Where is it better to invest in offshore oil and gas – Norway or the UK?
Nick Terrell, managing director of Azinor, said the North Sea newcomer’s US-based private equity backers had favoured the Scandinavian country’s tax regime.
Norway has a refund system that protects operators from 78% of the cost of a dry exploration well.
Mr Terrell said: “My investors have also invested in a Norwegian company. They’ve drilled four wells and we’ve drilled one.
“They see the UK North Sea as having high costs and low material investment opportunities from an exploration standpoint.”
However, he said there had been a change of sentiment in recent times thanks to drastic reductions in costs on the UK continental shelf, and changes Westminster had made to the fiscal regime.
Mr Terrell said: “Investors are looking at fiscal terms – the costs and risk performance of a basin. There’s reason to be positive in the UK from that point of view.”
He was speaking at MER UK in Practice at the Aberdeen Exhibition and Conference Centre.
The full-day event is aimed at explaining how the Oil and Gas Authority intends to regulate, influence and promote the UK continental shelf to maximise economic recovery (MER).
Nick Richardson, OGA head of exploration and new ventures, insisted the UK was more attractive than Norway and said the exploration rebate system was flawed.
Mr Richardson said: “Exploration rebates and the behaviours they have stimulated do not really support the system.
“With blanket refunds you get lots of technically poor wells.”
He added: “If you can do good technological work, you’ll make more money in the UK than in Norway. Investors would rather explore in the UK.
“It’s easier to set up a business here. There are no requirements for local staffing, which there are in Norway, so there are some things in our favour.”
