By Eliana Raszewski and Sarah Marsh
BUENOS AIRES, Sept 17 (Reuters) – Argentina’s federal government said on Wednesday it had reached a deal with provinces on reforms to overhaul energy regulations and improve incentives to lure the foreign investors needed to develop its vast shale oil and gas reserves.
The cash-strapped South American country, which defaulted on its debt in July and cannot tap global credit markets, requires investment in its Patagonian Vaca Muerta fields to reverse a costly energy deficit that is pressuring low foreign reserves.
Oil industry experts say it will cost hundreds of billions of dollars to exploit the world’s second largest shale gas resources and fourth largest shale oil resources – financing that officials say is beyond the reach of state-controlled energy firm YPF and regional governments.
“We have one of the most important underground reserves in the world and we have to exploit it,” said Francisco Perez, governor of oil-producing Mendoza province. “Neither Argentina nor YPF nor the provinces can raise that kind of debt capacity so we have to find strategic partners.
Under the country’s 1967 energy law, local administrations issue licenses and determine concessions and taxes foreign companies pay. The central government seeks a national framework that creates the same terms for all regions, which it says would ease doing business.
One senior energy official said the negotiations, including haggling over royalties, had resulted in a “good draft.”
The federal government wants the new law in place before 2015 when a number of concessions held by YPF expire, said the official who was involved in the talks but not authorized to talk to media. Continued…
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