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Norway’s Labour calls for debate on oil tax regime
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Norway’s Labour calls for debate on oil tax regime

OSLO: Norway should review its generous tax regime on oil drilling because of climate change, the opposition Labour party said on Monday, three weeks before a parliamentary election which opinion polls suggest it is on course to win.

Labour’s Marianne Marthinsen, a member of parliament’s Finance Committee, told daily Aftenposten that Western Europe’s top oil producer should look at changing rules that allow oil firms to reclaim costs of “failed exploration campaigns”.

She later told Reuters that Labour did not have “any intentions of making changes in the oil taxation regime in the next parliament’s term”, but wanted to hold a broad discussion about climate policy risk for the Norwegian economy.

“The taxation regime is one of many risk factors that naturally belongs to such a discussion,” she added.

The issue could have a bearing on the Sept. 11 election, in which the Green party, which advocates a total exploration ban, could hold the balance of power.

A system allowing oil companies to immediately reclaim 78 percent of the cost of dry exploration wells from the state was introduced in 2005, the loss being borne by taxpayers.

In the case of an oil or gas discovery, the companies can still deduct the costs over a number of years, but pay 78 percent on the profit. The measure works as a risk-reducing incentive to draw new players to Norway and was credited with boosting drilling activity by small and medium-sized players.

The oil industry and the Conservative party of Prime Minister Erna Solberg have strongly rejected even suggestions that it could be changed.

Oil and Energy Minister Terje Soeviknes said a stable and predictable framework was important.

Tina Bru, an energy spokeswoman for the Conservative party in parliament, said in an email to Reuters: “We do not in any way agree with this new proposal.”

Labour, which is trying to strike a balance between its environmentally minded voters and the powerful oil industry, has seen its support slip in the latest polls, though it still leads.(tmsnrt.rs/2ugJCjo)

Support for the Green party is near the 4 percent threshold, meaning that it could get 7-10 members in the 169-seat unicameral parliament, if it overcomes that hurdle.

The party said it could provide crucial votes both for the left and the right, but under one key condition.

“Our ultimatum to them, our single condition is ‘Stop exploring for oil and gas’. We do it because of the climate and also because it is a key criterion of the Paris climate agreement,” Rasmus Hansson, the party’s single representative in the current parliament, told reporters.