Law For The Promotion For Investment In Exploration And Exploitation Of Hydrocarbon.

Original Language Title: LEY DE PROMOCIÓN PARA LA INVERSIÓN EN EXPLORACIÓN Y EXPLOTACIÓN HIDROCARBURÍFERA .

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LAW 767

LAW OF DECEMBER 11, 2015

EVO MORALES AYMA

CONSTITUTIONAL PRESIDENT OF THE PLURINATIONAL STATE OF BOLIVIA

By the time, the Plurinational Legislative Assembly, has sanctioned the following Act:

THE PLURINATIONAL LEGISLATIVE ASSEMBLY,

DECRETA:

PROMOTION LAW FOR INVESTMENT IN

EXPLORATION AND EXPLOITATION OF THE HYDROCARBON

CHAPTER I

GENERAL PROVISIONS

Article 1. (OBJECT). This Law aims to promote investments in the activities of

exploration and exploitation of hydrocarbons, which are declared of national interest throughout the territory of the Plurinational State of Bolivia.

Article 2. (REACH). This Law has the following scope:

I. The signed Oil Services Contracts and to subscribe, when Crude Oil is the main hydrocarbon

produced in the Selected Area or Areas of Exploitation within the Contract area.

II. The Petroleum Service Contracts subscribed and to subscribe, when Natural Gas is the main hydrocarbon

produced in the Area or Areas of Exploitation selected within the Contract area.

III. The hydrocarbon Exploration and Exploitation activities conducted by Yacimientos Petrolíferos Fiscales Bolivianos-YPFB directly.

Article 3. (SCOPE OF APPLICATION). They are subject to the application of the provisions laid down in

this Law, national or foreign legal persons, carrying out activities of exploration and exploitation of hydrocarbons in the forms established in the current legal order.

Article 4. (PURPOSE). This Law aims, to promote investments that will allow

to increase the reserves and production of hydrocarbons in the country, through economic incentives to guarantee security, sustainability and sovereignty energy in the country.

Article 5. (DEFINITIONS). In addition to the definitions set out in Law No. 3058 of May 17 of

2005, of Hydrocarbons, for the purposes of the application of this Law, the following definitions are established:

Gas Field Dry. It is that field that has hydrocarbons that are in gaseous form in the reservoir and do not condense to surface or generate a minimum quantity of liquids.

Condensed. Mix of hydrocarbons that are subject to conditions Original reservoir is in a gaseous state and under pressure and temperature conditions surface is obtained in liquid state associated with the production of natural gas.

Contract of Petroleum Services. These are the contracts entered into or to be subscribed by YPFB with public, mixed or private companies, Bolivians or foreign, whose main object is the exploration and exploitation of hydrocarbons in exchange for receiving a reward or payment for its services.

Gasiferous field. It is the field that produces natural gas as a main hydrocarbon. with a Gas/Oil ratio exceeding three thousand five hundred (3,500) Cubic Feet of Gas per barrel and whose associated condensate has a gravity greater than 55 ° API? American Petroleum Institute.

Marginal Gas Field. It is that developed gas field, which has produced ninety percent (90%) or more, of its proven in situ gas reserves, as a result of which, it is in the decline stage of its gas.

Small Gasiferous Field. It is that developed gas field, whose level of fiscalized production of gas, associated condensate and natural gasoline, expressed in average flow rate Monthly daily oil equivalent barrels, is equal to or less than three thousand Five hundred (3,500) barrels per day equivalent of natural gas, associated condensate and natural gasoline. No field that has any remaining reserves of natural gas (Proven Reserves-Separator Gas) above zero point five (0.5) Trillion cubic feet may be classified as a small gas field.

Field Oil. It is the field that produces oil as a main hydrocarbon, with a gravity less than or equal to 55 ° API and a Gas/Oil ratio of less than or equal to three thousand five hundred (3,500) Cubic Feet per Barril.

Oil Crude. It is the portion of oil that exists in the liquid phase in natural underground reservoirs

CHAPTER II

INCENTIVES TO PROMOTE INVESTMENTS IN HYDROCARBON EXPLORATION AND EXPLOITATION ACTIVITIES

Article 6. (INCENTIVE FOR CRUDE OIL PRODUCTION).

I. There are incentives applicable to crude oil production per barrel:

In Traditional Zone, the incentive will be determined according to the international price of oil subject to regulation and will have a minimum amount of 30 $us/ Bbl and maximum of 50 $us/Bbl.

In Non-Traditional Zone, the incentive will be determined according to the international price of oil subject to regulation and will have a minimum amount of 35 $us/ Bbl and maximum of 55 $us/Bbl.

II. The incentive per barrel of crude oil, within the margins set out in points (a) and (b) of Paragraph I of the

this Article, shall be variable and subject, at least, to the international price of Crude Oil and production, in order to comply with the purpose of this Law.

III. The oil production incentive will only apply when production is assigned to the domestic market and will be adjusted in case of modification of the domestic market price conditions for Crude Oil.

Article 7. (INCENTIVE FOR THE PRODUCTION OF CONDENSATE ASSOCIATED WITH NATURAL GAS).

I. Incentives are established for the production of Condensado associated with natural gas resulting from the exploitation of

new fields or new reservoirs of natural gas discovered from the publication of this Law:

In Traditional Zone, the incentive will be determined according to the international price of oil subject to regulation and will have a minimum amount of 30 $us/ Bbl and maximum of 50 $us/Bbl.

In Non-Traditional Zone, the incentive will be determined based on the international price of oil subject to regulation and will have a minimum amount of 35 $us/ Bbl and maximum of 55 $us/Bbl.

II. The incentive per barrel of oil, within the margins established in points (a) and (b) of Paragraph I of the

this Article, will be variable and will be subject, at least, to the international price of Crude Oil and production, to object to comply with the purpose of this Law.

III. The incentive to the production of the Condensado associated with the natural gas, will only be applied when the production is assigned

to the internal market and will be adjusted in case of modification of the conditions of the price of the internal market for the Condensed.

Article 8. (TERM AND CONDITIONS FOR THE APPLICATION OF THE PRODUCTION INCENTIVE

OF CONDENSATE ASSOCIATED WITH NATURAL GAS).

I. The incentive in Traditional Zone, as set out in Article 7 of this Law, will last up to twenty (20) years, starting from the regular commercial production, which will be defined according to technical and economic criteria, to be regulated by Supreme Decree.

II. The incentive in Non-Traditional Zone, as set out in Article 7 of this Law, will last up to

twenty-five (25) years, starting from the regular commercial production, which will be defined according to technical criteria and economic, to be regulated by Supreme Decree.

III. To be able to benefit from the incentive set forth in Article 7 of this Law, the Service Contracts

Oil companies that are effective in the publication of this Law, must necessarily begin activities Exploratory drilling before January 1, 2019.

IV. To be able to benefit from the incentive set forth in Article 7 of this Law, the Service Contracts

Petroleum in Traditional Zone, with an effective date after the publication of this Law, must necessarily begin exploratory drilling activities up to the last day of the fourth year of the Contract, as of the effective date indicated.

V. To be able to benefit from the incentive set forth in Article 7 of this Law, the Service Contracts

Petroleum in Non-Traditional Zone, with an effective date after the publication of this Law, must necessarily begin exploratory drilling activities up to the last day of the fifth year of the Contract, as of the effective date indicated.

VI. For the purpose of the application of the paragraphs III, IV and V of this Article, it is understood to start activities of

exploratory drilling, to the start date of the Disassembly, Transfer and Assembly-DTM, of the drilling team

Article 9. (INCENTIVES FOR THE ADDITIONAL PRODUCTION OF GAS CONDENSATE

NATURAL).

I. An incentive is established for the additional production of Condensado associated with natural gas, coming from

fields that are in operation at the date of publication of this Law.

II. The parameters for the application of the incentive will be based on a baseline, which should be considered,

at least, the current reserves and additional investments to those approved by YPFB, according to regulatory Supreme Decree.

III. The incentive will have a minimum amount of 0 $us/ Bbl and will be able to reach a maximum amount of 30 $us/Bbl, and will be

applicable for Traditional Zone. The amount of the incentive will be variable and will be subject, at least, to the international price of Crude Oil.

IV. The incentive for the additional production of the Condensado associated with natural gas will only apply when production is

assigned to the internal market and will be adjusted in case of modification of the conditions of the domestic market price for Condensed.

V. The fields may benefit from this incentive for a period of up to ten (10) years from the publication of this Law, in accordance with the update of the Development Plan to be approved by YPFB, which incorporates the established baseline in Paragraph II of this Article.

Article 10. (DETERMINATION OF INCENTIVE TO GAS FIELDS WITH DRY GAS RESERVOIRS, MARGINAL AND/OR SMALL FIELDS). The incentive for those fields classified as Gasic Fields with Seco Gas Reservations, marginal and/or small, will consist of the priority allocation of natural gas export markets according to parameters and procedures

CHAPTER III

INVESTMENT PROMOTION FUND IN

EXPLORATION AND EXPLOITATION

ARTICLE 11. (EXPLORATION AND EXPLOITATION INVESTMENT PROMOTION FUND

HYDROCARBON-FPIEH). The Fund for the Promotion of Investment in Exploration and Exploitation of Hydrocarbons-FPIEH is created with resources from the Direct Tax to Hydrocarbons-IDH, to encourage the exploration and exploitation of hydrocarbons in the Plurinational State of Bolivia.

Article 12. (FINANCIAL YEAR).

I. The FPIEEH will be financed with twelve percent (12%) of the resources coming from the IDH, before the distribution to the

Autonomous Territorial Entities, Public Universities and all the beneficiaries provided for in Law No. 3058 of 17 May 2005, Law No 3322 of 16 January 2006, and Regulatory Supreme Decrees, applicable on the resources of IDH received from the month of January of the year 2016, considering the audited production of the corresponding month, of current regulations.

II. The proceeds obtained by the application of this Law will be distributed among all beneficiaries according to

current regulations.

Article 13. (ADMINISTRATION AND INVESTMENT OF FPIEEH RESOURCES).

I. The resources of the FPIEEH will be automatically paid into an account enabled at the Central Bank of Bolivia-BCB.

II. The resources of the FPIEEH will be in the custody of the BCB, being able to invest these resources in instruments

financial, following the established guidelines for the administration and investment of the International Reserves, guaranteeing the liquidity of the FPIEEH. The returns on investments made must be incorporated into the FPIEEH.

III. The resources of the FPIEEH and the returns they generate as a result of the investment, will not be the object of the

payment of taxes, levies, duties and others of any nature established in the Plurinational State of Bolivia and they shall not be subject to any foreign or foreign exchange transfer fees made by the BCB.

IV. The resources of the FPIEEH and the returns they generate as a result of the investment, are unembargable and not

may be subject to precautionary, administrative or judicial measures.

V. The Fund's resources shall be used solely against the delivery of the production of Petroleum or Condensed resulting from successful exploration and exploitation activities, subject to the scope of this Law, ensuring that These economic resources, after the commercialization of the hydrocarbons, generate revenues in favor of all the beneficiaries.

VI. At the end of the application of the incentives, the remaining balances of the FPIEEH, will be distributed among the

beneficiaries of the HDI in the percentages of co-participation of the tax, established in current regulations.

VII. This provision will be regulated by Supreme Decree.

CHAPTER IV

RESOURCES FOR FINANCING INCENTIVES TO THE

INVERSION EN EXPLORATION AND EXPLOITATION OF OIL

Article 14. (RESOURCES AND PROCEDURE FOR THE INCENTIVES FOR THE PRODUCTION OF CRUDE OIL).

I. The financing of the incentives applicable to the production of Crude Oil for existing fields in Zone

Traditional and in Non-Traditional Zone, will be made through the issuance of Tax Credit Notes-NOCRE's.

II. The NOCRE's will be issued by the Ministry of Economy and Public Finance, at the request of YPFB, prior

authorization of the Ministry of Hydrocarbons and Energy, based on the results obtained from the application of Article 6 of the Present Law.

III. The financing of the incentives applicable to the production of Crude Oil for new fields in Zone

Traditional and in Non-Traditional Zone, will be carried out through resources from the FPIEEH.

IV. For the purposes of applying paragraph III of this Article, the Ministry of Economy and Public Finance, a

request for YPFB, shall allocate the resources of the FPIEEH, after authorization from the Ministry of Hydrocarbons and Energy, on the basis of the result obtained from the application of the calculation formula set out in the Supreme Regulatory Decree.

Article 15. (RESOURCES AND PROCEDURE FOR PRODUCTION INCENTIVES

ADDITIONAL CONDENSATE ASSOCIATED WITH NATURAL GAS).

I. The financing of the incentives applicable to the additional production of Condensado associated with Natural Gas, will be

made through resources from the FPIEEH.

II. The Ministry of Economy and Public Finance, at the request of YPFB, after authorization from the Ministry of

and Energy, will allocate the resources of the FPIEH, based on the result obtained from the application of the formula calculation established in the Supreme Regulatory Decree.

Article 16. (RESOURCES AND PROCEDURE FOR INCENTIVES TO THE PRODUCTION OF

CONDENSATE ASSOCIATED WITH NATURAL GAS). The financing of the incentives applicable to the production of Condensado associated with natural gas, as a result of new fields or reservoirs discovered, will be made through the FPIEEH according to the following procedure:

Ministry of Economy and Public Finance, at the request of YPFB, after authorization of the Ministry of Hydrocarbons and Energy, will allocate the resources of the FPIEH, based on the result obtained from the application of the formula of calculation established in Regulatory Supreme Decree.

In the event that FPIEEH's resources are insufficient to grant the incentive, the Ministry of Economy and Public Finance is authorized to issue NOCRE's as a mechanism to ensure the country's energy security.

The issuance of NOCRE's will be carried out by the Ministry of Economy and Public Finance, at the request of YPFB, after authorization from the Ministry of Hydrocarbons and Energy, based on the results obtained from the application of the formulas established in the Supreme Regulatory Decree.

Article 17. (CONTRACT MODE).

I. For the execution of exploration and exploitation activities, YPFB will be able to subscribe, both in reserved areas and in

free areas, Petroleum Services Contracts with public, mixed or private, Bolivian or foreign companies, under any of the current contractual modalities.

II. The Ministry of Hydrocarbons and Energy, will establish the guidelines for the subscription of these contracts and for the

selection of companies, through Ministerial Resolution.

Article 18. (PROCESSING OF CONTRACTS). The negotiation, authorization and approval process of

the Petroleum Services Contracts, must be prioritized in the administrative and legislative field.

Article 19. (INCENTIVES FOR YPFB). When YPFB performs exploration and exploitation activities of

Crude Oil and Natural Gas, it will benefit from the incentives set out in this Law, whose operating conditions will be determined in regulation.

TRANSIENT DISPOSITION

ONLY.

I. This Law, as appropriate, will be regulated by Supreme Decree, within a period of up to ninety

(90) calendar days from its publication.

II. The Petroleum Services Contracts authorized and approved by the Plurinational Legislative Assembly, with

prior to the enactment of this Law, will retain the terms with which they were approved in respect of the new ones. delimited zones.

III. As long as Article 6 of this Law is governed, the application of Supreme Decree No. 1202 of 18 April 2012 shall be maintained in force.

IV. By Supreme Decree a new delimitation of the Traditional Zone and Non-Traditional Zone will be performed, in a

deadline of up to ninety (90) calendar days since the publication of this Law.

FINAL DISPOSITION

ONLY. The third paragraph of Article 42 of Law No. 3058 of 17 May 2005, of

Hydrocarbons, with the following text:

"If the fields of the area of the operating contract are in regular commercial production at the end of the contract period, YPFB may operate on its own, and, on the basis of YPFB's justification, may be operated by a contract under the service delivery scheme or with the contract holder by subscription of an addendum for the only time, the period of which may be until the reserves are exploited certified within the time limit of the main contract. In the latter case, the addendum may be subscribed within a period of up to five (5) years before the end of the main operating contract, and YPFB shall negotiate for that purpose new technical, economic conditions as long as they agree the interests of the State. Once the subscription of the addendum has been effected and for the purposes of its approval, it must be submitted to the Plurinational Legislative Assembly."

OPENING AND ABROGATORY PROVISION

ONLY.

I. Article 4 of Supreme Decree No 29130 of 13 May 2007, as amended by Supreme Decree

0459

24 March 2010, is repealed.

II. All provisions contrary to this Law shall be abrogated and repealed.

Remit to the Executive Body for constitutional purposes.

It is given in the Session Room of the Plurinational Legislative Assembly, on the nine days of the month December

year two thousand fifteen.

Fdo. Jose Alberto Gonzales Samaniego, Lilly Gabriela Montano Viana , Ruben Medinaceli Ortiz, Maria Argene

Simoni Cuellar, A. Claudia Torrez Diez, Erik Moron Osinaga.

Therefore, I enact it so that it has and will comply as the Law of the Plurinational State of Bolivia.

Palace of Government of the city of La Paz, at the eleven days of the month of December of the year two thousand fifteen.

FDO. EVO MORALES AYMA, Juan Ramón Quintana Taborga, Luis Alberto Arce Catacora, Felix Cesar

Navarro Miranda MINISTER OF MINING AND METALLURGY AND ACTING OF HYDROCARBONS AND ENERGY, Ana Veronica Ramos Morales.