Modification of the Regime Regarding Hydrocarbon Activities in the Argentine Continental Platform

The recent amendment was approved by Law No. 26,915, published in the Official Gazette on December 9, 2013, and provides the application of criminal and administrative sanctions to those who perform these activities without the authorization of the Argentine Federal Government.
According to Law No. 26,915, those who “entrust or perform, for themselves or for third parties,” any research activity by exploring hydrocarbons in the seabed or subsoil of the Argentine territorial sea or in the Argentine continental platform without authorization from the Argentine authorities will be sanctioned with imprisonment of 5 to 10 years, a fine equivalent to the market value of 20,000,00,000 barrels of crude oil (WTI), and a "special disqualification" for twice the duration of the disqualification to perform commercial activities.
If the activity performed were the extraction, transport or storage of hydrocarbons, the sanctions shall be of 10 to 15 years of imprisonment, a fine equivalent to the market value of 150,000 to 1,500,000 barrels of crude oil (WTI), and a "special disqualification" for twice the duration of the disqualification to perform commercial activities.
Any possible conviction will entail the revocation of all exploration permits, hydrocarbon exploitation, transport or mining concessions, any other concession or license of any kind arising from any contract awarded or approved by the Federal Government or a Province, and the termination of any tax or pension benefits granted to the convicted party, among other sanctions.
In the event that the banned activities are performed “on behalf, with the support or for the benefit of” a legal entity, the imprisonment conviction will be applied to directors, officers, comptrollers, members of the supervisory board, managers, agents, authorized representatives “who may have participated in the punishable act”.
Sanctions that may be applied to legal entities which have committed an illicit act would be the following:

1. fines equivalent to the market value of 100,000 to 1,000,000 or one hundred and fifty thousand 150,000 to 1,500,000 barrels of crude oil (WTI), depending on whether the activities are exploration or exploitation, respectively;
   
2. total or partial suspension of activities, for up to 10 years;
   
3. suspension to participate in public tenders or biddings for public works or utilities or in any other activity related to the State, up to 10 years;
   
4. cancellation of legal standing, if the legal entity had been incorporated for the sole purpose of committing the offense or if its performance is the main activity of the entity;
   
5. publication of an extract of the judgment at the expense of the convicted party.
   

The jurisdiction for the investigation and prosecution of breaches of this regime correspond to the Argentine Federal Justice.