Regulation of natural gas production

Ownership and organization

What is the ownership and organizational structure of natural gas production (other than LNG)? How does the government derive value from natural gas production?

Currently, the exploration and production of natural gas on the Polish market is carried out by PGNiG SA, whose majority shareholder is the State Treasury (71.88%). Part of the extracted nitrided gas is further processed into gas with a high methane content.

Since January 1, 2016, the extraction tax covers the extraction of natural gas. The tax is levied on the basis of the law relating to the tax on the extraction of certain minerals.

Regulatory framework

Describe the legal and regulatory framework and any relevant authorizations applicable to the exploration and production of natural gas.

The methods for extracting hydrocarbons are specified in the geological and mining law. The concession is the “integrated concession”, which includes the exploration, evaluation and extraction of hydrocarbons. The concession is awarded following a tender procedure or at the request of an interested entity. The concessionary body is the Minister of Climate and the Environment. In order to assess the ability of the entity to carry out the above activities, a qualification procedure is carried out. The provisions of the Geological and Mining Law implement Directive 94/22/EC, which aims to guarantee EU Member States non-discriminatory access to carry out activities related to the exploration and production of hydrocarbons . A cooperation agreement is concluded with the entity selected in the tender, to which the Civil Code applies to the extent not regulated by geological and mining law.

Unconventional gas production

Are there different rules or restrictions on unconventional natural gas production (including hydraulic fracturing)?

The fracturing process is subject to national and European regulations, including Commission Recommendation 2014/70/EU on minimum principles for the exploration and production of hydrocarbons (such as shale gas) by hydraulic fracturing at large volume. An entity interested in the activity of exploration and extraction of raw material after obtaining a concession must, at the same time, carry out an environmental impact study of the extraction and identify and eliminate the risk linked to the pollution of the environment. Companies are required to disclose the composition of the fracturing fluid they use for drilling, which is not a trade secret.

Deposits and guarantees required

Are participants required to provide bonds or guarantees to be issued with a gas exploration or storage license?

If it is supported by a particularly important interest of the State or a particularly important public interest related to the protection of the environment or the economy of the country, a concession for the exploration and evaluation of hydrocarbons and the The extraction of hydrocarbons or a concession for the extraction of hydrocarbons may be granted on condition that securities are constituted for the debts likely to arise as a result of the exercise of the activities covered by the concession. The same applies to a company carrying out such activities in the maritime areas of Poland. The surety is constituted after the date of pronouncement of the decision approving the mining plant’s operating plan at the latest before the start date of the mining plant’s operation.