Argentina to extend gas subsidies

Argentina will extend its gas subsidies for unconventional wellhead gas in the Austral Basin, local media reported over the weekend.

“[B]ased on the dialogue promoted by the national government between the trade unions of the industry, the companies of the sector and the respective provincial governments […] it is considered appropriate to extend the stimulus policy to the Austral Basin,” the Ministry of Energy and Mining said in a statement.

With this decision, producers of unconventional gas will be paid the same price for their output as companies extracting from shale and tight areas in the Neuquén Basin. The gas will fetch USD 7.50 per million Btu through 2018, a price that is to decrease yearly until it reaches USD 6 per million Btu in 2021.

Earlier in November, the energy ministry had opted to exclude areas outside of Neuquén from the scheme, prompting YPF CFO Daniel Gonzalez to tell investors that if the subsidies were cut, the state-owned company might shift its attention to oil production.

About 24% of Argentina’s gas output comes from the Austral Basin, trailing Neuquén, which as the country’s largest-producing area, accounts for 59% of gas production.