Press Release

No.: 34/99
Date: 10.05.99

The Government takes measures concerning the petroleum sector

- The Government has today decided to adjust the means governing the petroleum sector. The measures that have been taken will contribute to lessen the fall in the activity level, says Minister of Petroleum and Energy Anne Enger Lahnstein.

When the Government submitted its Storting Report No. 46 (1997 – 98) on the oil and gas activities in June 1998, the sector was characterized by a high activity level and the commencement of several new development projects on the Norwegian Continental Shelf. Today, we see few new development projects. This could result in a steep fall in the activity level and employment in the sector, when the ongoing projects have been finalized. This could again influence the further development of the petroleum sector as such, and the situation resulting from such development could become serious to many local communities.

In light of the new challenges the petroleum sector is faced with, the Government now proposes adjustments to certain means that are utilized in the petroleum policy.

To arrange for improved socio-economic decisions in the petroleum sector, and to contribute to lessening the expected reduction in the activity level, the following measures are proposed:

• NOK 100 mill. are to be granted to strengthen the development of technology on the Continental Shelf in 1999 (see a separate press release on this issue);
• A gradual abolishment of the obligation to pay royalty is aimed at. In the National Budget for the year 2000, the Government will submit concrete plans for a gradual reduction of royalty for the 8 fields to which this obligation apply;
• As regards the direct state participation (SDFI) in the North Sea, the Government bases itself on the following:
• In areas adjacent to existing production licences, the SDFI will as a main rule be stipulated on the same level as the one applying to the main field;
• The SDFI will as a main rule not participate in new production licences in the North Sea where the resource potential in small and the profitability is low. In licences where participation is relevant, the SDFI will as a main rule be stipulated at 25 %. In licences with a high profitability or a large resource potensial the share may be higher;
• To ensure good decisions in the sector, the Government will apply the following policy for the prolongation of production licences:
• Applications for the prolongation of a production licence, which increase the probability for a better exploitation of the resources, will be approved with the same ownership structure as before, unless specific conditions otherwise indicate;
• For certain licences, specific conditions like a very low state participation and/or large remaining reserves may justify an increase of the State's share or the renegotiation of other conditions as a prerequisite for the prolongation.
• To strengthen the work on internationalization of the Norwegian petroleum industry, a further NOK 2 mill. are proposed to be granted for the budget year of 1999. These means will mainly be channelled through the foundations Petrad and INTSOK;
• To improve efficiency in the exploration activities, the Government will establish concrete long term plans – for instance covering 5 years – for licensing rounds and the granting of other licences. This will be further presented in the White Paper that is planned to be submitted in the spring 2000.

In the White Paper which is planned to be submitted to the Storting next spring, the Government aims at carrying out a further evaluation of the governing system, what actors should be allowed to participate in the activities, and the state participation on the Continental Shelf. In particular, work will be undertaken on issues tied to compensation for the use of infrastructure and to the mobility of mobile platforms across the Continental Shelf borders.

Contact:
Sissel Edvardsen, tel. 22 24 61 09