Final Draft of Poland's New Oil and Gas Bill Submitted
NOKE Share Capped at 5%, No Veto Rights
A draft of Poland's oil and gas regulations has been submitted to the Prime Minister's office.
The Head National Geologist and deputy minister for environment Piotr Woźniak and representatives of the Ministry of Finance announced the conclusion of lengthy preparations.
Exactly one year after the first attempt to announce new regulations by the Ministry of Environment, the Prime Minister of Poland has documents at his desk for the cabinet`s approval.
The new law will then need an approval of the parliament and finally, a signature of the President. Consequently, implementation of the new regime should not be expected this year.
"I expect the shale gas draft bill to be adopted by the end of June and Parliament should do the same by the end of this year" said Piotr Woźniak earlier this month.
Two most important changes introduced into the new law concern: establishing of the National Energy Minerals Operator (NOKE) and increasing taxes.
According to the environment and finance ministries, the overall burden still will not exceed 40%.
NOKE is the state-owned operator, which will enter partnerships operating in Poland as a minority shareholder
In the final version of the draft, NOKE's profit share will be proportional to the share of the cost, set at a maximum level of 5%. Another concession is that NOKE will not have a right of veto over the other parties of the partnerships.
Natural Gas Europe has already described the foundations of new regulations and regularly reported on negotiations between at least six ministers of the Polish government.
We also noted controversies surrounding changes to the very inviting regulation system, that is, since 2007 Poland lured numerous companies, which has led to issuing over 110 concessions, covering roughly one third of Poland`s 312,000 km2 territory.
Changes to regulations in Poland were cited as one of the reasons for the slow pace of work and withdrawal of several companies. However, the latest EIA report, assessing the potential for shale gas development in 48 basins in 32 countries around the world, concludes that Poland remains the most promising place for the industry expansion in Europe.
At the same time however the EIA's report reduces shale gas resources estimate for Poland from 187 trillion cubic feet (5.3 trillion cubic meters) to 148 Tcf (4.1 Tcm).
The reduction is mainly the effect of downgrading a potential of the Lublin Basin (from 44 Tcf/1.2 Tcm to 9 Tcf/250 bcm), where some geological conditions, including numerous faults, pose a challenge for the expansion.