Milei signs deal with Chubut to scrap export duties on conventional oil

President Javier Milei’s government on Tuesday announced the elimination of duties on crude oil exports in Argentina, part of a move that will be rolled out to other regional producers of conventional oil.

Government officials inked a memorandum of understanding with Chubut Province to advance in the elimination of export duties on conventionally produced oil, part of a strategy designed to encourage investment and preserve jobs.

Cabinet Chief Manuel Adorni, Economy Minister Luis Caputo and Interior Minister Diego Santilli joined Chubut Province Governor Ignacio Torres at the Economy Ministry to sign a memorándum of understanding between the Nation and the Patagonian province with the aim of "preserving activity in the mature oil fields, giving predictability to investments and looking after jobs."

The meeting was also  attended by Energy & Mining Secretary Daniel González and Carlos Ormachea, the head of the CEPH (Cámara de Exploración y Producción de Hidrocarburos) chamber from the sector.

“This agreement to share efforts beginning with Chubut and extending progressively to the remaining oil-producing provinces was signed,” the Economy Ministry indicated in a statement.

With the understanding, the national state has committed itself to adjusting the existing export duties regime, advancing their removal from conventionally produced crude. In turn, the province “ratifies and deepens its policies of accompaniment view the revision of royalties and the companies pledge themselves to maintaining production and the investment plans necessary to guarantee the continuity of activity.”

According to the Economy Ministry, “investments within this framework give priority to projects destined to increase the production of conventional fossil fuels, reactivating plants and wells in mature fields, increasing the operational efficiency and sustaining the levels of direct and indirect employment associated with the industry.”

Governor Torres described the elimination of export duties as “a historic step which we firmly defend from the Agreement on Competitiveness on which we have been working together with the companies and trade unions of the sector."

“It represents the third most important investment in the Gulf of San Jorge basin with an estimated impact of US$370 million which will be directly reinvested into the industry,” he added.

The understanding establishes a scheme of efforts shared between three players:

• The National State: Commits itself to adjusting its export duties régime with the focus on removing export duties from conventionally produced crude oil.

• Chubut Province: Will accompany with a revision of royalties. 

• Companies: Will have to maintain production and the investment plans to guarantee the continuity of activity.

The measures seek to encourage projects which reactivate plant and wells in mature oil fields, increase production and maintain employment levels.

The government has pointed out that this policy will be progressively extended to the remaining oil-producing provinces in line with the decision to reduce the tax burden and promote new investments.

– TIMES/NA/PERFIL