Barents Sea development project on hold due to tax-insecurities

Jul 23, 2001 02:00 AM

An international consortium headed by Statoil has put on hold plans for the first petroleum development in the Barents Sea because of uncertainty over the long-term tax regime in the region. The NOK 40 bn ($ 4.4 bn) development of the Snoehvit, Askeladd and Albatross fields in the Norwegian sector of the Barents Sea had been expected to start production in late 2005 or early 2006.
Statoil said the project's partners had decided not to submit firm plans to the government because it was unclear what the system of taxation would be over the project's 25-year life. "One of the most important goals for the partnership has been to clarify the fiscal regime for the project in order to safeguard the economics.

However, it has not been possible to achieve an adequate clarification despite the goodwill displayed by all the parties involved," it said. Norwegian offshore petroleum tax rates are among the highest in the world at 78 %. The Norwegian Finance Ministry has agreed for the onshore elements of the project, which include a gas liquefaction plant, to be levied at the standard 28 % corporation tax rate. But Statoil said it was yet to agree on the level of tariffs it could charge gas shippers.
"The project is quite marginal so it can't really go forward without some sort of deal with the Norwegian Finance Ministry," said Iain Reid, an analyst at UBS Warburg. Snorre Jensen, Snoehvit project director, said the consortium regretted the delay but felt it had no other choice. He said the consortium would continue to negotiate with the government in the hope of making a breakthrough.

The NOK 40 bn cost of the project would include NOK 15 bn for land-based facilities and NOK 5 bn for LNG ships. Gas would be produced from sub-sea wells off the far northern coast of Norway and carried by pipeline to a treatment plant outside Hammerfest.
Norwegian gas developments have in the past been carefully controlled by the GFU, a gas marketing monopoly established by the government to optimise returns. Sales bythe GFU were temporarily halted in April following pressure from European Commission competition authorities and are expected to be abolished, pending parliamentary approval, from the start of next year.
Snoehvit and the associated fields have estimated gas reserves of about 320 bn cm. Statoil holds 22.29 % of the project and is the operator. Other partners include Petoro, which controls the Norwegian state's directly held interests (30 %), TotalFinaElf (18.4 %), Gaz de France (12 %), Norsk Hydro (10 %), Amerada Hess (3.26 %), RWE-DEA (2.81 %) and Svenska Petroleum (1.24 %).

Source: The Financial Times
Alexander's Commentary

Change of face - change of phase

In the period of July 20 till August 3, 2015, Alexander will be out of the office and the site will not or only irreg

read more ...
« May 2020 »
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31

Register to announce Your Event

View All Events