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Oil and gas in Uruguay: State ownership, ANCAP contracts, tax exemption, free export and FX guarantees

Last verified: 2026-10-27 · Status: Stable

Oil, natural gas, coal, shale and other energy minerals (Class I) are reserved to the State and ANCAP is the only competent body, but ANCAP may contract any phase to private or foreign companies, including risk contracts (Mining Code art. 7, 71 and 72). The Executive must authorise the bidding terms and approve each contract as a condition of validity, and selection is by tender unless the Executive authorises direct contracting (art. 73). Contractors may be paid in kind or cash in any currency, export their share freely, and enjoy a broad exemption from national and municipal taxes on exploration, production, transport and sale, plus a State guarantee of free use of export proceeds (Decreto Ley Nº 14.181 art. 10, 11, 13 and 16).

USD figures use UYU 40.21 per US dollar, the BCU quotation for DLS. USA BILLETE on 27 October 2026; amounts in Unidades Indexadas (UI) use UYU 6.6792 per UI, the BCU quotation for 27 October 2026; amounts in Unidades Reajustables (UR) use UYU 1,940.77, the September 2026 value published by IMPO (Decreto Nº 229/026), the latest available on 27 October 2026. Conversions are for orientation only.

Key facts

Hydrocarbon exploration and exploitation	Reserved to the State through ANCAP, which may contract third parties Código de Minería art. 71 and 72; Decreto Ley Nº 14.181 art. 2, as of 2026-10-27 · in force
Executive approval of ANCAP contracts	Condition of validity Código de Minería art. 73, as of 2026-10-27 · in force
Taxes on exploration, production, transport and sale by ANCAP and contractors	Exempt from all national and municipal taxes, except social security Decreto Ley Nº 14.181 art. 16, as of 2026-10-27 · in force
Contractor's share of production	May be exported freely Decreto Ley Nº 14.181 art. 11, as of 2026-10-27 · in force
Free availability of export proceeds	Guaranteed by the State Decreto Ley Nº 14.181 art. 13, as of 2026-10-27 · in force

The rule

1. Class I deposits comprise fossil fuels (oil, natural gas, coal, lignite, peat, oil shale and oil sands) and other minerals able to generate energy industrially. Mining activity on Class I deposits may only be carried out by assigning mining rights to the State and State industrial or commercial entities, and the deposits of liquid and gaseous hydrocarbons, fossil fuels and bituminous rocks may only be explored and exploited by the State; exploration includes studies, surveys and prospecting. Oil and hydrocarbon deposits are the exclusive property of the State, and searches may only be made by order of the State.
Cost to do it: No private title can be bought or applied for; access is only by contract with ANCAP.
Example: A private company cannot file for an oil exploration permit with the mining authority; it must contract with ANCAP. / Same: there is no fee schedule for private hydrocarbon titles because none exist.Código de Minería (Decreto Ley Nº 15.242); Decreto Ley Nº 14.181 (Hydrocarbons Law); Ley Nº 8.764, Código de Minería art. 7 and 60 a); Decreto Ley Nº 14.181 art. 2; Ley Nº 8.764 art. 10 and 11, 1982-01-08 official text · verified 2026-10-27

2. ANCAP is the competent body for Class I mining activity and may carry out one, several or all phases through contracts with third parties in the State entity's name, with national or foreign, public or private persons or international organisations. The contract may take any form used in the industry, including one that places the risk on the contractor.
Cost to do it: Contract economics (work commitments, bonuses, profit or production sharing) are set in each bidding round and contract; the law fixes no amount.
Example: An exploration risk contract in which the contractor funds the seismic and wells and recovers costs only from a discovery is expressly allowed. / Same in USD; work commitments are typically stated in the contract.Código de Minería art. 71 and 72 as worded by Ley Nº 18.813 art. 12, Art. 71 and 72, 2011-09-23 official text · verified 2026-10-27

3. The bidding terms must be authorised by the Executive, which must also approve the contract to be signed as a condition of its validity. The contractor is selected by competitive offers or public tender, although direct contracting is possible with Executive authorisation. When the contractor is paid in kind, ANCAP always has the right to buy the volumes needed for the domestic market, on the occasions, proportions and price bases set in the contract. All contracts and acts that commit State assets or hydrocarbon policy require Executive authorisation.
Cost to do it: Bid preparation and guarantee costs are set in each round's terms.
Example: A signed production sharing contract is not valid until the Executive approves it, even if ANCAP's board has signed. / Same in USD.Código de Minería art. 73 as worded by Ley Nº 18.813 art. 12; Decreto Ley Nº 14.181 art. 8, Código de Minería art. 73; Decreto Ley Nº 14.181 art. 8, 2011-09-23 official text · verified 2026-10-27

4. The contractor's remuneration may be wholly or partly in kind or in money, in pesos or foreign currency, and clauses providing payment in any monetary unit other than the Uruguayan peso, in goods or other values are fully valid. The contractor may freely export the hydrocarbon volumes that belong to it under the contract.
Cost to do it: No export duty or licence is set by these articles.
Example: A contract can pay the contractor a share of oil produced, which it may export without a separate export authorisation under these articles. / A dollar denominated service fee is valid under art. 10.Decreto Ley Nº 14.181, Art. 10 and 11, 1974-03-29 official text · verified 2026-10-27

5. The State guarantees contractors free availability of the foreign currency from their export income, and the convertibility and free availability of income from sales made to the State under the contract. Foreign currency the contractor brings into the country for peso expenses must be converted into pesos through the Banco Central del Uruguay, which takes the measures needed under Executive provisions.
Cost to do it: No FX fee is set by the law.
Example: Export proceeds may be kept abroad or repatriated freely; general FX freedom also applies (see the fx pages). / Same in USD.Decreto Ley Nº 14.181, Art. 13, 1974-03-29 official text · verified 2026-10-27

6. The exploration, production, transport and sale of crude oil, natural gas and oil, gas and sulphur from oil shale obtained in Uruguay are exempt from every tax and charge of any kind, existing or future. ANCAP and contractors that agree any of those activities with it are exempt from all national or municipal taxes and charges, existing or future, that fall on exploration, production, transport or sale of those substances obtained in Uruguay. The exemption covers taxes, fees and contributions and any fiscal, monetary or exchange levies, but not social security contributions or prices of services that reflect their cost.
Cost to do it: Social security contributions and cost based service prices remain payable.
Example: On hypothetical taxable profit of UYU 402,100,000 from production in Uruguay, IRAE at the general 25 percent rate (UYU 100,525,000) would not be due under art. 16. / On US$10,000,000 of profit, US$2,500,000 of IRAE not due; payroll contributions still apply.Decreto Ley Nº 14.181, Art. 16, 1974-03-29 official text · verified 2026-10-27

7. The Executive sets the regime for entry, exit, temporary admission or final import of raw materials, equipment, machinery, vehicles, plants and other items for exploration, production, transport or sale of crude oil, natural gas or oil shale products; those items are exempt from the related exchange operation and from guarantees, surcharges, prior deposits and similar requirements, and may circulate freely in the country.
Cost to do it: Import guarantees, surcharges and prior deposits are waived for qualifying items; the customs regime itself is set by the Executive.
Example: A drilling rig brought in for an offshore well can enter under the regime set by the Executive without prior deposits or guarantees. / Same in USD.Decreto Ley Nº 14.181, Art. 20 and 21, 1974-03-29 official text · verified 2026-10-27

8. Mining activity of any kind, and all disputes, claims and petitions relating to it, are subject without exception to Uruguayan law and jurisdiction; any agreement to the contrary is void, and the clause must be included in every contract granting mining rights.
Cost to do it: No cost; it is a mandatory clause.
Example: A foreign contractor cannot validly agree a foreign governing law for its mining rights under an ANCAP contract. / Same: no USD amount applies.Código de Minería art. 19 (paragraph 1 worded by Ley Nº 18.172 art. 194), Art. 19, 2007-08-31 official text · verified 2026-10-27

Protection	What it covers	Norm
Any contract form	Service, sharing or risk contracts	Código de Minería art. 72
Currency of payment	Pesos, foreign currency or in kind	Decreto Ley Nº 14.181 art. 10
Free export	Contractor's share of hydrocarbons	Decreto Ley Nº 14.181 art. 11
FX guarantee	Export proceeds and sales to the State	Decreto Ley Nº 14.181 art. 13
Tax exemption	All national and municipal taxes on the activity, except social security	Decreto Ley Nº 14.181 art. 16
Imports	No prior deposits, guarantees or surcharges	Decreto Ley Nº 14.181 art. 20

Contractor protections in Uruguayan hydrocarbon law

Worked example

Tax exemption: a contractor earning hypothetical taxable profit of US$10,000,000 (UYU 402,100,000) from gas production in Uruguay would not pay IRAE of US$2,500,000 (UYU 100,525,000) at the 25 percent general rate (T.O. 2023 Title 4 art. 23), because Decreto Ley Nº 14.181 art. 16 exempts the activity; its payroll social security contributions remain due.
Domestic supply: if the contract pays the contractor in oil, ANCAP keeps the right to buy the volumes needed for the domestic market on the terms set in the contract (Código de Minería art. 73).

Step by step

1. Watch ANCAP's bidding rounds: bidding terms are authorised by the Executive (Código de Minería art. 73).
2. Form or register the bidding vehicle (see entities/branch-of-a-foreign-company) and prepare technical and financial qualifications required by the round.
3. Bid by competitive offer or public tender; direct contracting needs Executive authorisation.
4. Sign the contract with ANCAP and obtain Executive approval, which is a condition of validity.
5. Set up the import regime for equipment under Decreto Ley Nº 14.181 art. 20 and plan peso expenses, which must be converted through the BCU (art. 13).
6. Keep social security compliance for staff, which the tax exemption does not cover.

Common traps

A contract signed by ANCAP but not approved by the Executive is not valid (Código de Minería art. 73).
The tax exemption is limited to exploration, production, transport and sale of substances obtained in Uruguay; other income of the contractor follows the general tax rules (Decreto Ley Nº 14.181 art. 16).
Choice of foreign law or courts for mining rights is void (Código de Minería art. 19); plan dispute resolution within that limit.
Payment in kind always carries ANCAP's right to buy domestic market volumes (Código de Minería art. 73).
Refining and import of crude oil and derivatives are a separate State monopoly; see the fuels page.

Sources

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