2023-07-05 14:06:31
After several months of delay began the treatment of the bill that establishes a Regime for the Promotion of Liquefied Natural Gas (LNG). The regulation has almost 40 articles and offers a series of benefits for companies that meet certain guidelines, terms, investment amounts and conditions. For Vaca Muerta, this is a key regulation.
The project sets benefits for up to 30 years for companies that invest a minimum amount (see below) and reach a minimum production, within a period that is also set in the regulations. Before they must subscribe to the regime that will have as application authority the Secretary of Energy.
Companies will have a guarantee of fiscal and regulatory stability and they will be able to opt for three options to export gas in a firm condition. Also included is the figure of exclusive gas transportation and supply works for said projects.
30 years of benefits offers the LNG bill that is in treatment.
For Vaca Muerta, it is essential to create a regulatory framework for LNG and that is the only way to unlock the true gas potential it has. The formation represents more than 150 years of local gas consumption and regional demand is insufficient to monetize Vaca Muerta.
If no progress is made with medium and large-scale projects, it is most likely that a large part of the gas that positions Vaca Muerta as the second largest shale gas of the world, stay underground.
On the other hand, the development of this market will also mean an increase in private investment in the country, it will optimize the trade balance hand in hand with greater exports and, on the other hand, it will allow the industrialization and development of large infrastructure.
LNG project: the 10 key points of the regulations
1. Access to the regime: To access the promotion regime, companies must invest at least 1,000 million dollars and reach a production of one million tons per year. The term to make these investments will be up to 6 years, and can be extended by negotiation with the application authority.
The projects may be modular, however, each successive stage should contemplate a new investment of another 1,000 million dollars or a minimum production capacity of 1 million tons per year.
1,000 million dollars and a production of 1 million tons per year is what companies must develop.
2. Deadlines: The beneficiaries will enjoy the rights, guarantees and promotional benefits provided for up to 30 years following the start-up of the liquefaction plant, the expansion or successive stages, as appropriate.
3. Access to foreign currency: The owners of the projects will enjoy for a period of 30 years, from the first export, an amount of free application of up to 50% of the foreign currency obtained in exports.
4. Guarantee of supply and transport: the companies will have a gas pipeline, with its respective supply, dedicated, which implies that it cannot be used for other means, nor will it be considered as a pipe part of the main transport system.
5. Withholdings: the export duty rate will be 0% in cases where the export price is equal to or less than 15 USD/MMBTU. If the price is equal to or greater than 20 dollars per unit of measure, the rate will be 8%.
8% is the export rate that companies will pay if the price of LNG exceeds 20 dollars.
6. Firm exports: Beneficiaries will be able to choose between three options. The first contemplates a firm export authorization, for the projected volumes of LNG production described in the project, for up to 365 days a year, for a period of 30 years.
The second is a firm export authorization for the projected volumes of LNG production, described in the project and produced between the months of January to May and from September to December of each year, for a period of 30 years.
The third contemplates individual export authorizations for the LNG produced by the project by shipment, prior to offering it to the domestic market, in accordance with the procedure established by law regulations.
7. Fiscal and regulatory stability: the beneficiaries will not be able to see an increase in the total tax burden determined at the time of the presentation of the investment project as a consequence of increases in taxes and fees (municipal, provincial and national) or the creation of new ones that reach them as subjects of law of the same, reaching all the tributes.
The companies will have the guarantee of regulatory stability, which will mean the inapplicability of future modifications to the LNG law, and the inapplicability of regulatory standards, in relation to an approved project and its extensions, modifications and/or successive stages.
8. Import of goods: Imports for consumption of capital goods, spare parts, parts, components and inputs that are destined for the various stages of the processes will be exempt from import duties, port, airport, statistical and verification fees and VAT. processes.
9. Value Added and Income Tax: The companies will enjoy the return of the Value Added Tax that, due to the purchase, manufacture, preparation or definitive import of capital goods and/or the execution of infrastructure works, would have been invoiced to them. They will be credited following 1 fiscal period has elapsed.
The beneficiaries are subject to a 30% rate, for the net taxable profits obtained as a result of the commercialization of LNG and gas transportation for the production of fuel.
10. National content: Investments made up to the tenth year must include 15% national content. As of that year the obligation increases up to 30% and, finally, from the twentieth year onwards up to 50%. It is worth mentioning that the law enables companies to withdraw from the regime, although it must be before the sixth year.
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