Romania Upstream Fiscal and Regulatory Report – Uncertainty Clouds Regulatory Landscape Despite Passage of Offshore Law

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Pending legislation has created uncertainty in the Romanian upstream sector in recent years, and additional changes to fiscal terms have created instability in the fiscal regime. Although the parliament has now passed the offshore law to facilitate the development of Black Sea gas fields, the final draft unexpectedly introduced a new tax. Vagaries in this new legislation combined with further policy proposals that may affect the sector mean that uncertainty will remain a cloud over the sector for the short-term at least.

“Romania Upstream Fiscal and Regulatory Report – Uncertainty Clouds Regulatory Landscape Despite Passage of Offshore Law”, presents the essential information relating to the terms which govern investment into Romania’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 Romania’s upstream oil and gas investment climate.

Scope

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

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 Romania

Reasons to Buy

Understand the complex regulations and contractual requirements applicable to Romania’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 2

2. Regime Overview 3

3. State Take Assessment 5

4. Key Fiscal Terms 6

4.1. Royalties, Bonuses and Fees 6

4.1.1. Royalties 6

4.1.2. Drilling Permit Fees 7

4.2. Additional Oil and Gas Taxes 7

4.2.1. Tax on Excess Revenue from Gas Price Deregulation 7

4.2.2. Offshore Supplementary Income Tax (Pending Promulgation) 8

4.2.3. Special Tax on Revenues from Natural Resources other than Natural Gas 8

4.3. Direct Tax 9

4.3.1. Corporate Income Tax 9

4.3.2. Deductions and Depreciation 9

4.3.3. Withholding Tax 9

4.4. Indirect Taxation 9

4.4.1. Value Added Tax 9

4.4.2. Customs and Excise Duties 9

4.5. EU Emissions Trading Scheme 10

5. Regulation and Licensing 11

5.1. Legal Framework 11

5.1.1. Governing Law 11

5.1.2. Contract Type 11

5.1.3. Title to Hydrocarbons 11

5.2. Institutional Framework 12

5.2.1. Licensing Authority 12

5.2.2. Regulatory Agency 12

5.2.3. National Oil Company 12

5.3. Licensing Process 13

5.3.1. Licensing Rounds 13

5.3.2. Bidding 13

5.4. License Terms 14

5.4.1. Duration and Relinquishments 14

5.4.2. Work Obligation 14

5.4.3. Domestic Market Obligation 14

5.4.4. Local Content 14

6. Outlook 15

7. Appendix 17

7.1. References 17

7.2. Contact Us 18

7.3. Disclaimer 18

Table

1.1. List of Tables

Table 1: Regime Overview 3

Table 2: Romania, Royalty Rates (%), Crude Oil and Condensate 6

Table 3: Romania, Royalty Rates (%), Natural Gas 6

Table 4: Romania, Offshore Supplementary Income Tax Rate Increments for Prices Exceeding RON85/MWh 8

Table 5: Bid Marking Scheme 13

Table 6: References 17

Figures

1.2. List of Figures

Figure 1: Regime Flow Chart 4

Figure 2: Romania, Indicative NPV10/boe, IRR and State Take Comparison, Regional 5

Figure 3: Romania, Legal Framework 11

Figure 4: Romania, Institutional Framework 12

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