Despite Chevron’s withdrawal in July 2014, Lithuania hasn’t given up on its dreams of profiting from shale reserves.
Daiva Matoniene, Lithuania’s Deputy Minister of Environment and the chairman of the committee responsible for shale gas exploration, announced on Friday that the country is planning to launch a new tender for shale extraction. The new tender, which is believed to be planned for the spring, will take into account the revised Hydrocarbon Law.
The new Hydrocarbon Law was approved by the Parliament of Lithuania on 4th of December 2014. It reduced taxation and – in a bid to gain popular support for fracking – gave 10 per cent of the collected tax to the local governments of the areas where the oil and/or gas would be extracted. The new tax regulations came into force on 1st of January 2015 and introduced a 1 per cent tax on unconventional exploration for the first three years from the date of issuing of the Exploration and Production license (but no longer than till January 2020), and rising to 15 per cent after that.
Despite the disappointment with Chevron, Lithuanian authorities still count on the interest of American companies in the country’s shale deposits. Especially that Lithuania really cleaned up its act. Apart from the legislative changes, the government also took other steps to make the country welcoming to the E&P companies. One such step was producing a report with the preliminary assessment of the shale gas and oil potential, which – among others – points to the similarities between Lithuanian shales and the Bakken in the U.S.
Dr Jurga Lazauskienẻ, Head of the Department of Bedrock Geology of the Lithuanian Geological Survey explained that: “If (we were) to compare Late Ordovician-Landovery shale play in Lithuania with the American examples, the data implied the most similarities to the Bakken shale oil play in the Williston Sedimentary basin in North America.”
According to the country’s Prime Minister, some American companies have already expressed interest in exploring for shale in Lithuania. Speaking to Lithuania Tribune, he said: “Obviously, as the prime minister, I cannot promise to these companies to create conditions for their exploration and extraction operations. But I can promise to make sure that all laws related to shale gas exploration and extraction are passed this year and invitations to a public international tender are sent out.”
What’s more, Jonas Satkūnas, director of the Lithuanian Geological Survey, disclosed that the Chinese giant Sinopec has also expressed interest in Lithuanian shale. The company’s experts visited Lithuania last summer although it isn’t yet known if the Chinese firm will take part in the upcoming tender.
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