Taxes threat to further Norwegian oil development
Development of a large hydrocarbon resource in the Barents sea north of the Norwegian mainland are under threat after Statoil said new tax rules would make development of the relevant fields uneconomical.
The Norwegian government has put forward proposals that mean that Statoil must review its assumptions in areas such as margins, if it were to push ahead with development of its Johan Castberg project.
“The Norwegian government has recently proposed reduced uplift in the petroleum tax system, which reduces the attractiveness of future projects, particularly marginal fields and fields which require new infrastructure. This has made it necessary to review the Johan Castberg project,” said Øystein Michelsen, Statoil’s executive vice president for development and production in Norway.
Johan Castberg is located 240 kilometres north-west of Hammerfest in Norway. The field consists of the Skrugard discovery from 2011 and Havis, which was discovered in 2012. Preliminary volume estimates are in the range of 400-600 million barrels of oil, Statoil said.
Currently the oil company is engaged in drilling at four exploratory sites in Johan Castberg, as part of developing a more robust argument for further development of the field.
The problem for Statoil and others is the proposals to amend tax rules that would effectively raise another NOK70bn from the industry from now until 2050, according to reports from Norway.