The new offshore law provides additional benefits to investors in the Romanian oil and gas sector

By rbj
Law amending and supplementing Law no. 256/2018 on some measures necessary for the implementation of oil operations by holders of oil agreements on offshore oil perimeters entered into force today.
The law provides for a set of measures on the stability of the tax regime and oil royalties, as well as the elimination of additional income taxation for sales prices at which investors do not make extra profits.
According to the normative act, the Romanian state has the right of pre-emption over the deposits to be exploited.
Under what conditions will the gas be exploited in the Black Sea. The main provisions of the offshore law
– Elimination of additional income taxation for sales prices at which investors do not make overprofits by maintaining the tax schedule in case of additional income obtained from the practice of prices higher than 85 lei / MWh. Initially, the investors paid this progressive tax on the additional income obtained from the increase of the gas price, when the gas price exceeded 45.71 lei / MWh.
-Increase from 30% to 40% of the maximum level for deducting investments from the upstream segment to determine the additional tax, in order to encourage investments in this sector.
– Elimination of the investment deduction limitation for the calculation of the profit tax, in order to ensure the observance of the principle of the Fiscal Code which stipulates that all activity sectors should be treated uniformly.
– The fiscal regime for onshore perimeters deeper than 3,000 m is regulated.
It is proposed to eliminate the use of the reference price in determining the basis for calculating the additional income tax. In this way, the principles of taxation provided by the Fiscal Code are respected and Romania will align with the international practice regarding the determination of upstream taxes based on the realized prices. Thus the quotas will increase from 15% to 70%, depending on the selling price of natural gas:
-15% of the additional revenues obtained as a result of prices higher than 85 lei / MWh and less than or equal to 100 lei / MWh;
-30% of the additional revenues obtained following the practice of prices higher than 100 lei / MWh and lower or equal to 115 lei / MWh;
-35% of the additional revenues obtained following the practice of prices higher than 115 lei / MWh and lower or equal to 130 lei / MWh;
-40% of the additional revenues obtained as a result of prices higher than 130 lei / MWh and less than or equal to 145 lei / MWh;
-50% of the additional revenues obtained following the practice of prices higher than 145 lei / MWh and lower or equal to 160 lei / MWh;
-55% of the additional revenues obtained following the practice of prices higher than 160 lei / MWh and lower or equal to 175 lei / MWh;
-60% of the additional revenues obtained as a result of prices higher than 175 lei / MWh and lower or equal to 190 lei / MWh;
-70% of the additional revenues obtained as a result of prices higher than 190 lei / MWh.
Holders of offshore and / or deep-sea deep-sea oil agreements in progress on 1 January 2022 shall be subject to the royalty and specific tax arrangements applicable to exploration, development, exploitation and abandonment, existing on January 1, 2023.
The distribution of the collected amounts is done by a decision of the Government.
What natural gas could be extracted from the Black Sea this year:
The first natural gas that could be extracted from the Black Sea in the middle of this year, according to Romanian officials, are the gases from the Ana and Doina fields, exploited by the Americans from Black Sea Oil & Gas. The estimated production capacity is 1 billion cubic meters of gas per year, the equivalent of 10% of Romania’s gas consumption.
The natural gas from the Ana and Doina gas fields, discovered in 2007 and 1995, respectively, is currently managed by the Americans from Black Sea Oil and Gas in the Midia Natural Gas Development Project.
A 126 km submarine pipeline will transport gas from the Ana platform to the shore, to the new gas treatment plant in Corbu commune, Constanţa county. The estimated production capacity will be 1 billion cubic meters of gas per year, equivalent to 10% of Romania’s gas consumption. The treated gases will be delivered in the National Transport System operated by SNTGN Transgaz SA at the gas measuring station located within the gas treatment plant.