Tax proposals will undermine new development off Norway, says OLF

The deputy director general of the Norwegian Oil Industry Association (OLF) Thursday called for the country's Ministry of Finance to rethink proposed changes to the tax regime on the Norwegian Continent Shelf that he believes will undermine future field developments in the offshore province. The OLF's Nils Heilemann said the ministry's new proposals, announced last Friday, "entail a comprehensive shift in the complex petroleum tax system and a significant tax increase."

April 13, 2001

2 min read

By the OGJ Online Staff

LONDON, Apr. 13 -- The deputy director general of the Norwegian Oil Industry Association (OLF) Thursday called for the country's Ministry of Finance to rethink proposed changes to the tax regime on the Norwegian Continent Shelf that he believes will undermine future field developments in the offshore province.

The OLF's Nils Heilemann said the ministry's new proposals, announced last Friday, "entail a comprehensive shift in the complex petroleum tax system, and a significant tax increase."

Under the new proposals, all oil companies operation on the NCS would be hit by plans to effectively suspend the so-called "uplift" which allow new fields to forego an offshore tax that can be as high as 78%, through the early field development phase.

The ministry also proposes to see net financial items divided between Norway's 78% offshore tax and the 28% corporate income tax in proportion to non-depreciated asset values, likely also to result in a tax rise for oil companies.

Heilemann said the proposal, in contrast to the government's stated policy, will decrease the competitiveness of the NCS, and will have a "particularly adverse impact" on new development projects.

"Predictability is diminished, and uneasiness is created surrounding the implementation of key oil policy goals," he stressed.

The consultation deadline for the affected taxpayers is next Thursday, said the OLF.