The government has extended Repsol-YPF SA's concession on giant Loma de la Lata field to 2027 from the original expiry in 2017 in exchange for $300 million in cash in three payments over the next 2 years, Treasury Secretary Mario Vicens said.
The agreement sets a precedent for future negotiations, said Vicens, who said that other postponements are being considered. Collecting cash in advance to extend a concession is a major policy switch, because under current regulations concession-holders can opt for a free, automatic extension unless they have failed to carry out required investments or environment protection measures.
As well as the national fee, Neuquen Province-which under constitutional law owns the field-will be granted a $300 million loan at 9% interest by Repsol-YPF's shareholder Banco Bilbao Vizcaya Argentaria SA. Vicens said Repsol-YPF could have been charged more, but Neuquen saw its priority in investments, which will total $500 million in the province by 2005. Plans include a 500 MW power plant, and 5,000 hectares of new forestation, and transport facilities.
