Elements of an optimal fiscal regime for Romania’s offshore sector

The Energy Policy Group (EPG) organized on 21 May 2015, with the support of the Romanian Black Sea Titleholders Association (RBSTA), a roundtable on The Romanian Offshore Petroleum Fiscal Regime. Participants included representatives of relevant public institutions (the Romanian Government, the National Agency for Mineral Resources, the Romanian Parliament), representatives of RBSTA member companies, fiscal and legal consultants, academia and specialized press. Talks were held in accordance with Chatham House rules. The roundtable was organized in the context of the Romanian Government being in full process of drafting a new oil and natural gas (O&G) fiscal framework. Clarifications in this area are necessary and expected by investors and public opinion alike.

The fiscal system is a decisive factor for O&G operators. It is the main tool for distributing revenue between state and investors and it must offer a fair, win-win outlook on the long term. The investment cycle of an oil project is long-term – typically 25-30 years, or longer for offshore projects. In addition, offshore projects in particular require large upfront exploration capital investments. Also, the investment risk for offshore exploration activities is high, and the cost recovery timeframe can be over a decade. Therefore, the details of the upstream fiscal framework will be extremely important as companies are hoping to move towards commerciality, since it will generate major long-term effects.

This policy paper summarizes the talks at the roundtable and puts forward, based on presented data and arguments, recommendations for political decision-makers in the Government, the National Agency for Mineral Resources (ANRM) and the Romanian Parliament. It also aims to offer the interested public clear and useful information on a topic that frequently raises emotional and disproportionate assessments.

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