Norway Excludes Oil-Industry Tax Breaks Amid Spending SlumpMikael Holter
Norway’s government rejected calls from the oil industry for tax breaks as investments are set to fall next year and western Europe’s biggest oil exporter struggles to keep up production levels.
“I have no plans on making any changes in the tax system for this sector,” Finance Minister Siv Jensen said today at a conference on petroleum taxation in Oslo. “We need to have a stable framework for this industry.”
Oil companies operating in Norway, headed by state-controlled Statoil ASA, will cut investments next year after a decade of growth to cope with rising costs and falling returns. Spending could fall by as much as 18 percent, according to a September survey by the country’s statistics bureau.
The projected decline, which has already led to thousands of job cuts in the service and supplier industry in Norway, could accelerate if oil prices stay at current levels following a more than 25 percent drop since a June high, Jensen said. It’s impossible to determine now if that drop is “temporary or permanent,” she said.
The Norwegian Oil and Gas Association, a lobby group representing Statoil and other companies such as Royal Dutch Shell Plc and Total SA, said last week the government should provide incentives for increased-recovery projects that could be threatened as operators favor the most profitable ventures.
“I’ve heard that for many years,” Jensen said in an interview after her presentation. “My door is always open” to the industry, she said.
Incentives for time-critical projects to boost recovery, which the government had said a year ago it would consider, have become even more important after the recent crash in crude prices due to higher global supply and slowing demand, said Gro Braekken, the Oil and Gas Association’s director general, in a phone interview today.
“We are disappointed that it hasn’t come,” she said. “This shouldn’t be static. Adjustments are needed to secure a good harvest from the hundreds of billions invested in producing, mature fields.”
The government will consider changes to the petroleum tax system if necessary and is continuously monitoring fiscal terms across the economy, Jensen told reporters after her presentation. The government’s main objective is to reduce the total tax burden, she said.