While the Government continues to make headway in restoring trust following the nationalisation of YPF, scepticism remains that it wont act to shore up domestic troubles. This creates obvious opportunities for smaller, more nimble corporates, but ensures that the outlook remains Uncertain.
August 12, 2022
Americas - South
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 COVID-19 pandemic, on top of Argentina’s two-year economic recession, has compounded the country’s economic woes. Current International Monetary Fund (IMF) predictions have Argentina’s GDP declining close to 12% in 2020. The poverty rate and inflation are both over 40%. Since 2017, the official exchange rate has fallen from ~ US$1:AR$20 to ~ US$1:AR$80, and the unofficial “blue” rate is double that. The Argentine government’s 2020 agreement with private bondholders to renegotiate billions of dollars of debt offers some hope as negotiations get underway to renegotiate another US$45 billion owed to the IMF.
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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