LAST week the excitement surrounding the rush for shale gas in Poland was tempered with some unwelcome news. Seven people were charged with offering or receiving bribes in the allocation of concessions to look for the gas in 2011.
The environment ministry handed out the last of 109 exploration concessions in the second half of last year, most of them to foreign firms or their Polish subsidiaries. The prices, at around €100 per square kilometre, were trivial.
The sums involved in the bribery scandal are also not large: thousands rather than hundreds of thousands of euros, according to Waldemar Tyl, Warsaw’s deputy public prosecutor. But Mr Tyl insists that the evidence against those accused is compelling.
The seven include the head of the environment ministry’s geology department, two other ministry officials and directors of three Polish companies, all of them linked to Petrolinvest, a large energy concern. Neither the ministry nor any of the three companies were prepared to put someone up for interview.
But perhaps more telling than the investigation is what it reveals about Poland’s attitude towards what many have hoped will be its new-found resource wealth. For the last few years the country has been getting ever dizzier at the prospect of ending its dependence on Russian gas and becoming a “new Norway”. Last summer a US study heightened the fever by suggesting that Poland had 5.3 trillion cubic metres of accessible reserves, more than had been previously estimated.
But some experts, such as Grzegorz Pytel of the Sobieski Institute, a think-tank, have been warning for some time that Poland is as much like gas-rich Turkmenistan or Uzbekistan as it is Norway.
Starting, like the former Soviet states, with laws designed for a climate in which a handful of state-owned firms would be operating, Poland invited investment from multiple domestic and foreign companies. “If you have a system like this where you know that these licences are potentially worth a lot of money, but you can get them virtually for free, it’s bound to be corruption-prone,” says Mr Pytel. He says the new corruption investigation may be just the tip of an iceberg. Increasingly active environmental campaigners agree.
The Polish government sold the shale concessions so cheaply because of the speculative nature of the investment, and because the investors would have to bear all of its costs. The country has very little home-grown industry to service shale-gas development. Contrast with Norway, which manages to levy taxes worth 78% of revenues on the likes of Exxon because local service companies look after all the technical difficulties involved in extracting gas.
The Polish government insists that the system is not to blame for any individual wrongdoing. Still, it is working on a new legal framework for shale-gas exploitation. A new geological and mining law [paywall] came into force on January 1st, applying EU regulations and simplifying procedures for investors.
Environmentalists, however, complain that although the law gives concession-holders potential buyout rights to properties where they might want to set up a drill, it says nothing about “fracking fluid”—the huge quantities of water and chemicals that shale-gas extractors pump into the ground in order to crack shale rocks and get to the gas.
In the next three months the government should present a new law on the taxation of shale gas. The concurrent corruption investigation could have a sobering effect on a country caught up in flighty dreams of riches.
Author: G.C. | WARSAW
Source: The Economist