Oil Brings Millions to Municipalities in Slavonia

Total Croatia News

Oil exploration activities bring much needed revenue to Slavonian municipalities.

Companies which will carry oil exploration activities in Slavonia have made their first payments to about 40 Slavonian municipalities. So far three million kuna has been paid, reports Glas Slavonije on August 22, 2016.

The first revenues from contracts on research and exploitation of hydrocarbons, which two oil companies – INA and Vermilion Energy from Canada – signed in June with representatives of the Croatian government have begun to trickle to the budgets of local government units in Slavonia. Individual municipalities have received from 15,000 kuna to several hundred thousand kuna, depending on the size of the area which will be explored. In addition to the municipalities, INA and Vermilion have paid to the state budget ten million kuna as a fee for signing the contracts.

The Hydrocarbons Agency explained that the companies have to pay a fee for the surface exploration area, which is received by local governments. “This fee is payable once a year and amounts to 400 kuna per square kilometre. In addition, during the exploitation period, local governments will also receive an additional fee which amounts to 4,000 kuna per square kilometre, and is also payable once a year”, announced the Agency.

Former government led by Zoran Milanović announced an international tender for the exploration of hydrocarbons. The tender was won by three companies – INA, Vermilion Energy and Nigerian company Oanda Plc. However, when contracts were signed in June, the Nigerian company did not sign them. “Oanda requested that the signing of the contract be postponed. Given the fact that currently there is only the caretaker government, it is not possible to sign the contract until a new government is formed”, said the Agency.

No one knows where in the municipalities the exploration activities will be conducted. The Agency will receive that information after the two companies prepare their annual work programmes and submit them to the Agency for review. That could happen by the end of this year. If exploration activities are successful and the exploitation of gas and oil commences, the state and local communities will start receiving substantial revenues. The state budget alone could receive between 3.4 and 6.8 billion kuna per year. Key precondition for this potential revenue are viable quantities of gas and oil.


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