Norway Pipeline Investors in New Row With Government Over Taxes

Investors including Allianz SE and Abu Dhabi’s sovereign wealth fund, already suing Norway’s government in a gas-tariff dispute, are petitioning for tax relief to cut costs of a natural gas terminal and pipeline.

They’re seeking to add projects for a terminal in Emden, Germany, and modifications to the Norpipe pipeline to those that were proposed to receive an exemption from a tax increase, according to a hearing letter from the Gassled owners. The projects are estimated to encompass investments of 5.9 billion kroner ($980 million).

Failing to exempt constitutes a “discrimination forbidden under Norway’s legal commitments to the European Economic Area,” the owners said in a letter to the Finance Ministry posted on the government’s website.

The petitioners include Solveig Gas Norway AS, Infragas Norge AS, Njord Gas Infrastructure AS and Silex Gas Norway AS, which hold 44 percent in Gassled and are owned by investors such as Allianz, a UBS AG infrastructure fund and Canadian pension funds. The four companies last month sued the Norwegian government in a separate conflict over tariff cuts which they say will reduce income by about 40 billion kroner.

Four other Gassled owners, Statoil ASA, ConocoPhillips, GDF Suez and DONG Energy A/S, also signed the letter to the Finance Ministry. Fully state-owned Petoro AS, which is Gassled’s biggest owner with 45.8 percent and doesn’t pay taxes, didn’t sign.

Promoting Exploration

The reductions in tariffs levied to transport gas decided by the previous Labor-led government last year are designed to make gas discoveries more profitable and boost exploration offshore Norway, the government has said.

Gassled owners who spent 32 billion kroner buying their stakes said the changes have hurt Norway’s reputation as a stable and predictable place to invest. In a Feb. 7 letter revealed by Bloomberg yesterday, Allianz asked for a meeting with Prime Minister Erna Solberg to argue against the cuts.

The tax exemptions are also being deemed as too narrow by oil producers, including Statoil, Conoco and Royal Dutch Shell Plc. Planned drilling projects estimated to cost 80 billion kroner could be scrapped if they’re not exempted, the Norwegian Oil and Gas Association said last week.

Last year’s tax change reduces the share of investments that companies can deduct from their income while keeping petroleum-industry taxation at 78 percent.

Applied to Gassled’s terminal in Emden, Germany, and the modification of the Norpipe pipeline, the changes imply almost 140 million kroner in additional taxes for the taxable owners, Njord’s finance director Birte Norheim said by phone today.

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