Through Decree No. 71/2015, published in the Official Gazette of the Province of Chubut on February 12, 2015, the Province established a new promotional scheme for licensees of hydrocarbon concession’s (“Promotional Scheme”), in order to incentive investments and sustain oil and gas production amid dropping crude prices.

According to Decree 71/2015, licensees of hydrocarbon concessions that increase their monthly production are eligible for the Promotional Scheme, under which refunds over the amounts paid in concept of royalties and Hydrocarbon Compensation Bonus for Sustainable Development (“Compensation Bonus”) are determined, as detailed below:

i. The Province of Chubut will pay to the hydrocarbons concessionaires an amount equivalent to 50% of the royalties and Compensation Bonus when the international price of crude oil is less than US$50;

ii. The Province of Chubut will pay to the hydrocarbons concessionaires an amount equivalent to 33.32% of the royalties and Compensation Bonus when the international price of crude oil is between US$50 and US$55;

iii. The Province of Chubut will pay to the hydrocarbons concessionaires an amount equivalent to 16.67% of the royalties and Compensation Bonus when the international price of crude oil is between US$55 and US$60;

The value of the international price for reference will be determined by the price of the Brent barrel.

Law No. 27,007 provides the possibility for licensees of a hydrocarbon concession to apply for a royalty reduction up to 50% for tertiary production, extra-heavy oil and offshore projects. The benefits granted by the Promotional Scheme could apply jointly with this royalty reduction, in order to inventive the offshore projects.

The Promotional Scheme will be in force up to June 30, 2015. However, it could be extended, depending on the economical situation of the hydrocarbon sector.