New Argentine natural gas production promotion plan: period 2023-2028
Due to the importance that production gas has acquired as a result of the Ukraine-Russia war, the Government of Argentina has introduced through a Decree changes to Plan for Promotion of the Production of Argentine Natural Gas, so-called ‘Plan Gas.Ar’ to secure domestic self-supply, exports, import substitution and expansion of the transportation system for all hydrocarbon basins of the country for the period 2023-2028.
The Decree empowers the Secretariat of Energy (SE) to implement the supply scheme of volumes, terms and maximum reference prices of natural gas at The Point of Entry to the Transportation System (PIST) to be applied to the supply contracts entered into under the Plan.
Among the most important goals of the Plan are:
- To develop a transparent, open and competitive system for the formation of the price of natural gas in agreement with the private sector that is compatible with the energy policy objectives established by the Executive Power and generate long-term certainty in the hydrocarbon production and distribution sectors.
- To protect the rights of current and future users of the natural gas service.
- To promote the development of national aggregate in the value chain of the entire gas industry. As well as, maintaining the jobs in the natural gas production chain.
Natural gas producing Argentine provinces are hereby invited to adhere to this decree.
The particular contracts resulting from the new structure shall be negotiated through a public bidding mechanism, to be designed by the Secretariat of Energy of the Ministry of Economy, which guarantees the highest standards of concurrence, equality, competition and transparency.
With the possibility of granting companies preferential conditions for gas exports, the previous maximum of 11 million m3 per day has been eliminated.
As regards prices, it is estimated that the contract values for large volumes to be sold in the domestic market will range between u$s3.50 and u$s4.20 per million BTU.
The producer may export in established periods more than 30% of the total volume authorized to place outside the country, or more than 50% of its delivery commitment under the Plan.
The exports will be granted taking into consideration the internal supply and the best sales prices to the external market at The Point of Entry to the Transportation System (PIST) of the export contracts.
The New Scheme establishes that the national government must create a guarantee system to support the payment of the spread between the price offered and the price included in the fee charts, which will have a settlement procedure based on the principles of speed and administrative efficiency, without prejudice to other mechanisms such as the recognition of tax credits to guarantee the gas producers the collection of the contractual compensations.