• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 1 hour GREEN NEW DEAL = BLIZZARD OF LIES
  • 7 days The United States produced more crude oil than any nation, at any time.
  • 58 mins Could Someone Give Me Insights on the Future of Renewable Energy?
  • 8 days How Far Have We Really Gotten With Alternative Energy
Tesla to Lay Off Over 10% of Global Workforce

Tesla to Lay Off Over 10% of Global Workforce

Tesla is laying off over…

IEA Cuts 2024 Oil Demand Growth Forecast

IEA Cuts 2024 Oil Demand Growth Forecast

Global oil demand growth is…

Norwegian Tax Increase Forces Statoil to Delay $15.5 Billion Arctic Project

The Norwegian government has been dealt a blow by the state-owned oil company Statoil, which has announced that it plans to delay a $15.5 billion Arctic project due to tax increases that have reduced the profitability of the venture.

The government had hoped that the development of the Johan Castberg field in the far north would have proven a huge boost to improve the infrastructure and economy in the sparsely populated northern region.

To be fair the Norwegian government only has itself to blame. It currently trails in opinion polls as the September elections approach, and it was hoping that the Castberg development would have earned a big boost in public support. Yet the decision to make changes to the oil tax system for the first time in 20 years has angered energy companies, as new projects across the industry become less attractive.

Falling oil prices around the world, and rising costs, has already reduced the amount of investment available for new projects, and now with taxes set to increase, and companies limited as to what they can write down as investment, the break-even point for projects has increased sharply.

Related article: The Arctic is Thawing, but Hasn’t Released Trapped CO2

Oeystein Michelsen, the development chief for Statoil in Norway, stated that the tax increase “reduces the attractiveness of future projects, particularly marginal fields and fields which require new infrastructure.”

Castberg’s break-even increased by $7 a barrel making it a far less appealing project and forcing Statoil to consider other options that offer a safer return.

The government is set to make a final decision on the proposed tax increase, and many think that Statoil’s move is aimed at putting pressure on the government to ditch the idea.

ADVERTISEMENT

Deutsche Bank “interpret  Statoil's decision to very publicly defer the final investment decision of a high-profile project ... as a deliberate gesture to demonstrate that the proposed tax change may have consequences which ultimately impair the value of Norway's resource base to the state.”

By. James Burgess of Oilprice.com



Join the discussion | Back to homepage



Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News