OIL AND GAS LAW UPDATE: ARGENTINA

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development, and Investment
(Apr 2011)
CHAPTER 24A
OIL AND GAS LAW UPDATE: ARGENTINA
Franciso Javier Romano
Chevron Argentina S.R.L.
Buenos Aires, Argentina

FRANCISCO JAVIER ROMANO, Legal Manager Chevron Argentina S.R.L., Buenos Aires, Argentina, since April 2005. He was the senior legal advisor at Pan American Energy LLC and the legal manager at Bridas. Francisco graduated cum laude at the School of Law of the University of Buenos Aires in 1990. In 2000 he obtained a Chevening Scholarship and obtained a Master of Laws with merit at King's College London and the LSE. He is fluent in English, French, Italian and has a degree in Russian.

The Birth of the Industry

• Comodoro Rivadavia, a village founded in distant Patagonia in 1901

• Central government sent crew to look for oil

• Well #2 struck oil at 550 m depth, on 13 Dec. 1907

• Government claimed exclusive mining rights in surrounding area

• National Oil Co. YPF established in 1922

The development of a modern industry

• The industry developed during 100 years, under a diversity of political paradigms

• Overriding historical objective: self sufficiency

• Today: mature industry, with technology and infrastructure

• Five productive basins

• Large development of gas. Today, 50% of primary energy, 4 bcf/d consumption

• 604 MBOE/d production

• Well developed oil and gas transportation infrastructure

Declining Oil and Gas Reserves and Production

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Is there a chance for further boost of business terms?

LNG reshaping gas business in Latin America

2010 crude oil prices recovered and stimulated drilling investment

Argentina may become a net importer of crude oil and/or refined products in the near future

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Impact of imports in winter affects the economy severely

Resumption of interest in Argentine Upstream

Re-regulation Environment

Domain and Jurisdiction

• Law 17, 319 "Hydrocarbons Law"

— Deposits of liquid and gaseous hydrocarbons belong to the patrimony of the State.

— National Government is granted the power to establish the national policy and regulate all matters related to the exploration, production, transportation and marketing of hydrocarbons.

• Law 24, 145 "Federalization of Hydrocarbons Law"

— Maintains status quo until new Hydrocarbons Law is passed by Congress.

— Provinces may grant permits and concessions over relinquished areas.

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• Constitutional Amendment of 1994

• Section 124: Provinces have the original ownership of resources existing in their territories.

• Need to distinguish "ownership" from "Jurisdiction".

• Jurisdiction i.e. power to regulate still with Federal Congress (Constitution Section 75).

• Permits and concessions are...