Level of oil royalties in Romania, above the European average


Romania’s applied oil royalties and taxes exceed on aggregate the European average, a study conducted at the request of Oil and Gas Employers’ Federation by Deloitte reads. According to a press release Deloitte analyzed the level of royalties and of similar taxes, calculated as percentage of revenues in the activities of exploration and production of oil and natural gas in Europe. Thus, Romania has a level of approximately 13.9%, while the European average is only 12.2%, according to the press release, which also states that if from the European average the Groningen gas deposit is excluded (the largest deposit in Europe and 10th in the world), the average drops to 9.6%.

In order to calculate the average in Romania, besides oil royalties, the tax on constructions, tax on domestic crude oil, the tax on additional revenues due to the deregulation of prices for natural gas and the tax on natural resources exploitations other than gas were considered, the release notes. The study also shows the correlation between productivity per well and the effective part taxed. Thus, in countries with low productivity levels, the royalties and similar taxes are lower than in countries with high productivity.

With a production of less than 40 barrels of oil equivalent (boe)/well/day, Romania is placed among the countries with low productivity per well, along with countries such as Poland, France, Bulgaria, Lithuania and Turkey. The average effective tax rate for these countries is 6.9% versus 13.9% in Romania, concludes Deloitte. Currently, the Ministry of Finance is considering replacing the existing oil royalties with a new profit taxation system of the companies that exploit hydrocarbons in our country, authorities analyzing several variants regarding the new system of royalties they want to put in place next year.

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March 2015

June 2017