Argentina increases incentive to drill for gas

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Argentina increases incentive to drill for gas

posted on Nov 20, 2009 07:20PM

Hi Sharky;

Thanks for your support. Here is an article from Rigzone that you will like. It's about the Argentine government increasing the payment that they allow natural gas producers to get to encourage them to produce more natural gas. The increased "production incentive" being offered in the article below to Apache in the Nuquen Basin in Argentina is called "Gas Plus" which is what Petrolifera is hoping to get from the Argentine government which Petrolifera's management refers to on page 12 of the new presentation. In Petrolifera's new presentation management states "Loma Montosa Natural Gas: The PM1018, 1022 and PME 1001 regions can probably qualify for "Gas Plus" pricing incentives. " So there may be some hope for Peterolifera to get much higher netbacks if this incentive is applied to new Loma Montosa natural gas drilling going forward.

Argentina to Launch New Program to Boost Gas Exploration

by Taos Turner

Dow Jones Newswires

Monday, November 16, 2009

Nov. 16, 2009

The Argentine government will soon announce a new program aimed at giving companies more incentive to explore and produce natural gas.

The program will build on a previous incentive plan known as "gas plus," which allows companies to sell natural gas at higher-than-normal rates.

The new program, reported earlier Monday by El Cronista newspaper and later confirmed by the Planning Ministry, would allow gas companies to sell excess supplies at above market prices.

Cronista reported that the Energy Secretariat expects the new plan to attract investment totaling about $900 million, though the Planning Ministry couldn't confirm this.

Apache Corp. recently received approval to sell natural gas at higher-than-normal rates under the Argentine government's "gas plus" program. It was the company's second approval so far this year and Apache has several approval requests in the pipeline.

Under the plan, Apache will start selling 10 million cubic feet per day of natural gas to Cammessa, Argentina's wholesale power-market regulator.

Starting in January, Apache will sell the gas for $4.10 per million British thermal units for one year. The gas will come from the Guanaco and Ranquil-Co fields in Neuquen province.

Earlier, Apache was approved to sell 50 million cubic feet per day of gas from two fields in the provinces of Neuquen and Rio Negro. That gas will sell for $5 per million BTU beginning in 2011.

That's about double what Apache and other companies have been getting per million BTU for other projects. Some gas producers have been receiving an average of $2 a million BTU, far below the average market price in many countries.

That's also far below the roughly $6 Argentina pays to import natural gas from Bolivia or what it pays to import liquefied natural gas from Trinidad and Tobago.

Argentina's gas industry has long faced unfriendly prices and unpredictable tax policies that discourage investment. Since Argentina devalued its currency in early 2002 and froze utility rates, companies here have voiced concern about severely reduced returns on their investments.

http://www.rigzone.com/news/article.asp?a_id=82510

Sharky, in terms of Petrolifera selling their Argentinian assets, they appear to have decided to keep them. They can drill into other strata on their existing lands to produce natural gas or oil deeper (or higher) than the accumulations that they presently are producing in order to produce other fields such as the Loma Montosa. Peterolifra has also stated that going forward they are going to look for partners to farmin on their exisiting lands to get them to pay up to 50% of the production costs going forward to explore and produce on Petrolifera's lands in Argentina. This way instead of owning 100% of our production we could take in partners to take say a 50% position in our lands in Argentina and get them to pay 50-70% of Petrolifera's costs in Argentina going forward. Then if you at least cut your costs in Argentina and significantly increase your production from newly discovered oil and gas formations there is always the chance that Petrolifera can sell off their holdings at some point to their new partners. This could be a good idea to exit eventually from Argentina.