Poland's New Mining Act

Eliminating Administrative Barriers to Exploration

Parliamentary work on the new Polish mining legislation has finally been completed. A new mining act was adopted by Parliament on June 9 2011 and signed by the president on July 5 2011.

Market Overview

Poland has a long-established history in, and regulatory framework for, the exploration and exploitation of conventional hydrocarbons, including separate authorities for the direction and supervision of such activities. According to statistical data announced by the Ministry of Environment, as of June 2011 there were a total of 737 licences.

In recent months Poland has become increasingly interesting to companies contemplating the exploration and exploitation of shale gas. A number of the biggest international companies engaged in the oil and gas sector already have a presence in Poland (eg, Aurelian, Chevron, FX Energy, Nexen, Marathon and ExxonMobil), and new players including ENI and Total have recently announced their interest in the Polish shale gas market. The most recent data shows that Japanese companies are also considering entering this market.

According to the Ministry of Environment, the pool of available exploration licence areas may soon be exhausted. This means that in future, the most likely way of entering this market will be through mergers and acquisitions. Currently, the largest total number of concessions is held by Polish incumbent PGNiG. Other Polish incumbents active in this field include Lotos Petrobaltic and PKN Orlen. The main international companies active in the Polish hydrocarbons sector are FX Energy, Aurelian, Marathon, 3Legs Resources, Exxon Mobil and RWE.

The first drilling for shale gas exploration commenced in June 2010 in the Łubień region of Pomorskie Province, northern Poland. According to the concessionaires' plans, it is intended that there will be 284 drilling wells by 2015, of which 84 are considered certain and the rest optional.

Currently, there is no solid data on where and in what quantities unconventional (ie, shale or tight) gas may be located. However, according to the State Geological Institute, the first reliable data in this respect should be available later this year.

Changes to regulations

The most important changes in relation to the previous regime are detailed below.

The Hydrocarbon Directive 94/92/WE has been fully implemented, regarding the terms and conditions for the exploration and exploitation of hydrocarbons. In order for a licence to be granted, establishment of the mining usufruct must be preceded by a tender.

A new ownership model has been implemented for minerals. A catalogue of minerals owned by the State Treasury lists any strategic minerals that are significant for economic development, including energy safety; other minerals are owned by land owners.

Various administrative barriers connected with exploration and exploitation activities have been eliminated (eg, in relation to licences and management plans for mining enterprises). The financial management of mining enterprises has been improved, including that concerning funding for decommissioning.

Health and safety regulations in the mining industry have been improved (eg, mining qualifications, safety and rescue). Stricter rules and regulations in respect of illegal mining activities have been implemented.

The administration has been decentralised through a shift in licensing competencies in respect of natural mineral water, hot spring water and brine.

There has been a shift of liabilities for damages to the Civil Code, with the choice of remedy against a person causing damages reserved to the person suffering injury. The period for submitting claims has been extended to five years, starting from the date on which the person suffering the injury becomes aware of the injury.

The new mining act will come into force on January 1 2012 and will repeal earlier mining regulations from January 4 1994.