Argentine lawmakers approved a revision of the hydrocarbons law to include regulations for shale and offshore oil and gas exploration as the nation seeks to boost investment in its Vaca Muerta formation.

The bill, approved by 130 votes for and 116 against with 1 abstention, must now be signed by President Cristina Fernandez de Kirchner and published in the Official Gazette.

The vote follows four months of negotiations between Fernandez’s government, YPF and governors from 10 provinces about how to distribute revenue from the country’s shale oil reserves, the fourth-biggest in the world. The bill, aimed at regaining Argentina’s self-sufficiency in energy, could triple the country’s oil and gas production in the next 20 years, according to a report by Accenture Plc.

“This new law consolidates the government’s push for energy sovereignty that began with the recovery of YPF in 2012,” Julian Dominguez, president of the lower house said on Twitter, referring to the expropriation of Spanish oil company Repsol SA’s 51% share in YPF. “The bill will give provinces greater income, promote investment and establishes common criteria for regulation.”

Royalties Capped

The overhaul will allow energy companies that invest $250 million over a three-year period to sell 20% of production in international markets without paying export taxes and to keep some export revenue outside the country for shale and conventional projects. The benefit will apply to 60% of output from offshore projects.

The bill separates conventional, shale and offshore to include the latter two areas, which weren’t part of the 1967 law. Shale and offshore fields will have concessions granted for 35 years in order to help companies to amortize investments.

Royalties will be capped at the same level nationwide starting at 12% plus 3% in provincial net income tax. Provinces also will agree to a unified federal auction system that will replace the current one that varies from province to province.

The bill would allow Argentina to boost production to 1.8 MMbbl/d by 2035 from about 550,000 bbl/d now, while gas output could more than triple to 317 MMcm/d (11 Bcf/d), according to a report by Accenture, extracts from which were distributed by the Dublin-based firm’s external public relations representative. That would boost the country’s revenue by $65 billion a year and achieve energy self- sufficiency between 2020 and 2025, the report concluded.

Environment Concerns

The royalties Argentina receives are less than other energy-producing countries in the region, said Hermes Binner, a lawmaker for the Socialist Party and an aspiring presidential candidate for next year’s elections. The bill doesn’t address environmental concerns surrounding shale oil and gas exploration, he said during the debate yesterday.

“Unfortunately today with this hydrocarbon law that we’re discussing in this session we’re losing the opportunity to agree upon a state energy policy that would allow for the necessary investment for the development of Argentina’s oil and the recuperation of self-sufficiency that we’ve lost this decade,” Binner said.

While YPF has partnered with Chevron Corp. and Dow Chemical Corp. to tap the shale deposits, eliminating the energy deficit is at least five years away, Fernandez said April 24. Argentina was the largest importer of spot and short-term liquefied natural gas in the Americas last year.

Shell, Exxon Mobil Corp. and Madalena Energy Inc. are among the companies drilling wells in Vaca Muerta, a Belgium-sized shale formation, in a preliminary phase that may increase investments once the bill is fully approved.