Romania’s Govt. ready to sweeten Offshore Law to stimulate investments

Romania’s Government has launched for public debate a bill that amends the Offshore Law by relaxing the taxation regime and waiving the obligation that producers sell at least half of the gas they produce on the local market.

OMV Petrom, which operates the largest offshore gas perimeter in Romania’s Black Sea section in partnership with US group ExxonMobil, welcomed the initiative.

“The fact that the authorities are considering changing the oil and gas legislation is an important step forward. Reopening the dialogue on a fundamental topic for Romania is welcome,” the oil company said in a statement, according to local Economica.net.

Specifically, the bill increases the benchmark gas price above which producers have to pay an extra tax and allows the oil companies to deduct past investments in upstream sector (related to exploration) up to the limit of 60% of the revenues for the purpose of calculating the supplementary tax, versus 30% in the current form, Bursa.ro reported. The amendments are needed “to keep the Romanian offshore sector competitive and encourage foreign investors.'' The expenditures with past investments are fully deductible for the purpose of calculating the corporate profit tax under the bill.

The bill comes just a month after president Klaus Iohannis and US president Donald Trump signed in Washington a joint statement that explicitly mentioned the need to change the investment law in Romania, to make it more predictable. “Romania and the United States will analyze ways to improve the investment climate in the field of energy for the benefit of both countries,” according to the joint statement of the two presidents.

The draft bill was launched a few days before prime minister Viorica Dăncilă went on a visit to the US, where the issue of investments in energy and gas in the Black Sea will most likely be addressed as well.

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(Photo source: OMV Petrom)