Tax proposals "not an incentive"

Statoil has mixed feelings about the Norwegian government's proposed changes in petroleum tax on Norwegian shelf activities.

Statoil has mixed feelings about the Norwegian government's proposed changes in petroleum tax on Norwegian shelf activities. These were outlined last Wednesday in the government's revised budget for 2004 and a new White Paper (No. 38). Statoil feels the adjustments – including a measure called "accelerated uplift" – are insufficient to revitalize the sector. "The proposed changes are a step in the right direction," said Acting Chief Executive Erling Overland, "but with the proposal that has now been presented, it will be difficult to secure an optimal utilization of resources and value creation on the Norwegian shelf."

Some new development projects are proving difficult to get off the ground, Statoil says, due to the large sums needed to eke out smaller volumes of hydrocarbons.

Others involve higher risk than has been the case previously in Norwegian waters. The industry itself had suggested new incentives – not entailing tax relief – to implement projects that it says could not be realized under current fiscal conditions. The increased activity would in turn have raised the government's tax revenues. However, if the decline is not halted, Statoil warned, Norway's petroleum industry may be forced to reduce jobs, with supplier companies among the hardest hit.

05/13/04

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