New twist in Romania’s offshore law saga: ruling parties disagree on latest changes; energy groups threaten to stop investments in Black Sea

Sorin Melenciuc 03/10/2018 | 11:27

New controversial changes decided by PSD, Romania’s main ruling party, in Parliamentary committees, hit energy groups owning oil & gas concessions in Black Sea exclusive economic area by reducing the possibility to deduce their investment when paying taxes.

ALDE, the junior partner of PSD in the ruling coalition, said it doesn’t agree the new form of the law, while major energy corporations investing in Black Sea offshore gas fields have asked on Wednesday the ruling parties to discuss with all stakeholders before adopting the law.

“Tax stability is completely removed, which makes it impossible to make final investment decisions,” offshore concessionaires association ARCOMN said in a press release.

The new form of the law allows investors to deduce only 30 percent of their investment when paying taxes, a change disapproved by investors and experts alike.

“Romania has to win only if the investments are made. The optimum gain should be determined calmly and transparently, based on an impact analysis made by ANRM and the Ministry of Finance,” Razvan Nicolescu, a former Energy Minister and currently senior expert at Deloitte, commented on Wednesday.

Two weeks ago, PSD has accepted in the energy committee of the Parliament two key-changes offshore bill favoring major energy corporations investing in Black Sea offshore gas fields.

PSD member proposed two amendments to the law, which allow investors to deduce their investment when paying taxes and freeze the taxes for the period of offshore gas production.

But the new form of the law hits large investors like ExxonMobil and OMV, which discovered large gas deposits in Romania’s exclusive economic area in the Black Sea.

On August 2, president Klaus Iohannis asked the Parliament to re-examine the controversial draft bill that regulates the development of offshore energy projects.

Romania’s head of state says the draft bill has to be re-analyzed by the Parliament from the perspective of the legal stability and predictability on the long term.

Oil companies have expressed concern about the new offshore law, saying that it may discourage new investments in the Black Sea.

OMV Petrom, one of the companies engaged in exploration works offshore Romania, said that it could announce by the end of the year a decision to start commercial operations.

However, the company said that the decision will consider the updates in the regulatory framework.

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