A Brief Overview of the 2020-2024 Gas Plan: Round 3

On October 21, 2021, Resolution No. 984/2021 of the Secretariat of Energy (SE) was published in the Official Gazette, which called for Round 3 of the national public tender for the “Plan to Foster the Production of Argentine Natural Gas: 2020-2024 Offer and Supply Scheme” or “Gas Plan” (“Plan de Promoción de la Producción del Gas Natural Argentino – Esquema de Oferta y Demanda 2020-2024”). For further information on the main guidelines of the Gas Plan and the two previous rounds of this new promotion scheme, please see 2020-2024 Gas Plan and 2020-2024 Gas Plan: Round 2 and Incentive Plan Regulation.

Round 1 had been called to award the base volume of 70 million m3 per day for 365 days a year, produced in the Neuquén, Austral and Northwest Basins; and an additional volume for each of the winter periods from 2021 to 2024. Under that round, volumes of 50.2 million m3 per day for 365 days each year and an additional volume of 3.6 million m3 per day for the peak of winter consumption were awarded.

Under Round 2, daily additional volumes were awarded for the winter periods of 2021 to 2024, which were added to the volumes already awarded under Round 1. The goal of Round 2 was to cover domestic consumption projections for the winter periods due to the insufficient volumes of gas offered and awarded under Round 1. Under the second round, an average volume of 3 million m3 per day was awarded for the months of June to September 2021 and May 2022 to September 2024.

The goal of Round 3 was to complete the 70 million m3 per day for the 365 days of each calendar year that had been initially projected under Round 1 and to award additional gas volumes to those awarded under Rounds 1 and 2 to ensure gas supply in the period from May 2022 to December 2024, with volumes from the Neuquén, Austral and Northwest Basins.

The offers under Round 3 were submitted on November 2, 2021; and then SE Resolution No. 1091/2021 (published in the Official Gazette on November 12, 2021) awarded the additional volumes to be injected from the Neuquén Basin and approved the prices there provided. A total of 3 million m3 per day were awarded for the months of May 2022 to December 2024. The tender was declared void for the Northwest and Austral Basins given that no offers were submitted.

Round 3 was different from the two previous rounds in several other aspects, among which the following may be highlighted:

• The counterparty of the producers in the gas sale and purchase agreements: While, in Round 1, the awarded producers had to contract with Compañía Administradora del Mercado Mayorista Eléctrico (CAMMESA) and the licensees of distribution and/or sub-distribution of natural gas services, in Round 2, the awarded producers had to contract with Integración Energética Argentina S.A. (IEASA – former ENARSA). In Round 3, the awarded producers are required to execute agreements with CAMMESA and IEASA.
• Unlike in the contract template from Round 2, the dispute resolution clause under the IEASA contract provides for submission before the Federal Administrative Litigation Court of the City of Buenos Aires (Fuero Contencioso Administrativo Federal de la Ciudad de Buenos Aires), while the Round 2 contract provides for arbitration before the Buenos Aires Stock Exchange (Bolsa de Comercio de Buenos Aires).
• Round 3 bidding terms and conditions expressly provide that the volumes awarded under this round have no additional firm natural gas export rights under SE Resolution No. 360/2021, which regulates the procedure for gas export authorizations, while the volumes awarded under the two previous rounds did have these export rights.
• The injection commitments contemplated in the agreements convened as a result of the awards made under Rounds 1 and 2 will have dispatch priority over those convened under Round 3.
• The price to be offered under Round 3 had to be equal to or lower than the maximum price of natural gas at the Point of Entry to the Transportation System (PIST) corresponding to the volumes awarded under Annex II of SE Resolution No. 447/2020 (which allocated the volumes awarded under Round 1), multiplied by an adjustment factor of zero point eighty two (0.82) for the months from October to April of each calendar year and an adjustment factor of one point twenty five (1.25) for the months from May to September of each calendar year. For a detail of the price to be offered under the previous rounds, please see our previous articles.