The Draft approved by the National Senate could be approved by the House of Representatives without additional amendments. This due to the fact that, on the one hand, the Senate did not introduce modifications to the proposed changes to the energy laws in the bill approved by the House of Representatives, as well as due to the application of the rules for the approval of laws, which prevents the chamber of origin – in this case, the House of Representatives – from introducing modifications to the text approved by it. On the other hand, the amendments made to the RIGI do not appear to be substantial and would not merit further changes by the House of Representatives.
Article 81 of the National Constitution is applicable, which establishes the following rules for the case at hand:
– The House of Representatives, as the chamber of origin, cannot totally discard the draft that originated in it and that was modified by the reviewing Chamber, the Senate, in this case.
– Consequently, the text of the energy laws, not having undergone changes in the Senate, would advance in the legislative process without further modifications.
– The Chamber of origin, the House of Representatives, may approve the draft with the additions or corrections introduced, or insist on the original wording. To do so, it will need to reach an absolute majority of those present, or two thirds of those present, depending on the number of votes cast by the revising Chamber, the Senate.
– Thus, the amendments to the RIGI introduced by the Senate could be reversed by an absolute majority of those present at the session in the House of Representatives. The changes introduced by the Senate do not seem to justify the insistence of the House of Representatives.
– The House of Representatives can only insist by approving the text sanctioned by the Chamber of origin, and cannot introduce new additions or corrections to those made by the revising Chamber, the Senate.
Regarding the energy laws, the text approved by both Chambers establishes:
- Hydrocarbons Law 17.319:
- It broadens the scope of the law, subjecting to them the activities of processing and storage of hydrocarbons.
- It also broadens the main objectives of the law, by incorporating as a new one, the maximization of the income obtained from the exploitation of resources. This, with the aim of transforming the country into an exporter of hydrocarbons, mainly natural gas, as it is considered the fossil fuel of the energy transition, which -therefore- will be displaced after liquid hydrocarbons.
- In line with the broadening of the scope of the law, it adds transportation and storage authorizations, and hydrocarbon processing authorizations.
- It repeals the powers to restrict the export of hydrocarbons, incorporates the freedom of commercialization and export of hydrocarbons and derivatives, prohibits market intervention and price fixing in the domestic market. Exports become a right of the producer subject only to a no-objection procedure before the Secretariat of Energy.
- It frees the international trade of hydrocarbons, under the terms to be regulated by the National Executive Power.
- It incorporates the possibility of reconversion of exploitation concessions from conventional to non-conventional. Such request must be based on the development of a trial plan and may only be made until December 31, 2028.
- It foresees that the owners of projects and/or facilities for the conditioning, separation, fractionation, liquefaction and/or any other hydrocarbon industrialization process may request an authorization for the transportation of hydrocarbons and/or their derivatives, without being subject to any term or exclusivity whatsoever.
- It establishes that those authorized in such terms must provide access to third parties in a non-discriminatory manner, as long as their own needs are covered.
- It incorporates the authorizations for subterranean storage of natural gas in depleted reservoirs, an activity that may be developed independently. Those authorized will be able to request authorization for transportation. The payment of royalties is foreseen when the stored natural gas is commercialized, based on the average price of the basin, when entering the Transportation System.
- Establishes the conditions for the bidding of areas, including productive areas, seeking to make the process transparent and recognize unamortized investments.
- In line with this, it repeals the possibility of extending exploitation concessions.
- It establishes new values for the assignment fee payable by exploration permit holders and exploitation concession holders, with reference to the equivalent in pesos of a barrel of oil, based on the quotation of the ‘ICE Brent First Line’.
- It modifies the royalty regime, referring the definition of its amount to the result of the bidding process, without affecting previously granted concessions. It establishes that royalties will be the only income mechanism on hydrocarbon production.
- Defines fines for non-compliance that do not constitute grounds for expiration in mobile values (UVA), which will not require updating.
- Severely limits the intervention of state-owned companies in the activities regulated by the hydrocarbons law.
- Deregulates the surface reconnaissance activity.
- Repeals the prohibition of participation in the activities regulated by the law to foreign legal entities of public law in their capacity as such.
- Natural Gas Law 24,076:
- Authorizes the import of natural gas without the need for prior authorization and subjects exports to the provisions of the Hydrocarbons Law, which is amended. This law provides for the repeal of the powers to restrict the export of hydrocarbons, incorporates the freedom of commercialization and export of hydrocarbons and derivatives, and prohibits market intervention and price fixing in the domestic market.
- It establishes rules for the firm export of natural gas after liquefaction or LNG treatment:
- Requires authorization from the Secretariat of Energy, within 120 days of receiving the request, according to the regulations.
- The Secretariat of Energy will make -within 6 months of the enactment of the law- a long-term Gas Resources Availability Statement to ensure domestic supply and firm export commitments.
- The granting of a firm LNG export authorization will imply the right to export all the volumes authorized in such capacity on a continuous basis and without interruptions or restrictions.
- Extends the possibility of renewing transportation and distribution licenses to 20 years, when the current regime provides for a 10-year extension.
- Authorizes transportation and distribution licensees to acquire, build, operate, maintain and manage natural gas storage facilities, either by themselves or by third parties.
- Electricity Laws 15.336 and 24.065: It authorizes the National Executive Power to adapt the regulations of these laws according to the following bases:
- Promote the opening of international trade of electric energy under safe and reliable conditions, in order to achieve the greatest number of participants in the industry.
- To ensure free commercialization and maximum competition in the electric energy industry, guaranteeing end users a free choice of supplier.
- Promote the economic dispatch of energy transactions on the basis of remuneration in the hourly economic cost of the system, taking into consideration the hourly marginal cost of the system; and that which the energy not supplied represents for the community.
- To adjust the tariffs of the energy system on the basis of the real costs of supply in order to cover investment needs and guarantee the continuous and regular provision of services.
- To make explicit the different concepts to be paid by the end user, with the express obligation of the distributor to act as a collection or withholding agent of the amounts to be received for energy, transportation and taxes corresponding to the Wholesale Electricity Market and the Treasury.
- To guarantee the development of electric energy transportation infrastructure through open, transparent, efficient and competitive mechanisms.
- To modernize and professionalize the centralized and decentralized structures of the electricity sector in order to achieve a better compliance with the assigned functions.
- It creates the Ente Nacional Regulador del Gas y la Electricidad, which will replace the Ente Nacional Regulador de la Electricidad (ENRE), and the Ente Nacional Regulador del Gas (ENARGAS).
This publication was prepared on the basis of information dated 19/6/24 and does not constitute a legal opinion on specific issues. If necessary, expert legal advice should be sought.
For further information, please contact:
Agustín Siboldi – SiboldiA@eof.com.ar
Jorge Muratorio – MuratorioJ@eof.com.ar
Ana Belen Micciarelli – MicciarelliA@eof.com.ar
María Angélica Fortuna – FortunaM@eof.com.ar