9.000
%
Neutral
51
mm boe
52
%
The election of Milei, while a surprise, is a welcome step away from the same tired old approach that have continually failed the country previously. There remains a number of issues, however, that need to be addressed before structural imbalances can be addressed. Consequently, the outlook has improved considerable, hence our outlook upgrade (Neutral), but it is too soon to understand whether risks, albeit lowered, have fallen sufficiently to reduce our risk premia.
November 23, 2023
Americas - South
mm bbl
bcf
Southern South America, bordering the South Atlantic Ocean, between Chile and Uruguay.
Multiple (PSC/Concession)
Royalties on the production of hydrocarbons must be paid every month to the relevant province or to the national government. The Hydrocarbons Law provides for a 12% royalty on the net price obtained from the sale of hydrocarbons produced under exploitation concessions and a 15% royalty on the net sales of hydrocarbons produced under exploration permits. Royalties can be reduced by up to 50% in tertiary production (enhanced oil recovery and improved oil recovery), extra heavy oil and offshore projects that, owing to their particular productivity issues and location, present especially unfavourable technical and economic characteristics.
The Government of Argentina identified its top economic priorities for 2022 as reaching an agreement with the IMF to renegotiate the 2018 Stand-By Arrangement, controlling inflation, and continuing the post-pandemic economic recovery. The government met some of these goals as Argentina finished 2022 with better-than-expected economic growth at 5.2%, but with high poverty (over 43%), high inflation at 95% (the highest rate in over 30 years), and mounting exchange rate pressure. On March 25, 2022, the IMF Executive Board approved an Extended Fund Facility ("EFF") program for Argentina. The EFF contains quantitative targets for continued compliance with the program that include a reduction in the primary fiscal deficit, progress toward elimination of monetary financing of the deficit, and the accumulation of foreign reserves. Argentina has been able to meet the IMF program targets in the first four reviews despite its heterodox economic measures. However, meeting the targets has not helped to rebalance the economy or set it on a sustainable path. Macroeconomic imbalances persist, fuelled by weak confidence, low policy credibility, high inflation, and uncertainty ahead of national elections in 2023.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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