Romania's Chamber of Deputies postpones vote on offshore law as PSD fails to secure majority

Romania’s Chamber of Deputies decided on Wednesday, October 3, to postpone a vote on the offshore law and allow further discussions in the specialty committees, local Profit.ro reported. It is for the first time since the current governing coalition came to power when the Social Democratic Party (PSD) couldn’t secure a majority in the Parliament to pass an important law, in which PSD leader Liviu Dragnea has been directly involved. In fact, the PSD once again came with significant last-minute changes to the law, making it less favorable for investors than the form adopted by the Senate last week. The amendments were passed by the industry, finance and administration joint committees on Tuesday without a real debate, despite protests from opposition parties and junior coalition partners ALDE, which didn’t agree to PSD’s proposals and said they wouldn’t’ vote them. PSD leader Liviu Dragnea was counting on the Hungarian Democratic Union (UDMR) to pass the law through the Chamber as UDMR representatives in the committees voted in favor of PSD’s amendments on Tuesday. However, on Wednesday, UDMR leader Kelemen Hunor asked that the law be sent back to the committees for further debate, saying that his party wanted explanations and long-term projections to understand the significant changes PSD proposed to the form adopted by the Senate. Liviu Dragnea said on Wednesday evening that his party accepted to have more discussions on the law as it lacked the majority to pass it. He added that PSD would maintain its position and that the debate should be transparent. Senate president and ALDE leader Calin Popescu-Tariceanu said his party’s MPs refused to vote on PSDs changes to the offshore law because procedure wasn’t followed not because they disagreed with the content. However, ALDE’s representatives were also unhappy after the law was voted first, in July, when PSD made last-minute changes in the Chamber of Deputies and increased taxation for offshore gas operations and obliged investors to sell half of their production on the Romanian market. The offshore law has the highest business stake of all bills the current ruling coalition has passed so far. The value of the estimated gas production in the Romanian Black Sea until 2040 is between EUR 38 billion and EUR 74 billion, considering a total output of 170 billion cubic meters of gas (according to Deloitte) and a sale price of between RON 100 and RON 190 per MWh (EUR 228 to EUR 433 per 1,000 cubic meters). The offshore law will decide how this money will be split between the state and the investors. PSD aims to get higher tax revenues from the Black Sea gas while investors have been asking for a tax framework that stimulates investments and long-term stability. An organization representing the investors, ARCOMN, said the changes proposed by PSD on Tuesday make it impossible for investors to make their final decisions on investing in the Black Sea. The investors include U.S. groups Exxon and Carlyle, Austrian group OMV, through its Romanian subsidiary OMV Petrom, and Russian group Lukoil. U.S. officials have been urging the Romanian authorities to finalize the offshore legislation. The European Union and Hungary, in particular, are also interested in Romania’s Black Sea gas, which could contribute to reducing the EU’s dependence on Russian gas.