Argentine province launches new oil block auction model

Argentine province Mendoza is launching its previously announced model of continuous hydrocarbons auctions.

An initial batch of exploration licenses corresponding to 12 blocks is being offered, with no minimum investment floor, according to a statement.

The jurisdiction is offering exploration rights to blocks Boleadero, Bajada del Chachahuen, Chachahuen Norte, CN-V, Malargüe, Ranquil Norte, Zampal, Calmuco and Sierra Azul Sur. Extraction licenses are also up for grabs, for Puesto Molina Norte, Loma El Divisadero and Payún Oeste.

Any not awarded would be made available in a subsequent round.

Companies can also present proposals to explore and extract hydrocarbons from free areas, those currently not on the concessions map.

The new model is part of an auction system overhaul to help spur investment in the province. As part of the changes, canon payments for extraordinary income and the concept of canon payments for extraordinary production have been scrapped, leaving in place a 12% rate established by law. 

Last year, with the support of an incentives scheme, Mendoza pulled in US$301mn in upstream investment, up 80% on pandemic year 2021.

In 2021 and 2022, the province managed to flatten a production decline curve seen in 2018-20.

In December 2022, Mendoza was the fourth-biggest oil and fourth-smallest gas jurisdiction. Argentina produced oil and gas in 10 provinces and federal offshore waters that month. Over 95% of gas and close to 100% of oil produced in Mendoza is conventional. The jurisdiction sits over a small section of Vaca Muerta shale play.

Picture credit: Government of Mendoza province. 

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Neuquén province’s government introduced a bill that mandates the creation of a climate change adaption and mitigation plan.

The plan, a statement said, would call for the “progressive” use of renewables and encompass associated areas such as climate risk management, pollution mapping and environmental impact evaluation.

Neuquén is Argentina’s biggest oil and gas province, with the bulk of production corresponding to unconventional assets in Vaca Muerta.

Among renewables projects planned for the jurisdiction is 100MW wind farm Picún Leufú, planned by provincial development agency ADI-NQN.

The provincial government has built a 1MW solar PV plant, El Alamito. In 2020, the province cut the ribbon on its first wind park, Vientos Neuquinos, which comprises 29 turbines. 

Decarbonization of the province’s large hydrocarbons sector may spur investment in clean energy.