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The Argentine president Javier Milei is leading an ambitious initiative to revolutionize the Oil. The idea is to free up crude oil exports and allow fuel prices to follow international market dynamics.
In this sense, Milei presented an extensive decree in Congress, standing out as the newest attempt at economic deregulation since he took office in December. His proposals, with significant implications for various sectors, include a specific chapter dedicated to the Oil, marking a radical change in policies implemented since the 1960s.
Freedom in Exports and Pricing According to the International Market
Milei's project attempts to replace old rules that limited exports and allowed government intervention in oil and gasoline prices. These restrictions, over the years, have negatively impacted the development of resources such as the vast shale field known as Vaca Muerta.
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According to the proposal, oil sales abroad will be deregulated, and the government will no longer have the power to set prices in the domestic market. According to energy consultant Juan Jose Carbajales, energy prices will be aligned with international values, representing a historic change in Argentina's tradition of ensuring affordable supplies in the local market.
Elimination of Restrictions and Advantages for Producers: Milei’s idea
An innovative aspect of Milei's proposal is the elimination of the obligation to meet the exclusive demands of the local market. This change, if implemented, will be a significant break with the Argentine stance. Furthermore, the proposal will benefit exploration companies, including YPF SA, a state-owned oil market company, which the new president plans to privatize. Shale investments, hurt by low pump prices, will have a chance to recover.
However, while the legislation is under debate, Milei is already seeking more informal liberalization in the oil markets. The government plans to withdraw from negotiations between producers and refiners, allowing them to freely set prices, signaling a fundamental change in the sector's regulatory approach.
