Tax benefits
In a strategic move that promises to reconfigure Argentina’s energy investment landscape, the national government, through Energy Secretary Daniel González, announced yesterday the extension of the Large Investment Incentive Regime, known by its Spanish acronym RIGI, to the entire upstream hydrocarbons segment, that is, to the core stage of drilling, development and well production.
The decision was revealed Thursday during the traditional Oil and Gas Day luncheon held annually by the Argentine Institute of Oil and Gas (IAPG) and marks a turning point in the country’s energy policy. The RIGI, originally conceived under the Bases Law — a sweeping reform package promoted by President Javier Milei to overhaul Argentina’s regulatory, fiscal and economic framework — had mainly benefited midstream projects, primarily the construction of long-distance pipelines for large-scale exports, focused on liquefied natural gas, or LNG.
The measure did not arise out of nowhere, but rather responds to an explicit and key request from the Province of Neuquén, the engine of the Vaca Muerta formation. Its governor, Rolando Figueroa, had been insisting that unconventional upstream projects require large investments and also require inclusion within this incentive framework. The objective is to unlock an even greater volume of capital, consolidate production expansion and enhance the basin’s export profile over the longer term.
González said that in the coming days the fine print of the new scheme will be defined, but he previewed two unavoidable criteria for qualification: investments must be aimed at incremental oil or gas production and must meet a minimum investment amount, maintaining the floor of $200 million that already applies to other projects under the RIGI.
Greater enthusiasm in Vaca Muerta
The expansion of the RIGI represents a radical change in the regulatory framework for companies engaged in hydrocarbon exploration and production in Argentina, granting them a longer-term incentive. The idea is to level investment conditions with global energy hubs such as the Permian Basin in the U.S. or Brazil’s pre-salt.
For upstream operators, this means they will likely gain access to a series of tax, customs and foreign-exchange benefits, previously reserved for mega LNG investments, which will now apply to their new drilling and development projects that generate additional crude or gas production. It is believed that the incentive package will include the promise of 30-year fiscal stability, essential for planning oil projects that have long maturation periods, a reduction in the corporate income tax rate, an exemption from import duties on capital goods critical to operations, such as drilling and fracturing equipment, and, crucially, free availability of the foreign currency generated by exports to meet capital payments, profits and dividends.
This combination of incentives would translate directly into an improvement in expected profitability and a significant reduction in the regulatory risk associated with investments in the country. All of this should drive an acceleration in investment, especially those aimed at maximizing production for export. All eyes are on Vaca Muerta because conventional fields can hardly aspire to large investments in pursuit of incremental production. The measure would come in a context of falling barrel prices and crude oversupply, something that has already begun to worry operators.
Both the national government and the government of the Province of Neuquén expect this new framework to accelerate the inflow of capital, trigger additional production of barrels and cubic meters, and underpin the export curve needed to continue guaranteeing an energy surplus in 2026, while also representing higher tax revenues and, over the longer term, a strengthening of energy integration with neighboring countries such as Chile, Brazil, Paraguay and Uruguay, transforming local operators into key players in regional energy supply.