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Poland: Draft Proposals Completed on Hydrocarbon Tax Law and Amendment to Geology and Mining Law

(Apr. 8, 2013) It was reported on March 3, 2013, that Poland’s Ministry of Finance had completed a draft hydrocarbon taxation proposal. The proposal sets forth tax rates for natural gas and oil extraction. It stipulates that extractive industries will be subject to an overall tax rate of 39% on extractions from shale deposits and a rate of 41.92% for extractions from conventional deposits. (Poland Announces Draft Hydrocarbon Taxation Bill (Mar. 3, 2013).)

The proposal calls for a 6% royalty tax on conventional oil extraction; a 1.5% levy on non-conventional gas extraction; and a 3% levy on conventional natural gas and on non-conventional (shale) oil extraction. The taxation scheme is aimed at being competitive with rates imposed in other countries; for example, Norway has an extraction tax rate of 68%, and the United Kingdom has a rate of 62%. The Ministry is aiming for the law to enter into force in 2015. (Id.; Draft of Hydrocarbon-Extraction Tax Law Complete, WARSAW BUSINESS JOURNAL (Mar. 4, 2013).)

At about the same time that the draft hydrocarbon tax proposal was completed, Poland’s Ministry of Environment put forward a draft proposal to amend the Geology and Mining Law and eight other laws. This proposal was published for public comment until March 18, 2013. (Poland: Draft of New Hydrocarbons Bill Finally Released (Feb. 16, 2013); Ustawa z dnia .… o zmianie ustawy – Prawo geologiczne i górnicze oraz niektórych innych ustaw [The Act of …. Amending the Law – the Geology and Mining Law and Some Other Laws] [this was the draft proposal for public comment], (Feb. 15, 2013), Ministry of the Environment of the Republic of Poland website.) It seems that originally the government had envisaged the drafting of a new hydrocarbons law jointly by the Ministries of Finance and Environment, but that this idea was abandoned. (Poland: Draft of New Hydrocarbons Bill Finally Released, supra.)

Some features of the draft proposal on amendment of the Geology and Mining Law and other laws are:


  • reduction of concession types from three to one and issuance of all new concessions by tenders;
  • retention of priority for existing exploration concession holders in obtaining access to production licenses, for a two-year period after the date of approval of the geological documentation; and
  • permissibility of the creation of partnerships by companies in order to share mining rights and obligations. (Poland: Draft of New Hydrocarbons Bill Finally Released, supra.)

National Energy Minerals Operator (Narodowy Operator Kopalin Energetycznych, or NOKE, a 100% state-owned company created by the state-owned bank BGK and the National Fund for Environmental Protection and Water Management)

  • representation of the state interest by NOKE, as a minority shareholder (5%) in exploratory and production operations; and
  • creation of a Generations Fund, which from 2019 will invest oil and gas production profits to support R&D, science, and education, as well as pension and health systems. (Id.)


  • simplification of procedures, clarification of requirements, and general diminishing of the regulatory burden in connection with mining operations and the environment;
  • drilling of wells up to five kilometers deep during the exploratory phase of operations without the application of full environmental assessment procedures;
  • faster and cheaper obtaining of environmental impact assessment reports, with such reports required only for a drilling site of two square kilometers (under existing regulations, reports must include the concession’s entire acreage);
  • elimination of the obligation to obtain separate environmental impact permission in order to deepen exploration wells or change drilling schedules;
  • modernization of systems for monitoring and controlling concession holders; and
  • establishment of a new condition for environmental groups wishing to take part in the environmental impact assessment process, such that only an organization established at least 12 months prior to the date when the process starts will be allowed to participate. (Id.)

Impact on Communities

  • guarantee of an increased share of profits from the mining operations for regions and districts and fourfold growth in revenues for local communities; and
  • requirement that companies establish websites and publish on the Internet “full information concerning their activities.” (Id.)


  • stipulation that the overall tax burden on oil and gas extraction not exceed 40% of the gross profit of the companies; and
  • determination of taxes to be based on the value of the extracted raw material, at a rate of 5% for gas extraction, 10% for oil, and 25% for other hydrocarbons. (Poland Could See Billions from Hydrocarbon Tax, WARSAW BUSINESS JOURNAL (Mar. 27, 2013).)

The proposed amendments are expected to be sent to the parliament by the end of June. (Id.) According to the Ministry of the Environment, the “new legal framework will pave the way for rapid development of exploration and mining, particularly of shale gas, help increase the gas production and the number of jobs in the sector, while also protecting the environment and guaranteeing benefits for the nation.” (Poland: Draft of New Hydrocarbons Bill Finally Released, NATURAL GAS EUROPE (Feb. 16, 2013).)