Argentina Rigi adhesion landscape taking shape, investors awaiting fine print

Jurisdictions in Argentina are debating – and starting to make decisions on – adherence to federal investment-promotion regime Rigi.

The regime is part of President Javier Milei’s economic reform law, which is known as Ley Bases and entered the statute books this month.

Seeking multibillion-dollar midstream hydrocarbons investment, chiefly a planned LNG plant and oil export facilities, Río Negro province is the pioneer. Río Negro approved an associated bill, while the municipal government of port city Mar del Plata, within the province of Buenos Aires and targeting investment associated with offshore hydrocarbons work, announced the signing of an adhesion decree.

Buenos Aires city, municipalities and the provinces are invited to adhere, Ezequiel Artola, a partner at the Argentine office of global law firm Baker McKenzie, told BNamericas.

“Although the main benefits of the regime are at the federal level, other jurisdictions adhering will in turn abide by the Rigi regime in terms of stability and may only impose taxes on services effectively rendered in the limited terms indicated in the Rigi,” Artola said.

Under Rigi, qualifying projects will receive tax, customs and forex benefits, with legal and regulatory stability established for 30 years. Projects have up to two years to adhere and have to deploy, within two years, at least 40% of the minimum investment agreed. Adhesion may result in the reduction of some local government autonomy.

In the oil and gas sector, a question mark hangs over Neuquén, where adhesion has support of governor Rolando Figueroa. However, some members of the local congress submitted a bill to formally oppose Rigi, alleging fallout on tax collection and natural resources and warning of the risk of money laundering.

But given Neuquén’s potential in the hydrocarbons sphere and the projects planned for the jurisdiction, and given Figueroa has the requisite political support in congress, adhesion seems likely. 

Economic powerhouse and population hub Buenos Aires province, meanwhile, has proposed its own investment regime.

Artola underscored the importance of a single framework, referring to what is happening in Buenos Aires.

“The adhesion of Mar del Plata is in the context of the province of Buenos Aires [where Mar del Plata is located] resisting adherence to the Rigi and wanting to impose its own eventual provincial incentives regime,” Artola said. “A reasonable scenario from an investor's standpoint - to avoid different standards - would be that both the province and the municipality where the project will be developed are aligned in terms of the application of the relevant regime, which also ideally should be the federal one.”

Rigi is whetting the appetites of investors, who are now waiting on the fine print, as Vaca Muerta driller Vista Energy said earlier this month.

Artola said: “We have seen growing interest of investors in relation to Rigi, but certain key aspects of the regime need clarification that are expected to be addressed in such regulations.”

Given Ley Bases establishes that the secondary legislation guiding its implementation will be issued within 30 days from the law’s publication in the official gazette, these rules are due by August 7.

“Sometimes these regulations are issued after the deadline,” Artola said. “But given importance of the Ley Bases in the legal reforms proposed by the national executive, we believe that these regulations should be issued reasonably on time.”

Projects seeking to obtain Rigi benefits must be US$200 million or bigger.

Argentina's top five oil jurisdictions by production, according to oil and gas chamber IAPG data, are Neuquén, Chubut, Santa Cruz, Mendoza, and Río Negro. In terms of gas, the top five are Neuquén, federal offshore waters, Santa Cruz, Tierra del Fuego and Río Negro. 

The bulk of upstream investment in Argentina is being pumped into Neuquén. Associated midstream work is being carried out, or planned, to support output growth.

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In recent days, BNamericas mining reporter Elinor Trebilcock published an overview of where jurisdictions stand with respect to Rigi.