Moeller-Maersk Disputes Government Tax Increase

The Danish Government is in discussions with A.P. Moeller-Maersk concerning tax increases on oil and gas revenues. This tax increase could significantly reduce the company's profit starting in 2004. The state could increase taxes or boost revenues by taking a stake in the Moeller-run Danish Underground Consortium (DUC), which operates 14 fields in the North Sea. There has been talk among Danish politicians about taxing around 20 percent. "The talks aim at increasing state revenues," the ministry said in a statement. A ministry spokesman said negotiations were expected to be closed by October this year.

In a worst-case scenario, DUC would have to pay an additional four billion crowns ($636.6 million) from 2004. A.P. Moeller-Maersk operates and owns 39 percent of the DUC, while partners Shell and ChevronTexaco hold 46 percent and 15 percent, respectively. DUC's oil production totaled slightly more than 300,000 barrels per day in May of this year.

Moeller's North Sea oil and gas activities generated a 2002 net profit of 7.0 billion crowns, out of a total group profit of 12.1 billion.

Moeller is concerned that increased taxation could diminish interest in oil and gas exploration in the Danish North Sea. However, the government said it seeks to find a balance so that oil and gas exploration remains attractive in the Danish sector of the North Sea.