Norway’s budget for 2016 sees mixed response from O&G industry

The Norwegian Oil and Gas Association, a professional body and employer’s association for oil and supplier companies engaged in the field of exploration and production of oil and gas on the Norwegian Continental Shelf, has said that, in its national budget for 2016, the government has not delivered on its increased oil recovery promise. 

In a press release issued on Wednesday, the association said: “233 billion NOK ($28.4B)  in revenues from the oil and gas sector is phased into the national budget for 2016. This enables the Norwegian politicians to increase public spending on welfare and new reforms, and thus shows that our sector will be the dominant sector for generations to come.”

Karl Eirik Schjøtt-Pedersen, CEO of the Norwegian oil and gas association, said: “The revenues from the oil and gas sector constitutes one fifth of the governments revenues. These revenues are crucial for public spending related to schools, health and pensions for the future. However, the government has not delivered on its promise to overhaul measures connected to incentives for increased oil recovery. This was a policy we expected them to deliver on.

“In a situation where many loose their jobs such measures would increase activity, increase employment and increase the governments’ revenues.”

Lacking measures for increased oil recovery

The governments proposal for the national budget does not contain the new policies that are needed to increase oil recovery from mature fields, the association emphasized.

This policy has been drafted by the current government itself as a part of their political platform and the Norwegian oil and gas association feels strongly that the government must deliver on this quickly, the oil and gas association said. Measures within this field can create values up to 460 billion NOK, and thus secure tax revenues for the government at approximately 135 billion NOK, the association further added.

Research and apprenticeships get increased funding

Although not happy with the lack of measures for increased oil recovery, the Norwegian oil and gas association welcomed the significant increase in the research funding regarding petroleum.

“This increase makes it possible to develop new technology that can make operations safer and more inexpensive. Especially will the increase regarding Demo2000 give valuable opportunities for trial runs and pilots to be run in the years to come. The Norwegian oil and gas association is also pleased to note that funding is put forward for more seismic surveys in the Barents sea,” the association said.

In addition, increased allocations for apprenticeships as well as reduced employment levees for apprenticeships enables more businesses to take on apprentices in the years to come.

“These are important policy suggestions from the government, that will secure competence and development in the years to come,” says Schjøtt-Pedersen.