The Ministry of Energy recently issued Resolution 197/2018, which details the requirements and procedures relating to reconnaissance permits for the Argentine continental shelf as part of the government's oil and gas agenda.
The Ministry of Energy conducted a study on 7 February 2017 and issued a reconnaissance permit to perform a survey of the Northern Argentine continental shelf to Spectrum ASA.(1) The permit was for a maximum of 24 months, to perform multi-client two-dimensional seismic surveys on the northern basins of the Argentine offshore areas. According to Spectrum's news releases, the results were encouraging enough to claim that there is significant potential in the area.(2)
In an attempt to exploit these promising results, the then minister of energy and mining announced future tenders of the offshore programme, similar to the successful Renovar programme. Reconnaissance permits for more than 450,000 square km (173,746 square miles) of unexplored areas of the Argentine continental shelf will be tendered.(3)
The resolution also regulates the commercialisation of information arising from offshore reconnaissance activities.
The government plans to develop surface reconnaissance activities, particularly in the offshore territorial area, subject to a legal framework that promotes the competition of different companies and allows the commercialisation of the information gathered by each licensee.
The resolution aims to regulate the uses and commercial terms of the information which arises from permits for surface reconnaissance activities in the Argentine offshore territory. Such permits cover the following activities:
- surface geology;
- seismic refraction and reflection;
- gravity and magnetic survey data;
- geoelectric and geochemical tasks;
- topographic works, including:
- geodetic work;
- aerial topography; and
- aeromagnetometry;
- piston corer studies; and
- seabed studies.
Section 18 of the resolution prohibits the performance of any sort of well or seabed perforation activities, except for those necessary to take samples for piston corer studies or seabed studies.
For clarification purposes the resolution defines certain relevant terms and conditions (ie, the right of commercial use, surface area explorations, the scope of the permit and the difference between branch and subsidiaries of foreign companies).
Based on the provisions of the resolution any individual or legal entity, whether national or foreign (acting through its Argentine subsidiary or branch), public or private, can apply for a surface reconnaissance permit, subject to compliance with certain minimum requirements, such as providing evidence of at least five years' experience in surface reconnaissance activities and having personnel with academic credentials and expertise in the surface reconnaissance field.
The resolution allows companies to apply for the permit as members of a joint venture with more experienced companies in the field in order to meet the above requirements.
The Ministry of Energy may authorise several licensees to perform surface reconnaissance activities in the same area. Therefore, the permit is non-exclusive and there are no barriers to enter areas that have already been granted to other licensees. However, before authorising a permit in the same area, the Ministry of Energy will issue a notice to the current holder of the reconnaissance permit for the specified area.
If the permit is issued for two or more licensees in the same area, before beginning surface reconnaissance activities, the licensees must establish coordination mechanisms to define the work hours in the shared areas so that the work plan provided in the permit application to the Ministry of Energy is not adversely affected.
The Ministry of Energy's Hydrocarbon Resources Office is in charge of granting surface reconnaissance permits.
Applicants must submit an affidavit with supporting documents evidencing a minimum of five years' experience, together with several other legal requirements, including Argentine tax identification and registration with the Public Registry of Commerce.
The application must include a general presentation of the project – including an executive summary, objectives and scope. The application must also include a work plan and an affidavit evidencing the technical, operational and personnel capabilities available to the applicant for the purpose of performing surface reconnaissance activities.
A foreign company can apply for a permit, even if it does not have any corporate presence in Argentina. In this case, the Ministry of Energy will conduct an assessment of its documents and, if approved, will grant 60 business days to provide evidence of registration with the Argentine authorities.
A surface reconnaissance permit will be granted to any entity with a registered corporate presence in Argentina.
The resolution sets forth the licensee's rights and duties. The permit grants the licensee the right to carry out surface reconnaissance activities and the resolution specifically establishes activities including:
- surface geology;
- seismic refraction and reflection;
- gravimetry;
- magnetometry;
- geoelectric and geochemical operations;
- topographic and geodetic work;
- aerial topography;
- aeromagnetometry; and
- any other activity that could contribute to determining sub-surface conditions favourable to hydrocarbon accumulation.
The permit is valid for a maximum term of eight years from grant. The resolution also sets out requirements for the delivery of reports, data and information relating to surface reconnaissance in order to ensure an effective and efficient evaluation of activities.
Further, the resolution clarifies the right of commercial use by licensees. During the permit's term, it is the licensee's responsibility to disseminate and commercialise in a transparent and non-discriminatory manner any information obtained.
The licensee, together with the Ministry of Energy, will have the right of ownership of the information obtained from surface reconnaissance activities. Licensees must also notify the ministry of any commercial transactions carried out after reconnaissance activities.
To promote wider participation, the resolution allows for the assignment of permits to third parties. Further, surface reconnaissance permits that have been granted for offshore areas before the date of the resolution and which are still in force, may be converted into permits at the interested party's request, .
Although certain offshore exploration areas have been granted by the Ministry of Energy, there is still significant potential for basin offshore exploitation.(4)
The current administration has done extensive work in the energy sector to foster a feasible and friendly environment for foreign investors. Although the government has not issued any statement since December 2017, the enactment of the resolution is clear evidence of its intentions for the hydrocarbons sector.
For further information on this topic please contact Federico Godoy at Beretta Godoy by telephone (+54 11 4326 7386) or email ([email protected]). The Beretta Godoy website can be accessed at www.berettagodoy.com.
Endnotes
(1) Resolution 19-E/2017, 7 February 2017 ([33561] BO).
(2) Karyna Rodriguez et al, "Recent survey highlights frontier exploration potential offshore Argentina", Offshore Magazine, (2017).
(4) Ministry of Energy and Mining, Mapas de Exploración y Producción de Hidrocarburos, (2015).
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