The Norwegian government has proposed cuts in the tax relief package introduced for oil and gas companies as part of its response to the Covid-19 fallout — and more funding for its defence forces to help strengthen security around critical energy installations.
The proposed changes to temporary tax rules for the petroleum sector would reduce the uplift rate — special tax deduction — from 17.69% to 12.4% and increase state revenues by an estimated Nkr2 billion ($191 million) in 2023.
“In connection with the pandemic and subsequent fall in oil prices, the Norwegian national assembly enacted temporary tax rules for the petroleum sector in June 2020… The current situation, with very high oil and gas prices, is completely different,” the Finance Ministry said last week.
The extra revenues will be transferred to Norway’s sovereign-wealth fund and will therefore not be a component in the 2023 national budget, the ministry said.
The Norwegian government also said it expects record income next year from oil and gas, predicting an increase of 18% from this year’s level and a fivefold increase over 2021, according to a Reuters news agency report.
Norway expects to achieve average production of 4.3 million barrels of oil equivalent per day next year, up from an expected 4.1 million boepd in 2022.
European gas prices are running about 10 times higher than in the same period of 2021 following Russia’s invasion of Ukraine and the drastic reduction of gas supplies to Western Europe
In a parallel move, Norwegian defence forces are to receive an annual budget boost of Nkr6.8 billion, as the government strengthens the protection of critical energy installations following recent sightings of unidentified drones offshore Norway and unexplained explosions on the Nord Stream pipeline between Russia and Germany.
The Norwegian government’s statements on energy security have also underlined the country’s role in providing a stable gas supply lifeline to Europe ahead of the upcoming winter.
Commander Tor Ivar Strommen, a Norwegian military expert, told Upstream earlier this week that Oslo must do more to deter potential sabotage of its extensive offshore oil and gas system.
A Defence Ministry spokesperson told Upstream: “The Norwegian Armed Forces have already enhanced their presence in relevant geographic areas and are conducting patrols with assets on land, in the air, at sea, underwater and in cyberspace.”