Mendoza's Senate gave final approval this week to a new Hydrocarbons law by a wide margin, closing the legislative process on a reform that rewrites the province's rules for oil and gas activity. The vote gives the province a new framework for future licensing, production recovery in mature fields and non-conventional development.
The approval matters now because the law arrives after 20 years under a framework that had not kept pace with changes in production, technology and regulation. It also completes the treatment of a bill sent by the Executive after it had already cleared the lower chamber on October 21 with 39 votes in favor and 4 against.
Jimena Latorre said the reform is meant to give investors predictability and to project the development of Mendoza's hydrocarbon resources for the next 50 years. Her argument was direct: the province needs a rulebook that can support both aging conventional fields and the potential tied to Vaca Muerta, without treating them as the same business.
The law does that by setting a specific regime for non-conventional activity and by creating incentives to recover output in mature areas. It also ratifies provincial control over hydrocarbon resources and updates the rules to reflect the last two decades of technological, productive and regulatory change, including the national Ley Bases.
The sharpest change is in royalties. The new regime sets a reference rate of 15% for future hydrocarbon tenders. Under the old rule, the general royalty was 12% on production and could be reduced to 5% depending on each project. The new text does not lock the province into one number for every case: companies may offer higher or lower percentages depending on the economic and productive conditions of each area, and the award process will also weigh the overall value of the project, expected output and committed investment.
That flexibility is the law's strength and its risk. A reference rate can attract capital, but the final outcome will depend on how much room Mendoza leaves in each tender and how the province balances investment claims against the value of its own resources. The environmental side also got tougher, with the law reinforcing requirements rather than leaving them at the general level that had governed the sector before.
What happens next is not another legislative vote. The real test begins with the first tenders under the new regime, where Mendoza will have to apply the royalty formula, the environmental controls and the differentiated treatment for mature fields and non-conventional projects in a way that proves the reform is more than a promise.
