Polish Environment Ministry amends proposed hydrocarbon law


Polish environment ministry amends proposed hydrocarbon law


WARSAW -- Poland's environment ministry has amended its proposed hydrocarbon law to address the concerns of companies exploring for shale gas in the central European country in a bid to speed up growth of the fledging industry.

The proposed "geological and mining law," which has been nearly two years in the making, has now been sent to the prime minister's chancellery to await a government meeting at which it can be approved or discussed further.

Despite protests from the country's shale gas lobby, the ministry has opted to push ahead with its plans to create NOKE, a state-controlled company that will take up to a 5% equity stake in each concession.

But the new law stipulates NOKE will proportionally share both in the costs and profits of these licenses, said deputy Environment Minister Piotr Wozniak.

NOKE will have a right of first refusal on the secondary trade in licenses, but until a holder maintains a license, they can opt out of NOKE participation.

Unlike in a previous version of the bill, NOKE won't be able to veto license-holders' decisions, but only file "reservations" with the Environment Ministry, Mr. Wozniak added.

The oversight measure is intended to protect Polish hydrocarbon reserves from spoilage due to badly designed wells or hydraulic fracturing, something the ministry says its experts will be able to prevent.

The shale gas lobby, OPPPW, has said state participation in capital intensive and technologically complicated projects could slow decision-making.

Poland's Environment Ministry will retain its environmental and geological oversight role, instead of a previously proposed separate new government office, but will absorb the budget and the planned additional 200 staff of that office, Mr. Wozniak said.

While the ministry's duties will increase as a result of the law, Mr. Wozniak admitted the ministry is falling short in fulfilling some of its current duties to the hydrocarbon industry in a timely manner.

OPPPW has complained about red tape ensnaring progress on exploration.

Mr. Wozniak said he expects between one to three individual shale gas wells to turn out to be commercially viable in the next 12 months, "this isn't the same thing as commercial production", which isn't likely for several years.

The Finance Ministry is working on a separate law to tax oil and gas production. It brought cheers from the industry when it said last month a proposed new tax regime wouldn't be imposed until 2020, rather than 2015.

Dow Jones Newswires

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