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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2020

8.	PROPERTY, PLANT AND EQUIPMENT


	2020			2019			2018
Net book value of property, plant and equipment		1,456,148			1,156,950			740,103
Provision for obsolescence of materials and equipment		(11,267	)		(6,610	)		(3,955	)
Provision for impairment of property, plant and equipment		(65,354	)		(81,329	)		(37,061	)

		1,379,527			1,069,011			699,087

Changes in Group’s property, plant and equipment for the years ended December 31, 2020, 2019 and 2018 are as follows:


	Land and buildings			Mining property, wells and related equipment			Refinery equipment and petrochemical plants			Transportation equipment			Materials and equipment in warehouse			Drilling and work in progress			Exploratory drilling in progress			Furniture, fixtures and installations			Selling equipment			Infrastructure for natural gas distribution			Other property			Total
Cost		21,394			775,353			134,675			7,614			15,993			59,529			2,871			10,454			18,788			3,406			11,978			1,062,055
Accumulated depreciation		9,250			566,334			69,160			4,512			—			—			—			8,686			11,656			1,381			8,446			679,425

Balance as of December 31, 2017		12,144			209,019	(1)		65,515			3,102			15,993			59,529			2,871			1,768			7,132			2,025			3,532			382,630

Cost
Increases		425			(10,216	) (4)		370			38			19,885			67,264			5,438			59			—			—			385			83,648	(5) (6)
Translation effect		20,845			808,772			138,924			7,400			15,332			61,084			3,851			10,935			20,016			—			11,468			1,098,627
Adjustment for inflation (7)		5,096			152			—			797			1,107			792			—			1,371			—			20,519			6,968			36,802
Decreases and reclassifications		287			30,807			6,482			313			(17,327	)		(64,288	)		(4,188	)		1,898			2,194			243			838			(42,741	) (3) (8)

Accumulated depreciation
Increases		758			82,939	(4)		9,517			960			—			—			—			1,561			1,680			677			777			98,869	(5)
Translation effect		9,356			609,973			73,643			4,639			—			—			—			9,158			12,396			—			8,127			727,292
Adjustment for inflation (7)		2,785			141			—			565			—			—			—			1,309			—			10,584			5,152			20,536
Decreases and reclassifications		(35	)		(27,457	)		(25	)		(97	)		—			—			—			(7	)		(35	)		(134	)		(44	)		(27,834	) (8)

Cost		48,047			1,604,868			280,451			16,162			34,990			124,381			7,972			24,717			40,998			24,168			31,637			2,238,391
Accumulated depreciation		22,114			1,231,930			152,295			10,579			—			—			—			20,707			25,697			12,508			22,458			1,498,288

Balance as of December 31, 2018		25,933			372,938	(1)		128,156			5,583			34,990			124,381			7,972			4,010			15,301			11,660			9,179			740,103

Cost
Increases		46			1,980	(4)		4,676			83			43,089			114,878			6,532			106			—			865			589			172,844	(9)
Translation effect		24,838			967,212			171,788			8,723			21,044			70,818			5,014			14,289			25,116			—			13,581			1,322,423
Adjustment for inflation (7)		3,382			—			—			716			920			1,326			—			828			—			13,010			4,793			24,975
Decreases and reclassifications		880			114,493			15,715			1,358			(37,620	)		(116,818	)		(8,132	)		1,077			4,021			6,600			(3,894	)		(22,320	) (3)

Accumulated depreciation
Increases		1,260			137,017	(4)		16,092			1,345			—			—			—			2,536			2,765			989			1,325			163,329
Translation effect		11,444			758,928			93,611			5,917			—			—			—			11,935			15,822			—			9,862			907,519
Adjustment for inflation (7)		1,726			—			—			486			—			—			—			773			—			6,733			3,270			12,988
Decreases and reclassifications		9			(2,287	)		(33	)		(376	)		—			—			—			(834	)		(13	)		3,647			(2,874	)		(2,761	) (3)

Cost		77,193			2,688,553			472,630			27,042			62,423			194,585			11,386			41,017			70,135			44,643			46,706			3,736,313
Accumulated depreciation		36,553			2,125,588			261,965			17,951			—			—			—			35,117			44,271			23,877			34,041			2,579,363

Balance as of December 31, 2019		40,640			562,965	(1)		210,665			9,091			62,423			194,585			11,386	(2)		5,900			25,864			20,766			12,665			1,156,950

Table of Contents


	Land and buildings			Mining property, wells and related equipment			Refinery equipment and petrochemical plants		Transportation equipment			Materials and equipment in warehouse			Drilling and work in progress			Exploratory drilling in progress			Furniture, fixtures and installations			Selling equipment			Infrastructure for natural gas distribution			Other property			Total
Cost		77,193			2,688,553			472,630		27,042			62,423			194,585			11,386			41,017			70,135			44,643			46,706			3,736,313
Accumulated depreciation		36,553			2,125,588			261,965		17,951			—			—			—			35,117			44,271			23,877			34,041			2,579,363

Balance as of December 31, 2019		40,640			562,965	(1)		210,665		9,091			62,423			194,585			11,386	(2)		5,900			25,864			20,766			12,665			1,156,950

Cost
Increases		62			(13,412	) (4)		1,724		119			33,422			72,162			152			121			—			1,587			341			96,278	(9)
Translation effect		27,498			1,110,354			194,960		10,051			24,712			61,134			2,605			17,133			30,261			—			14,969			1,493,677
Adjustment for inflation (7)		3,600			—			—		902			421			2,575			—			537			—			16,134			3,416			27,585
Decreases and reclassifications		(589	)		93,720			13,872		205			(31,252	)		(106,547	)		(10,245	)		3,997			6,023			1,735			(516	)		(29,597	) (3) (10) (11)

Accumulated depreciation
Increases		2,054			171,786	(4)		27,195		1,679			—			—			—			4,092			4,493			1,287			1,727			214,313
Translation effect		13,013			896,732			111,376		6,905			—			—			—			14,394			18,791			—			11,135			1,072,346
Adjustment for inflation (7)		1,801			—			—		524			—			—			—			489			—			8,629			2,497			13,940
Decreases and reclassifications		(1,647	)		(8,915	)		—		(360	)		—			—			—			(117	)		(25	)		(221	)		(569	)		(11,854	) (3) (10) (11)

Cost		107,764			3,879,215			683,186		38,319			89,726			223,909			3,898			62,805			106,419			64,099			64,916			5,324,256
Accumulated depreciation		51,774			3,185,191			400,536		26,699			—			—			—			53,975			67,530			33,572			48,831			3,868,108

Balance as of December 31, 2020		55,990			694,024	(1)		282,650		11,620			89,726			223,909			3,898	(2)		8,830			38,889			30,527			16,085			1,456,148

(1)	Includes 34,801, 22,343 and 16,154 of mineral property as of December 31, 2020, 2019 and 2018, respectively.

(2)	As of December 31, 2020, there are 10 exploratory wells in progress. During the year ended on such date, 4 wells were started, 6 wells were charged to exploratory expense and 12 wells were transferred to properties with proven reserves in the mining property, wells and related equipment account.

(3)	Includes 1,256, 48 and 60 of net book value charged to property, plant and equipment provisions for the years ended December 31, 2020, 2019 and 2018, respectively.

(4)	Includes (13,918), 1,172 and (11,710) corresponding to hydrocarbon wells abandonment costs and 12,492, 4,664 and 5,521 of depreciation recovery for the years ended December 31, 2020, 2019 and 2018, respectively.

(5)	Includes 1,470 and 1,092 of cost and accumulated depreciation, respectively, corresponding to additions for the acquisition of a participation in several areas.

(6)	Includes 2,327 corresponding to business combination. See Note 3.

(7)	Corresponds to adjustments for inflation of opening balances of property, plant and equipment of subsidiaries with the Peso as functional currency which was charged to other comprehensive income.

(8)	Includes 31,800 and 28,673 of cost and accumulated depreciation, respectively, corresponding to the reclassification of certain areas that were reclassified as assets held for disposal.

(9)

Includes 599 and 2,109 corresponding to short-term leases as of December 31, 2020 and 2019, respectively; includes 1,669 and 1,228 corresponding to the variable charge of leases related to the underlying asset performance/use as of December 31, 2020 and 2019, respectively. Additionally, it includes 3,789 and 2,021 corresponding to the depreciation capitalization of

right-of-use

assets as of December 31, 2020 and 2019 (see Note 9); and 967 and 311 corresponding to capitalization of the financial accretion of the lease liability as of December 31, 2020 and 2019, respectively (see Note 19).

(10)	Includes 2,027 and 204 of cost and accumulated depreciation, respectively, corresponding to the disposal of the 11% interest of Bandurria Sur area. See Note 3.

(11)	Includes 2,715 and 2,221 of cost and accumulated depreciation, respectively, corresponding to the reclassification of assets held for disposal.

The Group capitalizes the financial borrowing cost as a part of the cost of the assets. For the fiscal year ended December 31, 2020, 2019 and 2018, the rate of capitalization has been 9.70%, 10.33% and 10.50%, respectively, and the amount capitalized amounted to 867, 949 and 660, respectively, for the years mentioned above.

Set forth below is the evolution of the provision for obsolescence of materials and equipment for the years ended December 31, 2020, 2019 and 2018:


	2020			2019			2018
Amount at beginning of year		6,610			3,955			1,652
Increase charged to profit or loss		1,977			410			629
Decreases charged to profit or loss		(1	)		(22	)		—
Amounts incurred due to utilization		(6	)		(48	)		(60	)
Translation differences		2,687			2,315			1,666
Transfers and other movements		—			—			68

Amount at end of year		11,267			6,610			3,955

Set forth below is the evolution of the provision for impairment of property, plant and equipment for 2020, 2019 and 2018:


	2020			2019			2018
Amount at beginning of year		81,329			37,061			26,535
Increases charged to profit or loss (1)		57,920			41,429			36,937
Decreases charged to profit or loss (1)		(66,170	)		—			(39,837	)
Applications to utilization		(1,250	)		—			—
Depreciation (2)		(42,861	)		(17,435	)		(10,208	)
Translation differences		36,386			20,274			23,634

Amount at end of year		65,354			81,329			37,061

(1)	See Note 2.c.

(2)	Included in “Depreciation of property, plant and equipment” in Note 25.

Set forth below is the cost evolution for the exploratory wells in evaluation stage as of the years ended on December 31, 2020, 2019 and 2018:


	2020			2019			2018
Amount at beginning of year		8,456			4,067			1,236
Additions pending the determination of proved reserves		86			5,229			2,179
Decreases charged to exploration expenses		(1,174	)		(1,036	)		(382	)
Reclassifications to mineral property, wells and related equipment with proved reserves		(6,760	)		(2,716	)		(703	)
Translation difference		1,928			2,912			1,737

Amount at end of year		2,536			8,456			4,067

The following table shows the cost for exploratory wells under assessment for a period greater than a year and the number of projects related as of December 31, 2020.


	Amount		Number of projects		Number of wells
Between 1 and 5 years		2,536		2		2