Romania raises taxes for production of gas in Black Sea region

BUCHAREST: Romania has passed a law to impose additional taxes on gas companies operating in the Black Sea, prompting an outcry from energy companies active in the country.

Parliament adopted the legislation late on Monday, with the left-wing government saying it will bring in substantial new revenues and help increase its energy independence from Russia.

The new law introduces tariffs on the revenues of offshore operators and also obliges them to sell at least 50 per cent of their output on the local market.

ExxonMobil, OMV Petrom and Lukoil, who all own concessions in the Black Sea, said in a joint statement that the law would have “a significant negative impact” on offshore gas and oil production in Romania and underlined the need for a predictable and stable legal framework over the lifetime of their concessions.

The new rules will enable Romania to become “one of the few countries in the world which benefits from energy independence”, said Liviu Dragnea, leader of the ruling Social Democratic Party ( PSD).

“We cannot tolerate that Romania keeps being dependent on the Russians,” Dragnea said.

Dragnea is acknowledged as country’s most politician.

Thanks to a suspended jail sentence for electoral fraud, he was prevented from becoming prime minister after the PSD won elections in 2016, but still wields huge influence over the government.

Romania’s current energy production already covers almost widely being the powerful 75 per cent of the country’s needs.

According the figures from Eurostat in 2015 it was the EU’s third biggest producer of natural gas after the UK and the Netherlands, and tenth biggest energy producer overall.

According to Dragnea, the new taxes will bring at least US$ 13.2 billion into Romania’s coffers over the next 20 years, based on already attested deposits of 200 billion cubic metres (seven trillion cubic feet).

The total revenue from the new taxes could reach US$ 40 billion up to 2040, Dragnea said.

The revenue would be a boost to Romania, one of the EU’s poorest states and also one of its most prone to corruption, with scores of local and national level officials brought to trial in recent years in a crackdown by anti-graft prosecutors.