Amendment of the Geological and Mining Law Act – a range of amendments with respect to hydrocarbons

Amendment of the Geological and Mining Law Act – a range of amendments with respect to hydrocarbons

On January 31st, the Economic Committee of the Council of Ministers approved the amendment of the act of December 12th, 2017 which amends the Geological and Mining Law („Amendment”).

Changes applicable to the prospection and extraction sector are mainly restricted to hydrocarbons. The most important of them is the introduction of an open door procedure for hydrocarbons (although the possibility to organize a tender procedure by the concessor has been kept in force), as well as the possibility to increase, without any tender procedure, the mining area, provided that it does not go beyond the boundaries of the documented space. Another change consists in the possibility to include in one and the same project decision two neighbouring deposits in order to extract natural resources from those two deposits together. The amendment liberalizes the eligibility procedure by cancelling a company’s obligation to prove its experience in exploration, identification or extraction of hydrocarbons. Should the circumstances identified by the company in their concession application change, it will not automatically result in its rejection as an eligible applicant – the concessor’s decision shall be taken at its discretion, which means that it is the concessor that shall decide whether the circumstances imply the need to change its initial decision.

The list of reasons for refusal to grant a concession has been extended by adding „the state’s resource interest” and the concession withdrawal in case of mining usufruct expiry, regardless of the reason behind it. The amendment also modifies the terms of renewal of concessions for exploration and identification of hydrocarbon deposits by revoking the time limit of 2 years. As for the extraction stage, it can be prolonged for the period required to end the extraction of hydrocarbons from their deposits.

As for geological works, one reason for their refusal was added -  when the type and scope of intended geological works and the way of their performance do not comply with the purpose of those works. The amendment also introduces changes to geological information and the need to provide up-to-date geological information resulting from geo-physical surveys related to hydrocarbon deposits.

The amended provisions also postpone the deadline for applying for transformation of „old” concessions into integrated ones – up to December 31st, 2018.

There is a sensitive issue connected with the amendment of the priority in establishment of mining usufruct in case of transition from the identification stage to extraction one. Companies shall have this right guaranteed for 3 years following the service of the approval of their mineral deposit geological documentation, but, if they fail to conclude in that period agreements for establishment of mining usufruct, they will lose that right. This change is so problematic, because the concessor does not have to establish the mining usufruct any longer. Instead, it CAN conclude the respective agreement with a company. Should such an agreement fail to be concluded within the aforementioned 3 years, such a company shall lose its right of priority. As a result of this change, it shall become hard to determine when a company should file the respective application for establishment of mining usufruct to enable the concessor to conclude such an agreement. The amendment does not specify any criteria of refusal to conclude such an agreement either.

Another important change is the introduction of mining ownership for rare gases as well as for deposits of rare earth elements and of amber, which makes mining usufruct provisions applicable to them.

The amendment also introduces amendments in other acts of law specific to prospecting and extraction activities, including i.a. Act of October 3rd, 2008 on dissemination of information on the natural environment and its protection, community involvement in environmental protection as well as environmental impact evaluation  (Journal of Laws of 2017, item 1405). With respect to application for environmental approvals, the amendment makes it easier to change concessions for extraction of black and brown coal granted prior to the entry of the amendment into force and to change concessions granted prior to the entry in force of the Geological and Mining Law Act from 1994 by enabling to obtain an environmental approval on the grounds of the project outline specification (in Polish: karta informacyjna przedsięwzięcia).

The amendment also regulates precisely transitory provisions, by pointing out the regulations which should be applied to pending proceedings. The amendment draft is undergoing the legislative process and its final content shall be adopted after the votings in the Polish Parliament.

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