New Lithuanian Shale Gas Tender Set for Late May or June

Having booted out US-based Chevron as the explorer and miner of country’s shale gas resources, Lithuania mulls announcing a new tender in Western Lithuania as early as May or June at latest, Lithuanian Environment Minister Valentinas Mazuronis has said.

“As of now we have approved all the necessary legislative acts and the conditions for a new competition, I am looking forward to having the Government and Lithuanian Parliament passed respective shale gas exploration and extraction taxation legislation. I am really looking ahead to seeing those things moved forward. I think that the most realistic date for a new tender issuance could be late May or June,” the minister said.

Chevron, the sole bidder in the previous shale gas procurement, pulled out after securing the right last October citing adverse tax and legal environment in Lithuania. The US company’s exasperation was largely over the numerous shale gas legislation changes and especially the Baltic lawmakers’ brewing proposal to tag a 40 percent basic tax on shale gas, which, if adopted, would have been the largest rate worldwide.

Lithuanian lawmakers argued they needed to set out all safeguards to ensure safety of shale gas exploration and mining in the country. Underscoring the need to give potential bidders a clue of how big environment tax might be Mazuronis said there “are several options.”

“Under one of the options we’ve discussed at the Ministry we will leave the taxation of traditional oil unchanged and keep the current tax average at 10 percent; or raise it slightly, perhaps to the average of 12-13 percent. I assume the average taxation of shale resources could be 15 percent,” the minister said.

Lithuania’s State Geological Service (LSGS) have already drafted and submitted for coordination a number of hydrocarbons regulations: new terms and conditions of the tender, new classification of hydrocarbon resources and draft amendments to the Law on Environmental Impact Assessment of the Proposed Economic Activity. To better prepare for the shale gas exploration and mining monitoring, LSGS specialists have been apprenticed abroad for the task.

In this pursuit, a joint Lithuanian-US agreement on collaboration in developing an unconventional hydrocarbons sector technical possibility program and its plan were prepared last year. The first hearing over the implementation of the plan has already taken place. A Chevron representative in Lithuania has said the US energy giant restrains from giving any comment whether the Americans will pursue the bid again.