Romanian Government expected to raise royalties for oil and gas in 2015

Newsroom 14/05/2014 | 09:23

Romania’s current royalty rates range between 3.5 percent and 13 percent (averaging between 7 percent and 8 percent), and this percentage is likely to increase in 2015.

The country set its royalty terms in 2014 with a 10-year stability agreement that will expire by the end of the year. According to consulting firm GlobalData, changes in the country’s fiscal regime will raise average royalties to at least 10 percent for the medium term of a new framework that will be introduced at the start of 2015.

GlobalData said the Romanian government will establish different rates for onshore and offshore fields.

“This will allow the country to raise its take from onshore production, while at the same time offering an attractive climate for exploration in the Black Sea, where costs are high particularly for deepwater areas,” said Will Scargill, upstream fiscal analyst at GlobalData.

The government also may apply specific rates for unconventional operations to provide incentives for shale exploration in Romania.

Oil and gas windfall taxes established in 2013 will expire at yearend. The reduction in revenue could lead policymakers to enact permanent taxes on oil and gas production the report said. The country is midway through a deficit-reduction program, which is considered as a possible motive for increased taxation.