Norway Sticks to Gas Pipeline Tariff Cut
Officials in Norway have indicated that they will go ahead with a controversial plan to cut tariffs on gas pipelines by up to 90% despite investor alarm over revenue losses for operators. The final decision will be made by the end of the month, and the tariff reduction is intended to make gas discoveries more profitable and to boost exploration and recovery rates. This is bad news for pipeline operators and investors such as Canadian pension funds, UBS AG and Abu Dhabi’s sovereign fund. But while the move is intended to make discovery and production more profitable in places like the Barents Sea, Norway’s plans to change its petroleum taxes has already led to Statoil recommending a delay in one of its major projects here as viability is now more uncertain. The new tax plans were presented in early May and would lower the amount of development subsidies paid to oil and gas companies in order to offset tax cuts planned for non-oil companies. If passed, oil companies will have to start paying 12% of their project developments costs beginning in 2014—up from 9%. There is now a risk of other projects in the Barents Sea, Norwegian Sea and North Sea being shelved.
Ecuador Discourages Foreign Mining Investment
Kinross Gold Corp is withdrawing from its Fruta del Norte gold mining project after failing to reach an agreement with the government over a 70% tax on extraordinary revenues. While the government…