Orlen energy seeks tax relief for oil and gas extraction similar to copper tax incentives

Orlen has submitted an opinion to the Ministry of Finance calling for changes to the tax on oil and gas extraction, similar to the investment reliefs granted under the so-called copper tax.

The Ministry of Finance is currently working on an amendment to the law on extraction tax for certain minerals. This reform aims to reduce tax burdens on copper producers to enable investments linked to the important role of copper in the clean energy transition.

The planned reform includes the possibility of deducting 50 percent of investment expenses related to increased extraction from tax liabilities starting in 2026, along with a three-year reduced tax rate period. Copper producers are expected to receive approximately PLN 750 million (EUR 175.8 mln) annually for the first three years, and about PLN 1.5 billion (EUR 351.7 mln) annually thereafter for investment purposes.

In its response, Orlen highlighted that the extraction tax for natural gas and crude oil was designed as a form of resource rent during the expected significant growth of shale gas and oil production.

However, the domestic oil and gas industry faces substantial investment challenges linked to the transition toward emission neutrality.

Orlen proposes introducing a possibility to deduct 50 percent of qualified investment expenditures in natural gas and crude oil extraction from January 1, 2026, analogous to the proposed copper and silver tax relief. The deduction in a given settlement period would be capped at 40 percent of the tax calculated on the gas or oil extracted in that month.

Eligible investment costs should include expenditures on building new or restoring existing gas and oil mines to maintain domestic production levels.

Furthermore, Orlen recommends that the list of deductible expenses be expanded to include investments aimed at fulfilling methane emission reduction obligations and CO2 storage preparation projects in depleted fields.

The company also calls for raising the exemption thresholds from extraction tax for gas and oil produced from marginal fields, currently set at 1100 MWh per month for gas and 80 tons for oil. Orlen argues these limits are too low and negatively affect the economic viability of production.

Orlen suggests new exemption thresholds of 3000 MWh for gas and 300 tons for oil, which would help preserve extraction in smaller fields where current taxation levels undermine profitability and the rationale for mining operations.

"This will allow mining to continue in small deposits, for which the current tax thresholds significantly affect the lack of profitability and economic justification for the operation of a mining plant," the release said.

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