BUENOS AIRES Jan 12 (Reuters) - Argentina's province of Chubut said on Monday it was "significantly" cutting royalty fees for oil and gas producers who raise output this year, in an attempt to incentivize higher production despite falling energy prices.
The Patagonian province, which is home to Argentina's largest oilfield, Cerro Dragon, also said it would halve royalties for new projects.
"We cannot allow for production to fall because we have low prices and high royalties," said Chubut Governor Martín Buzzi.
"In times of high prices, I was very tough on the sector to try to get the most possible, raising royalties to 16 percent of production. But now with the international price falling, it is the moment in which to cut royalties."
He did not provide details as to how much royalties for existing projects would be cut.
Oil prices fell 5 percent on Monday to their lowest in nearly six years, extending the second-steepest rout on record after Goldman Sachs warned that prices would fall further and Gulf oil producers showed no sign of cutting output.
Argentina last year introduced a new energy investment framework aimed in particular at attracting foreign oil companies to the country's vast shale deposits.
Geologists say Argentina has more natural gas trapped in shale rock than all of Europe, a 774-trillion-cubic-feet bounty that could transform the supply outlook for the Western Hemisphere. (Reporting by Eliana Raszewski and Sarah Marsh)