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The government of El Salvador does not claim to have oil or natural gas on its territory.
The Economics Committee approved a reform of the hydrocarbon law that would allow the country to contract for studies to determine the presence of oil and natural gas in Salvadoran territory. The changes include a new name for the regulation: Hydrocarbon Deposits Exploration and Exploitation Act.
The government’s proposal was unanimously approved by the committee’s representatives. This reform, which still has to be approved by the plenary session of the Legislative Assembly, will allow the Lemba River Hydropower Executive Committee (CEL) to employ specialized companies to conduct geophysical and geochemical studies.
“Let’s imagine that we have a large map of the subsoil of El Salvador, which is incomplete and outdated. Multi-client contracts allow us to invite experts with advanced tools to complete and improve that map. They are responsible for collecting information about the place where the Earth is located,” the Directorate General of Hydrocarbons and Mines (DGHM) explained in a statement. Its resources such as oil and natural gas.
The reform proposal encourages multi-client contracts and establishes the legal framework for operation. According to the Salvadoran state, this represents a saving of $1 million for itself, exclusivity of commercialization and ownership of the data, as well as tax benefits for the investment.
he The government of El Salvador does not claim to have oil or natural gasbut you need tools to check whether these resources exist in the country.
Studies conducted in the past are not conclusive, the head of the Executive Committee for Hydroelectricity of the Lemba (CEL), Daniel Alvarez, told deputies of the Economics Committee, so new and more complete studies are needed to determine if El Salvador has the potential to become a producer of hydrocarbons.
“In the past, some studies conducted indicated that what is found in our territorial sea is natural gas,” Alvarez confirmed on Monday.
He added, “Updating the legal framework of the hydrocarbons sub-sector development plan seeks to increase knowledge of the subsoil. These reforms will allow this to be done efficiently and at a low cost to the state.”
The companies that will come to conduct the study bear the overall risks at a low cost to the state, which subsequently allows them to commercialize the data, not the resources, as determined by the head of the commission, Rodrigo Ayala.
Unattended
Contracts will be exempt from the application of the Public Procurement Law. The General Budget Directorate will not interfere in these contracts either, because they are excluded by the CEL law.
The hydrocarbon law reform prohibits any person, whether natural or legal, from carrying out oil exploration and exploitation operations in El Salvador if they are not the holder of a contract awarded by the government or if they are not contracted by CEL.
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