New hydrocarbubon law: changes in royalties, mining and local suppliers
The Government of Mendoza submitted to the Legislature a draft new Hydrocarbon Law (File 88528) that repeals Law 7526, in effect since 2006, and Law 9137. The initiative was filed on Friday, September 18 by the Chamber of Deputies and seeks to adapt the provincial framework to the Bases Law and a scenario in which Vaca Muerta has become the axis of Argentine production.
The submission letter, signed by Governor Alfredo Cornejo and Energy and Environment Minister Jimena Latorre, states that Mendoza has a “dual matrix.” On one hand is the Cuenca Cuyana, in the north and center, with mature conventional deposits that require incentives to sustain production. On the other is the Cuenca Neuquina, in Malargüe, where the “Mendoza tongue” of Vaca Muerta is located, an unconventional resource that requires large-scale investments and predictable rules.
Royalties: 15% base rate plus a discretionary factor
The most visible change is in royalties. The current law sets a general rate of 12%. The draft proposes a base value of 15% for biddings, to which each bidder adds a percentage “X” of their choosing, which can even be negative. The preponderant factor for awarding will be the amount of committed investments.
For mature fields, the Executive may reduce the royalty to as low as 5% if the company meets its investment plan, and create regimes that lower it further to reactivate idle wells, exploit heavy crude or apply tertiary recovery. The draft also incorporates the unconventional exploitation concession, a figure that the 2006 law did not contemplate, and exempts from bidding the conversion of concessions toward that regime.
Vacant areas and private initiative
In areas without a titleholder, the Executive may contract on a direct and exceptional basis with EMESA or operators already established to operate them for up to 18 months, until they are awarded by bidding. Additionally, any company may submit projects on free areas or those approaching expiration. If declared of public interest, the initiator will have right of first refusal on equal terms.
Coexistence with mining
The text addresses the overlap between oil and mining rights, an issue that gains weight with advancing mining exploration. Mere overlap does not cause the forfeiture of any right, and titleholders must coordinate their activities. If coexistence proves impossible, the Executive Power decides, with intervention from both authorities and prior hearing, considering temporal priority, executed investments and environmental and social impacts. The postponed project may claim indemnification from the prioritized one.
Suppliers and local employment
On this point, the wording is more limited than the discourse. The law requires companies to include in their work plans programs to expand their local supplier network and to tend to prioritize Mendoza labor or residents and local market purchases, provided there are equivalent conditions of capacity, quality and price. It also requires a sworn statement of best practices, public and updated every two years, with information on local suppliers and labor training.
The draft does not set percentages or targets, does not create a supplier registry and does not provide a specific penalty for non-compliance. Nor does it include local content as a scoring criterion in the bidding, although the authority could incorporate it in the tender documents. Regulations will be the responsibility of the Executive.
The Neuquén model
Neuquén followed another path. Its Law 3,338 requires affected companies to present annual supplier development plans, and according to the PyME-ADENEU Center, certified Neuquén firms absorbed 46% of contracted amounts in the second half of 2025. More than 1,000 SMEs already hold the Neuquén company seal, which opens the door to operators and their major contractors. Even so, the report itself notes that the pending challenge is for local capacities to scale at the pace of the sector.
The scale of the business explains the urgency. Neuquén reached its highest historical oil production in January 2026, with 610,715 barrels per day, and Vaca Muerta accounts for 97% of the province's oil.
Other points
Environmental obligations cover the entire project life cycle, including well closure and abandonment, and do not expire when the company leaves the area. Fines will be expressed in liters of premium gasoline, from 20,000 to more than two million liters for the most serious offenses, with the possibility of doubling in case of aggravating factors. A Provincial Registry of Hydrocarbon Activity and a Control Fee of up to 0.8% of royalties and fees are created.
Now the draft must be debated in the Legislature. Questions remain open about how local preference will be regulated and whether Mendoza will back the promise of employment and SMEs with concrete tools.