Oil Minister: Norway Looks to Reduce Costs in Oil Sector
OSLO, Dec 4 (Reuters) – Norway's new government is looking at measures to reduce rising costs in the oil and gas sector as well as tax incentives for energy firms that boost the rate of recovery at offshore fields, the oil and energy minister said on Wednesday.
The world's eighth-largest oil exporter has seen sector costs increase strongly in recent years due to rising rig rates, wells being harder to drill and higher labour costs, threatening the viability of small and marginal offshore fields.
Authorities also want to boost oil and gas field recovery rates from the current 46 percent, though they have not said by how much. Oil firms can shy away from investing in projects if costs are too high, making meeting that target harder.
They estimate an extra one percent of oil recovered can boost public revenues by 300 billion crowns ($49.20 billion).
"We will look at whether there are procedures or regulatory measures that can be done (to address costs). We are working on it now," Tord Lien said on the sidelines of an oil conference.
"We will spend a significant part of next year on this subject, in order to come up with something substantial on this," he told reporters.
"Tax incentives for increased recovery ... is also a job that we have just included. Many government departments are looking at this," Lien added, declining to give further detail.
Operating costs in the oil sector rose by an average of seven percent a year from 2005 to 2012, according to Petoro, the firm handling the Norwegian state's stakes in oil fields.
Overall costs are forecast to continue to rise, at an average 3.5 percent annually through 2018, twice Norway's overall inflation rate, according to the Norwegian oil industry lobby.
($1 = 6.0974 Norwegian kroner)
(Reporting by Gwladys Fouche; Editing by Jon Boyle)
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