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Argentina will remove a duty on oil product exports that has been in place for 15 years in a bid to encourage more foreign oil and gas investments, according to Reuters.
The news, if confirmed by official sources, comes a couple of months after Mauricio Macri’s government said it would remove state subsidies for the local oil and gas industry, mostly represented by Yacimientos Petrolíferos Fiscales (YPF).
That announcement immediately led to a substantial drop in Argentine oil prices, but the timeline for the actual removal of the subsidies was not detailed.
Both measures are part of Macri’s government’s efforts to plug a wide budget gap by stimulating investments primarily in the country’s energy and mining industry: the country is home to one of the largest shale oil and gas deposits in the world, Vaca Muerta, and takes up most of the so-called Lithium Triangle.
The Vaca Muerta formation is estimated to hold some 16.2 billion barrels of crude oil and 308 trillion cu ft of natural gas, which makes it the second-largest in terms of gas reserves.
Chevron and Exxon have expressed interest in developing Vaca Muerta, and have already invested in exploration there: Exxon has splashed US$250 million and plans to add another US$10 billion to this over the next 20-30 years. Chevron invested US$1.5 billion when it struck a joint venture deal with YPF three years ago.
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Last month, the state oil company in the province that is home to the Vaca Muerta said it would tender six new blocks in the deposit—a key element of the government’s economic recovery plans.
In September last year, the chairman of YPF told Bloomberg that he expected the removal of oil production subsidies to bring in some US$5-10 billion in additional energy investments in the country by the end of 2017.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.