Argentina raised by as much as 67 percent the amount of cash received for exports by oil producers including BP Plc unit Pan American Energy LLC and China Petroleum & Chemical Corp.
The government ended the Oil Plus program through which producers received $42 a barrel in cash for exports plus a credit of $28 a barrel, the government said in the official gazette today. That means they’ll receive the full payment of $70 a barrel in cash, provided the market price is above $80.
The end of the Oil Plus program seeks to encourage output by granting producers similar profitability for crude sold in domestic and international markets, the Gazette said.
“The oil industry should celebrate this regulatory change,” Chubut’s province Oil Minister Ezequiel Cufre said by phone from Rawson, Argentina, Chubut’s capital. “The province will also benefit as it will collect more taxes securing the payment of its bond backed by oil royalties payments.”
Chubut bonds due 2020 reached a record-low price of $74 after a strike at Pan American’s Cerro Dragon field cut output by about 80 percent in June. The bond hasn’t yet recovered to its $96 record in 2012 and trades at $88.
Pan American, which exports 40 percent of its Chubut-based Cerro Dragon field, reduced output to 89,700 barrels in November 2012 from 100,600 barrels in December 2011, according to a Jan. 2 e-mail response to questions.
The company had said it may fire 500 workers this month because of reduced production.
Pan American should shelve plans to fire workers now that it has secured the return it sought, Cufre said. The company, 40 percent owned and managed by Bridas Corp., a joint venture between China National Offshore Oil Corp. and billionaire brothers Carlos and Alejandro Bulgheroni, should resume production in less than 15 days at Cerro Dragon, he said.
Mario Benechi, a Pan American spokesman, didn’t immediately reply to a telephone call and an e-mail seeking comment today.
YPF SA and Petroleo Brasileiro SA’s Argentine unit are also among oil exporters in the South American country that will benefit from the revision.