Big Oil Dangles $19 Billion in Investments for Norway Tax Breaks
(Bloomberg) — Norway’s oil industry says it has some major investments in store if the government can just come through with some tax incentives.
It’s still hoping for tax breaks to encourage recovery of oil from older fields. Those failed to materialize over the past four years even as the industry went through its worst investment collapse in a generation.
As Norway heads into an election next month, the oil industry still has “some expectation” that whoever wins will consider those incentives, said Karl Eirik Schjott-Pedersen, a veteran politician who leads the Norwegian Oil and Gas Association.
His main argument: tax breaks could help trigger investments of about 150 billion kroner ($19 billion) which might otherwise not happen, according to a study the group commissioned in 2015.
“Raising the recovery rate in fields would create enormous value,” Schjott-Pedersen, who has served as finance minister for Labor among other cabinet posts, said in a phone interview on Thursday. “It’s also critical that it’s done now, given that it depends on either the fields or the infrastructure still being in operation.”
These projects would give a welcome boost to the supplier industry, which has seen tens of thousands of jobs disappear after oil prices plunged in 2014. They could also bring in about 135 billion kroner in taxes, at a time when the government’s petroleum revenue has dropped to the lowest this century, forcing it to raid its $970 billion sovereign wealth fund for the first time.
None of this persuaded the Conservative-led government to offer tax breaks, which said after winning elections in 2013 that it would consider such incentives. Instead, the administration has insisted oil companies have an obligation to produce all profitable…
