On July 26, 2019, Resolution No. 417/19 (the “Resolution”), issued by the Secretary of Government of Energy of the Ministry of Treasury has been published in the Official Gazette with important implications regarding natural gas exports. This Resolution approves a new procedure that must be complied with by those interested in exporting natural gas.
The Resolution revokes prior Resolution No. 104/18 issued by the former Ministry of Energy on August 22, 2018.
This Resolution also entrusts the Undersecretary of Hydrocarbons and Fuels to: (i) enact the applicable framework that shall rule mechanisms for energy substitution for natural gas exports on a firm basis – notwithstanding Resolution’s applicability until such mechanisms are enacted-, and (ii) the elaboration and further approval of the mechanisms applicable for natural gas exports which shall apply upon shortage of natural gas in the local market.
The Resolution’s most relevant aspects are outlined below:
- Type of authorizations: The Resolution foresees four (4) kinds of authorizations:
- Firm or uninterruptible: natural gas purchase agreements which contemplate delivery and reception of gas by the contracting parties that are mandatory and cannot be carved-out except for force majeure events;
- Interruptible: natural gas purchase agreements which do not contain mandatory delivery and/or reception provisions which bind the contracting parties;
- Operational exchanges: agreements executed for purposes of attending operational requirements (back-up fuel) and/or emergency scenarios and others of similar nature, to the extent the enforcement authority requires the exporting party to reimport equal amounts of natural gas (or equivalent electricity quantities) within twelve (12) months as of the first event of exportation;
- Assistance agreements: for providing support to neighboring countries under critical situations and/or declared states of emergency. The exporter shall not be required to import equivalent volumes of the exported natural gas nor its equivalent in power. These exports are excluded from the procedure provided in the Resolution.
- Simplification of the procedure to request the authorization: The export filing request shall be made digitally through an online remote platform.
- Unconventional natural gas: The volume of exported natural gas produced by a project benefited from the Government’s Incentive Program will be offset from the project’s total production, prior to the determination of the project’s Included Production volumes. Former Resolution No. 104/18 provided that exported gas could not be employed within the Government’s Incentive Program approved for unconventional gas.
For further information, please do not hesitate to contact either Nicolás Eliaschev or Javier Constanzó.