Poland Faces Shale Gas Challenge at European Court of Justice
In the face of proceedings against Poland at the European Court of Justice, Polish Ministry for Environment says that it is examining how to protect already issued exploratory licenses.
The court adjudicates if Poland has failed to comply with the EU Directive 94/22 of 30 May 1994, which lays down rules on the conditions for granting and using authorizations for the prospection, exploration and production of hydrocarbons.
The Head Geologist and junior Environment Minister Piotr Wozniak, who has been responsible for shale gas licensing for almost a year, emphasizes that the intention of the EU Commission was to make the licensing regulations in Poland fully competitive.
Piotr Wozniak says that provisions of the European Union Directive have been entirely implemented into existing law for a year and the ECJ proceedings are late. He also confirmed that they will be re-introduced into the new, already drafted hydrocarbon bill.
On the other hand Piotr Wozniak stresses that Warsaw intends to respect the principle of priority in obtaining mining rights by current exploratory licenses’ holders.
“Otherwise it would make no sense for the companies to continue investments” – he explains, pointing to high costs of exploration for shale gas in Poland and in Europe in general.
The Head Geologist also says that the ministry is analyzing how to solve the issue and protect the interest of the State and companies.
"We’re preparing appropriate solutions" - the minister adds.
Story
Since 2007, the Polish government has issued over 110 exploratory licenses, covering primarily the most promising shale belt area, reaching from Pomorze to Lubelskie.
Licenses have been granted to Polish private as well as state-controlled companies and foreign registered companies, including North American majors. Out of nineteen companies involved only three are partly State-owned.
The EU Directive 94/22 requests member states to award licenses by open and transparent tenders, based on non-discriminatory and clearly specified criteria.
In 2007 the European Commission initiated the infringement procedure. After an initial examination of the issue, in 2010 the EU Commission brought the case to the Luxembourg Court of Justice. On the 1st of January 2012 the new mining law entered into force , however disregarded by the Commission.
The European Commission claims, among others, that priority to obtain the production concession, given by the Polish regulations (Prawo Geologiczne i Górnicze or Geological and Mining Law of 1994) to holders of exploration licenses, contradicts the requirements of the Directive.
There are two sets of separate authorisations in the Polish GMLaw: for exploration and for production.
According to the Law, as long as they respect all of their obligations, exploration licenses holders operating in Poland may apply for the grant of mining usufruct rights with priority over other parties.
In the European Commission's view, tendering procedures in Poland are not fully open and effective as the Directive clearly states that exploratory and mining authorizations should be granted by separate, transparent tenders.
Proceedings
The court is advised by eight Advocates-General. Their opinions are advisory, and not binding, but followed in most cases.
On November 20, the Advocate General (AG) proposed that the Court of Justice should declare pleas are inadmissible. In his written opinion Pedro Cruz Villalón noted that grounds of the legal action taken by the European Commission are substantially different from those deployed at the pre-litigation stage.
However, the AG analyzed in his written opinion all of the pleas in detail, explaining that “not in every case the statement of complaints set out in the operative part of the reasoned opinion and the form of order sought by the action must be exactly the same, provided that the subject-matter of the proceedings, as defined in the former document, has not been extended or altered”.
The AG also wrote that the issue raised in these proceedings was “substantive” and as such would “allow the Court of Justice, in the context of very specific national legislation, to develop the case-law relating to access to tendering procedures for granting administrative authorisations for the commercial exploitation of publicly owned natural resources”.
According to the opinion, “the interplay of priorities and exclusive rights introduced by the Geological and Mining Law may give rise to a situation in which the holder of the exclusive rights to the geological documentation obtains the mining usufruct rights without a genuine competitive tendering procedure being held”.
The AG also commented that “priority” could either mean “true preferential right to the creation of the usufruct” or “that the investment in the preparation of the geological documentation constitutes a positive factor to be taken into account in the tendering procedure; a positive factor for evaluation, perhaps, but certainly not to the extent of determining the outcome of the tendering procedure. Giving this factor its proper weight may constitute reasonable remuneration for the investment, without going as far as the case put by the Polish Government”.
Date of the hearing is not known.
Michal Zielinski has been reporting and blogging on shale gas exploration in Poland since 2009. Formerly at the BBC World Service, he is currently working for the RMF FM and rmf24.pl in Krakow.