The law on royalties could be approved in the Parliament in the first half of next year, with application as of 2017

The law on royalties could be approved in the Parliament in the first half of next year, following to become applicable as of 2017, Finance Minister Eugen Teodorovici stated on Thursday. He mentioned that he had had a discussion with the team of the International Monetary Fund on the royalty issue. Also, the Finance Minister said the law would reach the Parliament this year, following to be debated and approved in the first half of next year and to become applicable as of 2017. Teodorovici declined to provide further details on the value of royalties under the future law. Last month, Artur Stratan, President of the Romanian Petroleum Exploration and Production Companies Association (ROPEPCA), said that the new law on royalties could enter into force on January 1st 2017, in conditions in which, by the end of the year, it was technically impossible to take the necessary steps in this regard. He emphasized that the level of royalties should remain unchanged, to provide a “breath of fresh air” to the oil and gas industry, otherwise such a measure being “catastrophic” for the industry. “We estimate that the new law on royalties could enter into force on January 1st 2017. We do not believe that something will happen by the end of the year, because there are only several months – and we don’t think it is technically possible that the ministry succeeds to conduct a public consultation with the business environment, with the industry and with our association, to circulate a draft for public consultation posted on the ministry’s website for 30 days, then receive feedback from the business environment and get a final draft for approval in Parliament. So, by the end of the year, we don’t expect that it can be achieved by the Government. It would be ideal to introduce a change of royalties as of January 1st of any year, because it is very difficult to change during the year the calculation method and all the book records of a company operating in the oil and gas industry”, Stratan said. On the other hand, NAMR President Gheorghe Dutu stated in May that in the short term a spectacular increase in royalties was less likely and that the new royalties would most likely apply to future petroleum agreements. “The existing agreements had already been signed and contain clauses including the current royalties, based on which companies prepared business plans for 10-15 years”, Dutu explained.

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