RESOURCE DEVELOPMENT: THE KEY ROLE OF LAW AND INSTITUTIONS

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development and Investment
(Apr 2009)
CHAPTER 1B
RESOURCE DEVELOPMENT: THE KEY ROLE OF LAW AND INSTITUTIONS
Francisco J. Romano
Chevron Argentina S.R.L.
Buenos Aires

Francisco Javier Romano was born in Buenos Aires, Argentina and obtained his Bachelor of Laws with honors from the University of Buenos Aires School of Law in 1990. In 2000 he was awarded a Chevening Scholarship and obtained his Master of Laws at King's College London with merit in 2001. He then worked for the law firms of Klein and Mairal and Le Pera and Lessa in Buenos Aires, and in 1995, he became the legal manager of independent oil company Bridas. In 1997, when Bridas and Amoco merged their assets in the southern cone and created Pan American Energy, Francisco became the senior legal advisor. In 2005, he became the legal manager of Chevron Argentina, a position he still holds.

Re-regulation Environment - National Level

Phase I
2001- 2005

□ Emergency

▪ Devaluation and Mandatory Conversion of US Dollars denominated obligations into Pesos 1 to 1

▪ Freeze on Natural Gas Price

▪ Creation of Export Tax:

— Contrary to deregulation decrees and concessions

— Discourages Exports

— No sharing of new tax with Provinces

— Artificial reduction of crude oil price at the local market creates conflicts with Provinces over royalty calculation

▪ National oil company factor

▪ Repatriation of 2002 Export Proceeds

Phase II
2006 - 2007

□ Emergency renewed

▪ Higher Export Tax (45%)

▪ Extension of Export Tax to previously exempt situations

▪ Resolution 394

— Cap on crude oil export price at US$ 42/Bbl

— Increase In export tax rate on crude oil products

▪ Disposition 1 - Royalty to be calculated on cap (even if actual price is lower than cap)

▪ Higher Inflation and costs More pressure on the industry

Phase III
2008 - 2009

□ Some developments

▪ Gas Plus

▪ Oil Plus

▪ Tariff Increase

▪ LPG Subsidy

▪ Creeping devaluation

▪ Stagflation

▪ Offer exceeds demand

▪ The price question

▪ "Truce" Agreement

▪ What next?

— More regulation?

— Less regulation?

— Gradual deregulation?

[Page 1B-2]

The Short Law (Law 26,197)

▪ Liquid and gaseous hydrocarbons fields located in the Republic of Argentina and its Continental Shelf belong to the inalienable and indefeasible domain of the Federal State or the Provinces, depending on the territory in which the same are located.

▪ Ratifies that jurisdiction over the fields remains with the Federal...