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New shale gas regulations

 On April 24, 2014 new shale gas regulations were presented to the Polish Parliament under governmental draft of the law amending the geological and mining law and some other laws (“Draft”).

The Draft includes the regulations on prospecting and exploitation of carbohydrates, including shale gas and oil. It retains majority of proposals, originally included in the previous drafts of the bill, but introduces also some innovations.

The National Operator of Energy Resources concept and its participation in every investment having concession was abandoned. Instead the Government decided to assign its competences to already existing mining and environmental institutions.

Having in regard one of the main purposes of the Draft, which is to simplify the bureaucracy in the administrative proceedings on prospecting and exploitation of the shale gas, three separate concessions shall be replaced by one join concession for prospecting, surveying and mining carbohydrates. The concession shall be awarded by tender for definite period of time, from 10 to maximum 30 years with possibility of its extension for two or maximum 5 years. The Draft provides also for possibility of mining before completion of prospection and surveys phase.

The temporary regulations of the Draft provide that concessions for prospecting and survey of carbohydrates, issued before the day of new law entering into force, shall be binding until the date of the expiration. The Draft provides however the possibility of converting the given concession, within two years from the day of new law entering into force, into new join concession or change of the existing concession with possibility of its extension up to three years.

The Draft introduces also some facilities in the construction phase of the shale gas mining process. It provides for possibility of construction of the structures for conducting prospection and survey of the carbohydrates upon declaration (no need of construction permit) Further facilities concern the obligation of obtaining the environmental decision. Under the Draft such decision would be obtained not until decision on initiation of drilling. The participation of the ecological associations in the administrative proceedings would be also limited to these which included in their statute activity the environment or nature protection, not later than one year before the administrative proceedings was started. The above amendment would cover not only the mining projects but all the investments requiring the environmental proceedings.

New rates of taxation for mining and proposal that until 2020 mining shall be free from new taxation, is another Draft’s solution that may support development of this field. Shale gas exploitation being innovating field of industry, requires stable and practical law regulations to assure efficient access of the investors to the business and its development.

The present progress of shale gas survey in Poland is too slow, therefore fast adoption of the new law (generally within 3 months from the law publication) is looked forward.

Disclaimer: This publication has been prepared for clients and professional associates of Miller Canfield. It is intended to provide only a summary of certain recent legal developments of selected areas of law. For this reason the information contained in this publication should not form the basis of any decision as to a particular course of action; nor should it be relied on as legal advice or regarded as a substitute for detailed advice in individual cases. The services of a competent professional adviser should be obtained in each instance so that the applicability of the relevant legislation or other legal development to the particular facts can be verified.