Weekly Update


In the midst of the internal tension over the dollar, the Government is confident that it will reach an agreement with the IMF earlier than expected

Economía trusts in the good harmony that exists with the managing director, Kristalina Georgieva, and her staff. The November mission will begin designing the new program. “The talk I had with Martín Guzmán about the path that Argentina has ahead was very good. We will continue to support the authorities as they work to ease exchange rate pressures, anchor economic stability and lay the foundations for recovery, ”the managing director wrote on her Twitter account yesterday.


In recent times, cooperation between the two states has not been limited solely to the health field, but has also resulted in a greater commercial, economic and political relationship, at a particularly delicate time for the country. Alberto Fernández’s speech at the United Nations (September of this year) was in strong harmony with the speech of Xi Jinping (President of China), in relation to the commitment to multilateralism, South-South cooperation and the role of emerging countries in the fight for the covid-19 pandemic.



The FIS group, owner of the global payment processor Worldpay, announced today the most recent expansion of its global presence in the Latin American market, with new acquiring licenses in Argentina. Thus, with a renewed ability to offer the local market greater offers in card payment processing, it will allow Argentine merchants to have access to a larger set of solutions, products and services for online commerce.


Gas: transporters and distributors must pay $ 528.28 million to finance Enargas

The National Gas Regulatory Entity (Enargas) set the final balance of the Fiscalization and Control Fee for the year at $ 528.28 million, which must be paid mostly by transport and distribution companies until November 6. On this occasion, the obligation includes the cooperative sub-distributors, with another $ 24 million, which, by determination of Enargas, pay the rate in two installments.



The Federation of Energy Chambers (FECENE) listed a series of actions that, according to them, should be resolved in the short term. They demand the Vaca Muerta law. The Neuquén Basin and Vaca Muerta are going through times of change that arose after the union and national agreements reached in the last month. In this framework, the Federation of Chambers of the Energy Sector of Neuquén (FECENE) detailed the 5 points that should be “resolved” in the short term to recover and expand activity levels.



So far, 23 wind and solar farms are already delivering clean energy to Large Users through contracts between parties. However, other 15 projects are subject to extensions that may be granted by the Ministry of Energy led by Darío Martínez. The company that regulates the Argentine electricity market, CAMMESA, published a report detailing that there are already 23 wind and solar parks in the country that were assigned within the framework of the Renewable Energy Term Market (MATER).

Foreign Exchange Regulations

Through Communication “A” 7138, published yesterday and effective as of today -October 16, 2020-the Central Bank (BCRA) introduced new requirements to access the foreign exchange market to settle imports, in order to control the outflow of currencies.

In addition to the current requirements to give access to the exchange market for the payment of imports of goods with pending customs entry registration, you must verify that the importer has the declaration made through the Comprehensive Import Monitoring System (SIMI) in state OUTPUT in relation to the goods involved, in all cases in which said declaration is a requirement for the registration of the application for import destination for consumption.

The same requirement will be applicable for access to the exchange market by local financial entities for the cancellation of letters of credit or guaranteed letters issued or granted as of October 16, 2020.

Thus, from now on, it will be necessary to have Customs approval to access the exchange market; orders to the BCRA cannot be anticipated.

Likewise, the BCRA established that as of November 2, payments for imports of goods with pending customs entry registration will be considered in arrears, made between September 2, 2019 and October 31, 2019. Importers Those who register this type of operations in a situation of delay will not be able to make new advance payments for imports of goods until they regularize the situation.

Finally, the information regime of “Advance of exchange operations” foreseen was expanded; The advance must be reported for the operations to be completed as of October 16, 2020 when the expenses operations involved imply access to the exchange market for a daily amount equal to or greater than the equivalent of USD 50,000.

There will be no automatic exchange of financial information with the US.

On August 31, the tax collection agency of the United States of America (IRS) issued Resolution RP 2018/36, which updates with application from January 2019 two country listings for the purposes of the report of certain financial operations. It is an annual reporting obligation for cases of deposit of interests paid by US financial institutions to not resident subjects in that jurisdiction, residing in any of the countries listed in any of the lists in question.

The first list includes the countries that signed a “classic” exchange of information agreement with the United States, under which the United States is authorized to provide and receive financial information (either within the framework of an agreement to avoid double taxation or of a specific bilateral agreement for the exchange of information “upon request”).

For its part, the second list includes the countries with which the United States is authorized tocarry out an “automatic” exchange of financial information. Among several other jurisdictions,this list includes some countries in the region such as Brazil, Colombia and Mexico.

Argentina – which at the moment was not included in this legislation – was incorporated into the first list, which confirms that between the United States and Argentina there is currently no legalinstrument that enables both jurisdictions to exchange information of the “automatic” type.

Indeed, in December 2016, Argentina and the United States signed a bilateral agreement for the exchange of tax information, which enables tax authorities to request information on their respective taxpayers, and establishes the necessary procedures to carry out such requirements. Within the framework of such an agreement, the information to be exchanged (held by financial institutions or persons acting in representative or fiduciary capacity, among others) must always be “upon request” and in specific cases.

Under guidelines that the United States had already followed in other agreements (for example, in those subscribed with the Cayman Islands and the Mauritius Islands), although this agreement contains information exchange clauses in “automatic” and “spontaneous” mode, they do not result operational as they require additional agreements, which specify the information to be exchanged and the procedures to be followed for such purposes. In effect, this agreement does not constitute an “Intergovernmental Agreement” type 1 (IGA-1), thus differentiating itself from those agreements that -in the framework of the “Foreign Account Tax Compliance Act” (FATCA) – the United States signed with other countries in order to exchange information on massive, routine and “automatic” way.

YPF plans to invest U.S. $2 billion in renewable energy over the next five years

YPF has announced an ambitious plans to move from being a traditional hydrocarbon producer to a comprehensive energy company. In this scenario YPF Luz subsidiary of the company controlled by YPF- works as a bridge towards the future of renewable energy.

YPF Luz has a generation complex in operation in Tucumán, two thermal power plants in Neuquén, one for cogeneration in La Plata and Dock Sud; and develops wind energy parks in Chubut and Santa Cruz.

With an investment plan of U.S. $ 2 billion and after joining General Electric as a partner, the company is confident of positioning itself, towards the horizon of 2020, as the third largest energy generator in the country.

The main objective is to become a profitable, sustainable, efficient company that wants to position itself within the five largest energy generating companies in Argentina, in addition to leading the renewable energy sector. YPF Luz wants to reach 5,000 megawatts (MW) of installed power.

To achieve this goal the company will embark in buying assets. It already has two large combined cycle projects in the pipeline and other renewable energy projects that we are working on. It has to grow from the 2,400 Mw that it has today in operation plus construction to 5,000 Mw.

The market is ripe for M&A. Today there are some 4,600 Mw of renewable projects, between developments and signed and unsigned PPAs. There are several opportunities under the RenovAr program. Many of them with financial difficulties where we can play an active role.


The Argentine Court in the bankruptcy of the Indalo Group accepted the offer to purchase its Oil assets by YPF and DAPSA. Both companies began to operate officially as brand new holders of the assets of the former Indalo. DAPSA will take charge of the service stations while YPF will manage the fluvial plant and the storage tanks.

YPF and DAPSA began operating the Oil assets acquired in the framework of a national and international bidding in the process of bankruptcy of, a company of the Cristobal Lopez Group. In this way, both companies are committed to carrying out a plan that ensures the sustainability of the business.

YPF will take over the operation of the fluvial terminal that will allow it to boost its supply in the core zone of the country and leverage its logistical network with the San Lorenzo terminal that YPF has in the area. Likewise, it will use the storage capacity for its own logistics operations, both for the supply of the local market and for the eventual expansion in regional markets, maintaining the availability of storage for other companies

At the refinery, YPF will continue the remediation plans that Oil was carrying out in accordance with the requirements formulated by the provincial environmental authority. Likewise, YPF will implement with its technical teams the plans to improve the condition of a safe shutdown of the plant.

The Service Station network will continue to be supplied by DAPSA, whose management will allow an efficient supply of products to its customers during the period of temporary operation.

This preliminary process does not include, at this time, any change in the image of the vending machines or the commercialization conditions, maintaining the same characteristics as during the administration of the bankruptcy.

It should be remembered that YPF and DAPSA are in charge of the management of the assets of Oil since June of this year, within the framework of the bankruptcy proceeding and that, on October 3, both companies were awarded the assets acquired in the bidding process ordered by the judge.

NEUQUÉN: Already produces mora than half of its OIL and GAS from Shale.

This level of production was achieved exploiting only 600 square kilometers of the 30,000 that make up Vaca Muerta proven reserves and with 10% of the total investment committed of 160 billion dollars. It is the largest investment in an energy pole in Latin America.

Neuquén has been historically the petrochemical industrial center of Argentina. Though oil was first

discovered and exploited in the San Jorge Gulf in the province of Chubut on the Atlantic Coast, soon Neuquén developed oil exploration sites at different points of the province, in spite to be known first for its production of apples, pears, and other fruits.

With the discovery of the Vaca Muerta oil fields (3rd largest shale gas & oil reserves in the world) Neuquén became one of the most attractive regions for investments not only of the oil & gas companies, but also their suppliers.

Currently 62% of the gas and 50% of the oil produced today in Neuquén is unconventional. This fact aligned with the price of oil set up the ideal conditions to accelerate investments.

The industry is now lobbying the Government to match the tax legislation of unconventional development sources with other countries, where there is an accelerated depreciation of fixed assets. This means that you can deduct more quickly the investment that was made in a machinery or in the construction of a civil infrastructure. By accelerating the deduction less income tax is paid.


It will be to perform exploration tasks. The concession terms will range from four to eight years. With the aim of further expanding the extraction of hydrocarbons within the national territory, through a decree, the Ministry of Energy will be instructed to launch a public, national and international tender to explore 38 offshore blocks in the Argentine sea. It is a long-term project since it deals with exploration tasks, and companies will not be obliged to develop the areas in the beginning.

The West Malvinas Basin is the area where more blocks are going to be tendered with 18, followed by the north of the Argentina Basin with 14, and finally the Austral Basin with 6 blocks.

The areas to be tendered cover 225,000 square kilometers (km2) in total. Specifically, they are 90,000 square kilometers (km2) of the West Malvinas Basin, 5,000 km2 of the Austral North Platform and, finally, 130,000 square kilometers of the Argentine Basin.

In May of this year, through Resolution 197/2018 of the Ministry of Energy, published in the Official Gazette, the national government updated the regulation for the granting of surface recognition permits in search of hydrocarbons in offshore areas.

According to the regulations, the period of validity of the Superficial Recognition permit will be four years with the possibility of extending four more years.

In this first block companies will not be forced to start drilling tasks unless they request the extension of the term.

Integrity guidelines for compliance of the companies criminal liability law

In December 2017, Argentina enacted an innovative law on criminal liability of legal persons. The art. 22 of said norm established the possibility for legal persons to implement integrity programs consisting of the set of actions, mechanisms and internal procedures for the promotion of integrity, supervision and control,

aimed at preventing, detecting and correcting irregularities and unlawful acts included in the law. said law. These integrity programs must be related to the risks inherent to the activity carried out by the legal entity, its size and economic capacity.

The art. 23 of the standard establishes the minimum contents of integrity programs, consisting of: a) A code of ethics,

b) Specific rules and procedures to prevent unlawful acts in the context of tenders and bidding processes, in the execution of administrative contracts or in any other interaction with the public sector, and

c) Periodic training on the integrity program for directors, administrators and employees.

Likewise, the integrity programs may also contain periodic risk analysis and the consequent adaptation of the integrity program; the visible and unequivocal support for the integrity program by senior management and management; the internal channels for reporting irregularities, open to third parties and properly disseminated; a whistleblower protection policy against reprisals; an internal investigation system that respects the rights of those investigated and imposes effective sanctions on violations of the code of ethics or conduct;

procedures that prove the integrity and trajectory of third parties or business partners, including suppliers, distributors, service providers, agents and intermediaries, when hiring their services during the commercial relationship due diligence during the processes of corporate transformation and acquisitions, for the verification of irregularities, of unlawful acts or of the existence of vulnerabilities in the legal entities involved; the monitoring and continuous evaluation of the effectiveness of the integrity program; an internal manager in charge of the development, coordination and supervision of the integrity program; the fulfillment of the regulatory requirements that on these programs dictate the respective authorities of the

national, provincial, municipal or communal police power that governs the activity of the juridical person.

It is convenient to emphasize that these integrity programs are mandatory for most of the contracts with the National State.

The Regulatory Decree of the Law on Corporate Criminal Liability established that the Anticorruption Office should establish the guidelines and guidelines that are necessary for the best compliance with the provisions of the aforementioned articles.

On October 4, 2018, the Anticorruption Office has finally established said guidelines through Resolution 7/2018. In light of the aforementioned legislative history, the rule is of undoubted importance, usefulness and convenience for companies.

Among other elements, the guidelines highlight the greater demand for larger companies that can afford more sophisticated and complex programs.

The standard contains a sequence of steps and keys for the design and implementation of the programs in order to facilitate their adoption. Also, the standard provides an interesting and long list of circumstances that reveal the ethical climate of an organization and the possible indicators of lack thereof.

The guidelines also contemplate the possible contents of a comprehensive Code of Ethics that should be considered not only as a response to the Law of Corporate Responsibility but as a pillar of the correct

behavior of all the members of the organization in all relevant aspects

On the other hand, guidelines are provided to ensure integrity in bidding processes, in the execution of administrative contracts and in other interactions with the public sector. In this sense, the law especially addresses the treatment that should be given to gifts and hospitalities with respect to public officials, expressly recalling the scope of Decree 1179/16 which considers prohibited the gifts made on the occasion or occasion of the functions, except those of diplomatic custom or courtesy.

In addition, the standard provides some tools for the implementation of periodic training on integrity programs for directors, administrators and employees.

In order for integrity programs to be effective and have credibility, it is necessary that behaviors that are contrary to the ethical rules of the organization be detected and that there is a perceived reaction to them in a firm and fair manner. For these purposes, it is important to establish an internal channel of complaints so that employees and third parties can report violations of the Code of Ethics or other policies regarding conduct, principles, values or illegal acts, confidentially and anonymously, and without fear of reprisals. To this end, the standard establishes some guidelines and recommendations for the correct implementation of these channels. The same also makes the rule regarding whistleblower protection policies against possible reprisals.

With regard to internal investigations, the regulation provides some directives for an implementation that balances the same with labor rights and the protection of privacy, privacy and dignity. There are cases of unquestionable practical validity such as access to locked drawers or cabinets or the implementation of video surveillance in offices or productive sectors.

The guidelines contemplate on the other hand the index of third parties potentially covered by the need to verify their integrity and trajectory, as well as the procedures for the implementation of due diligence in these cases. Actions to be deployed in due diligence processes in M & A operations are also contemplated

In certain organizations of large dimensions, it is impossible to conceive an adequate structuring of an

integrity program without a person or team with full-time responsibility for its development, implementation and operation. For this the norm contemplates the generic figure of the “internal manager” and a series of functions ascribed to such position.

The periodicity in the control of risks is essential for an integrity program to permanently corroborate if what was appropriate in the past continues to be so in the present. In this sense, the standard contemplates some guidelines that contribute to this update. Intimately linked to this point appears the monitoring and continuous evaluation of the programs and the actions to be taken in that sense.

With regard to all the aforementioned issues, the standard provides practical “corroboration questionnaires” whose response helps in the implementation of the programs.
Finally, the sources cited at the end of the document reveal that it has been inspired by precedents from the United States, Great Britain, Brazil, Colombia, Spain, as well as the work of international organizations

ARGENTINA: History repeats itself?

The current economic and financial situation of Argentina appears to be risky and its forecast bleak. The Government is finally adopting measures to eliminate fiscal imbalances with the support of the IMF. For many too late and for others the beginning of a long road to solve the structural problems that haveaffected Argentina’s economy for more than fifty years. The pessimistic view finds striking similaritieswith the period preceding the crisis of 1989 and 2001. I summarize the comparisons for better understanding and further analysis:


In 2000 – 2001 the government of the Alliance (political coalition opposing the Peronist Party that won the presidential elections in 1999) after failing to implement economic reforms and facing lack of external lending, entered into an agreement with the IMF and obtained first a disbursement of two billion and another one in February 2001, for the same amount.

As the economic deterioration also continued, the Government entered into a new agreement with the IMF where it applied a “zero deficit” law in July 2001 and by adopting the law with it became the recipient of additional financial aid: in September, it obtained a “bailout” for 8 billion dollars (6 billion dollars from the IMF and another 2 billion from the World Bank).

Despite the implementation of fiscal adjustment policies, the relief lasted just three months. In December foreign exchange and bank accounts limitations were implemented as the Fund stopped attending thecountry financial needs (called “corralito”). There was no way then to avoid the debacle and everythingexploded.

The resemblance to the current government management of the crisis by Cambiemos is more than evident. In January of this year the Government received 9 billion dollars of its last debt placement in the open markets. In May already without funding it went again to the IMF to request a financing similar to that above described of the Alliance, obtaining 15 billion in June. After just three months at the end of September the level of reserves at the Central Bank are the same as in June. The Fund’s money lasted again for only three months.

In spite of this clear failure, we insist again with another agreement with the IMF, with a new attempt to obtain a “zero deficit” balance. Although what is now agreed with the IMF in this second agreement is more like what was applied in 1989.


In August of 1988 the then government of Alfonsin (Radical Party opposed to Peronism) launched the so- called “Spring Plan” to contain a dismal economic situation. Under this plan a strong fiscal adjustment was applied to reduce the deficit and tariff increases were authorized in public services, betting that a hard recession could contain inflation and the run on dollar. In addition, the Spring Plan was accompanied by the support of the World Bank and bank reserves were raised and interest rates were raised to very high levels.

That is to say, an economic formula was applied that was almost identical to the current one, which also combines adjustments, tariffs increases and high interest rates, being the only difference in that it is now only the IMF behind the plan and not the World Bank.

The Alfonsin plan went relatively well the first three months (similar to the 2001 crisis). They attracted dollars to the country by paying high interest rates (similar to the current measures). The pressure on the dollar was decompressed somewhat and the fall of the economic activity made the inflation decrease substantially, reducing it to a monthly digit. However, in December everything became complicated again: the capitals that had entered the country began to leave, increasing the pressure on the dollar, which had become the key anti-inflationary anchor. The Central Bank began selling foreign currency to calm it, but the pressure could not be stopped. In addition, being 1989 an election year, fears of the return of Peronism to power took over the markets, redoubling the exchange rate pressure (another similarity with the present situation).

Against this background, the World Bank cut off its aid to Argentina since it was no longer convenient to continue supporting the country. As a consequence, the Central Bank withdrew from the exchange market in February 1989 to protect its reserves and the final run ended in a hyperinflation burst, consequently ensuring the Peronist triumph.

As we pointed out above, today there are striking similarities with both crisis. At the end of 2019 there will also be a presidential election, where there is also fear in the markets of the return of Peronism to power as in 1989. The capital that is invested in government notes as a result of the high interest rates of 70% that the Central Bank is paying, may also fade away if the situation does not improve and the chances of the return of Peronism in the next presidential elections increase. It happened before in 1989. If the similarities continue to grow, it is worth wondering if the IMF will not stop helping Macri as the World Bank did with Alfonsin.

There is a “déjà vu” feeling which makes people wondering what will the government be willing to doto avoid repeating once again the tragic consequences of the past?

Infrastructure transportation development:

The Government will call for bids for the construction of a Vaca Muerta train in November

The Norpatagónico Train, better known as the Vaca Muerta train, is a very much needed infrastructure for the rapid development of the Vaca Muerta shale area. It is key to reduce the costs of transporting key inputs for hydrocarbon activity such as fracture sands and pipes and put the Argentine shale in direct competition with the resources of the main formations of the

United States.

The Ministry of Transportation of the Nation, one of the ministries that was not affected by the recent political reforms introduced by the Argentine Government to respond to the financial crisis will tender the construction of the railroad in November through the system of private – public participation (PPP), that is to say that the private sector will finance the work.

The train will allow the present operators active in the Vaca Muerta formation to bring supplies to the oil area but transported on the road back to the port of Ingeniero White.

The project under development uses a current trace that traverse existing municipalities, which has raised the objections of some of the Rio Negro mayors. They have requested that the convoy go through a new road in the north fences.

Oil companies indicated that in order to face the additional cost of the new trace, it would be necessary to raise the value of its use, taking away the initial cost advantage. Is that even going through the current trace of the tracks, the purchase of trains, the improvement and extension to Añelo (at Vaca Muerta doorsteps) involve an investment of $1,285 million dollars. To which it would have to be added another 252 million dollars if, as stated by the mayors, the route is changed.

The debates on the project will continue in a new meeting of the Vaca Muerta Table that will be held this time at the headquarters of the Ministry of Energy of the Nation. The meeting will once again involve the national ministers of Energy, Production and Transport, the holders of the country’s major oil companies, representatives of the governments of Río Negro and Neuquén and the unions.

Currently in Vaca Muerta, about 30 wells per month are completed, which involve the use of 7,000 tons of sand per each well, that is, about 210,000 tons per month. That sand, which is mostly produced in Entre Ríos and Chubut, reaches the Neuquina Basin deposits in trucks, adding a logistics cost that makes its value double. With the freight train, the national government estimates that not only will the logistics cost be reduced by 50%, making each well cost up to 10% less. But it also aims to sixfold the amount of cargo transported, from 700,000 to 4, 100,000 tons per year by 2030.


Gas production increased by 7% in July compared to the same month of 2017, and accumulated an increase of 4.9% in the first seven months of the year, attributable to the areas receiving the stimulus price subsidized by the State.

In July, the extraction of gas was 4,096.3 million cubic meters, which implies about 132 million daily. Of that total, YPF extracted 1,243.5 million with a decrease of 3.1% compared to the same month last year, and Total 1,040.8 million with a decrease of 2.1%. On the other hand, Pan American Energy (PAE) showed a rise of 1.7% to 472.9 million, while Tecpetrol showed an increase of 146.8% with an extraction of 332.1 million, and Compañía General de Combustibles (CGC) extracted 133 million, 59% more.

These last two companies are those that have areas in which the price of gas is insured at US $ 7.50 per million BTU, so that the State covers the difference between that value and the realization amount.

Thus, 92% of the increase in production in the first seven months of the year corresponds to only two areas: Fortín de Piedra de Tecpetrol in Vaca Muerta and Campo Indio Este of CGC in Santa Cruz, because the benefit also extends to the Southern Basin.

The situation raises questions about the scope of the current recovery in production, because the Government announced that it will not authorize new projects with a stimulus price, with the exception of some that were already being processed.

In petroleum, 2,382,925 cubic meters were extracted in July, of which 1,077,291 were produced by YPF with an interannual increase of 1.8%, and 496,455 cubic meters correspond to PAE that showed a recovery of 6.3% with relation to the same month of 2017.

Important auctions are expected for wind energy

The government is close to rule on the Law for the Promotion of Renewable Energies approved last year, according to a meeting held between the Minister of Energy and Mining Juan José Aranguren and a delegation of the Global Wind Energy Council. The law establishes penalties for large consumers that do not consume at least an 8% of renewable energy by the end of 2017. Once the expected regulatory decree is issued, the government plans to launch an auction for 1,000 Mw/h of renewable energy. Steve Saryer, general secretary of the Council reported that the meeting with the Minister was promising, and that companies will gradually return to invest in Argentina. The delegation included representatives of leader companies  like Vestas, Gamesa, Iberdrola, Siemens, Det Norske Veritas, NRG Systems, Mainstream Renewable Power, AWS Truepower and Vaisala, among others. Sawyer stated that they expect that the prices per Mw/h will at least double in the first auction the prices that are being paid in countries like Perú, which are around US$ 30 per Mw/h. Law has a maximum cap of US$ 113 per Mw/h