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Argentina to allow used drilling rig imports

26 Apr 2017, 10.22 pm GMT

Argentina to allow used drilling rig imports

Houston, 26 April (Argus) — Argentina will allow imports of used equipment for oil and gas hydraulic fracturing as part of a plan to boost foreign investment in the Vaca Muerta shale formation.

The equipment will be taxed at a discounted rate of 7pc, said Argentina's president Mauricio Macri at an event in Houston with oil and gas industry officials. Macri is meeting with US President Donald Trump in Washington this week.

Foreign companies have been requesting that Argentina allow imports of used drilling equipment that is still in good condition and may be idle because of changing technology, Argentina officials said. The details of the plan will be announced in the coming days or weeks.

Macri had a separate meeting in Houston with Halliburton president Jeff Miller, according to Macri's official Twitter account. Halliburton is one of the largest oil services companies in the world.

Argentina is hoping yearly investment in Vaca Muerta will increase from $6bn-$8bn confirmed this year, to $12-$15bn in 2018 and to $20bn by 2019, said energy and mining minister Juan Jose Aranguren.

Argentina earlier this year launched a four-year subsidy program for unconventional natural gas in a bid to encourage investment in Vaca Muerta. The program will kick off on 1 January 2018 by paying $7.50/mn Btu for approved tight and shale gas projects that are carried out in the Neuquen basin, home to Vaca Muerta. The subsidized price will then decrease by 50¢/yr until reaching $6/mn Btu in 2021.

The plan is to eliminate imports of LNG in Argentina in 4-5 years, said Aranguren.

Large companies have signed deals to explore Vaca Muerta. Argentina's state-controlled YPF signed a preliminary $500mn agreement last month with BP-controlled Pan American Energy (PAE), France's Total and Germany's Wintershall to produce natural gas from Vaca Muerta. In February, YPF sealed a preliminary $306mn deal with Shell to develop a pilot shale oil and gas project in Vaca Muerta operated by Shell. And Argentina's Tecpetrol is planning to invest $2.3bn through 2019 to develop unconventional gas in Vaca Muerta.

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