The head of BP's Norwegian operations said Thursday that the country's high-tax regime is hindering development of oil and natural gas deposits, and is forcing the oil major to redirect its exploration and production investments to more attractive markets.
Scott Kerr, managing director for BP Norge, said in a speech at a petroleum tax conference in Oslo
that a significant factor in the company's decision last month to sell its share in Ormen Lange was oil-company tax rates of 78%. Ormen Lange, though yet undeveloped, is considered Norway's largest oil field.
"We've decided there are other places in our portfolio that can get a higher rate of return," Kerr said.
"We could not control the pace, the scale or the ultimate returns on the (Ormen Lange) project," he concluded, partially reiterating comments made by BP at the time it began advertising for a buyer of its 10% stake.
Under the current regime, oil and gas companies pay a 28% corporate tax and then a 50% special tax. Earlier this year, the industry issued a report calling for a lowering of the special tax rate.
While the tax regime wasn't the deciding factor in BP's decision to pull out of Ormen Lange, "it certainly played a part," Kerr said