Notification of the depreciation rules of the Petroleum Tax Act Section 3 b

Notification of the depreciation rules of the Petroleum Tax Act Section 3 b, as proposed amended by Royal Decree of 27 May 2002, relating to large scale LNG facilities located in Finnmark County or the municipalities of Kåfjord, Skjervøy, Nordreisa or Kvænangen in Troms County.

We hereby notify the Authority of the depreciation rules of the Petroleum Tax Act Section 3 b, as proposed amended by Royal Decree of 27 May 2002, relating to large scale LNG facilities located in Finnmark County or the municipalities of Kåfjord, Skjervøy, Nordreisa or Kvænangen in Troms County.

The information contained in this letter, including the annexes, together with the information enclosed in previous letters from the Norwegian Government regarding this issue, is considered to meet the requirements referred to in Article 1(3) of Protocol 3 to the Surveillance and Court Agreement.

The Norwegian Government is of the opinion that the depreciation rules of the Petroleum Tax Act (PTA) in force do not contain any element of State aid in the meaning of Article. 61(1) EEA.

Nevertheless, the Government acknowledges that the Authority, after a preliminary assessment of the case, is of the opinion that the amendments to the Petroleum Tax Act adopted in December 2001, may contain State aid. We are also aware of the Authority's view expressed in point 3.2.1.(5) of its State Aid Guidelines that "When an EFTA State has doubts whether or not a planned measure contains state aid elements, the EFTA Surveillance Authority should be informed of it before it is put into effect". In this situation, the Government finds it appropriate to notify the Authority of the depreciation rules as proposed amended by the Government and submit information which shows that the measure is consistent with Article 61. 3 (c) EEA.

Compatibility with Article 61.3 (c) of the EEA Agreement

The Government deems the depreciation rules of the PTA Section 3 b to be compatible with Article 61.3 (c) as permissible regional aid. Relevant in this regard is the Authority’s own State Aid Guidelines chapter 17 B, 25 and 26. The aim of region aid is to promote investment and job creation in areas with permanent regional disadvantages. In order to qualify for regional aid, it must be demonstrated that the proposed measure has positive regional effects.

The PTA Section 3 b, third sentence will, as proposed amended, be geographically limited to target zone A in the approved regional aid map. The maximum aid intensity in zone is 25 pct of eligible costs. In annex 2 to this letter, the economic gain for the involved undertakings is stipulated. As shown in the annex, any regional aid granted in the form of application of the PTA Section 3 b, will be within the maximum aid intensity of 25 pct.

Any regional aid granted to undertakings in accordance with the PTA Section 3 b, will be cumulated with aid from other sources.

Enclosed you will find documents demonstrating that the measure is compatible with Article 61 3. (c). For relevant references to the Authority’s Guidelines chapter 17 B, 25 and 26, please see in particular point 2 in our letter of 30 April 2002 and point 5 in our letter of 19 April 2002.

If you have further questions please do not hesitate to bring these forward as soon as possible.

Yours sincerely,

Annexes:

1. Letter from the Ministry of Finance to the Ministry of Trade and Industry of 27 May 2002
2. Letter from the Ministry of Finance to the Authority of 27 May 2002
3. linkdoc133257#docGovernment Proposal to the Odelsting nr. 84 (2001-2002)