In the context of intensive discussions on the fiscal framework applicable to oil and gas industry, the Romanian Association of Petroleum Exploration and Production Companies (ROPEPCA) submitted to decision-makers in Government, Parliament and energy regulators a Position Paper  which reminds, among others, that at the end of this year will expire the tax regime’s stability clause applicable to oil and gas industry in accordance with Law no. 555/2004 on certain measures for the privatization of Petrom SA.

ROPEPCA representatives stress that it has been discussed as an option the adapting of tax system to the industry’s realities, namely specific levels of royalties differentiated by type of concession, mineral resources and oil perimeters (e.g., conventional versus unconventional resources, onshore vs. offshore operations.

“In light of the highly anticipated new royalty regime for oil, already announced by the Government, the income tax on additional companies’ revenues in the oil and gas business, introduced in early 2013, would expire by the end of 2014, but there are not reliable information on its applicability in the next fiscal year”, indicates the major oil companies operating in Romania. Moreover, the special constructions tax, imposed without consultation with the oil sector, brought additional tax charges that burden operators.

All statements about the charging and taxation framework are made in during a time when the Romanian State, through the National Agency for Mineral Resources, plans to have in the near future a new round of public tender for the concession of oil blocks. The programs of the auction winners from the previous are in delay, and an unclear fiscal regime can make investors reluctant to engage in future auctions.

ROPEPCA believes that “any increase in royalties and or the imposition of additional taxes on the industry should be offset by the introduction of incentives to reduce the impact on capital flows and returns on invested capital, to support the onshore oil and gas industry in Romania by recognizing investment costs.”

Since its establishment in 2013, ROPEPCA aims to be a promoter of onshore industry, to support the development, diversification and competitiveness of this industry. ROPEPCA comprises the most active members in onshore oil and gas industry, and now has 17 full members and one observer: ADX Energy, Amromco, Aurelian Petroleum, Beach Petroleum, Blackstairs Energy, Chevron Romania Exploration and Production, East West Petroleum, OMV Petrom, FORA Oil & Gas, Expert Petroleum, Hunt Oil, Moesia Oil & gas, NIS Petrol, Panfora Oil and Gas (MOL Group), KMG International, Raffles Energy, Winstar Satu Mare/Serinius Energy, Zeta Petroleum.