The agreement, signed on November 18, 2025, with the participation of national ministers, provincial officials, oil companies, and unions, seeks to restore economic viability to aging oil fields facing rising operational costs and diminishing margins. The tax relief is expected to take effect from January 2026 after additional provincial measures are finalized.
The Golfo San Jorge Basin, shared between Chubut and Santa Cruz provinces, has experienced a steep decline in output, losing approximately one million barrels compared to the previous year. Increasing extraction costs—up 30% to 40% in 2024 due to inflation in services, energy, and labor—have squeezed profitability, with EBITDA margins dropping from 40% in 2023 to around 30% last year. This decline has severely impacted Chubut’s public finances, where oil royalties represent about one-third of provincial revenues and have fallen 13.6% year-on-year through the first nine months of 2025.
Recognizing the sector’s strategic importance, the national government agreed to forgo around $60 million annually in export tariffs, redirecting that fiscal relief toward operational expenses and capital investments to stabilize and boost production. Concurrently, Chubut committed to lowering its provincial oil royalties by up to four percentage points—from the standard 12% to as low as 8% or a variable scheme—to encourage tertiary recovery projects that extend the life of mature fields.
Oil companies, represented by the Cámara de Exploración y Producción de Hidrocarburos (CEPH), pledged to reinvest the savings generated by the elimination of export duties to slow down the production decline. A permanent competitiveness committee, including representatives from the national and provincial governments, unions, and companies, will monitor costs and seek efficiency gains.
The agreement is part of a broader government strategy to ease the tax burden on energy producers, promote new investments, and establish stable, transparent rules for the sector’s long-term growth. Following Chubut’s lead, similar deals are underway with neighboring provinces Santa Cruz and Neuquén, signaling a coordinated effort to support Argentina’s conventional oil industry amid global and domestic challenges.
Beyond the fiscal and operational stakes, the move has crucial implications for Argentina’s domestic fuel supply. The crude produced in the Golfo San Jorge Basin, especially the heavier oil grades, is vital for national refineries that require a specific blend of heavy and light crudes to optimize diesel output. Without intervention, Argentina risks having to import heavy crude within three years, adding pressure on foreign currency reserves and potentially driving up fuel prices for consumers.
Chubut’s Governor Ignacio “Nacho” Torres stressed the accord’s comprehensive benefits: fiscal relief for companies, increased production capacity, and job preservation for the thousands dependent on the oil sector. He highlighted the collaborative nature of the agreement, involving government, unions, and industry players, which together created a shared vision to revive the basin’s fortunes and sustain the regional economy.
The signing ceremony in Buenos Aires brought together key figures including Luis Caputo, Minister of Economy; Diego Santilli, Minister of the Interior; Daniel González, Secretary of Coordination of Energy and Mining; and Manuel Adorni, Chief of Cabinet. Union leaders from petroleum and gas sectors also participated, underscoring the broad sectoral consensus.
This historic accord marks a decisive step toward stabilizing Argentina’s conventional oil production amid a landscape dominated by the emerging shale plays of Vaca Muerta. By targeting mature fields with tailored fiscal and operational incentives, authorities hope to maintain the backbone of the country’s hydrocarbon industry, securing energy supply and regional development for years to come.
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This article was curated and published as part of our South American energy market coverage.
