>>> The holders of agreements in progress benefit from the level of royalty, the percentage of oil royalties existing at the date when the law enters into force
By Edwig Ban
The Romanian Parliament adopted today the Offshore Law on the conditions in which the Black Sea gas exploitation will take place. Investors are obliged to trade 50% of gas on the Romanian stock exchange and 25% of employees must be Romanian.
According to the law, 50% of the production of gas extracted from the Black Sea will be traded on the Romanian stock exchange. Investors have a 30% deduction from the extra income tax. The Romanian state and investors fairly share the profit from the Black Sea gas extraction.
Regarding the profits that the Romanian state and offshore investors will get, analysts show that, according to the evaluations, the report is 50-50%.
The petroleum offshore oil permits have the obligation that at least 25% of the average annual number of employees used to carry out the agreements be Romanian citizens with fiscal residence in Romania, the law provides.
By way of derogation from the Labor Code, the specific work program shall be organized taking into account the following: "(a) the average normal working time for offshore employees is 168 hours / month, calculated on a reference period 12 months; the hours worked by offshore employees outside the time worked under this letter, calculated over a 12-month reference period, will be considered as overtime and will be offset in accordance with subparagraph (b) above; the maximum working time for offshore employees may not exceed the average of 48 hours / week, including overtime, calculated over a 12-month reference period; (b) supplementary hours of work shall be offset by an increase of at least 75% of the basic hourly wage for each additional hour provided and unpaid with corresponding free time during the 12-month reference period referred to in point (a). "
Regarding the taxation of companies by the Romanian state, the law states that "Oil offshore oil holders in operation at the date of entry into force of this law shall benefit, throughout the period of their performance, from the level of fees, percentages of petroleum charge, the gross production thresholds related to those quotas existing at the date of entry into force of this law. "
In addition, the oil offshore oil perimeter holders, including their subsidiaries and / or belonging to the same economic interest group that actually carry out both extraction activities and sales activities of natural gas extracted from these perimeters, are required to calculate, declaration and payment of tax on extra offshore revenue.
The tax on the offshore supplementary income is calculated by applying one or more percentages of the extra revenue from the sale of natural gas extracted from offshore perimeters, which deducts the value of investments in the upstream segment. The tax on extra offshore revenue takes into account the reference price established by the National Mineral Resources Authority for the calculation of royalties. Transactions below the reference price are taxed at the reference price.
"The percentages for the calculation of the tax shall be calculated on the basis of the gas sales prices of offshore oil perimeter oil-price permits on the basis of the price grid below, adjusted annually from 1 January 2019 to the annual price index consumption, as follows:
a) 30% of the additional income for prices up to 85 lei / MWh inclusive;
b) 15% of the extra revenues obtained from prices higher than 85 lei / MWh and less than or equal to 100 lei / MWh;
c) 30% of the additional revenues obtained from prices higher than 100 lei / MWh and less than or equal to 115 lei / MWh;
d) 35% of the additional revenues obtained from prices higher than 115 lei / MWh and less than or equal to 130 lei / MWh;
e) 40% of the additional revenues obtained from prices higher than 130 lei / MWh and less than or equal to 145 lei / MWh;
f) 50% of the additional revenues obtained from prices higher than 145 lei / MWh and less than or equal to 160 lei / MWh;
g) 55% of the extra revenues obtained from prices higher than 160 lei / MWh and less than or equal to 175 lei / MWh;
h) 60% of the extra revenues obtained from prices higher than 175 lei / MWh and less than or equal to 190 lei / MWh;
i) 70% of the additional revenues from prices higher than 190 lei / MWh ", the law provides.
The maximum limit for deducting investments in the upstream segment may not exceed 30% of the total offshore income tax, the law also stipulates.
Also, the sums owed by oil offshore holders related to offshore perimeters as additional revenue tax are collected in a special account used to expand natural gas distribution networks and connections to the national gas transmission system as well as to finance other investments established by Government Decision. The distribution of the collected amounts is made by the Government decision. The collection of the tax on the additional income is administered by the National Agency for Fiscal Administration.
The investments taken into account for deduction from the income tax are not subject to other deductions, the offshore law also provides. Also, the investments taken into account for the deduction from the additional income tax are not taken into account in the calculation of the taxable profit for the periods in which the tax is payable, in the sense that they are not subject to reductions / exemptions or deductions of costs, which are considered non-deductible in the calculation of corporation tax.
Another provision refers to the fact that oil offshore oil permits owners, starting with the effective date of the law, "in so far as they contract the sale of natural gas on the wholesale market in a calendar year, have the obligation to in the calendar year in which it supplies gas, concludes contracts on centralized, transparent, public and non-discriminatory markets in accordance with the regulations issued by the National Regulatory Authority for Energy (NAMR), for the sale of a minimum amount of natural gas that can not be less than that represented by a 50% share of the quantity of natural gas in its own production contracted with delivery in that calendar year as the seller. The amount of natural gas contracted on centralized, transparent, public and non-discriminatory markets is sold under a procedure approved by ANRE so that natural gas purchasers can not be conditioned by the purchase of a minimum quantity imposed by the seller. "
The initial duration of the concession may be up to 30 years, with the possibility of an extension of up to 15 years by Government decision at the request of the petroleum agreement holder regarding offshore oil perimeters, provided that the works programs established by ANRM petroleum, provides the law.