Press releases

Projected law gaps endanger future of hydrocarbon exploration and production already commenced in Latvia

2 April 2013

The bill “On Subsoil” prepared by the Ministry of Environmental Protection and Regional Development (MEPRD) which the Economic Committee of the Saeima is planning to consider at the third reading on the 3rd April includes provisions regarding hydrocarbon exploration and production branch which were previously unsuccessfully developed by the Ministry of Economics (ME); adoption of the bill in its the current version threatens to suspend hydrocarbon exploration and production projects already running for a long period of time.

In Latvia in this sphere actually are engaged merchants, whose proposals and objections until now were ignored by ME. Also previous progression of the bill causes concern about formalistic and irresponsible work of state officials, who don’t consider merchant’s reasons based on practical experience and develop “on-paper” formal regulation, not based on any theoretical or practical experience and designed for the mining branch of high economic opportunities.

Serious cause for concern about possible enactment of the hydrocarbon production bill is also provision which provides to establish 100 meter distance from well to the land boundary. Several members of the Association are merchants who already implement hydrocarbon prospecting and production projects in license areas specified by the Cabinet decisions. Enactment of the proposed new limitations shall decrease the areas already used subject to previously issued licenses to such an extent, that it shall exclude any implementation of these projects. In spite of previously established requirements, enactment of new, groundless provisions contradicts the principle of confidence in legality of actions and prevents the development of investment-demanding exploration and production projects.

- Sigita Rozhelaite, member of the Board of Baltic Hydrocarbon Exploration and Production Association:

The Association did its best to take part in preparation of the bill, offering proposals based on practical experience. Unfortunately, ministry officials avoided the openness and ignored branch representatives’ repeated requests to listen to their arguments. Both theoretical and practical experiences as well as any legal grounds were permanently ignored, thus creating an impression that legal provisions which are vital for the branch are being developed in official’s offices separate from real situation and creating invincible hindrances to the continuation of the brand merchants’ activities under the cover of state and public interests.

Long before the ME has been protractedly developed the project of Regulations on hydrocarbon production branch (previous Cabinet Regulations already became inoperative), avoiding involvement of representatives of the branch and non-public organizations. Since the adoption of Regulations was not no possible without accept of Branch and non-public organizations representatives, ME submitted discriminatory proposals on amendments of the Subsoil law to MEPRD who supervise the bill.

Both in the first and second reading of the bill representatives of the Branch have not participated; the last meeting was held on Christmas eve without informing interested parties about proposed version of the Law, and in the bill were included public unavailable EM proposals. Moreover, the ME version was corrected after it was adopted in the second reading.

The Association has analysed the experience of Lithuania, Poland, America and other countries, which does not allow temporary suspension of productive wells before other exploration works are completed. The regulation which establishes that a good well may not be used for several years until full completion of hydrocarbon exploration program can not exist. Moreover, such unreasoned provision contradicts the purpose of the Law “On subsoil”.

The Association on behalf of its members would like to underline indistinct and irresponsible progression of the bill, namely, absence of any explanation of fact that in the bill are not included all submitted proposals, but only proposals developed by ME, which were already rejected at consideration of project offered by the Cabinet.

On behalf of whose interests this bill is being considered so hastily and why it includes only ME proposals in circumvention of proposals made by Association, merchants and Latvian lawyers Association?

The Association invites all responsible parties to be farsighted and avoid quick, random and reciprocal decisions, but listen to and weigh arguments of all parties.