Law no. 157/2022 approves the fiscal framework for oil exploration, development and exploitation carried out by holders of oil agreements for offshore and deep onshore oil fields.
A series of changes have been made to Law no. 256/2018 (Offshore Law).
The main amendments brought by Law no. 157/2022:
- The obligation to calculate, declare and pay tax on “additional revenues” has been extended from covering holders of offshore oil agreements to include deep onshore oil agreement holders, including their subsidiaries.
- The concept of a “deep onshore oilfield” has been introduced and defined as an oilfield located on land with an area corresponding to the surface projection of the contour of the part of the earth’s crust within which, over a depth of 3,000 metres, exploration, development, exploitation or storage works are carried out, as well as areas on the surface necessary for carrying out the activities of exploration, development, exploitation, storage and transport.
- “Additional revenues” are calculated by multiplying the volumes of gas sold by the difference between:
- weighted average price of natural gas sold from fields minus the transport, distribution, storage and other logistical costs insofar as they are borne by the holder of the oil agreement (according to Law no. 256/2018, these costs could not be deducted) and;
- the minimum basic price of the calculation interval corresponding to the price grid from Law no. 157/2022 (according to Law no. 256/2018, the purchase price of natural gas from domestic production for domestic and non-domestic customers in 2012 decreased to RON 45.71/MWh).
- The tax rate of 30% of the additional revenues for prices up to RON 85/MWh has been repealed. The tax rate is still applicable for the additional revenues obtained as a result of prices higher than RON 85/MWh.
- The maximum limit for deducting investments in the upstream segment has been established as 40% (previously 30% under Law no. 256/2018) of the total additional tax.
- The additional tax is a deductible expense when determining the profit tax result.
- During the development of the oil agreements, the holders and their affiliated companies will be able to trade freely hydrocarbons produced from the deep offshore and onshore areas. However, by way of derogation, the government may introduce temporary price and sale restrictions on the quantities needed to ensure that the consumption needs of household customers, producers of thermal energy for the population and European solidarity mechanisms under European regulations can be met. These measures will be limited in time and purpose, and they will be applied in proportion to the total quantities of natural gas in domestic production.
- The quantities of gas will be offered in advance for sale, with priority, to the Romanian state. In the event of refusal, the agreement holders have the right to then sell those quantities to third parties.
- If included in the oil agreements, the royalty and tax regimes applicable to exploration, development, exploitation and abandonment activities will not change to the advantage or disadvantage of the holders during the application of the oil agreements. .
Source: [Law no. 157/2022 for the amendment and completion of Law no. 256/2018 regarding some measures necessary for the implementation of oil operations by the holders of oil agreements regarding offshore oil perimeters, published in the Official Gazette no. 516 dated 25 May 2022]