On 6 March 2017, the Ministry of Energy and Mining enacted Resolution No. 46/2017 creating the Incentive Program for the Investments in the Production Developments of Natural Gas of Non‑Conventional Reservoirs (Program) to stimulate the development and production of the Neuquina Basin’s non‑conventional natural gas reservoirs.

The Program sets an incentive price (Incentive Price) to the non-conventional gas produced in concessions located in the Neuquina Basin held by companies registered in the National Registry of Oil Companies that prepared a special investment plan which shall be approved by the Provincial Enforcement Authority and the National Secretariat of Hydrocarbons Resources (Secretariat).

The Incentive Price will be of: (i) USD 7.50/MMBTU for 2018; (ii) USD 7.00/MMBTU for 2019; (iii) USD 6.50/MMBTU for 2020; and (iv) USD 6.00/MMBTU for 2021.

The Secretariat will pay the Incentive Price through a monthly compensation when the effective selling price of the non-conventional gas is lower than the Incentive Price (Compensation). The Compensation’s amount will be distributed between the company (88%) and the Province where the concession is located (12%).

Payment of the Compensation will be instrumented through a provisional payment of the 85% of its amount according to the companies’ previous estimations of non-conventional natural gas commercial production and of the effective selling price, and will be subject to a later adjustment by the Secretariat (between the provisional payment amount and the final amount declared by the companies).

The companies included in the Program will receive the first payment of the Incentive Price in January 2018, except for companies currently included in a previous incentive program (Incentive Program for the Natural Gas Injection by Companies with Reduced Injection), whom may receive the Compensation from the following month of their inclusion to the Program.

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