Romania loosens surplus tax on OMV Petrom

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Romanian President Klaus Iohannis promulgated the revised law that lays down a “solidarity contribution” from the “excessive profits” of energy companies, on Friday 12 May.

The new provisions were much softened compared to the initial version, which was deemed “unconstitutional” by a furious OMV Petrom, the Romanian integrated oil company controlled by Austria’s OMV.

OMV Petrom requested that Iohannis re-examine the law, eventually resulting in the complete removal of those details from the text, according to profit.ro.

Law targets companies with refinery activities

The provisions that were subject to re-examination were those aimed at “forcing” a percentage of 75% of turnover paid.

Under the new terms, a fixed tax on crude oil processed at refineries will be payable only by companies that practice both oil extraction and refining activities. The only Romanian company fitting this description is OMV Petrom.

The fee will be 350 Romanian lei per ton of crude oil refined. Last year, OMV Petrom processed 4.24 million tons of crude oil and condensate at the Petrobrazi refinery, south Romania, according to its annual report for 2022, which would result in a payment obligation to the state budget of over 1.48 billion lei.

The figure is far below the estimates regarding the payment invoice of OMV Petrom for the solidarity contribution in the situation where the activities targeted by the contribution would have totalled at least 75% of its turnover, estimates that went from a minimum of 3 billions of lei up to EUR 1bn.

MPs vote to amend surcharge law

The elimination of the first variant of the OMV Petrom surcharge initiated in the Parliament was confirmed on Wednesday by the Chamber of Deputies, after a similar decision of the Senate the day before.

The amendment was adopted by 182 votes for, 38 against and 44 abstentions. The law will enter into force three calendar days after its publication in the official gazette.

The coalition argued that “refining margins” have lately been “superior to margins obtained under normal market conditions. Although margins are expected to narrow in 2023, they will still be superior to margins obtained under normal market conditions, coalition politicians added.

“The text presents ambiguities and difficulties in interpretation, potentially generating situations that would lead to non-compliance with European legislation” the governing coalition added, as it decided to eliminate the provisions flagged by Iohannis.

Profit.ro commented that MPs have moved quickly, given the June 25 deadline for the declaration and payment of the solidarity contribution.

Concessionaires exempted from over-taxation

The solidarity contribution will not be payable by concessionaires of the Midia offshore natural gas perimeter in the Black Sea, where production began last summer, as the relevant operational period is listed as 2018-21.

The three concessionaires, Black Sea Oil&Gas (BSOG), Petro Ventures Resources and Gas Plus Dacia have already challenged the solidarity contribution in court, claiming it is unconstitutional.

In addition, US ambassador to Bucharest Kathleen Kavalec, told Romanian Prime Minister Nicolae Ciuca that investors need “stable, predictable and transparent taxation”, during a meeting where energy investments in the Black Sea were also discussed.