Back from the wilds of Indonesia, and the luxury of Seoul. To find that one of the world’s best oil and gas plays just got even better.
The place is the nation of Argentina. Where recent moves by the government to ensure high prices have made the country perhaps the top place globally for E&P activity right now.
And late last week, Argentina’s lawmakers took another big step in attracting energy investment. Paying for past nationalizations in the oil and gas sector.
The government said Friday that it has reached settlements with both Shell and U.S. midstream major Kinder Morgan. Over long-running suits related to expropriations carried out by Argentina’s previous governments.
In Shell’s case, the injustice happened to the company’s now-susidiary BG Group. Which had filed an arbitration claim against Argentina back in 2003 — claiming that government price controls in the energy sector had reduced the value of BG’s holdings in Argentine natgas distributor MetroGas SA.
Kinder Morgan’s subsidiary El Paso Energy also won a more-recent judgement against Argentina. With a World Bank arbitration council awarding the firm $74 million in damages in 2014 — related to the state expropriation of El Paso’s shareholdings in a number of Argentina energy firms.
Up until now, Argentina’s government had been resisting both of these settlements. But on Friday, officials said they will pay the damages in full — amounting to $217 million in total payouts to the two firms.
That amount is relatively small. But the move is a highly symbolic gesture that Argentina’s new pro-business government is eager to put aside past issues in the energy sector. And give foreign investors the comfort they need to move forward with new projects in the country.
Combined with world-leading financial incentives, and the highly prospective geology of Argentina’s shale plays, this should help cement the country as one of the top spots for E&P activity. Watch for more deals on projects here.
Here’s to bygones being bygones,