Lobby Group: Norway's Politics Threatens Oil Competitiveness
OSLO, Aug 20 (Reuters) – Norway's high carbon tax, reduced tax allowances for investments and political meddling in oil and gas projects is threatening the competitiveness of the country's vital offshore energy sector, the Norwegian Oil and Gas Association said on Wednesday.
The country still scores among the top producers for competitiveness but a study by consultancy IHS, commissioned by the industry lobby group, is showing growing risk.
Norway is the world's seventh biggest oil exporter and Europe's second biggest gas supplier but production is a decade past its peak as fields mature and many new finds prove to be either small or very expensive.
"This is the first time Norway has been put on a watch-list in a survey like this, and we take it very seriously," Erling Kvadsheim, the director for industry policy at the lobby group said.
Parliament last year tried to force Statoil to power its Johan Sverdrup field, its biggest oil find in decades, plus nearby fields from the shore from the start, risking its 2019 start up date and $20 billion budget.
The parties eventually relented, compromising on a 2022 date, which could still put pressure on the project's budget, analysts said.
"One particular watch-point which could result in a downgrade in Norway's score for the monetization of resources is if parliament repeats its attempt to intervene on field development plans," IHS said. "The compromise on Johan Sverdrup has been noted in this regard, but the precedent provides a watch-point for future action."
The centre-right government rules in a minority and the study noted that its reliance on two smaller parties is an additional risk given these parties' "more ambitious environmental policies".
IHS added that Norway has among the highest oil taxes in the world while a reduction in investment write offs and the increased carbon tax levied on energy firms that do not get power from the shore are also a concern.
The oil ministry could not immediately comment on the IHS report.
(Reporting by Joachim Dagenborg; Writing by Balazs Koranyi; Editing by Michael Urquhart)
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