Norway’s government won’t propose any tax incentives for oil companies to boost recovery at aging fields and marginal offshore discoveries before parliamentary elections later this year.
“There are no planned initiatives related to this,” Petroleum and Energy Minister Terje Soviknes said in an interview in Trondheim on Tuesday. “My experience is that the market for the time being seeks stability first of all. It’s been a very demanding three-year period.”
The minister’s comments mark the first time the Conservative-led government rules out such measures, which it promised to consider when it took office in 2013. While stressing the need for stability in the oil industry’s framework conditions, including the tax system, officials from Prime Minister Erna Solberg to Finance Minister Siv Jensen have signaled minor changes could occur in line with the government’s political platform.
“We haven’t considered it necessary to implement this now,” Soviknes said. He didn’t exclude such changes in the future, but said no initiatives would come before parliamentary elections in September.
The government has resisted calls from the Norwegian Oil and Gas Association, the industry lobby, to provide incentives even as investments in the country’s offshore industry plunged from a 2014 peak after oil prices collapsed. Spending is expected to fall for a third consecutive year in 2017, and about 50,000 jobs have been lost in the industry over the past three years, Soviknes said during the Energy Transition 2017 conference in Trondheim on Tuesday.
Thanks to higher prices, boosted by output cuts from OPEC and other producers, and drastic cost reductions, the Norwegian oil industry is now getting closer to the bottom of the deepest downturn on record — or may even be past it, Soviknes said. One sign is that companies operating in Norway raised their spending forecasts for 2017 last month, he said.
“Of course we’re getting support from the oil price globally, but we’re seeing that activity is coming back,” he said. “We’ve gotten through a tough crisis.”