Bases Law: Amendments to the Gas Law Now Regulated

Decree 1057/2024 was published in the Official Gazette on November 29, 2024, regulating the amendments the Law 27742 of Bases and Starting Points for the Freedom of the Argentine People introduced to the Hydrocarbons Law 17319, the Gas Law 24076, and the provisions regarding uniform environmental legislation. For a description of the amendments to the main energy-related laws provided in the Bases Law, see our article “Reforms for the Energy Sector.”

This article summarizes the main aspects of the regulations related to the Gas Law, as detailed in Annex II of the Decree. For an overview of the regulations regarding the Hydrocarbons Law, refer to our article “Bases Law: Regulations Implementing Amendments to the Hydrocarbons Law Now Regulated.”

1.-    Procedure for Exporting Liquefied Natural Gas 
Annex II of the Decree regulates the procedure for the export of liquified natural gas (LNG). Accordingly, the subjects covered are those involved in the production, processing, refining, marketing, storing, and/or fractionation of hydrocarbons and/or their derivatives.
The Decree instructs the Secretariat of Energy (SE) to establish the applicable procedures for LNG export, which must include an evaluation of all stages of the export project, its impact on existing infrastructure usage, and the potential development of new infrastructure, as required.

Annex II specifies the scope of the "Declaration of Gas Resource Availability," as provided for in the Bases Law. The Decree instructs the SE to issue this Declaration, which must ensure the sufficiency of gas resources in Argentina. Among other matters, the Declaration must include market conditions, production, processing, transportation, exportation, and storage configurations, as well as an estimate of technically recoverable gas resources. This data must facilitate a proper assessment of Argentina’s LNG export potential and its impact. The SE must update the Declaration every five years or when a new LNG export request warrants it.

2. Requirements for Obtaining an LNG Free Export Authorization

Interested parties seeking authorization for LNG free export must submit an "LNG Export Notice" with: 

1.    Projected availability based on their investment plans or firm quantities agreed upon with other producers and their commercial production capacity to fulfill the export volumes and conditions, certified by external auditors, for at least five years.
2.    Documentation proving their technical and financial solvency.
3.    Maximum LNG quantities to be exported (annually, monthly, and daily).
4.    Technical consistency of the project.
5.    A statement regarding their participation in the Incentive Regime for Large Investments (RIGI).

The SE may request additional information from the applicant, and this will suspend the term for raising objections.

The SE will have 120 administrative business days (as from the date the Notice is submitted) to issue total or partial objections to the export request. 

3. Grounds for the SE’s Objections 
The SE may object to a Notice only on the following grounds:
1.    Insufficient natural gas availability at the national level (as determined by the Declaration).
2.    Failure to evidence capacity in any stage of the LNG export transaction.
3.    Inaccuracy or lack of veracity in the information submitted by the applicant.
4.    Anti-competitive practices.

When the period for raising objections expires, the SE must issue the authorization, which will specify the term for starting and expiration of operations and the volumes of LNG to be exported. The authorization may be revoked if there is material default regarding its provisions.

4. LNG Free Export Authorizations
The authorization ensures that exports will be considered firm: 
(i)    with respect to the maximum total, annual, monthly, or daily quantities, as per the terms and conditions of the authorization,
(ii)    for 30 years as of the starting of operations at the liquefaction plant or its expansions or subsequent phases.

Thus, amendments or repeals of the LNG export, supply, transportation, processing, or storage regimes will not affect previously granted authorizations, except where such amendments are more favorable to the holders.

The exporter, under the authorization, must: 
(i)    maintain the validity of projected availabilities and show evidence of them at least six months before they expire,
(ii)    report any changes to the information provided in the notification and comply with the information duties for LNG export holders, as established by the SE.

The rights to carry out an unobjectionable LNG export and the issued Authorization for Free Export of LNG may be fully or partially transferred to third parties meeting and complying with the applicable conditions and requirements for LNG exports, subject to prior SE verification.

The Authorization will expire: 
(i)    automatically, when the term (with the possibility of extending it upon request),
(ii)    If the SE revokes it, following formal notice to its holder, only if there is: (a) default with obligations related to maintaining projected availabilities or repeated breaches of information supply obligations or (b) material and significant default with the terms and conditions of the authorization.

5.    Extensions of Transportation and Distribution Licenses
Article 6 of Decree 1738/1992 (which regulates Law 24076) establishes the procedure for approving extensions of transportation and distribution licenses. The Decree amends this. Accordingly, it establishes that the agreement providing for the extension of a license must be signed by the Ministry of Economy, including contractual renegotiation agreements to ensure continuous service provision. 

Moreover, it incorporates an obligation evaluation procedure, in which the Federal Gas Regulatory Agency (Ente Nacional Regulador del Gas or ENARGAS) will have the authority to perform technical analyses and request necessary information. After celebrating citizen participation mechanisms, ENARGAS will deliver the Executive Branch, through the SE, a recommendation on the extension.

The Ministry of Economy is authorized to negotiate and formalize necessary agreements to ensure the continuity of licenses without reciprocal claims, providing for the relevant withdrawals and waivers. It may also request support from federal agencies. The agreement must be reviewed by the Attorney General's Office and the General Audit Office before being ratified.

Extensions will apply from the original expiration date of the license, subject to the ratification of the Executive Branch, and must be requested at least 54 months in advance.

6.    Appeals, Public Hearings, and Sanctions
Regarding the appeal established in article 66 of the Gas Law, the Decree establishes that it will not have suspensive effects, and the filing period will be that provided in article 25 bis of Law 19549 (30 judicial business days).

Additionally, the provisions of Decree 1738 regulating public hearings related to the five-year tariffs review were modified, incorporating the possibility for the regulator to complement or replace these hearings with public consultation procedures in accordance with articles 1 bis and 8 bis of Law 19549, which offers greater flexibility for citizen participation mechanisms.

Finally, regarding sanctions, the Decree grants suspensive effects to the filing of direct appeals against sanctions imposed by ENARGAS.