The Norwegian Oil and Gas Association (Norsk Olje & Gass), an industry body and employers’ organization, has warned about a ‘serious’ imbalance between oil revenues and oil spending in Norway.
According to the organization, the government’s estimate of oil revenues in the 2017 budget is NOK 138 billion.
In order to avoid further decline in oil revenues in the coming years, the organization stated it is essential for the country to focus on continued development of the Norwegian continental shelf and enabling access to new, attractive areas for exploration.
If this does not happen, regardless of the oil price, there will be significantly less money coming from the petroleum industry into the state budget as several of the currently producing oil fields are approaching the end of life, the industry body explained.
In 2014, the oil revenues totaled NOK 312 billion while the oil spending was NOK 156 billion. On the other hand, in the budget for 2017, oil revenues are estimated to be NOK 138 billion while spending is estimated to be NOK 260 billion.
Karl Eirik Schjøtt-Pedersen, Norwegian Oil and Gas Association CEO, stated that if this trend continues the country will have to make cuts in welfare services or raise taxes to keep the welfare. This shows just how important it is to maintain large revenues from the oil and gas operations, he explained.
Schjøtt-Pedersen also noted it is remarkable that in a state where the government reduces corporate taxes to increase the competitiveness of Norwegian business that this does not apply to Norway’s most important industry.
Offshore Energy Today Staff