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What does Argentina’s new hydrocarbon law mean for coalbed methane?

World Coal,

After months of debate between the federal government, the provinces and the private sector, the Argentine Congress passed a new Hydrocarbons Law to regulate the exploitation of unconventional hydrocarbon reserves and establish the conditions needed to support and attract long-term investment in the hydrocarbon sector.

The new law defines the exploitation of unconventional hydrocarbons as: "The extraction of liquid and/or gas hydrocarbons through unconventional stimulating techniques applied to deposits located in shale gas and shale oil geological formations, tight sands, tight gas, tight oil, coalbed methane, and/or characterised, in general, for the presence of low permeability rocks.”

According to the International Law Office (ILO), the Argentinian federal government beliueves the new law will turn Argentina into a net exporter of hydrocarbons and an important player in the unconventional hydrocarbon sector.

Companies looking to potentially invest in the Argentinian coalbed methane (CBM) sector, will need to study the new law carefully, particularly in regards to permitting.

One of the main changes to the bidding process is the move from the existing, varied systems of awarding licences to a competitive bidding process that is uniform across Argentina, irrespective of the national or provincial authority that is holding the bidding process. This means that the competent authority must evaluate the level of work commitment proposed by prospective concessionaires before granting the respective licences.

The ILO argues that the key development introduced through the new law is the move towards a uniform regulatory system across Argentina.

“This is a commendable achievement, considering that Argentina is a federal state in which the right and title to exploit natural resources rests with the provinces under the national Constitution,” Federico Godoy of the ILO said. “Nonetheless, given that many deposits run through multiple provinces, it was a sensible and necessary direction to take to promote the development of the industry in Argentina.”

“Many of the regulations that were in place throughout the successful period of growth in the 1990s have been reintroduced, whereas the protective measures introduced following the 2001 crisis are now being wound back. In the coming years it will become apparent whether the changes go far enough,” Godoy said. 

Edited from various sources by Sam Dodson

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