November 21, 2014
Gov’t: oil and gas bill not created for YPF
Kirchnerite Senator Marcelo Fuentes responds to criticism by Neuquén governor
The national government yesterday defended its decision to move forward with a new law to regulate oil and gas production and said the bill it proposes does not confer any special benefits to state-owned oil company YPF.
“This project does not grant privileges to YPF. The company only accounts for some 37 percent of oil and gas production,” Victory Front (FpV) Senator Marcelo Fuentes said.
“The goal of this new regulation, which will be adopted by consensus, is to promote companies and other players to enter this process,” Fuentes added.
His remarks were made following criticism by Neuquén province Governor Jorge Sapag, who had expressed worries about the ongoing conflict between YPF and provincial oil firm GyP.
“Governor Sapag is a responsible man who understands the investment made by the new YPF are the greatest investments of the last times in our province. I don’t think he actually opposes clear and equal rules for all companies wanting to invest in Neuquén,” the Kirchnerite senator added.
Beforming an old law
As the Herald has reported, President Cristina Fernández de Kirchner’s administration is eager to debate a reform to the 1967 Oil and Gas Law, in order to re-work production regulation, as well as revenue sharing for shale, which isn’t included under the current legislation.
Provincial leaders who make up the Federal Organization of Hydrocarbon Producing Provinces (Ofephi) have met with Fernández de Kirchner to move forward with the new regulations, but their different stands about it augur long-term discussions.
Companies that invest US$250 million — a decrease from the current floor of US$1 billion — would be able to export 20 percent of their output at international prices, and would be able to send profits abroad. The bill seeks to freeze royalties at 12 percent, but would allow an additional three percent, according to the draft.
The CFK administration hopes to start discussion of the bill in August in the Senate and then in the Lower House. The bill will then have to be passed by all the provincial legislatures, a process that will delay it from being fully operational until mid-2015, according to estimations made by the governors.
Debate at the Upper House promises to be harsh, with the opposition led by dissident Peronist senator Guillermo Pereyra who has vowed to “defend Neuquén resources from the national government’s intentions” along with Sapag.
But yesterday Fuentes played down the conflict.
“The deal needs to establish a competitive bidding process without privileges for public companies or companies with state participation,” he expressed. “Investment needs to be the main factor.”
The Kirchnerite representative insisted on saying that the Vaca Muerta shale oil and gas field was “a huge opportunity” for both the country and the province and that the goal of the government-sponsored bill was to create “a predictable legal framework in order to ensure fresh investment.”
The national government helps the provinces through a benefits scheme, gives up millions of pesos in taxes, and contributes with one percent of the funding of infrastructure works, such as it did in 2013 following the YPF-Chevron deal, Fuentes concluded.