Neuquén tells oil producers to pay up or face legal action

Tuesday, March 23, 2004

Argentina's Neuquén province has threatened to take legal action against oil companies that do not pay some 50mn pesos (US$17.2mn) in outstanding royalties by Thursday, provincial energy director Eduardo Carbajo said in a statement.

Neuquén wants the companies to pay royalties on oil production according to their original contracts with the province and not according to a national crude price agreement that has fixed the domestic crude price at US$28.50 a barrel since early 2003.

The difference, excluding taxes and interest, was 50mn pesos in January, Carbajo said.

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Companies operating in Neuquén were advised on March 18 that they had one week to pay. "If we don't receive an answer or receive payment, the province will take legal action against these companies to obtain the money they owe us," Carbajo said.

Oil producers and refiners signed an agreement last Friday (Mar.19) to extend the crude price-fixing arrangement for another 60 days until end-April.

However, "the province's royalties are 12% of the value of the contracts and that is fixed in the new provincial hydrocarbons law," Carbajo said.