Update of Hydrocarbon Fees

Through Decree No. 771/2020 (“Decree No. 771”), published in the Official Gazette on September 25, 2020, the Argentine Executive updated the value of hydrocarbon exploration and exploitation fees provided for in sections 57 and 58 of Law No. 17,319.

As stipulated in the abovementioned sections, holders of exploration permits and hydrocarbon exploitation concessionaires must pay annually and in advance the stipulated fee per square kilometer or fraction of the relevant area.

The latest update of hydrocarbon fees values was introduced in the year 2014, through section 14 of Law No. 27,007, providing for fixed amounts in Argentine pesos.

Since the fees are denominated in fixed Argentine pesos, in order to avoid the periodic loss of the values and in use of the powers granted through section 102 of Law 17,319, Decree No. 771 sets the fees values in oil barrels per square kilometer. Although these new values are also denominated in Argentine pesos, they will be updated automatically based on variations in the domestic market of the internal crude oil price.

For the purposes of calculating the fees value, section 3 of Decree No. 771 stipulates that the price to be considered to determine the value of an oil barrel will be the one that arises from the average of the domestic market price of oil corresponding to the first semester of the year prior to settlement. Said prices will be published by the Secretariat of Energy taking the domestic market value plus transfers without price, total provinces, from the crude oil royalty report or from the publication that replaces it in the future.

In addition, section 4 of Decree No. 771 provides that the exchange rate to be used for the fees settlement will be the one corresponding to the Banco de la Nación Argentina USD selling currency, in effect on the prior business day to the effective payment date.

Finally, since the applicable regulation foresees that the respective fees must be paid annually between January 1 and January 31, Decree No. 771 stipulates that the new values will be applied as from the year 2021.