Argentina Cuts Oil Export Tax as It Seeks to Lure Investment
The change means energy companies will receive $70 per barrel of exported oil, up from $42 previously. Argentina controls the price of oil exports in order to guarantee domestic supply.
Until now the state kept the difference between the international price for Argentine crude — currently between $80 and $90 per barrel — and the reference price of $42.
The reform means that the state will only retain the difference between the market prices and $70, meaning increased revenue for oil companies that export crude.
Energy analysts said the measure, which was published in the government’s Official Gazette, will have the most benefit for Argentina’s Pan American Energy (PAE).
PAE, in which Britain’s BP holds a 60 percent stake, is the South American country’s biggest oil exporter, shipping 2.3 million cubic meters of crude between January and November 2012. Argentina only exports about 10 percent of its crude.
France’s Total and China’s Sinopec will also benefit from the government’s export tax overhaul.
Argentina’s President Cristina Fernandez nationalized the country’s largest energy company, YPF, last year and has made boosting production a top priority in a bid to stem rising imports.
Analysts said Monday’s announcement was part of a series of measures aimed at luring investment, especially in the country’s vast shale resources.
A U.S. Department of Energy report shows Argentina holds more natural gas trapped in shale rock than in all of Europe – a 774-trillion-cubic-feet bounty that could transform the outlook for Western Hemisphere supply.
“In order to get the industry moving, you have to have decent prices,” said independent analyst Victor Bronstein. “This gives a stimulus to investment and allows the oil industry to recover.”
In November, the government said wellhead natural gas prices would rise to $7.50 per million British Thermal Units (BTU) from about $5 per million BTU previously.
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