The Government announced the signing ofand agreement with the province of Chubut to eliminate retentions on conventional oil from the Golfo San Jorge Basin (one of the oldest productive basins in the country), which will imply a lowering the tax to 0% from the current 8%.
The argument is that in recent years conventional activity has shown an accelerated decline compared to shale production or through fracking in Vaca Muerta and they seek to protect “activity and sectoral employment.” The truth is that the oil companies will pocket enormous profits, while the government seeks support for the approval of the adjustment and looting laws in Congress, such as labor, pension and tax reform.
According to an estimate by the national government, the conventional sector generates a flow of about US$60 million annually in export withholdings. If we advance to the elimination of withholdings in all the oil provinces, the Argentine State will stop receiving the equivalent of 42% of the total budget in “Ecology and sustainable development”which reached a total of $198,000 million in 2025, and which presents an accumulated cut of 65% in real terms between 2023 and the budget planned for the year 2026, which the national government intends to approve in these negotiations with the governors, among other laws.
To this we must add the royalty reduction that the province will carry outthe perfect combo to improve the profitability of oil companies without any effort. In theory, companies will have to invest the money pocketed for this benefit, a piece of paper that no ministry is then in charge of controlling. “The national government is committed to adapting the export rights regime by advancing in the removal of withholdings on conventional crude oil; the province ratifies and deepens its accompanying policies through the review of royalties and canons; and companies commit to sustaining the production and investment plans necessary to guarantee the continuity of the activity,” Economía reported.
The meeting took place at the Ministry of Economy, where the Chief of Staff, Manuel Adorni; the Minister of Economy, Luis Caputo; the Minister of the Interior, Diego Santilli; the governor of Chubut, Ignacio Torres; the Secretary of Energy and Mining Coordination, Daniel Gonzalez; and the president of the Chamber of Hydrocarbon Exploration and Production (CEPH), Carlos Ormacheaalong with dozens of oil executives. The meeting lasted less than 10 minutes.
The majority state oil company YPF abandoned all its conventional operations and now it is only dedicated to “shale”. Among the companies that carry out operations in the San Jorge Gulf are Compañía General de Combustibles (CGC) and PAE (Pan American Energy), the company with the highest production that operates the Cerro Dragón field.
The understanding It begins with Chubut and, according to the statement, will progressively extend to the rest of the provinces conventional hydrocarbon producers such as Santa Cruz, Neuquén, Río Negro, Mendoza, among others. Chubut and Santa Cruz are the provinces where this type of production predominates.
The unconventional production of Vaca Muerta explains 66% of the national totalwhen five years ago it was barely 25%. The accelerated progress is 30% year-on-year. In September 2020 the ratio was 25-75 in favor of conventional oil.
According to the latest IAPG statistical report from last September, the country accumulated 132,575 cubic meters (about 833,807 barrels of oil per day), of which 87,583 m3 are unconventional and 44,992 m3 are conventional.
The national government wants to give signals (as Trump suggested) of seeking agreements with the provinces. It needs to reach a political agreement to promote laws in Congress favorable to the businesses of big capital and interests of North American imperialismwhich financed his electoral campaign.
Source: www.laizquierdadiario.com
