Rio Negro: Incentives for Conventional Production

The Provincial Incentive Program for Conventional Production was created within the scope of the State Secretariat of Energy and Environment (SEEyA) by means of Decree 136/26, issued by the Executive Branch of the Province of Río Negro, and published in the provincial Official Gazette on February 26, 2026.

The recitals of the Decree state that this measure seeks to reverse the structural decline of the province’s conventional production, marked by the natural depletion of mature fields, the existence of a large number of inactive wells, and the loss of competitiveness of conventional fields vis-à-vis unconventional developments. To make investments viable, the Program applies incentives targeted exclusively at incremental production, without affecting the provincial revenues associated with the existing base production. The Program expressly excludes unconventional projects within the Vaca Muerta formation.

Through Resolution 560/2026, published in the provincial Official Gazette on August 18, 2026, the SEEyA regulated the Program and established the admission procedure; the required technical documentation; the criteria for determining Base Production and Incremental Production; and the certification, measurement, control, and supervising mechanisms. The main aspects of both rules are described below.

1. The Decree

The Program consists of granting the following benefits over incremental hydrocarbon production:

i. a differential royalty rate: parties included in the Program will pay the Provincial Government, on a monthly basis, 6% as hydrocarbon royalties on the incremental production obtained (compared to the general 12% rate); and

ii. exemption from the complementary production contribution: parties that had committed to making such contribution will be exempt from paying the 3% on the incremental production obtained.

The benefits will apply to the incremental production obtained as a result of a commitment of incremental investments, such as new drilling, extraction improvements, optimizations, well interventions, investments in compression, or improvements in associated injection, under all hydrocarbon exploitation concession agreements—and their relevant extensions—granted by the Province of Rio Negro, excluding unconventional projects within the Vaca Muerta formation.

Holders of exploitation concessions seeking to join the Program must submit to the enforcement authority a project that has:

1. a plan of activities and investments supplementing the investments originally committed under the agreements previously executed for each concession (Incremental Investments), together with its associated incremental production; and
2. the monthly Base Production, i.e., the decline extrapolation of current production, certified by external auditors. Such curve must reflect the natural decline without activity and the decline adjusted for the activity committed to under the agreements in force.

Incremental Production means the volume of hydrocarbons actually produced in a given month in the project area in excess of the Base Production.

The Program will have a duration of ten years or until the respective exploitation concession expires, whichever occurs first. The enforcement authority of the Program will be the SEEyA, acting through the Secretariat of Hydrocarbons.

The annex to the Decree also determines the mechanisms for measuring and supervising the Incremental Production. Among other matters, it provides that:

i. the project area must correspond to an exploitation concession or to a clearly delimited subset of it,

ii. the incentive will apply only to the positive difference between the actual production obtained and the approved Base Production, and

iii. concessionaires must submit an annual certification of the Incremental Investments.

2. Resolution

The Resolution establishes that holders of exploitation concessions must file the application to join the Program with the enforcement authority, which must decide on it within 30 administrative business days counted as of the date the documentation is complete.

The project must include, at a minimum:

i. the delimitation of the project area, which may correspond to the entire surface of the concession or to a sector of it;

ii. the plan of complementary activities and investments, which must include the proposed activities, their associated investments, the expected incremental production, and an estimated annual schedule;

iii. if applicable, the details of the investments committed to under the contracts or agreements in force as of the date of adhesion, together with the performance schedule; and

iv. the monthly Base Production, certified by external auditors. If there are no committed investments, the current production of the wells in the project area, adjusted for natural decline, will be considered.

To receive the benefits, concessionaires must file every month—within the terms established for the settlement of royalties—a separate sworn statement for the incremental production included in the Program, applying the 6% royalty rate.

The Resolution provides that the Program will enter into force, for each concessionaire, as of the month immediately following the administrative act approving adherence to it, while the benefits will begin to apply once the initial investments and their associated incremental production have been evidenced.