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Argentina: New Hydrocarbons Law Maintains Uniformity of Legislation at the Federal Level while Recognising Eminent Domain to the Provinces Over Oil and Gas Reserves

José A. Martínez de Hoz , Mining and Oil and Gas Law, Development, and Investment - Book 2 (2007)

Since the first discovery of oil in 1907 there has been an ongoing controversy between the Federal Government and the provinces regarding the eminent domain of the hydrocarbons reserves and the authority to legislate on the matter.

The Constitution delegated to the Federal Government (i.e. Congress and implementing regulations issued by the Executive Branch) the authority to establish the substantive rules governing the exploration and production of crude oil and gas, thus ensuring the uniformity of legislation. However, in spite of this uniformity in legislation, the eminent domain of the hydrocarbons reserves has shifted between the provinces and the Federal Government, and this has had practical consequences in relation to the granting of exploitation concessions and exploration permits, collection of royalties and the level of involvement of the national and provincial authorities.1

Since the Constitutional amendment of 1994 (the “Constitutional Amendment”) the provinces recovered the ownership rights over the natural resources existing in their territory. However, until the recent enactment of Law No 26,197 in December 2006, the provinces were not able to effectively exercise their rights due to implementation delays.

2. Ownership over hydrocarbons reserves

2. a) Historical background

The first attempt to create a hydrocarbons l