Regulation of the Regime of Hydrocarbon Sovereignty of Argentina

On July 27, 2012, the Decree Nº 1277/2012 (the “Decree”) was published in the Official Gazette. The Decree regulates the Regime of Hydrocarbon Sovereignty, Law No. 26.741 (the “Law”).

The Law declares that fifty one percent (51%) of the shares of YPF SA and Repsol YPF SA are of public interest and subject to expropriation. Also, the Law declares as a national public interest the achievement of self-sufficiency in hydrocarbons, and the exploration, exploitation, industrialization, transportation and marketing of hydrocarbons.

The Decree provides for the creation of a National Plan of Hydrocarbon Investment (the “Plan”), which will have as strategic axes the increase and maximization of investments, to ensure the self-sufficiency and sustainability of the activity in medium and long term.

The Plan tends to promote the industrialization and marketing of hydrocarbons with high added value, and to protect the interest of consumers such as price, quality and availability of hydrocarbon derivatives.

For the purpose of annually developing the Plan, a Commission of Strategic Planning and Coordination shall be created (the “Commission”). The Commission will establish minimum premises and goals for investment in exploration, exploitation, refining, transportation and marketing of hydrocarbons to achieve the aims of the national hydrocarbon policy.

The implementation of this policy will require a National Registry of Hydrocarbon Investment (the “Registry”). Natural and legal persons developing activities related to the exploitation of hydrocarbons and fuel must be registered in the Registry.

The registered persons must provide technical, quantitative and/or economical information, needed to evaluate the performance of the sector and to design the Plan.

Finally, the Decree provides for penalties in case of non compliance. Prior intimation of the Commission, the penalties can be: warning, fines, suspension or cancellation of the registration, invalidity or revocation of licenses or permissions. In all cases, the Tax Authorities and the corresponding judicial authorities will be informed to take all corresponding measures under their jurisdictions.

The Decree came into force on July 27, 2012.

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