Roundup: Market entrant, Rigi bill, energy integration, carbon trading

Market entrant

A new hydrocarbons company was established in Argentina.

Known as Aconcagua Energía No Convencional, the venture is majority owned by the co-founders of local driller and renewables firm Aconcagua Energía: Javier Basso and Diego Trabucco.

Aconcagua Energía has traditionally focused on unconventional assets.

Aconcagua is competing in a hydrocarbons licensing auction in Mendoza province, having bid for extraction rights to area Payún Oeste. In 2012, national oil company YPF said it had discovered unconventional crude at several blocks, among them Vaca Muerta acreage Payún Oeste. YPF never registered large-scale oil production at the license.

In a May regulatory filing, Aconcagua also said it would participate in YPF’s conventional area divestment program, Proyecto Andes.

Today, Aconcagua’s top three producing assets are Entre Lomas, 25 de Mayo-Medanito Sur Este and Jagüel de los Machos (all Río Negro province), according to July data from local industry chamber IAPG. Entre Lomas produced 411m3/d oil and 402,000m3/d gas that month. The firm acquired the assets from Vista Energy, which is focused on shale. 

Aconcagua production in 2Q24 was 505,029b oil (around 890m3/d) and 36Mm3 gas (around 400,000m3/d), according to a financial report. 

National oil and gas production was 105,083m3/d and 148Mm3/d. 

The bulk of upstream investment is being channeled into the Vaca Muerta unconventionals formation.

Rigi adherence

Argentina’s top-producing hydrocarbons province, Neuquén, will submit a Rigi adherence bill next week, the jurisdiction’s infrastructure minister, Rubén Etcheverry, said.

Rigi is the federal government’s investment-incentives regime. 

The fine print was published last week, outlining that projects including export-focused natural gas initiatives are eligible to tap the benefits.

Etcheverry, citing the minimum of US$200mn that Rigi projects must invest, said the province would also submit a bill to create a local-level initiative, branded Invierte en Neuquén, aimed at opening the door for projects involving smaller levels of outlay. 

“Very few investments can reach those amounts [US$200mn], so this will be for amounts ranging from zero to infinity, with a distribution of incentives or benefits by region and activity, depending on each region," Etcheverry said.

Biobío talks

Government officials from Neuquén province and Chilean region Biobío held energy integration talks, the former said in a statement.

Areas covered include exporting to, and importing from, Chile. Exporting to other regions via Chile was also discussed.

Currently gas and oil are piped over the Andes from the Neuquén basin to Biobío region, home to 12 ports, a refinery and manufacturing industries.

Carbon markets

Neuquén’s investment promotion agency ADI-NQN held a carbon markets training session.

Around 50 interested parties attended.

“Vaca Muerta will not only allow us to monetize our subsurface, but we are working to achieve this with zero carbon emissions. It is an ambitious goal, but it’s not impossible,” said Neuquén governor Rolando Figueroa, referring to the need to give a competitive edge to the province’s hydrocarbon production to better position itself in markets like Europe.

Argentina has a national strategy for the use of carbon markets.

The first draft of President Javier Milei economic reform bill authorized the executive branch to establish and assign greenhouse gas emission rights to each sector and subsector of the economy. The draft also authorized officials to establish a greenhouse gas emissions trading market and set the rules. However, the definitive version, approved earlier this year, does not.

Argentina, which accounted for 0.83% of global greenhouse gas emissions in 2021, aims to achieve net-zero emissions by 2050. 

Current policies and actions are “highly insufficient,” according to monitoring project Climate Action Tracker. 

Milei has previously said he was a climate change denier. Necessity may force his hand, given Argentina is a major exporter and faces the risk of being subject to border carbon taxes, eroding the competitiveness of its products.