts.com
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Platts
03 13 06
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