New Regulatory Procedure to Obtain Natural Gas Export Licenses

The Argentine Ministry of Energy has unified and updated all regulation concerning natural gas exports by means of Resolution No. 104/2018, already in force. It does not provide for change in customs-related regulation, but it does loosen up the regime and provides for several types of license types which may apply in the case of natural gas exports.

One of the main novelties in the new legal framework is the abrogation of Resolution No. 265/2004 of the former Argentine Secretariat of Energy that set a full suspension on exports of natural gas excesses to provide for domestic supply. The Resolution created various kinds of natural gas export licenses. As well as short-term (up to one year) and long-term (up to ten years) permits, either unchangeable or interruptible services, other types of export permits were created, such as the summertime (between October 1 and April 30) export permit and the operational emergency exchange permit (authorized for a year since the first dispatch). The latter provides for the possibility to re-enter either natural gas or an equivalent quantity of electricity to the domestic market to compensate for the operation under an emergency scheme, setting up new business opportunities in the industry.

The permits (regardless of their kind) may be granted only if the natural gas domestic supply is ensured and after the Ministry of Energy corroborates so within the procedure. In this light, all information relevant to the permit request and to the operation must be public and accessible so as to make it available to all third-party natural gas consumers in the domestic market. Once the information is uploaded on the Ministry of Energy website, third-party consumers may request to acquire the amounts of exportable natural gas by presenting a bidding offer that follows the original request’s terms and conditions.

It must be acknowledged that this new regulation does not make any reference to daily mean volumes in export permits; it centers on the period of time that they are requested for and the contractual terms on which the delivery of natural gas is agreed upon.

Resolution No. 104/2018 is an update of the previous twenty-year-old regulation and it sets out the grounds for one of the main objectives of the energy policy, to encourage the development of the oil & gas industry.

This regulation seems to be on point considering that there are times of the year in which there are natural gas excesses in Argentina, and the possibility of once again opening markets that could have been lost forever. It is crucial that the steps taken in this direction are firm enough to rebuild trust and to obtain better prices. To do so, we will need to know in more detail how the exported natural gas will be deducted from the production included in the programs that are under promotional regimes.