Norway considers further petroleum tax changes

The Norwegian government and the Ministry of Finance have issued proposals for potential changes to Norway’s petroleum taxation system from 2022 onwards.

Following a period of feedback, final changes should be enacted during the spring of 2022.

According to Longboat Energy’s latest results statement, one change would involve the immediate expensing of investments with the aim of improving the neutrality of the tax system between the government and the oil and gas industry by aligning pre-tax versus-post-tax economics.

While the total marginal tax rate would remain at 78%, the Special Petroleum Tax (SPT) would rise from 56% at present to 71.8%. However, Corporation Tax (22%) would become fully deductible from the SPT, and the uplift on investments would be removed.

In addition, the current exploration refund at 78% will cease to exist, with companies instead having the tax value of losses (including exploration costs) refunded in cash at the revised SPT rate the year after the losses are incurred. The remaining corporation tax element (6.2%) would then be carried forward and set off against future profits from production.

Longboat also revealed that the semi-submersible West Hercules should start drilling the Ginny and Hermine prospects in late 4Q 2021.

Ginny is interpreted as a hanging-wall half graben adjacent to the Bremstein High, with faults subdividing the prospect into the Ginny North, Central, and South segments.

Hermine is beneath Ginny; both be drilled by the planned exploration well, with total prospective resources of up to 129 MMboe.

Source: Offshore Magazine