Polish government passes draft on shale gas extraction, with taxes totalling 40%

By bne IntelliNews March 12, 2014

The cabinet has passed a draft law regulating the shale gas industry and plans to send the bill to the parliament within the next two weeks, according to PM Donald Tusk. The draft is long overdue and its delay has often been as one of the reasons for several investors' withdrawal from Polish shale gas projects.
Under this bill, shale gas extraction will be tax-free till 2020. Afterwards, tax burden will total no more than 40%, Tusk said. It will include 1.5% tax levied on all gas (conventional or unconventional) extracted, up to 25% of fees depending on a deposit's richness and cash flow generated, plus regular 19% CIT.
A landmark decision is to "radically simplify" administrative procedures, the Premier also stressed. Instead of the current three licenses, an investor will obtain a single license allow to prospect, extract and sell shale gas. Thus, the licensing tender will be preceded by pre-qualifying verifications for candidate for the tender. A license will be valid for 10-30 years. Current license holders will have additional two years for filing and for changing their prospecting licenses into new-type licenses.
As at Mar 1 of 2014, there were 92 licenses for shale gas extracting granted to 34 Polish and foreign entities. License-holders have completed 57 prospecting wells so far, according to the data provided by the ministry of environment.
In April of 2011, the U.S. Energy Information Administration (EIA) estimated that Poland's technically recoverable shale gas resources are 187tr cubic feet (or around 5.3tr cu.m.). In March of 2012, the State Geological Institute (PIG) estimated that Poland's shale gas deposits are at least around 345-768bn m3.

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