Unconventional hydrocarbons are today's trending topic in the oil and gas business. The U.S. shale boom, which is boosting the country's economy, makes one wonder if the U.S. experience with unconventional hydrocarbons can be replicated elsewhere.
Significant shale plays exist in several countries, among which Argentina ranks in the "top five." The "Vaca Muerta" shale play located in the Argentine Province of Neuquén, became globally known during 2011, as many experts see it as the country's salvation in terms of crude oil and natural gas supply, and even as a revival of a Southern Cone energy-integrated market.
In an attempt to recreate a friendly investment environment to foster shale activity, the Argentine federal government recently issued a new promotion regime for the development of shale oil and gas projects. On July 11, 2013, the government issued Decree 929/13 creating a new "Investment Promotion Regime for the Exploitation of Oil and Gas" (the "Promotion Regime").
On July 15, 2013, the Strategic Planning and Coordination Commission for the National Hydrocarbons Investment Plan (the "Commission"), the enforcement authority of the Promotion Regime, issued Resolution 9/13 supplementing certain aspects of Decree 929/13.
The Promotion Regime
Companies interested in participating in the Promotion Regime must:
hold exploration permits and/or production concessions granted by the federal government and/or the provinces or be associated with a company that holds such permit or concession rights (e.g., through a production sharing contract with YPF);
register with the "National Registry of Hydrocarbons Investments";
have presented an annual investment plan; and
submit to the Commission an investment project to develop unconventional hydrocarbons for a minimum amount of USD 1 billion. This amount must be effectively invested in Argentina during the first five years of the project.
Following the fifth anniversary of the start-up of the investment project, the investors shall have the right to:
export 20 percent of the oil and gas produced under the investment project, exempt from export taxes;
maintain abroad the export proceeds; and
obtain for the 20 percent exportable production, a price that is not lower than the export parity price when domestic production of hydrocarbons is insufficient to cover domestic needs and exports of oil and gas are prohibited. 
The benefits shall cease upon the expiration of the concession, early termination of the concession due to breach of the concessionaire, bankruptcy of the concessionaire, or failure to comply with the investment project.
Unconventional Hydrocarbons Concession
Decree 929/13 creates a new type of concession, the Unconventional Hydrocarbon Concession, although acknowledging that all production concessions grant the exclusive right to exploit both conventional and unconventional hydrocarbon reservoirs. Holders of existing concessions that qualify under the Promotion Regime may have their concessions subdivided into new blocks to be regulated by new unconventional hydrocarbon concessions with a term of 25 years extendable, with the simultaneous granting of the new concession for ten additional years. The decree allows existing concessionaires that have discovered shale resources within their concession areas, but whose concessions are nearing expiration, to obtain new unconventional concessions for 35 years. This system only benefits existing concessionaires. Any new participant would have to enter an association with an existing concessionaire.
Argentina created a special regulatory system to promote investment in an industry that is key for its economic development, especially taking into account that hydrocarbon imports have increased greatly as a result of declining production. As of March 2013, Argentina was paying an average of USD 10-12 per MMBtu for natural gas from Bolivia and USD 16-18 per MMBtu for LNG.  In a country with technically recoverable shale gas reserves estimated at 802 TCF, a new unconventional hydrocarbons regime seems logical for reasons including:
Its shale resources rank among the world's "top five".
It has a large natural gas domestic market (approx. 42 bcm).
It has a well-developed gas transportation system, both domestic and for export.
There is demand for natural gas in the Southern Cone (mainly, Brazil, Chile and Uruguay) and export opportunities (approx. 8.3 bcm).
Identified shale plays are located in low-density areas reducing the environmental and social concerns.
Successful investors will need to surpass certain obstacles including: a tight and discretionary regulatory system; foreign exchange rules which limit the free entry and exit of funds; lack of stabilization rights with respect to the tax or hydrocarbon regime; and the shadow of a very recent nationalization of YPF.
Argentina needs to tackle in a realistic and pragmatic manner a number of issues from a regulatory, tax, foreign exchange and environmental standpoint and possibly extend additional stabilization rights to attract potential new investors and regain the faith of former ones. In any event, the process has begun and the resources are there.