ROPEPCA, an active partner for dialogue

Transcription

1 ROPEPCA, an active partner for dialogue

2 ROMANIAN OIL AND GAS INDUSTRY OIL PRODUCTION Over 150 years of experience GAS PRODUCTION Over 100 years of experience Annual decline production rate, is in average, 10% MATURE PETROLEUM ONSHORE FIELDS Hydrocarbons production requires adapted technology to cover national demand Reserves decrease rate is approximatively 87% The average operating cost is 17 USD per barrel of oil equivalent(boe). Romania has one of the most reduced rates of production per well among all European Countries, 21 barrels/ well / day.

3 OIL AND GAS SECTOR IS VITAL TO THE ROMANIAN ECONOMY Maintaining a stable oil production level requires constant investments. In the exploration, development and exploitation phases, massive capital investments are required. The onshore oil and gas industry, is highly capital intensive, with a high impact over the general economy of the country: 1 euro invested in the oil and gas sector generates 2,3 euro in the economy. A job in the oil and gas sector generates additional 4,3 indirect jobs.

4 ROPEPCA in figures November founding members FINAL RESULTS 2014 September members 1,5 billion EUR 5 billion EUR 2,5 billion EUR Cumulated investments Cumulated turnover Contributions to the state budget Jobs

5 ROPEPCA INITIATIVES PERMANENT PASTURE LAW SPECIAL CONSTRUCTION TAX LAND ACCESS (PETROLEUM LAW) CLASSIFIED DATA REGIME ( SECRET DE SERVICIU ) PETROLEUM ROYALTIES NEW FISCAL CODE SUPLIMENTARY TAXATION NEW FISCAL CODE MESSAGES

6 PERMANENT PASTURE LAW THE ISSUE Access to land that are permanent pastures ACTIONS Implicating the diplomatic members (USA, Canada, Great Britain, Austria, Ireland, Hungary) RESULTS Amending Em.Ord. 34/ By introducing as exception the petroleum operations

7 SPECIAL CONSTRUCTION TAX THE ISSUE Temporary tax of 1,5% arbitrarily introduced and tacitly adopted ACTIONS 1. Position Papers 2. Dialogue with ICS from DEPC, MoF & IMF MOTIVATION The opposition of the industry on taxation of the investment and not the profit RESULTS Reduced at 0,5% in 2015 and elimination in 2016

8 LAND ACCESS (PETROLEUM LAW) THE ISSUE Difficult/impossible to access to conduct petroleum operations ACTIONS 1. Position Papers 2. Proposal to amend Petroleum Law STATUS Petroleum Operations = national public interest + establishing legal superficies + rent + fortuitous case; N.A.M.R requested opinion of several Ministries and Agencies Fortuitous case Unforeseen event, other than force majeure that can not be removed by the person affected

9 CLASIFFIED DATA ( SECRET DE SERVICIU ) THE ISSUE Archaic law, cumbersome procedures and in contradiction with the EU legislation ACTION 1. Position Papers 2. Dialogue with the Ambassador for Energy and the rep. of the Energy Dep. STATUS N.A.M.R will propose relaxing the regime of classified documents, by shortening the list of classified documents

10 PETROLEUM ROYALTIES THE ISSUE Populism + changes without consultation, negociation ACTIONS 1. Position Papers 2. Dialogue with N.A.M.R, MoF și IMF STATUS Draft proposal was circulated, not public Introducing a petroleum tax in addition to the profit tax Golden principles Applicability only to new concession agreements Existing concession agreements are protected by the stability clause Lower royalties for mature brownfields.

11 NEW FISCAL CODE THE ISSUE Ambiguous interpretation and application ACTIONS 1. Position Papers 2. Proposals to ISC- DEPC, MoF STATUS Art. 26 abandonment provisions RF + excl. offshore (yes) Art. 28 fiscal amortization relinquishment of linear amortization(nu) Art. 47 small company special taxation application of similar fiscal treatment to new companies (postponed) Reality Weak tentative to negotiate and discuss Withdrawal of FIC from discussions Adopted with closed doors

12 SUPLIMENTARY TAXATION THE ISSUE 0.5% oil+ 60% gas Arbitrarily introduced and tacitly adopted ACTIONS 1. Position Papers 2. Dialogue ISC-DEPC, NAMR, MoF, IMF STATUS Incentive for strategic electricity consumers developing energy efficiency projects (incentive state aid) Termination from 2016 presented as favor Reality Forced imposition over the stability clause and tacit acceptance due to the temporary nature

13 NEW FISCAL CODE THE ISSUE Suspending the impact of the taxes introduced arbitrarily and unilaterally ACTIONS POSITION PAPER, recommendation for a stable transparent and predictable fiscal code STATUS Confirming the elimination of SCT, 0,5% oil tax and 60% gas tax Higher petroleum royalties+ higher application norms Decrease of the base of taxation increase of deductions GOLD RULES Impact analysis Impact simulation Industry consultation Negotiation Application

14 KEY Messages The upstream industry is not a piggy-bank for the Government to use whenever state budget funding is needed, by introduction of new taxes The piggy-bank needs to be healthy to generate future contributions + the multiplication factor for the economy. ISSUES: lack of new discoveries, low reserves replacement rate, high exploration costs in areas that are technological frontiers, high redevelopment cost by using new technologies. SOLUTIONS: Decrease of royalties rates for mature fields saving the industry estimated at 10 years remaining.

15 FUTURE PROJECTS ISSUES N.A.M.R Archaic Organization; No access to new or old data Public acquisition law Financial directive for reporting all payments to the state budget ACTIONS Consultations Position Papers Dialogue Law regarding the safety of offshore operations

16 Thank you!