Assessment of the amended Geological and Mining Law in terms of new powers and responsibilities of National Geological Survey

The amended Geological and Mining Law took effect on 1 January 2015. The Law introduced major changes in the access to geological information, as well as in the role played by National Geological Survey performed, under Art. 163.1 of Geological and Mining Law, by Polish Geological Institute – National Research Institute.

The issue of geological information is an important aspect of Poland's legislation governing the mining and production operations. The Geological and Mining Law of 9 June 2011 defines geological information as “geological data and samples, including the results of processing and interpretation thereof, in particular those presented in geological documentation and recorded on electronic media”. The latest amendment of the Law, as adopted on 1 August 2014, provides for significant changes in the right of access to geological information.

A dual nature of geological information is worth of noting. One of its components are “[...] data, including the results of processing and interpretation thereof”, i.e. obviously intangible assets that may be rightly associated with intangible rights. On the other hand, geological information includes tangible “geological samples”, such as drilling core samples of which a half is normally delivered to the State under concession agreements. Accordingly, geological information, treated as a single entity by the Law, in fact involves several different rights.

Obviously, the right to geological information is difficult to understand intuitively due to its duality. On the one hand, it includes a tangible component in the form of geological samples, while on the other it comprises geological data and findings from the analysis thereof. The two components are complementary to each other and together form geological information. Considering the nature of that right, the changes introduced by the latest amendment of Geological and Mining Law are worth of noting.

Most of the changes from the amendment of that Law took effect with 1 January 2015. The provisions on Geoinfonet, an information exchange platform maintained by National Geological Survey and containing data on exploration, appraisal and production concessions, are the only exception. They will take effect with 1 August 2016.

Establishing a platform of this kind by way of a legislative act may seem not quite reasonable. However, there are some reasons to justify this approach. First of all, considering a high interest expressed in gas and oil production in Poland, a tool to ensure a smooth flow of information, transparency of concession awards and access to geological information is required.

In this particular case, there are several advantages of legislative approach. First, the central government will be able to allocate funds to the platform project. Expenditures are inevitable, considering the volume of information to be collected. Second, the legislative approach whereby Geoinfonet maintenance is provided for as a separate responsibility of National Geological Survey, will help to establish the system in a smooth and efficient way. It would be troublesome to regulate this process by way of internal regulations due to the autonomy enjoyed by Polish Geological Institute – National Research Institute. Neither Minister of the Environment nor any other authority may request the Institute to maintain the platform. Concluding, this non-standard approach is well grounded.

The amended Law extends the scope of supervision over exploration and production operations, as performed by National Geological Survey (NGS). This includes entrepreneur's obligation to notify National Geological Survey of the planned date of sample collection during geological works, so as to ensure that National Geological Survey is able to test drilling samples in an effective manner.

Only undisturbed samples are suitable for effective reservoir testing. Following the amendment, NGS specialists will have access to fresh and undisturbed research material. Entrepreneur has to give supervisory authorities at least seven day advance notice of the planned drilling and coring operations. Having received the notice, NGS specialists may appear on the sampling site to inspect and deliver the tests. This is expected to ensure that the interests of the State are protected and inadequate reporting by entrepreneurs is prevented.

National Geological Survey was assigned additional responsibilities regarding its participation in awarding hydrocarbon exploration, appraisal and production concessions on a competitive basis. According to the amended Law, Polish Geological Institute ”shall prepare materials for awarding hydrocarbon exploration, appraisal and production concessions or hydrocarbon production concessions on a competitive basis, and shall assess the geological prospectiveness in collaboration with the licensing authority”. Consequently, an institution that is familiar with the specificity of the industry and has adequate expertise will have a say in the concession awarding process. Article 49f.3 of the amended Law provides for the assessment of geological prospectiveness. The collaboration between licensing authority and NGS is intended to assess the potential for subsequent reservoir investigation/proving and production prospects. The purpose of this approach is to improve concession awarding processes and ensure a better national policy planning in that area.

So far, there was no single legislative act to specify the entity that is responsible for collecting geological information. Worth of noting Article 162.3 of Geological and Mining Law, where the legislator does not use the term ”geological information”. Only the obligation to collect, archive and process geological data, as defined by Art. 6.1.1, is mentioned in the Law. Geological data are defined as ”results of direct observations and measurements made during geological works”. The amendment removed this ambiguity by stating explicitly that National Geological Survey “shall collect, make available, process and archive geological information”. Thus, the position of NGS and its responsibilities have been significantly strengthened considering a growing demand for geological information on the part of entrepreneurs.
Arguably, these changes are an effect of the reports on the presence of shale gas accumulations in Poland. Accordingly, the legislator came to the conclusion that considering hydrocarbon exploration and production operations conducted in Poland the national interests should be protected by vesting adequate rights in National Geological Survey.

The Geological and Mining Law, as amended, considerably increases both powers and responsibilities of National Geological Survey. This move is justified in light of the growing importance of hydrocarbon production in Poland, which necessitates more transparency in the access of businesses to geological information and concession data, as well as adequate protection of State Treasury's interests. The new Law meets these requirements.

9 January 2015

Author: Szymon Dziubicki – student, Law and Administration Faculty, Maria Curie-Skłodowska University in Lublin and Vice-president of the Students for the Republic Association

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