Argentina cuts tariffs on importation of used oil equipment

  • As China protests US ship sailing by island in South China Sea
Argentina’s government published a decree on Thursday eliminating or reducing tariffs on imports of used equipment for oil and natural gas companies, a measure long sought by the industry.
Meanwhile, it included requirements to buy some locally produced goods.

The new rules would go into effect on Friday and apply through June 2019, according to a resolution published in the Official Gazette.

Developing the Vaca Muerta shale fields, some of the world’s largest, is a key goal of Argentine President Mauricio Macri’s administration.

“In many cases, the goods in question cannot be provided by the local industry, in the time frame and quality required to purchase by the sector,” the resolution said.

Tariffs on the imported equipment  will now vary between zero to 14 per cent, down from seven to 28 per cent previously.

However, companies that import second-hand machinery are also required to purchase a certain amount of nationally produced goods.

That amount ranges from 15 per cent of the value of imported equipment up to two years old to 80 per cent of the value of some 10-year-old imported equipment, the decree said.

Imports of equipment older than 10 years would not be allowed.

Macri first promised oil companies tariff reductions on used rigs and other equipment during a visit to Houston in April.

But the government, facing midterm elections in October, then negotiated with local manufacturers who feared used imports would put them out of business

“We have approved that (companies) can come with used equipment,” he said. “There is left over machinery in the United States.

They should bring it.”

In the meantime, China expressed its “strong dissatisfaction” with the U.S. over the Navy’s latest freedom of navigation operation in which a warship sailed past one of China’s man-made islands in the strategic South China Sea.

Foreign Ministry spokesman Geng Shuang said in a statement late Thursday that the U.S. move “severely undermines China’s sovereignty and security, and severely endangers the safety of frontline personnel of both sides.”

China, which claims virtually the entire South China Sea, routinely protests such operations, which President Donald Trump’s administration has continued partly to reassure allies locked in territorial disputes with Beijing.

“China has the firm determination to safeguard its territorial sovereignty and maritime interests,” Geng said. The U.S. move will “compel China to take measures to further raise its capacity to defend national territory,” he said.

A U.S. Navy official told The Associated Press that the destroyer USS John S. McCain sailed past Mischief Reef on Thursday but gave no details. U.S. officials say the military will continue to sail, fly and operate wherever permitted by international law.

Geng said the Chinese navy “identified the U.S. warship, warned and expelled it.”

China and the U.S. maintain different interpretations on international law as applied to the operation of warships, and Beijing has ignored a Hague arbitration court’s ruling that invalidated much of its South China Sea claim.

Additional report from Abc