Energy Advisor

Jose L. Valera, partner at Mayer Brown LLP in Houston: “Argentina’s economy as a whole will hardly get a boost as a result of these measures. This is now dubbed the ‘Vaca Muerta Dollar,’ which is similar to the ‘Soy Dollar.’ Exporters from Argentina are required to sell their dollar export proceeds to the central bank. Within the byzantine system of exchange rates, now only 75 percent of those funds will be converted into pesos at the existing official exchange rate (350 pesos to the dollar) as of Sept. 26, while 25 percent will benefit from a higher rate (778 pesos to the dollar as of the same date). It is better rate overall. The stated purpose of this change is to encourage oil companies to keep producing and exporting and generating dollars for the central bank (which has negative foreign currency reserves). Critics say that this is another way to devalue. Argentina caps the price of crude oil sold in the local market at around $56 per barrel. This compares to…”