Echo Energy, the Latin American focused upstream oil and gas company, provides an update on local oil prices in Argentina, following a government decree that was signed and published on the evening of 19May 2020.
In order to support and promote the local hydrocarbon industry, the government of Argentina signed and published a decree (the "Decree") to, amongst other matters, set a fixed reference price of US$45 per barrel for Argentine standard Neuquén Medanito crude subject to standard local quality discounts. This is significantly above current international prices and provides potential support for local producers such as Echo to increase cash flows in the current climate.
The legislation is effective immediately and will last until the earliest of either 31 December 2020, or until such point ICE Brent exceeds a price of US$45 per barrel for more than 10 consecutive days. This price is subject to periodic review. Furthermore, mandatory requirements have been set, subject to demand, for refiners to pay producers on a fixed price basis and refiners are prohibited from importing crude oil from abroad, providing that certain terms and conditions are met which include supporting local demand.
In light of these positive events, the Company is currently assessing the effect of the Decree upon its Santa Cruz Sur assets, including the prospect of increasing oil production.
