Poland Unveils Shale Gas Taxation and Regulatory Legislation
Poland has finally unveiled proposed new taxation and regulatory changes to its hydrocarbon sector.
The proposals, which impacts both conventional and unconventional oil and gas production, have in particular, been eagerly awaited by the developing shale gas sector.
The tax regime, which applied to foreign as well as domestic players, will see total levies on the oil and gas sector reaching 40% of gross profits in 2015 and based on both the value of a given company’s production volumes and its profits.
Specifics include a flat 19 per cent corporate tax, and an increase in extraction fees from the presnt currently 4.90 zlotys to 5.89 zlotys per 1,000 cubic metres, to an amount ranging between 20-24 zlotys.
Natural gas and crude oil volumes will be taxed at 5% and 10% of the value of production volumes, respectively, from 2015.
The government also plans a “special hydrocarbons tax” worth 25% of the difference between companies’ revenues and expenditures.
The new law also provides for the creation of a state-owned operator, NOKE, or National Energy Minerals Operator overseen by the Treasury Ministry, which will participate in shale gas projects and hold a share in concessions to “strengthen the administrative oversight of proper execution of license obligations and a safe secondary market of licenses.”
In addition to its will supervisory role over the exploration industry, the new body will have the right of first refusal on the secondary trade of exploration licenses.
NOKE will pay out its net profit to the Polish central budget and municipal government budgets, budget and to a planned Hydrocarbon Generations Fund, to be spent on long-term investments.
The re-sale of hydrocarbon licenses, a matter highlighted by the recent departure of Exxon Mobil from Poland, will only be permitted to buyers pre-approved by the government.
However, current holders of exploration licences will keep the pre-emptive right to acquire production licences of their acreage.
Explorers seeking to acquire new exploration licences will have to go through a pre-qualification process prior to being allowed to participate in license tenders. Non-drilling exploration work will be allowed to be undertaken without a license, “which will increase competition.”
Poland is hoping that regulations will provide for a stable investment framework and attract continued investment to develop the country’s shale gas reserves.
"We are launching this system to ensure that investors who are currently investing in Poland can feel assured what the State's strategy in this matter" commented Tomasz Arabski of the prime minister's office.
"After all, we are talking about billions of zlotys in investments," Arabski said. "This is why we need to conduct this debate with open doors. It is very important for us that investors feel safe and that these investments can be made in a transparent manner."
In a speech several days ago, Polish Prime Minister Donald Tusk proposed that investment in shale gas development would reach 50 bln zloys (12 bln EUR, 16 bln USD)/