Page 10 - LatAmOil Week 50 2019

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Currently, though, only two are operational – the Bahia facility and the Pecem port facility in Ceara State. A third terminal located in the state of Rio de Janeiro has been idle since September of last year.
All three of these terminals were built by Petrobras. Nevertheless, a number of pri- vate-sector companies have said they intend
to establish a foothold in the country’s nascent LNG industry. ]
There are plans to build at least 23 new LNG terminals in Brazil. Two of these are already in the construction phase, while another 10 are in the licensing phase and 11 are the subject of ini- tial studies, according to Brazil’s federal energy planning agency, known as EPE. ™
Argentina proposes new pricing, tariff policies for hydrocarbons
ARGENTINA
ARGENTINA’S new government has taken steps to alter tariffs and taxes on crude oil and natural gas.
On December 17, President Alberto Fernan- dez’s administration sent a bill to Parliament that would keep natural gas and electric power prices in place for a period of six months and then bring them down. The scope of the proposed reduction is not yet clear, but Economy Minister Martin Guzman said that the government was taking this approach in a bid to propel consumer spending and industrial production upwards.
This initiative is “the first step to solve the economic and social crisis that Argentina is going through,” Guzman said at a press confer- ence convened in Buenos Aires to unveil a draft version of the bill.
“We understand how very hard the current situation is: the rise of poverty, destitution and hunger,” he told reporters.
The minister also indicated that Fernandez’s administration was not worried about the pro- posed changes discouraging outside investment in Argentina’s energy industry. The new tariff schedule will establish “an adequate balance between social protection, production and the promotion of energy investment,” he asserted.
He also criticised the pricing policies fol- lowed by President Mauricio Macri, whom Fer- nandez replaced on December 10. Macri had hoped to eliminate a number of long-standing energy subsidies on the grounds that they were impeding investment, and his efforts led to a rise in consumer prices. These increases “worsened the situation that had to be resolved and contrib- uted to the productive deterioration that Argen- tina is living through today,” Guzman argued.
The draft legislation presented to the press on December 17 also called for raising taxes on oil and gas exports. It stated that the tax would be raised from its current level of 4% on every US dollar earned from export sales to 12%.
Eleventh-hour changes
This proposal raised some concerns in Neuquen Province, which is home to the Vaca Muerta shale formation.
According to Argus Media, Governor Omar Gutierrez said on December 18 that he had urged the government not to introduce a tax hike of this scale. His efforts appear to have suc- ceeded, as Buenos Aires is now looking to push the export tax rate up to 8%.
This “last-minute adjustment” ensures that export tax increases will be more modest than originally planned. Even so, Argus Media com- mented, it is likely to have an impact on domes- tic prices. This is because Argentina’s oil and gas producers take tax rates into consideration before deciding whether to export their produc- tion or deliver it to the domestic market.
The bill is widely expected to pass in the near future. Fernandez’s Frente de Todos Party, which is less sympathetic to free markets than Macri’s Republican Proposal faction, holds a majority of seats in both chambers of the country’s legisla- ture. ™
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Economy Minister Martin Guzman (Photo: Economy Ministry)
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Week 50 19•December•2019