Government Expects High Interest in Oil and Gas Fields

Significant global energy companies are interested in potential oil and gas deposits in Croatia, and the new hydrocarbons law will enable them to carry out exploration and exploitation, which could bring Croatia revenues measured in hundreds of millions and even billions of dollars, says a high-ranking source from the Government.

The Government reminds that there are only 15 active wells on the Croatian side of the Adriatic, while there are 180 on the Italian side. Since these are equal geological formations, there is no reason not to believe that the Croatian Adriatic also hides large reserves of hydrocarbons, especially gas, says the source from the Government.

It announces that after the expected adoption of the hydrocarbons law in the Croatian Parliament, the creation of a database, namely detailed two-dimensional seismic data of the Adriatic and potential continental deposits, will follow, which will take about six months. This data will be owned by the state, which will sell it to companies that apply for exploration and exploitation tenders.

The announcement for exploration and exploitation tenders should follow by the end of the year, and then companies will need an additional six months for analysis, so the first contracts could be signed by mid-next year.

Just in the exploration phase, Croatia could earn several hundred million dollars, even before the extraction of oil and gas has begun, claims the source from the Government. It adds that only Plinacro from gas transportation could earn a billion kuna annually, and Croatia could gain the opportunity to sell non-Russian gas in the region.

The exploitation contract falls under the domain of the Government, and its implementation would be overseen by the hydrocarbons agency. In the case of a Product Share Agreement, the implementation would be overseen by a state trading company whose primary activity would be the exploration and/or exploitation of energy mineral raw materials.

This trading company would practically also perform the role of a trader of the extracted quantities, which would belong to the state under the contract.

The Government expects that the adoption of the new law and the facilitation of conditions for oil and gas exploration, along with the expected entry of foreign companies, will also awaken INA, which they expect to participate in the tenders.

A government source emphasizes that the Government has no favorites among global companies, that they are neither Russians nor the American ExxonMobil, as speculated in the media, and that all will be treated equally.

The Government has submitted a proposal for the hydrocarbons exploration and exploitation law to the parliamentary procedure from today’s session, aiming to simplify administrative procedures for obtaining concessions and improve legal security and flexibility in the realization of investment projects in oil and gas extraction.

The adoption of the law is a novelty in domestic legislation as oil and gas exploration and exploitation are now regulated by the Mining Act.

The most important novelty brought by the new law is the introduction of a unified procedure for issuing permits and concluding contracts, thus directly acquiring concessions. This means that the issuance of a permit for concluding a contract and concluding a concession contract is carried out based on only one public competition in a unified procedure.

The final decision on the concession is made by the Government.

The proposed law anticipates the formation of a hydrocarbons agency and, within the jurisdiction of the Ministry of Economy, the decision to establish a national trading company whose primary activity would be the exploration and/or exploitation of energy mineral raw materials.

The investor and the Government can conclude one of the contracts provided by the law, which are the contract for exploration and sharing of hydrocarbons exploitation, the contract for exploration and exploitation with the obligation to pay fees and taxes, or a combination of these two types of contracts.