Norway should give companies fiscal incentives to continue production from maturing oilfields in the North Sea as investment falls, Exxon Mobil XOM.N Production Vice President John Chaplin said on Wednesday.
Unlike many other oil and gas producers, Norway, Western Europe’s top oil producer, hands out licences for free and subsidises exploration and development costs, before imposing a 78 percent tax on production.
The change in the taxation system in 2004 led to an exploration boom which resulted in finds such as the giant Johan Sverdrup field in 2010.
But with oil prices having more than halved since their June 2014 peak, companies have slashed investment and axed more than 25,000 jobs in Norway’s oil sector, and more cuts are expected.
“I think so,” Chaplin told Reuters, when asked if Norway should provide tax incentives for the production phase.
“Most countries have come to that conclusion … The UK has recognised that they need to have investments for the tail-end production,” he said on the sidelines of the International Petroleum Tax conference, where other speakers raised the issue.
However, there was little appetite from the Norwegian government to lower taxes for oil companies as it may have to dip deeper into its sovereign wealth fund to plug its structural budget deficit.
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