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 ROPEPCA’s point of view

“The truth about the payment of natural gas royalties”

The Romanian Association of Petroleum Exploration and Production Companies (ROPEPCA) expresses its concern about the harsh and unjustified accusations brought more and more often in the public space against the Romanian natural gas producers, accusations that refer to the allegedly incorrectly paying royalties on natural gas.

The members of the association consider that these allegations lack of any real substance and their apparition in the public space can be explained only by insufficient information about the process of calculating royalties.

The “Technical instructions related to the take over and grasp of petroleum quantities representing royalties” as outlined in NAMR order 98/1988 state that the production value is determined by considering the prices used by the concession holders to exploit their petroleum quantities, which may not be lower than the reference prices established and communicated quarterly by the NAMR. In other words, the reference price for domestically produced natural gas as published quarterly by the NAMR represents nothing more than a lower limit, which the price for calculating royalties is not allowed to go below.

“We emphasize that the Romanian petroleum industry strictly followed the instructions received from NAMR and fulfilled the obligation to pay royalties, by applying in the computation formula of the royalties the maximum between the reference price set by NAMR – in its quality of representative of the Romanian State under the concession agreements – and the selling price, according to the applicable legislation”, states Harald Kraft, ROPEPCA President.

ROPEPCA mentions that, for the better understanding of the subject, as well as for supplementary information regarding the issues related to the upstream sector, it stays at the disposal of the mass-media representatives who wish to conduct interviews with the Association’s President, on the margin of this press release’s subject.

ROPEPCA brings together 17 of the most important holders of oil concession agreements concluded with the Romanian state. The members of the association hold most of the oil concession agreements for Romania’s onshore exploration, development and production blocks, representing cumulated investments of 650 million euros in 2016, a turnover of almost 2.9 billion euros, contributions to the state budget of 300 million, and are responsible for creating and maintaining 14,800 jobs.