Norway Modifies Tax Laws to Please ESA
Norway's finance minister said he would modifiy laws governing the Arctic Snoehvit gas development to please the ESA which has said the field's tax regime could be seen as state subsidy. Non-EU member Norway holds a special European Economic Area (EEA) agreement with the Union which demands that Norway sticks to EU competition rules in return for free access to the Union's internal market. Competition issues between Norway and the 15-member block are governed by the EFTA Surveillance Authority (ESA).
"I take into account that ESA regards the current proposal as a violation of the EEA agreement's state subsidy rules," Per Kristian Foss said in a statement, adding that he would now define the Snoehvit tax regime within a geographic area. EAS has said the Snoehvit tax regime would give partners a break by cutting the depreciation period to three years from six even though the entire project was put under a 78 percent onshore tax instead of a 28 percent offshore tax. "Based on the signals I have received today, I have a strong hope that the issue will be solved by ESA accepting the tax regime as a tool for regional development and that the Snoehvit project can go ahead," Foss said.
Snoehvit is planned to be developed as a sub-sea tie-back with onshore processing facilities near the city of Hammerfest at Norway's northern tip at an estimated cost of 46 billion Norwegian crowns ($5.57 billion). Statoil holds a 22.29% stake in Snoehvit, while the Norwegian state holds 30%, Norsk Hydro holds 10%, TotalFinaElf 18.40%, Gaz de France 12%, Amerada Hess 3.26%, RWE-DEA 2.81% and Svenska Petroleum 1.24%.