Oil Bosses Urge Norway to Revise $10 Billion Crisis Package
Oil Bosses Urge Norway to Revise $10 Billion Crisis Package
(Bloomberg) --
Two of Norway’s most influential oil executives asked the government to change a tax proposal that is meant to boost investment, but that they say risks doing little to protect the industry against the Covid-19 slump.
The chief executives of Equinor ASA, Norway’s biggest oil company, and Aker ASA, which controls one of the biggest producers and a handful of service firms, both raised forceful concerns about the plan in the past two days. While the proposal to defer as much as 100 billion kroner ($10 billion) in taxes will improve oil companies’ liquidity, it does nothing to improve the profitability of projects, they said.
Read: Norway Hands $10 Billion in Tax Deferrals to Ailing Oil Industry
“Changes to the proposal are required in order to avoid significant and permanent reduction in capacity and competency for the Norwegian supplier industry,” Aker CEO Oyvind Eriksen said in the company’s first-quarter report on Friday. Aker attached an overview of the consequences of the tax changes, which it said would decimate activity across its supplier firms.
Equinor CEO Eldar Saetre came out against the plan on Thursday, saying it had left the industry “not at all very happy” and would force him to delay a series of projects. Talks with authorities continue ahead of the final proposal, which will be presented next week and that could still be amended in Parliament.
Read: Equinor Abandons Production Target as Profit Plunges 63%
Aker BP ASA, the producer owned 40% by Aker, has also criticized the proposal, as has rival Lundin Energy AB. The public comments from executives underscore the pressure facing the industry, which usually leaves political wrangling to its lobby organization, the Norwegian Oil and Gas Association.
The government’s plan would allow oil companies to accelerate deductions from investments decided by the end of 2021 and completed no later than 2024. That time frame is far too short for many projects, the industry argues. In addition, the reduction of the so-called uplift will increase the total tax burden over time, Aker’s Eriksen said.
Both Saetre and Eriksen this week called leading opposition politicians this week to make their case, Dagens Naeringsliv reported.
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