President Mauricio Macri , in an opinion column published in the newspaper La Mañana, Neuquen, the agreement last week signed with companies and oil unions to encourage investments in Vaca Muerta referred, considered that Argentina can "be part of The answer "to the global energy challenge and announced that this year will follow sectoral agreements in search of a country" without poverty and opportunities. "
In the column published in that morning, Macri remember Vaca Muerta, the second book of unconventional gas and the fourth of unconventional oil in the world, "is a development tool for the country" and that "has the potential to generate thousands jobs and energy needed to power our industry and our homes " .
Asks why take care " not only extracting resources responsibly and sustainably, but also consuming energy wisely ."
The President referred to the consequences of many years of deficiencies in energy production. " While reserves and investments fell, the quality of services worsened, increased fiscal costs and increasing self - supply would lose more capacity , " he says in a call to reverse that trend.
" The world needs energy, and we can be part of the response to this global challenge, both renewable energy and conventional and unconventional resources. We needed to change , " said Macri in his column.
" That is why we made energy a state policy , " continued the President, who clarified that his government is " investing in key sectors, generating the need for companies to trust and invest in our country framework ".
There noted that the agreement signed last week was the result of several months of a mature dialogue with companies involved all parts of the sector and put the goal of " investments exceeding 10,000 million dollars a year "; He adds that " the unions pledged to improve the organization of production to achieve greater efficiency " and the Nation and the province will " bring with roadworks and railways " to improve logistics. " Each party gave up on something to improve the set, and the result was successful , " he summarized.
Finally, Macri said this as " the first in a series of sectoral commitments" that will drive in 2017. "It 's a step every day to advance toward that goal with which I personally promised: an Argentina without poverty and opportunities " ,
Argentina's government has agreed to extend a natural gas wellhead price subsidy until 2020 and reduce labor costs in a bid to jumpstart investment in the Vaca Muerta shale formation. The agreement, reached between the national government, the provincial government of Neuquen, industry and labor unions, comes at a time of lackluster upstream activity, reflecting an uncertain price environment and cost concerns.
Under the new pact, the government will maintain the subsidy that pays as much as US$7.50/mn Btu for new gas production. The subsidy had been scheduled to expire this year.
One of the key costs dissuading investors in Argentina's emerging shale patch is labor. Under the agreement, the government appears to have negotiated with the unions to limit benefits in exchange for fresh investment.
Companies that already have a presence in Vaca Muerta—mainly state-controlled YPF, BP-controlled Pan American Energy, France's Total, Shell, Chevron and US Dow—have pledged to invest a combined US$5bn this year in the shale formation with a goal of reaching US$15bn/yr in 2018.
“We knew we had to give guarantees and certainty in order for investments to arrive,” President Mauricio Macri said in announcing the agreement, which has yet to be signed.
The wellhead price support, put in place by Macri's predecessor, flies in the face of the administration's efforts to re-introduce market prices across the energy chain. The process has run into headwinds, not least from the oil and gas producers, who say market-based prices would spark layoffs and bankruptcies.
“These measures will allow us to boost development of unconventional resources in the country and promote investments to generate the energy that Argentina needs to grow,” YPF chief executive Miguel Angel Gutierrez said.
The deal to extend the subsidy coincides with a gradual increase in wellhead prices for all gas production earmarked for residential users. That price currently averages US$3.42/mn Btu, almost three times the previous prevailing price. The plan is to reach US$6.80/mn Btu in October 2019.
On the oil front, Macri confirmed that Argentina would no longer charge export taxes on crude, reinforcing a policy of scrapping almost all duties on overseas sales. The main beneficiary is PAE, which exports 24°API Escalante crude that is too heavy for local refiners.
The agreement came after “three or four months of hard work,” said Neuquen governor Omar Gutierrez, who qualified the measure as “historic.” As part of the deal, Neuquen agreed to keep its provincial taxes steady.
The US Energy Information Administration (EIA) ranks Argentina second in the world for gas and fourth for oil in terms of potential shale resources, in large part thanks to 30,000km2 (11,583mi2) Vaca Muerta, which is mostly in Neuquen.
Datafeed and UK data supplied by NBTrader and Digital Look.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk.
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.