“Oil Plus” and “Refining Plus” Programs

1.    New measure to promote the expansion of the energy supply

Decree No 2014/2008 of the Argentine Executive Branch (the “Decree”)[1] created the programs “Oil Plus” and “Refining Plus” –“Petróleo Plus” and “Refinación Plus”- (the “Programs”) to promote (i) the increase of crude oil production and the incorporation of reserves, and (ii) the construction of new refineries and the extension of the existing refineries.

The Programs complement other measures already adopted by the Argentine Government aimed at increasing the activities of the hydrocarbons sector in order to face the high energy demand, such as the Gas Plus Program, Energy Plus, Energy Delivery and Power Rational Use, related to the gas and power markets (see articles published in Marval News # 69, # 70 and # 76).

2.    Tax incentives

The Decree provides the creation of the Programs and certain basic guidelines, delegating the regulation of such programs to the Secretariat of Energy (the "SE"). For such purposes, the SE will determine the content, terms and scope of these Programs.

Oil producers that comply with the requirements of the Programs which will be provided by the SE will have the possibility to obtain fiscal incentives by means of two mechanisms:

(i)           Tax Credit Certificates: The Program provides the granting of "Tax Credit Certificates" for those oil companies which increase their production and reserves. These certificates may be applied to the payment of export duties of crude oil and certain oil products, liquefied petroleum gas and other gaseous hydrocarbons[2].

(ii)           Tax benefits derived from the promotional regime for investments in infrastructure works (Law No 26,360): For those oil companies which carry out works for the exploration and exploitation of new oilfields, the increase of their production capacity and the incorporation of new technologies for the exploitation and development of existing oilfields that raise the levels of their current capacity (the "Works"), the Decree provides the possibility for such companies to obtain the tax benefits provided by Law No 26,360 of "Promotion of investments in assets (bienes de capital) and infrastructure works". This law provides, among other matters, special tax regulations for investment projects which are aimed at infrastructure works, if such projects comply with certain requirements. The benefits consist in the possibility to obtain the early return of the Value Added Tax, or to make an accelerated depreciation (amortización acelerada) in the Income Tax of those assets applied to the project. For such purposes, works which will be developed under the Programs may be considered as "Critic Infrastructure Work" (Obra de Infraestructura Crítica) in the terms of Article 7, paragraph b) of such Law.

Finally, the Decree creates a monitoring commission for the Programs, which will be in charge of controlling and evaluating their development. The commission shall be comprised by the Secretariat of Energy (who will chair the commission), and one representative of each of the Ministry of Economy and Production, the Federal Tax Authority (Administración Federal de Ingresos Públicos) and the Customs Office (Dirección General de Aduanas).