BUENOS AIRES - Argentina will require all oil companies operating in the country to submit an annual investment plan for official approval as the government strives to boost production after years of declining output and investment.
Companies operating in Argentina will have to submit a plan to President Cristina Kirchner's top economic adviser, Deputy Economy Minister Axel Kicillof, by Sept. 30 of each year. If the government isn't satisfied, it will send the plan back to the company for revision, according to a resolution in the government's official bulletin Friday. Failure to have the plan approved will result in expulsion from a registry required to operate in the company's oil and gas sector.
The move will affect company's such as Pan American Energy LLC and Petrobras Argentina, the local unit of Brazil's Petroleo Brasileiro.
In addition, Mr. Kicillof's office will set reference prices for each and every cost and sales price for oil and gas sales "which will allow [companies] to cover production costs and obtain a reasonable margin," according to the resolution.
The move is the latest step by the government to take control of the country's power sector.
In May, the government nationalized a 51% stake in the country's top oil producer, YPF SA, taking over the stake from majority shareholder Repsol YPF SA of Spain in a dispute over investment and dwindling production.
Ms. Kirchner accused Repsol of under-investing in exploration and production, which she said has forced the government to import billions of dollars of fuel every year. That saw Argentina turn into a net energy importer for the first time in 17 years.
Copyright (c) 2012 Dow Jones & Company, Inc.
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