Oil and gas exploration and production in Germany is regulated by the Federal German Mining Act (“Bundesberggesetz” or “BBergG”). A mining license is required prior to commencing exploration or production activities.
The Federal German Mining Act differentiates between exploration and production licences as follows:
Prior to granting a license, the relevant Federal State must approve the associated technical plan for the proposed exploration or production activities.
The holder of a production licence must pay royalties to the government based on the value of hydrocarbons produced. The current royalty rate for natural gas production in Lower Saxony is 30% and is in addition to any corporate taxes.
Vermilion supports the recent discussions about the mining and water laws that provide a stronger link between environmental and mining interests and call for greater public and administrative participation. We will comply with these new regulations even before they become effective.