Florencia Barragan 
A few days before the end of the special benefit for soybean exporters and in the midst of financial dollar turmoil, Economy Minister and Unión por la Patria (UxP) presidential candidate Sergio Massa announced a new dollar exchange rate.
Known as the “Vaca Muerta” dollar, it will be similar to the exchange scheme of the agricultural sector and have a dual goal: a nod to the oil sector so that it can end the year with record investments, but also as a way of liquidating more foreign currency and avoiding a new run on the peso during the presidential elections.
For hydrocarbon companies, this new scheme will allow them to liquidate 25% of their exports at the blue chip exchange rate (also known as contado con liquidación), which on Tuesday closed at AR$778 per US dollar, without losing access to the single and free exchange market (MULC, for its Spanish initials), where the exchange rate is AR$350 per US dollar.
Massa made the announcement in Vaca Muerta. “We have a record oil and gas production, as well as record investment in the hydrocarbon sector. With the election results, however, some started to think that uncertainty was putting a brake on investment in this sector. We don’t want to stop generating jobs, or have drilling stop. That’s why we made the decision to allow them to bring in 25% of what they export and invest it in Argentina at the blue chip exchange rate in order to increase gas and oil investment levels in the next 60 days, guaranteeing job stability and ensuring that works continue.”
The minister also added what the underlying objective of the measure is. “It guarantees financial stability. Believe it or not, the work of oil companies will allow those who are speculating before the elections to find an offer so that they cannot speculate with the results.”
The announcement was made during Massa’s tour of the Vaca Muerta Norte oil pipeline, which will start operating in October and will allow a 50% raise in transportation capacity in order to increase exports to Chile.
This measure comes in addition to another one the government granted oil companies in August 2022 to increase oil and gas production. This benefit allows companies to access hard currency for a percentage of this excess production, 20% in the case of oil, and 30% for gas production.
A nod to the sector
The economic team finalized the fine print of the measure at a dinner at Massa’s house in Tigre on Monday night. The minister made it public it Tuesday morning in a meeting at the Economy Ministry with the most important businessmen of the sector: Pampa Energía owner Marcelo Mindlin, Vista President Miguel Galuccio, YPF President Pablo González, and representatives of Pan American Energy and Techint, among others.
At the meeting, Massa informed them that promoting investments is one of the objectives of this benefit. “We saw a slowdown in drilling after the primaries, with businessmen fearing how measures like dollarization could impact their costs and competitiveness”, an official source said.
Shielding from a run on the peso
The Economy Ministry is expecting US$1,2 billion to be liquidated in the next two months, taking into account the international rise of crude oil prices. Of this total, US$900 million is expected to come through the official exchange rate and US$300 million through this new rate. Although the measure is initially scheduled to last 30 days, until October 25, it is expected it will be extended for another 30 days, until November 25.
Within a context of negative net reserves and in light of the extreme uncertainty due to the presidential elections, Massa is looking to increase foreign currency supply to protect himself from another run on the peso and to reach October 27 with exchange rate stability in the financial dollars.
“What they did to us in the primaries, they will not do it again”, an Economy Ministry source said, referencing the pressure on the dollar the week before the primaries, which elevated the exchange rate gap to over 120%.
The hydrocarbon sector was also chosen because there are few actors in the sector, similar to what happens with grain companies. In exchange, Massa asked them to maintain a freeze on gas prices, which is currently in force until October 31, but could be extended if the Vaca Muerta dollar benefit continues.
Going forward, they do not rule out also adding the mining sector, although the percentage the sector could direct to the blue chip exchange rate would be 15%. As is the case with the special benefit for soybean exporters that ends this Friday, they do not rule out that it could continue after this date.
