Congress passes law aimed at attracting oil investment

Argentina’s Congress gave final approval to a law revamping energy investment regulations, the latest step by President Cristina Fernandez to lure foreign companies into the country’s promising shale sector.

The law, passed by a 130 to 116 vote in the lower house, cuts the minimum investment needed for companies to be exempt from import controls to $250 million from $1 billion.

The same level of investment would also allow oil and gas producers to get around foreign exchange controls by holding on to the hard currency earned from 20 percent of their exports.

The Senate approved the bill earlier this month. Argentina needs to ramp up production from its vast but barely tapped Vaca Muerta shale oil and gas deposits in order to reverse a gaping $7 billion energy deficit that is draining foreign reserves.

Opposition lawmakers accused the government of rushing the law through and handing strategic resources to foreign firms.

Developing Vaca Muerta in the shadow of the Andes mountains and securing energy independence will cost up to $200 billion in the next 10 years, state-controlled energy firm YPF says.

Argentina has just over $27 billion in foreign reserves and a new debt default this year further hindered its access to global capital markets, leaving the government to rely on foreign oil firms to lead the investment drive.