Argentina to ease exchange control for oil and gas companies

BUENOS AIRES

Argentina on May 24 announced an easing of foreign exchange controls for the shale oil and gas industry in a bid to promote investment and boost production.

In an area known as Vaca Muerta in Patagonia, Argentina has what is considered the second-largest shale gas reserve in the world and the fourth largest of shale oil.

Extraction has been hampered by a lack of much-needed but costly investment, especially for hydraulic fracking.

On May 24, Economy Minister Martin Guzman said “a special regime for currency access” would be put in place for the hydrocarbon industry “to guarantee the special equipment they require,” especially for fracking.

About 20 oil companies have been operating in Vaca Muerta since 2013, including Chevron, Shell, Total and Statoil in partnership with the Argentine oil company YPF.

Since September 2019, Argentina has had exchange controls in place with a limited official rate of about 120 pesos for one dollar.

At the same time, currency can be exchanged at a rate of some 200 pesos to the dollar through debt bonds or on the informal market.

“We have a great opportunity in energy in Argentina. The next 15 years have great potential for development,” said President Alberto Fernandez, on a working trip with Guzman.

The government says oil production can increase by 70 percent and gas production by 30 percent over the next five years.

In recent months, Argentina has increased its production of hydrocarbons to reach a record 578,000 barrels per day in April, an increase of 13 percent in 12 months, according to the government.

Gas production in the same month was 127 million cubic meters, an increase of 12 percent year-on-year.