Governor Alberto Weretilneck proposed to the Legislature his new oil extension plan where he proposes extending the exploitation of 21 areas in Río Negro for 10 years.
Between 2014 and 2015, Río Negro had its first renovation for a decade, generating income then of more than 160 million dollars.
These contracts will expire in the coming years and the Rio Negro administration proposes their expansion with a project sent yesterday to the Legislature, lowering the expectations of the possible resources because – as it says in the foundations – “the coming scenario is far from reproducing the conditions” of the previous experience.
The ruling party estimates the parliamentary debate for June and its treatment for early July. In general terms, the renegotiation design repeats the previous process, established by the framework of Law No. 4,818 of 2012, with the reforms of Law No. 5027 of December 2014.
A “one-time” payment from the oil companies is maintained, based on “a bonus” and “a contribution” for Social Development and Institutional Strengthening.
The collection for “the extension bonus” will be shared with municipalities and Development Commissions. The government project reserves 10%, with a distribution of 30% for the local hydrocarbon-producing states (Catriel, Allen, Roca, Campo Grande, Fernández Oro, Cinco Saltos, Cervantes, Cordero and Cipolletti), 60% is distributed between “ all of the remaining municipalities” and 10% is reserved for the Development and Commune commissions.
The ruling party plans the debate in June, with treatment for July. The Legislature formed a stumbling block in the first Weretilneck oil process.
The percentage of participation and the distribution scheme is not the same as the 2014 renewal plan, which allocated 14% for the municipalities (7% for the whole and the other half for the oil tankers).
The articles establish that the funds for the Province will be allocated to “equipment or infrastructure improvement works.”
In a video, Weretilneck detailed his assignment to the “purchase of patrol cars, road machines, as well as ambulances and equipment for hospitals under construction, such as Fernández Oro, Bariloche and Ramos Mexia.”
- twenty-one
- Areas included in the renewal plan, as estimated by the governor. There is no detail in the elevated project.
The president also specified that the renewal objective includes “21 oil and gas areas.” The initiative does not present details, except that the fundamentals refer to the fact that it covers all those to “expire in the period 2025-2028.”
The governor also explained that his proposal “specifies various general conditions that concessionaire companies must respect” to achieve the extensions, such as “environmental commitments, prioritization of local labor, investments and activities for the development of hydrocarbon areas, maintenance of facilities and information obligations.”
With this extension, Río Negro begins a new stage in its oil and gas exploitation for the benefits of the people of Rio Negro.”
Governor Weretilneck, in his message issued after the elevation of the project
The power of negotiation is granted to the Secretary of State for Energy, providing for “one-time payments, as an extension bonus and contribution to social development and institutional strengthening” while “periodic payments may be maintained as royalties (12% ) and the production contribution (3%), surface area fee and training contribution.
But, also, an article empowers the Executive to “implement incentive regimes on incremental production and/or on other specific investment projects”, consisting of the “reduction of royalties, fees or any other economic advantage.”
«Mature deposits» and «real expectations»
There are no details of the concessions in the project, except those – it says in its foundations – to expire “in the period 2,025-2,028.”
This period – he adds – forms an “obstacle to making investments that allow the increase and/or maintenance of production and reserves.”
He explains that they are “mature deposits” and warns about the “real expectations that these new extensions could generate” because “the coming scenario is far from reproducing the conditions that at the time” generated the 2015 renovations.
Likewise, it is explained that the wells “continue to be productive and have development potential” and, later, it is considered that “they are important in economic terms for the Province.”
They represent 76% of the current concessions, with “an 85% participation in the total oil production and 72% in the total gas production registered in 2023. Which, in terms of royalty income, represents 80% of the total received in 2023 for this concept.”
