Polish Briefing 12 August, 2019 9:00 am   
Editorial staff

Polish Briefing: Shale gas burned out. The Sejm will remove a special tax

What goes on in Poland on the 12th of August.

Shale gas burned out. The Sejm will remove a special tax

On August 9, the first reading of the government draft act on repealing the act on special hydrocarbon tax and amending some other acts took place in the Sejm of the Republic of Poland. The reason for the change is the failure of the “shale revolution” in Poland to date.

How does the special hydrocarbon tax work?

The Act on Special Hydrocarbon Tax introduced a tax on profits from hydrocarbon mining activities and extended the scope of the Act on the tax on the extraction of certain minerals by taxing the extraction of natural gas and crude oil.

– The basis for the special hydrocarbon tax is the profit on hydrocarbon extraction activities constituting the surplus of revenues from hydrocarbon extraction operations in a given tax year over the eligible expenses incurred in a given tax year. The amount of natural gas and crude oil that is the subject of the supply of extracted hydrocarbons is determined on the basis of an invoice or other document regarding their supply – the authors of the act explain in the justification.

Unsuccessful shale revolution in Poland

It reads that the tax was introduced in the hope of profits from the growing extraction of shale gas in Poland. Despite promising U.S. forecasts The Energy Information Administration estimates deposits of this type at 5,2 trillion cubic meters; later estimates of the Polish Geological Institute already showed, however, that Polish shale gas resources are probably between 346 and 768 billion cubic meters. Therefore, it confirmed the lowest values ​​of shale gas resources forecast so far.

– Currently, according to the information of the Ministry of the Environment, as at 30 April 2017, 20 licenses for shale gas exploration in Poland, which means that compared to the state as of 1 July 2013, i.e. the state that was assessed for the purposes of the Regulatory Impact Assessment for the Act on special hydrocarbon tax, when 108 licenses were issued in Poland, the number of licenses in force decreased by 81 percent. There is also a drastic decrease in the dynamics of exploration and appraisal work on shale gas – the authors of the changes warn.