Germany Upstream Fiscal and Regulatory Report – Banning Unconventional Exploration and Exploitation

Pages: 26 Published: January 30, 2018 Report Code: GDGE0135UFR

Germany’s parliament passed a bill prohibiting commercial fracking of shale gas and oil reservoirs from 2017 until 2021, when the legislation will be revised and a permanent fracking ban is possible. This law underpins the on-going German energy transition from fossils fuels towards renewables. Additionally, Germany’s main oil producing state Schleswig-Holstein rose the royalties towards 40% back in 2015. In general, Germany’s federal governance allow states to stipulate fees and royalty rates, which range between 5% to 40%, pending on resource and asset type. Apart from the fiscal and stricter environmental regulations, Germany also joined the Extractive Industry Transparency Initiative (EITI) in order to promote transparency of the resource industry.

“Germany Upstream Fiscal and Regulatory Report – Banning Unconventional Exploration and Exploitation”, presents the essential information relating to the terms which govern investment into Germany’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Germany’s upstream oil and gas investment climate.


Overview of current fiscal terms governing upstream oil and gas operations in Germany

Assessment of the current fiscal regime’s state take and attractiveness to investors

Charts illustrating the regime structure, and legal and institutional frameworks

Detail on legal framework and governing bodies administering the industry

Levels of upfront payments and taxation applicable to oil and gas production

Information on application of fiscal and regulatory terms to specific licenses

Outlook on future of fiscal and regulatory terms in Germany

Reasons to Buy

Understand the complex regulations and contractual requirements applicable to Germany’s upstream oil and gas sector

Evaluate factors determining profit levels in the industry

Identify potential regulatory issues facing investors in the country’s upstream sector

Utilize considered insight on future trends to inform decision-making

Table of Contents

1. Table of Contents

1. Table of Contents 1

1.1. List of Tables 2

1.2. List of Figures 3

2. Regime Overview 4

3. State Take Assessment 6

4. Key Fiscal Terms 8

4.1. Royalties 8

4.1.1. Baden-Württemberg 8

4.1.2. Bavaria 8

4.1.3. Brandenburg 9

4.1.4. Bremen 9

4.1.5. Hamburg 9

4.1.6. Lower Saxony 9

4.1.7. Mecklenburg-Vorpommern 10

4.1.8. North Rhine-Westphalia 10

4.1.9. Rhineland Palatinate 11

4.1.10. Saarland 11

4.1.11. Saxony-Anhalt 11

4.1.12. Schleswig-Holstein 11

4.1.13. Thuringia 12

4.2. Rental Fees 13

4.3. Direct Taxation 13

4.3.1. Corporate Income Tax 13

4.3.2. Solidarity Surcharge 14

4.3.3. Trade Tax 14

4.3.4. Deductions and Depreciation 14

4.3.5. Withholding Tax 16

4.4. Indirect Taxation 16

4.4.1. Value Added Tax 16

4.4.2. EU Emissions Trading Scheme 16

5. Regulation and Licensing 17

5.1. Legal Framework 17

5.1.1. Governing Law 17

5.1.2. Contract Type 18

5.1.3. Title to Hydrocarbons 19

5.2. Institutional Framework 19

5.2.1. Licensing Authority 20

5.2.2. Regulatory Agency 20

5.2.3. National Oil Company 20

5.3. Licensing Process 21

5.3.1. Licensing Rounds 21

5.3.2. Prequalification 21

5.3.3. Licensing Process 21

5.4. License Terms 21

5.4.1. Duration and Relinquishments 21

5.4.2. Work Obligation 22

5.4.3. Environmental Regulation 22

6. Outlook 23

7. Appendix 25

7.1. Contact Us 25

7.2. Disclaimer 25

List of Tables

1.1. List of Tables

Table 1: Germany, Regime Overview 4

Table 2: Baden-Wuerttemberg, Germany, Royalty Rates (%), 2006 onwards 8

Table 3: Rates Lower Saxony, Germany, Royalty Rates (%) 2004 – 2016 10

Table 4: Rhineland Palatinate, Germany, Royalty Rates (%), 2006 – 2018 11

Table 5: Rates Schleswig-Holstein, Germany, Royalty Rates (%) 2004 – 2018 (afterwards consecutively if not changed). 12

Table6: Germany, Corporate Income Tax Rate (%), 2000 onwards 14

Table7: Germany, Tangible Asset depreciation 2016 15

Table8: Germany, State Level Mining Legislation, 2018 18

Table 9: Germany, State Level Mining Authorities 20

List of Figures

1.2. List of Figures

Figure 1: Regime Flow Chart 5

Figure 2: Germany, Indicative NPV10/boe, IRR and State Take Comparison, Internal 6

Figure 3: Germany, Indicative NPV10/boe, IRR and State Take Comparison, Regional 7

Figure 4: Germany, Legal Framework 17

Figure 5: Germany, Institutional Framework 19


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