Monday 4 May 2020

Proposed is a comprehensive package of measures to maintain activity in the oil and gas industry and the supplier industry. We propose targeted, temporary changes to the tax system so that planned projects can be realized. In addition, we propose a green transition package, says Prime Minister Erna Solberg.

The measures will contribute to keeping the activity in the oil and gas industry and the supplier industry sustained throughout the crisis. At the same time, a package for further development in the direction of the green shift is presented.

The Norwegian oil and gas industry is the country's largest and most important industry measured as a share of value creation, revenues to the state, exports and investment.

- We have long known that investments on the Norwegian continental shelf would fall. Although the government is pursuing a policy to make the Norwegian economy less oil-dependent, it is important that the crisis we are in now does not make the fall so sudden and deep that we lose valuable competence that is important for the transition, says the prime minister.

The outbreak of viruses and the stringent infection prevention measures, both in Norway and internationally, have hit the world economy hard. The oil market is characterized by a sharp fall in prices and great turmoil. This has led to investment stops. Both planned developments and maintenance are put on hold on the Norwegian continental shelf. The assignments fail and the uncertainty is great.

- The oil industry has been an engine in the Norwegian business and economy for decades. If we lose the growth power in this industry, we also lose much of the driving force in the restructuring. We need to bring investment, capital, networks and knowledge into the new industries, ”says Solberg.

The government is proposing temporary changes to the petroleum tax system.

- To help create activity and secure jobs during a difficult time, we propose some temporary changes. In practice, this will mean that the tax bill will come later. This improves the liquidity of the companies. This gives companies the opportunity to make more investments, says Finance Minister Jan Tore Sanner.

The liquidity effect of the tax changes could amount to as much as NOK 100 billion related to investments in 2020 and 2021. The impact in the future will depend on how the companies' investments develop.

- We still have to expect oil investment to decline in the future, but with this proposal the decline will not happen so quickly. This means that we retain jobs and valuable expertise. This will curb the fall, not hinder restructuring, Sanner continues.

The government is also proposing a green business package. It includes, among other things, increased funding for Enova, more money for research, development and innovation, and increased funding for green shipping.

- We will also present a green change package that will help keep the pace of the green shift up. We are totally dependent on this if we are to cut greenhouse gas emissions while also securing and creating new green jobs. These measures will both help the oil and gas industry, but also help the supplier industry to continue the green shift. The package will include increased funding for research, development and innovation. This helps us to develop and maintain valuable high-tech competence environments that are important in the green transition, says Minister of Trade and Industry Iselin Nybø.

The details of the green transition package will come at the same time as the government presents a package of measures for the way out of the crisis, at the end of May.

- The Norwegian oil and gas industry and the supplier industry are now in the midst of a crisis unlike anything we have experienced before. Extensions and major maintenance are the basis for much of the activity in the supplier industry. The measures we are now proposing are a vitamin injection that will help to implement more developments on the Norwegian continental shelf as planned. Activity will secure jobs and maintain competitiveness throughout the value chain of what is Norway's largest and most important industry. This is also how we continue to secure value creation from oil and gas resources and revenues for our common welfare, says Oil and Energy Minister Tina Bru.

The corona crisis has caused the price of CO 2 emissions to fall, as the European quota price has fallen.

- For KrF, it is crucial to save jobs and to secure the expertise that will carry out the green shift. By increasing the CO2 price as a counterweight to the lower quota price, we propose that the operators should face almost the same emission cost as before the crisis. This helps to maintain the financial incentives for electrification of the shelf, says Minister of Children and Family Kjell Ingolf Ropstad.

Proposed temporary changes in the petroleum tax:

Companies receive expensed investments, including free income, immediately in the special tax. Free income is reduced from 5.2 per cent per year in the first four years to 10 per cent in the first year. This applies to the investment costs incurred by the companies in 2020 and 2021, and for investments covered by plans (PDOs / PADs) submitted by the end of 2021 and approved by the end of 2022, up to the start of production. The changes will not apply to investment costs incurred by the companies after 2024.

The tax value of deficits in the income years 2020 and 2021 can be paid out.

The Ministry of Finance will assess the relationship with the EEA Agreement.

The Government will present the proposal in a separate proposal to the Storting on May 12.

At the end of May, the government will also present a green change package for the business community.