Companies exploring and exploiting oil and gas fields in the Black Sea will have a normal royalty regime, and will pay the quota currently provided in the law or in the contracts concluded with the Romanian state, according to a draft law adopted by the Government. The project consulted by HotNews.ro also states that these companies (already exploring in the BlackSea are Exxon, OMV, Lukoil) have to have at least a quarter of Romanian employees and have to get approvals from 9 institutions, including the General Staff of the Army and the Foreign Ministry.The draft was adopted by the Government last week and has already been sent to Parliament for debate and adoption.
The offshore law is long awaited by companies that have invested in explorations in the Black Sea, where the first results have shown the existence of huge gas deposits. The commercial decision of a company is influenced by the fiscal regime, the facilities offered by the state, the number and duration of obtaining approvals, as well as the market prices.
Black Sea gas fields are considered strategic for Romania.
The project stipulates that companies that have agreements in offshore oil perimeters (deep into the Black Sea) benefit from the level of fees,percentages of oil fees, gross production thresholds related to these fees and the tax regulations existing at the date of entry into force of this law. In other words, companies in the Black Sea will pay fees in effect from the Oil Law (2004): from a minimum of 3.5% of the value of gross output extracted up to a maximum of 13%.
In addition, the draft stipulates that Black Sea firms are exempt from the tax on additional income from the deregulation of prices (OUG 7/2013), a tax paid by companies which extract gas on shore (classical deposits). The project also shows that if companies in the Black Sea are obliged to pay any amounts charged by public authorities in addition to the amounts that would have been due under this law, they will be entitled to a full tax credit calculated annually for the amounts additional paid. The amount of the tax credit is compensated according to the Law no. 207/2015 with the profit tax due for the calendar year for which the tax declaration is filed.
Companies that currently have offshore oil agreements:
- OMV Petrom and ExxonMobil: the deep perimeter Neptune Deep
- Lukoil, PanAtlantic Petroleum and Romgaz: the Trident perimeter
- Black Sea Oil & Gas: Midia and Pelican perimeters
- Petromar Resources: the Muridava and Est Cobalcescu perimeters
Offshore works must be authorized by the Ministry of Energy, but license holders must obtain approvals from a number of ministries, government agencies and local authorities:
2.National Administration of Romanian Waters
3. Maritime Constanta Water Department
4.Romanian Naval Authority
5.Army General Staff
7.Ministry of Culture and National Identities
8.Competent Regulatory Authority for Offshore Oil Offshore Operations at the Black Sea
9. Ministry of Foreign Affairs
Attention: the draft law provides fines for institutions that do not comply with legal deadlines, issue incomplete approvals, demand unnecessary documents or unjustified refusal to issue authorization documents. The fines are between 1,000 lei and 5,000 lei.
The draft law also provides for the conditions under which oil companies can benefit from the right to pass over state-owned or privately owned buildings and land. In the case of the latter, the already existing stipulations apply (Law 238/2004).
The project also shows that permanent or temporary constructions in the pipeline safety area will be banned. Also, a derogation from Law 597/2001 will allow Black Sea companies to carry out coastal work throughout the year.
Regarding environmental compliance, the project shows that offshore works must comply with GEO 57/2007 on the regime of protected natural areas, conservation of natural habitats, wild flora and fauna.
The government-approved project obliges petroleum firms to have at least a quarter of Romanian employees and allows for a flexible working schedule, with derogations from the Labor Code (one working month, one of rest, 12 hour shifts, etc.).
Also, the Black Sea oil companies will have to purchase, under similar technical and price conditions, goods and services from companies with a capital owned by more than 25% of Romanian individuals or legal persons.