On November 29, 2024, the Government of Argentina released Decree 1057/2024 (“Decree 1057”), that regulates Chapters I, II, and VI of Title VI of Law No. 27,742 ( “Foundations Law”), which modifies Law No. 17,319 on Hydrocarbons (“Hydrocarbons Law”), Law No. 24,076 on Natural Gas (“Natural Gas Law”), and environmental legislation under Law No. 27,007 (the “Environmental Regulation“).

To review our comments on the Foundations Law, please access here.

The key takeaways of Decree 1057 are summarized below:

1. Regulation of the Hydrocarbons Law

  1. Decree 1057 establishes certain guidelines regarding the activities of exploration, exploitation, processing, transportation, storage, industrialization, and commercialization of hydrocarbons, including:
    1. Free market principles;
    2. Competitive markets through the participation of the actors across the production chain and related sectors;
    3. Local price alignment with international market conditions, ensuring hydrocarbons supply and parity in imports and exports;
    4. Efficient resource allocation;
    5. Long-term contracts, competitiveness, productivity, and integration into global trade; and
    6. Ensuring present and future hydrocarbons local supply.
  1. Interested parties in developing the previously mentioned activities shall (i) establish a legal address in Argentina and (ii) demonstrate financial and technical capacity. Regarding interjurisdictional and international transportation, the Government shall grant concessions and authorizations for inter-provincial operations, as well as for imports and exports.
  1. Decree 1057 provides for the free exports of hydrocarbons, subject to specific requirements, that include the submission to the Secretary of Energy of documentation that evidences (i) the details of the planned operation, (ii) production capacity, (iii) commercial agreements, (iv) compliance with the destination country requirements, (v) legal representative information, (vi) semi-annual and annual projections of volume and quality of hydrocarbons, port of in operation, and loading estimated date. The Secretary of Energy may object exports in case of:
    1. Shortages affecting local supply;
    2. Inaccuracies in the submitted documentation;
    3. Evidence of anti-competitive practices; and
    4. Unforeseeable variations of prices in the local market.
  1. The Secretary of Energy shall manage an export registry to monitor approved, objected, and completed transactions, and shall issue the Free Export Certificate in favor of the interested party i if no objections are raised.
  1. The Secretary of Energy may consider the export of surplus volumes of gas.
  1. Concessionaries shall submit annually the information regarding the availability of the resources and estimated production.

2. Natural Gas Law Regulation

  1. Decree 1057 provides for the free exports and imports of Liquified Natural Gas (“LNG”). The Secretary of Energy shall regulate its procedure, contemplating its impact on the current and new infrastructure and its investment amounts. Interested parties shall submit documentation that evidence (i) availability of resources; (ii) technical and financial capacity; (iii) LNG maximum volumes to be exported; and (iv) if the project has filed for the Large Investments Incentive Regime (“RIGI”).
  1. The Secretary of Energy will elaborate a Declaration on the Availability of Gas Resources, which must be updated at least every five (5) years, including market conditions, estimated production and exports amounts, and its impact on the local demand.
  1. The Secretary of Energy may object LNG exports in case of (i) shortages affecting local supply; (ii) lack of capacity to export LNG; (iii) inaccuracies in the submitted documentation; and (iv) evidence of anti-competitive practices. If no objections are raised, the Secretary of Energy shall issue a Free Export Authorization.
  1. Transportation and distribution licenses are eligible for a twenty (20) year extension beyond the initial thirty-five (35) year term, subject to compliance with obligations and corrections of deficiencies identified by the National Gas Regulatory Body (“ENARGAS”).

3. Environmental Regulation

In order to promote a consolidated environmental regulation, Decree 1057 instructs the Secretary of Energy to identify a coordinated procedure to amend the legal framework, considering, among others: (i) environmental licensing processes, (ii) abandonment of wells and installations, (iii) management of environmental liabilities, waste, emissions, and effluent management, (iv) safety conditions, (v) greenhouse gas emissions and decarbonization, (vi) guarantees and insurance for environmental contingencies, (vii) participation and access to public information, (viii) corporate environmental and social responsibility, (ix) inspections and sanctions.

***

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, Daiana Perrone, Milagros Piñeiro, Victoria Barrueco and/or Giuliana Manzolido.