Poland sees initial hydrocarbon tax revenue at $73 million at most
WARSAW -- Poland will earn up to $73 million a year if a proposed tax on natural gas and crude production becomes law, the Finance Ministry said in draft bill published on its website.
The bill, part of a long-awaited overhaul of Poland's regulatory framework for its shale gas sector, will now go through a process of public consultation.
The proposed taxes will also affect Polish state-controlled utility PGNiG, which produces conventional oil and gas domestically, but is exploring for shale gas using vertical drilling and hydraulic fracing techniques.
The Polish state wants its "take" from commodity "rent" defined as the difference between the market price of a commodity and the cost of extracting it to be at about 40%, the ministry said in the bill, in line with earlier government guidance.
In one element of its formula the ministry set lower tax rates for extraction of shale gas and shale oil than for conventional production, arguing this type of hydrocarbon mining is more expensive.
Prime Minister Donald Tusk first mentioned the idea the Polish state wasn't getting a fair share of its natural resources in late 2011, suggesting that it should increase taxes on extraction of minerals like copper and silver as well as hydrocarbons.
Since then a royalty tax on the two metals has been passed by parliament. State-controlled miner KGHM Polska Miedz, which has an effective monopoly of copper and silver deposits in Poland, began paying millions of dollars into state coffer in April 2012.
Meanwhile, the bill to tax the extraction of hydrocarbons stalled due to inter-ministry in-fighting, as some cabinet members raised concerns that taxes would stifle the embryonic sector, while others worried foreign firms would profit too much from shale gas deposits in Poland.
At present there is no commercial shale gas production in Poland, but the government hopes unlocking this source of natural gas will loosen its dependence of gas imports from Russia.
The law, if passed, is scheduled to go into effect Jan. 1, 2015.
Dow Jones Newswires