Access to Hard Currency Regime for Hydrocarbons Producers Increasing Their Production

The beneficiaries of the Regime to Access Foreign Currency for the Incremental Production of Oil and Gas (RADPIP and RADPIGN, respectively, after their acronyms in Spanish), created by the National Executive Branch through Emergency Decree No. 277/2022 of 05.27.22, must be holders of hydrocarbon exploitation concessions and be registered in the Registry of Oil Companies. For natural gas, it is required to be an awardee under the Gas Plan provided under Decree 892/2020 (Gas Plan).

RADPIP and RADPIGN beneficiaries, respectively, may access the foreign exchange market to pay principal and interest on commercial or financial debts with foreign parties, including related parties and/or profits and dividends corresponding to closed and audited financial statements and/or the repatriation of direct investments.

Such access to the foreign exchange market will be limited to:

• In the case of the RADPIP, an amount equivalent to the Benefited Incremental Production Volume (VIPIB, after its Spanish acronym), valued based on the average price of the "ICE BRENT first line" of the last 12 months, net of export duties, incorporating the premiums or discounts for crude oil quality, as appropriate and as established by regulation. For such purposes, the VPIB is defined as 20% of the quarterly incremental production that each beneficiary has obtained with respect to its baseline, which consists of the total crude oil production accumulated in the year 2021 on all the beneficiary's areas, according to the data of the Secretariat of Energy. Likewise, said 20% may be increased by a certain amount of percentage points, to the extent that certain technical conditions are met related to the supply of the internal market, the possibilities of reverting the decline in conventional basins and other situations provided under the Decree.
• For the RADPIGN, to an amount equivalent to the Benefited Incremental Injection Volume (VIIB, after its Spanish acronym), valued at the weighted average export price of the last 12 months of the system, net of export duties. The VIIB is defined as 30% of the Incremental Injection that each RADPIGN beneficiary has obtained with respect to their Injection Baseline, multiplied by the number of days in the quarter, and may also be increased in percentage points to the extent that certain technical conditions are met, as provided in the Decree.

Access to the foreign exchange market for up to said amounts may not be subject to the prior approval requirement of the Argentine Central Bank (BCRA, after its acronym in Spanish), even if the regulation establishes it.

To access the benefits, in addition to increased production, beneficiaries shall adhere to this regime and comply with the regime for the promotion of employment and the development of regional and national providers from the hydrocarbons industry. For the beneficiaries under the RADPIGN, producers must fulfill their obligations under the Gas Plan.

The benefits can be transferred by the producers to direct suppliers, in the terms to be established in the regulations.

If access to such benefits was limited by pre-existing foreign exchange regulations, BCRA must implement suitable mechanisms to facilitate access to the foreign exchange market.

Lastly, it is established that the benefits of access to foreign currency that are obtained will be considered and duly deducted from those that correspond to other existing exchange regimes, such as, for example, the Regime for the Promotion of Investments for Exports created by Decree No. 234/21, in the terms defined by the regulations, as determined by BCRA.

So far, BCRA has not issued any regulations, while the Secretary of Energy is expected to issue the corresponding regulations to be able to access such benefits.

The provisions of the Decree will enter into force 30 days after its publication in the Official Gazette, which took place on 05.28.2022, and it is expected that the National Executive Branch will issue the corresponding regulations within the same period.