Oil & Gas: Offshore Exploration in Argentina
The Argentine Executive plans to call for an International Public Bid to grant hydrocarbons exploratory permits in the Argentine territorial sea.
On October 2, 2018, Decree No. 872/2018 (the “Decree”) enacted by the Argentine Executive (the “PEN”) was published in the Official Gazette. The Decree instructs the Secretary of Energy (the “SE”) to call for an International Public Bid to grant hydrocarbons exploratory permits in 14 areas of the Northern Argentina Basin (7 deepwater blocks –WD 200 to 1,300 m- from 6,000 to 9,000 km2 and 7 ultradeepwater blocks –WD 1,200 to 4,000 m- from 3,000 to 9,000 km2), 6 areas of the Sea-Austral Basin (shallow water blocks –WD less than 100 m-) from 2,000 to 2,700 Km2 and 18 areas of the Western Malvinas Basin (deepwater blocks –WD 100 to 700 m-) from 3,600 to 6,300 km 2[1]:
Among its recitals, the Decree highlights that the different exploratory basins of the Argentine Continental Shelf are under-explored and with less than 1% of their area granted under concession. Moreover, it is noted that in the last 20 years no significant exploration investments have been made in the Argentine Continental Shelf, despite the significant technological advances that have been developed in offshore exploration in the same period.
The Decree establishes the formula that must be applied annually to define the percentage of royalties that must be paid by those who are granted a concession in the International Public Bid. The Decree delegates to the SE the regulation of complementary norms related to the procedure and calculation of the terms of the mentioned formula, and inclusion or exclusion of elements in its components, among other aspects.
The Decree authorizes the inclusion of sections that submit resolution of disputes to the jurisdiction of international arbitral tribunals seated in a State that is part of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958).
The PEN invites those provinces with jurisdiction over offshore areas (territorial waters up to 12 nautical miles from the mean low-water line) to coordinate with the SE the call for International Public Bidding Processes in similar terms as those determined by the SE.
The terms and conditions of the International Public Bid will be determined by the bid terms approved by a Resolution of the SE which is expected to be issued shortly.
[1] Technical details of each block can be consulted at the following link: http://servicios.infoleg.gob.ar/infolegInternet/anexos/310000-314999/314835/dec872-01.pdf
This insight is a brief comment on legal news in Argentina; it does not purport to be an exhaustive analysis or to provide legal advice.