New Tax Forces Statoil to Review Johan Castberg Decision

New Tax Forces Statoil to Review Johan Castberg Decision

Norway's Statoil said Wednesday that it wants to delay the investment decision for its Johan Castberg project in the Norwegian Barents Sea due to new Norwegian tax rules that it believes reduces the attractiveness of future projects.

Although Statoil said that it has continued to mature the resource base and development plans for the project, there are still uncertainties related to the resource estimate and investment level. The company noted that earlier this year the license partners selected a development concept for the project, including a new oil terminal at Veidnes, outside Honningsvåg in Finnmark county, Norway.

Statoil also noted that state aid regulations will be used to enable onshore landing of oil and gas in northern Norway, as with the Snøhvit project. However, it added, these plans have not been specified and presented as part of the proposal which is now up for approval in the Norwegian parliament. State aid will require notification to and approval by ESA (the European Free Trade Association Surveillance Authority), which Statoil said means significant uncertainty for the project at the present time.

"The Norwegian government has recently proposed reduced uplift in the petroleum tax system, which reduces the attractiveness of future projects, particularly marginal fields and fields which require new infrastructure. This has made it necessary to review the Johan Castberg project," Øystein Michelsen, Statoil's executive vice president for development and production in Norway, commented in a company statement.

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