Argentina has reduced its energy subsidies in the first seven months of the year by $2.7 billion, Energy Secretary Eduardo Rodriguez Chirillo said on Thursday, as part of the government’s goal of reducing its fiscal deficit.
The South American country aims to advance an ambitious reform package that includes guarantees for large investments, a new hydrocarbon law, and changes to the country’s foreign exchange system, aimed at securing dividend repatriations for foreign investors.
Argentina also is cutting billions of dollars in energy subsidies while encouraging domestic oil and gas output to replace costly energy imports that have included liquefied natural gas cargoes and motor fuel in recent years.
An oil pipeline from the massive Vaca Muerta shale region dedicated to crude exports and being built by state company YPF will have capacity of 350,000 barrels per day next year, and greater than 700,000 bpd in 2028 once a second phase is completed, YPF CEO Horacio Marin said.
In a meeting with energy business officials in Houston, Rodriguez Chirillo said Argentina had achieved an energy trade balance surplus $2.9 billion dollars between January and July.
“Our mission in the new model is that the investor can design his own model (…) and knows that he has the right to export,” explained Rodriguez Chirillo.
The governor of Neuquen province, home to the nation’s giant Vaca Muerta shale oil and gas reserves, said at the same meeting that the country must quickly move away from foreign exchange controls to attract oil and gas investment.
“We can multiply by six the (oil and gas) production we can offer to the world,” Governor Rolando Figueroa said, adding that clear rules, a new legal framework for the energy sector and a good administration of resources are essential to achieve output goals.
(Reporting by Marianna Parraga in Houston and Eliana Raszewski in Buenos Aires; Editing by Adam Jourdan and Alistair Bell)