On 17 November 2018, the "offshore law" came in force. This aims to provide a set of legislative solutions to adapt the existing regulatory framework to oil exploration, development and exploitation projects in offshore oil perimeters, thus ensuring their functionality. The new rules cover areas such as the procedure for authorizing work, financial, commercial, and labor law issues, compensation and compensation provisions, as well as the applicable legal regime for civil offenses and penalties. The law also regulates the tax regime applicable to offshore gas revenues and the investments that this kind of activity involves.
In the Official Journal of Romania no. 964 (November 14, 2018), Law no. 256/2018 on certain measures necessary for the implementation of oil operations by offshore oil perimeter owners was published. The key provisions include the following:
For the owners of oil agreements for offshore oil perimeters which are in operation at the time of the entry into force of the law, the level of royalties, the percentages of petroleum charge, the gross output thresholds to be applied for the entire duration of the agreements, of these amounts and the tax regime specific to these activities will be that which applies at the date of the entry into force of the new law.
Owners of agreements, including their subsidiaries or members of the same economic interest group that will carry out both extraction activities and sales activities of natural gas extracted from these perimeters, are required to calculate, declare and pay the tax on the extra offshore revenue. Additional offshore revenue means "the difference between the weighted average price of natural gas sold from its own domestic production from offshore perimeters and the purchase price of natural gas from domestic production for household and non-household customers in 2012, ie 45.71 lei / MWh, multiplied by the volumes of gas sold off from domestic production in offshore perimeters.
The new tax has the following features:
There is considerable controversy about the correct interpretation of certain provisions of the offshore law. Some provisions were also challenged as non-compliant with EU law during the legislative process, but were maintained in the final form. We will issue a further newsflash if these issues are clarified.