• 4 minutes China 2019 - Orwell was 35 years out
  • 7 minutes Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 11 minutes Trump will capitulate on the trade war
  • 14 minutes Glory to Hong Kong
  • 3 hours China's Blueprint For Global Power
  • 1 hour Here's your favourite girl, Tom!
  • 10 hours IMO 2020:
  • 3 hours Brexit agreement
  • 5 hours The Problem Is The Economy, Not The Climate
  • 11 hours Yesterday Angela Merkel stopped Trump technology war on China – the moral of the story is do not eavesdrop on ladies with high ethical standards
  • 7 hours Australian Hydroelectric Plant Cost Overruns
  • 1 hour Peaceful demonstration in Hong Kong again thwarted by brutality of police
  • 1 day Idiotic Environmental Predictions
  • 19 hours The Ultimate Heresy: Technology Can't Fix What's Broken
  • 1 day NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 3 hours 5 Tweets That Change The World?
  • 2 hours Bloomberg: shale slowing. Third wave of shale coming.
Alt Text

Did Venezuela Just Default?

S&P Global Ratings declared Venezuela…

Editorial Dept

Editorial Dept

More Info

Premium Content

NORWAY: Investors Balk at Government Indifference

Bottom Line: Norway’s pending plans to cut tariffs on gas transport by 90% will reduce income for pipeline investors by as much as $7 billion, adding to the lingering anxiety after a 2011 move to pull support from AAA lender Eksportfinans ASA and reduce it to a junk-rate lender. Norway feels emboldened by its status as the world’s largest wealth fund and home of Europe’s largest oil and gas reserves--enough so that it feels it can demonstrate selective indifference to investors. 

Analysis: Norway still enjoys a stable AAA rating and status as the smallest default risk country in the world, but its actions over the past couple of years have sparked growing investor concern. The hardest hit will be Solveig Gas Norway AS and Silex Gas Norway AS, both of which back the pipeline network (Gassled) that charges the gas transport tariffs. Infragas Norge AS and Njord Gas Infrastructure AS will also take a beating. The decision announced in January and now pending approval is being interpreted by investors (both local and foreign) as an illegal intervention by the government. Foreign companies who would also take a hit from this move include those pipeline stakeholders controlled by UBS AG (UBSN), Allianz SE (ALV), Canadian pension funds and the Abu Dhabi sovereign wealth fund. Oil and gas production companies like Statoil ASA (STL), Royal Dutch Shell Plc (RDSA), Exxon Mobil Corp. (XOM) and Total SA (FP) will escape any heavy losses, having sold most of their pipeline stakes before the January announcement; but they remain nervous about the government’s path. Norway’s state-run pension fund is also highly critical of the proposed tariff cuts, as one of Gassled’s stakeholders.

Rumblings that the country is going the way of Venezuela are exaggerated, but the move could reduce investor confidence, though so far news of the pending cut has not had an effect on markets. Norway remains a rich state and believes it has enough here to gamble with.

Norway

Recommendation: Investors in Norway should remain cautionary. While there is optimism to be found in the fact that Eksportfinans bonds have managed to recoup since the 2011 removal of support, the trend here is for Norway to increasingly consider its sovereign wealth fund prowess and oil and gas reserves as affording its indifference to investors. There may also be some political fallout here, with general elections scheduled for September and the opposition criticizing the government’s policy towards investors.




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play