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Norway to Keep Tax Increase on Oil Companies Amid New Incentives

Norway’s incoming Conservative-led government won’t reverse a recent tax increase for oil companies and will instead seek other incentives to improve recovery rates in Western Europe’s biggest producer.

“Reversing this issue isn’t on the agenda,” Conservative Party energy spokeswoman Siri Meling said by phone today. “That would be sort of back-and-forth policy making, and we don’t want that kind of unpredictability. It’s better to spend some time now to look at how we can rig possible changes.”

The Conservative Party and Progress Party, which will form a government this month, said yesterday they would consider tax changes to give oil companies incentives to boost recovery rates at producing and marginal fields, as well as improve resource management.

That won’t include reversing a May decision by the outgoing Labor-led coalition to limit tax deductions for oil companies, cutting a so-called uplift on cash flow to 22 percent from 30 percent. Statoil ASA (STL), Norway’s largest oil and gas producer, has said the tax change would harm investments, particularly on marginal fields, and rock the country’s reputation as a stable environment for long-term investors.

The Progress Party, which said before the Sept. 9 election it favored a reversal of the tax increase, said the new government’s policy platform showed it would seek to avoid abrupt changes in the oil industry’s legal and fiscal framework.

“It signals that the oil-tax increase Labor suddenly pulled out of its pocket, that’s not the way we will operate,” Ketil Solvik-Olsen, a deputy party leader, said in an interview.

To contact the reporter on this story: Mikael Holter in Oslo at mholter2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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