Can Vaca Muerta be sold?

2023-10-20 14:51:26

The candidate for Freedom Advances, Javier Milei, turned on the fan for all kinds of speculation around the possibility of “selling Vaca Muerta.” Beyond the proposal there are a series of regulationsfrom the National Constitution, to national and provincial laws that regulate the operation of the lighthouse to which all presidential candidates look: Vaca Muerta.

The question that Milei left open is whether it is possible to sell Vaca Muerta, but before answering that question It is necessary to clarify what Vaca Muerta issince misunderstanding that point is where the most unusual statements have emerged since yesterday, when the candidate was on Samuel “Chiche” Gelblung’s program.

Dead cow It is not a place, as if it were a city, a province or a field with its perimeter fence. It is a geological formation that is about 2,500 meters below the ground. In simpler terms, it is something that is underground.

Since the constitutional reform of 1994 lNatural resources are property of the provinces, and this is where what is in the subsoil, whether precious metals, or in this case gas and oil, is the property of the provinces. That does not mean that what is on the surface is from the provinces, but rather that On the surface is what we all know, cities, routes, lakes, private or public property.

The provinces, as in this case Neuquén, what they grant are concessions for the exploitation of the resources that are in that subsoil, which we reiterate is gas and oil. They are a type of contract between the concessionaire company or companies that commit to a detailed work plan and the provinces that allow them to operate for a period of time, in this case 25 years.

What can be “sold” about Vaca Muerta

Above these concessions are the lands that may or may not have deeds.. That is why in the industry the payment that oil companies must make to those is even legislated. “superficial” of the areas they have under concession.

With this clarified, to the question. Can Vaca Muerta be sold? The short answer is yes, you can. What oil companies have about Vaca Muerta we said that They are exploitation concessionsand those concessions Not only can they sell, but they do so regularly.

The concessions They can be sold in total, or in percentages, and it is common not only in Vaca Muerta but in the hydrocarbon industry around the world. Now this It does not imply that what is on the surface is sold, that as if it were a sign they were private or public properties.

To do a parallelism We can use the example of an electricity distribution company, such as CALF. This company has the concession to provide electric energy service in a certain city, in the case of CALF in the city of Neuquén.

If the sale of the concession of an electricity distributor is proposed, no one would think that this sale includes the town where the concession is held.

If for some reason, as Milei suggests, the company decides to sell its concession, it could do so – always after the approval of the granting power. But it is clear that if we look at the example of CALF, if the cooperative sells its concession, it will not sell the city of Neuquén with it.

The same happens with Vaca Muerta, companies can sell their concessionsand in fact It is the process that ExxonMobil has had open for a few months. But that does not imply selling the surface properties at all.

Furthermore, these are concessions that have a specific term and a commitment that is not only detailed in work, but that commitment is reviewed annually by the granting power, by the province of Neuquén.

Milei’s statements generated a range of repercussions and it is no wonder since They are clearly confusing (he proposed looking for a mechanism to sell for example), but If what they are looking to sell are the concessions that YPF has in Vaca Muerta, that is something not only possible, but something that YPF has already done.

When YPF achieves a «farm in»a partnership with another company to develop one of its blocks, such as For example, with Chevron in Loma Campana, it is doing nothing other than selling a part of that block to that partner company.. It is something that has happened and will surely continue to happen, but it does not modify at all what happens on the level of the earth.

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