T R E ND I NG NEW ROYALTY REGIME IN SIGHT THE END IS FINALLY IN SIGHT of the legal limbo that
PICTURE: SZYMON SZCZEŚNIAK
have made it impossible to draw business plans for shale gas extraction in Poland. In October, Polish minister of environment Marcin Korolec presented the key assumptions of an upcoming oil and gas law. According to the proposal, there will be a tax on the extraction of hydrocarbons imposed on revenue (a royalty) that will amount to 5 percent of the value of extracted gas and 10 percent of oil. A 25 percent tax
Piotr Woźniak, Poland’s chief geologist, gave the powerpoint
will be imposed on positive accumulated cash flow, or upon an excess of revenues from hydrocarbon operations over expenditures. According to the government, the total tax burden, including CIT and property tax, should amount to about 40 percent of the gross profits of the industry. Current operational fees for gas will increase roughly four times to PLN 24 per 1,000 m3 of extracted highmethane gas (from 5.89 PLN) and to PLN 20 per 1,000 m3 of extracted nitrogen-rich gas (from 4.90 PLN). The operational fee per ton of extracted crude oil will increase to 50 PLN (from 34.89 PLN). The Polish government will set up a state owned operator, known by its Polish acronym as NOKE, that will be responsible for oil and gas activities. NOKE will also have the right of first refusal in secondary concession offerings. Piotr Woźniak, Poland’s chief geologist, described the taxation model proposed in the outline as the “most favorable” in Europe, a view doubted by some analysts.
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Read about the new royalty regime: pages 42&78.
SGIG FEED 7/11
@NCBiR press release State agencies NCBiR and ARP pledge 240 million for shale gas R&D
9/18 @cleantechpoland.com LOTOS and PGNiG team up for oil and gas E&P in Poland @bloomberg.com 9/20 Exxon will return two Polish shale gas permits to government 10/12 @bloomberg.com Total to push ahead with shale gas drilling in Poland @ministry of environment 10/16 Ministry of environment announces the proposed royalty regime in Poland 11/6 @cleantechpoland.com ConocoPhillips/3Legs Resources flare Łebień LE-2H at 560-780 mscf per day
24 | SHALE GAS INVESTMENT GUIDE | WINTER 2012