Gov't announces rebalancing of partnership with OMV Petrom: royalties increased by 40%, waiving litigation

Royalties for oil and gas extracted by OMV Petrom on licenses taken over during privatization will increase by 40%, which will ensure Romania a fair share of the exploitation of its resources, according to a Government's press release.The press release recalls that the Government adopted on Tuesday evening, through a decision, the measures for rebalancing the cooperation with OMV Petrom for the next 15 years and established, through a memorandum, an agreement in principle between the two parties."This agreement creates the premises for a balanced and predictable relationship, intended to contribute to the consolidation of Romania's energy independence for the near future. The main provisions refer to the increase in the level of royalties, the full assumption of environmental responsibilities by OMV Petrom, the company's waiver of all litigation against Romania and the extension of the duration of the contracts," the press release states.Prime Minister Ilie Bolojan emphasized that, thus, the Government has managed, 20 years after the signing of the initial contract, to rebalance the cooperation with OMV Petrom."The objectives are for Romanians to benefit from energy independence and a predictable energy market, for the state to have correctly sized revenues, and for OMV Petrom to continue investing and developing to become a strong regional player on the energy market," said Ilie Bolojan, quoted in the press release.Royalties for the oil and gas that OMV Petrom extracts for the licenses taken over during privatization will increase by 40%, which will ensure Romania a fair share of the exploitation of its resources, the quoted source specifies."Also, Romania will no longer pay OMV Petrom the cost of closing down the wells that are no longer in use and the penalties for debts that have arisen from various litigations. At the same time, OMV Petrom waives the arbitration regarding the Neptun Deep project and will recognize the provisions of the law regulating the exploitation of gas in the Black Sea, as this law currently stands. As part of this agreement, Romania extends the exploration period of the Black Sea perimeter by two years and the duration of the exploitation licenses of the perimeters taken over upon privatization (onshore) by 15 years. In all its activity, OMV Petrom will take into account the national interests of Romania and the interests of Romanian consumers, respecting the principles regarding competition within the framework of national and European Union legislation. All these interdependent elements will be materialized in the next two months in appropriate legal and contractual acts, on which occasion all the details will be published", the press release explains.The Government extended on Tuesday by two years by decision the duration of the current exploration phase of the Concession Agreement for the exploration, development and exploitation of petroleum in the XIX Neptun perimeter, without changing the total duration of the concession, which is 45 years, namely until November 28, 2045.