Page 12 - EurOil Week 35 2021

EurOil POLICY EurOil

Norway announces

snap tax hike

NORWAY NORWAY’S government has unexpectedly expenses from their tax base. Under the
announced an overhaul of its oil and gas taxa- changes, though, these reimbursements will
Norway is reducing tion regime that will involve the removal of some decrease.
reimbursements for incentives. Support for exploration kept exploration
exploration costs. The move comes two weeks ahead of national rates high over the past year and a half despite
elections. Finance Minister Jan Tore Sannet told the oil market crash triggered by the coronavirus
reporters on August 31 that the depreciation pandemic. The Norwegian Petroleum Directo-
and uplift rules in the special tax for petroleum rate (NPD) expects that 40 exploration wells will
would be replaced by immediate expense rec- be drilled this year, versus 31 in 2020. In com-
ognition of investments, or cash flow, from parison, no exploration wells were drilled in the
2022. The step is expected to boost government neighbouring UK last year.
revenues by NOK7bn ($810mn) over time for Norway’s parliament also approved some
investments made in 2022, assuming it is passed $11bn in tax relief last summer to encourage
by parliament. operators to continue approving new invest-
“This is a change that will mean that the sys- ments in spite of low prices. The bill was backed
tem will be a little tighter, but also neutral, and not only by the Conservatives and their partners
there will be good conditions for both Norwe- in Norway’s ruling coalition, but also left-wing
gian and foreign companies in the future,” Saner opposition parties.
said in an interview with Bloomberg. The oil and gas industry is one of the main
The government is responding to criti- bedrocks of Norway’s economy and typically
cism that some of tax deductions encourage provides roughly 20% of the nation’s budget-
excessive risk-taking by oil firms. Norway ary receipts. And the government has rejected
encourages high levels of exploration even calls to restrict new exploration, announcing in
during periods of market weakness by allowing a strategy in June that it would continue issuing
operators to deduct most of their exploration new licences for decades to come. ™

P12 www. NEWSBASE .com Week 35 02•September•2021