"The taxation regime for gas production in Romania has become even more uncompetitive, significantly above the European average. This puts pressure on investments in Romania, endangering the supply [of local consumers] from domestic natural gas production. Not amending the [2018] Offshore Law leads to the delay of the final decision to invest in Neptun Deep [for beginning production] until 2023. In order for Romania to benefit from its natural gas resources, the urgent intervention of the authorities is needed," warned OMV Petrom CEO Christina Verchere, quoted by Ziarul Financiar.

The most important element that changed since 2018 - when the latest version of the Offshore Law was endorsed - is the skyrocketing natural gas energy price. Which, among others, pushed up OMV Petrom's profit - as well as the value of the 48-84 bln cubic meters of natural gas to be extracted from Neptun Deep offshore by the Austrian group in partnership with the Romanian state company Romgaz.

The way the royalties are calculated (based on Baumgarten price as opposed to realised price) complicates the taxation as well.

The new circumstances require indeed a new Offshore Law and amending the way the royalties are calculated.

But it is not sure whether the ruling coalition formed by Liberals (PSD) and Social Democrats (PSD) has the political consistency and the technical skills to negotiate a new and fair Offshore Law. 

(Photo: Dreamstime)

andrei@romania-insider.com