Argentina is promoting LNG production infrastructure and low-emission hydrogen projects through legislation to improve macroeconomic stability, offtake contracts, and regulatory frameworks. The bill enables exports year-round for 30 years, provides fiscal gains, accelerated depreciation, access to foreign currency, and promotes local development.
Argentina is promoting LNG production infrastructure and low-emission hydrogen projects through legislation.
Improved macroeconomic stability, offtake contracts, and regulatory frameworks that promote and safeguard investment are crucial.
Green hydrogen and natural gas are abundant in the nation, as is acreage for clean energy projects. LNG and hydrogen projects are in development.
Argentina possesses the world’s second-largest unconventional gas reserves and Vaca Muerta’s world-class productivity.
In the previous five years, Vaca Muerta’s oil and gas output increased, causing distribution issues. The initial LNG concepts in Argentina came from liquefaction, which reduces gas volume by 600 times and makes transportation easier and cheaper.
In a worldwide environment of rising energy consumption, emissions reduction standards, and hydrocarbon prices, O&G companies are interested in investing in LNG in the nation. Argentina’s legal and economic instability, coupled with high inflation and a currency scarcity, has prevented investors from making these investments until now.
LNG projects take years to develop and finish, and the return on investment is considerably longer. Thus, any government that encourages such investments must take these aspects into account.
The measure wants Argentina to export LNG, which might enhance its macroeconomics. For this, it allows investment proposals with a minimum investment commitment of US$1bn and a minimum production capacity of 1Mt of LNG a year to be presented during the first five years after the regulations take effect.
The bill’s advantages include: It enables exports year-round for 30 years, even in winter, when domestic consumption is strongest.
Fiscal gains: non-fixed export rights withholding tax: 0% to US$15/MMBTU, 8% to US$20/MMBTU.
Income tax accelerated depreciation of assets for income tax purposes, which allows a smaller initial payment maximum rate of 30%, compared to 35% for other economic activities deduction of interest and exchange rate differences generated by project financing compensation for losses in up to 10 years and updatable using the consumer price index if certain conditions are met, among others
Access to foreign currency: The bill allows access to foreign currency for capital, interest, and dividend payments of up to 50% of exports, a measure that aims to provide predictability on a fundamental aspect that is currently hindering investments in the country due to macroeconomic measures.
The measure also promotes local development by requiring investments with national content: 15% for the first 10 years, 30% for 11–20 years, and 50% for 30 years.
The hydrogen promotion draft law addresses two important areas Argentina must address. The Paris Agreement’s pledge to cut carbon emissions. However, create a regulatory framework for a sector with the potential to flourish in the country, even for parties interested in investing and creating projects but lacking the skills to do so. The 30-year law supports hydrogen power generation.
