After hot debate and an eleventh-hour consensus struck between Romania's most powerful parties, the Romanian parliament passed the “Offshore Law" on October.
The law regulates offshore oil & gas projects in the Romanian waters of the Black Sea, and makes significant changes to existing laws on protective provisions for archaeological sites, historically protected areas and coastal areas.
The law sets royalties at levels roughly equal to onshore production (up to 13.5%), while the "windfall tax" remains in place and is calculated by applying rates that vary from 15% to 70% on supplemental revenues obtained from the sale of natural gas extracted offshore (after the deduction of up-stream investments). The additional revenue is calculated as the difference between the average weighted offshore gas price, which shall not be lower than the reference price set by the National Agency for Mineral Resources, and RON 45.71/MWH, representing the 2012 regulated acquisition gas price, multiplied by the volumes sold.
According to the tax, transactions below the reference price are taxed at the reference price, and the value of investments in the upstream segment permitted to be deducted from the windfall tax is up to 30%, but such investments will be "non-deductible" for profit tax purposes.
Also, the law provides that the title-holders of petroleum agreements currently in force are subject to the royalty regime existing at the date of enforcement of the law.
Offshore producers are also required to trade at least 50% of Black Sea gas production on the Romanian commodity markets (OPCOM and BRM).
According to other terms in the law, non-resident subcontractors are required to set up local Romanian premises, while 25% of the average number of employees hired each year should be Romanian nationals. Subject to equal treatment conditions, preference is set for use of the Romanian and EU entities when obtaining goods and services.