Poland completes shale law overhaul

New horizons: Poland finishes shale law shake-up, although operators still have concerns

Poland has enacted its new shale taxation measures almost three years after embarking on an overhaul aimed at revamping shale gas licensing and taxation to stimulate the resource's development.

The Polish president signed the Special Hydrocarbon Tax Act into law that offers tax-free exploration to companies not yet in profit up to 2020 and creates a system that aims to see a total tax take of about 40% including 19% corporation tax.

From 2020 shale gas production will see a profit-based tax levied up to a maximum of 25%, with a separate extraction tax set to levy another 1.5% for unconventional gas, 3% for conventional gas and 6% for shale oil excluding certain cost deductions.

Earlier this month, the companion bill – the Geological and Mining Law – was also passed, creating a unified licence for exploration, drilling and production of between 10 and 30 years’ duration.

The Polish Exploration and Production Industry Organization (OPPPW) welcomed many of the measures it considered key such as the rejection of the proposed state operator that would have held a mandatory 10% of all projects.

The OPPW, which is supported by many of the active explorers in Polish shale, also welcomed the unified licence but said nothing had been done to address red tape outside the scope of the Ministry of Environment.

The group said “a significant number of red tape issues greatly extend the permitting process”, which in Poland can last up to a year versus as little as 45 days in Pennsylvania.

While it also welcomed the tax break, the OPPPW criticised the “time and cost-consuming monthly taxation reporting” that is to start in 2016 as a hindrance on business activity.

Another industry platform, Shale Gas Europe, said that Poland had taken "a significant step forward in creating a more attractive investment environment for operators exploring the country’s shale gas potential".

The Polish environment ministry is meanwhile conducting public consultation on an update to its overall energy policy to 2050, which sets out three priorities of developing the energy sector, fostering economic growth and energy security as well as meeting the needs of businesses and the public.

Developing shale gas potential to replace decreasing conventional gas and coal output is among the priorities set out in the draft strategy.

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