Tax proposal irks Statoil

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STAVANGER, Norway, May 6 (UPI) -- A proposal by the Norwegian government to change tax policies could make the offshore sector will be less attractive, Statoil said.

The Norwegian government announced a proposal Sunday that would cut a tax break on new energy development from 7.5 percent to 5 percent. Statoil, which is majority-owned by the government, said the measure translates to an initial cash flow loss of around $8.6 million for the year.

Statoil Chief Financial Officer Torgrim Reigan said the proposal raises serious questions about the future of offshore Norway.

"The proposed change in the Norwegian petroleum tax reduces the attractiveness of future projects, particularly marginal fields and raises questions regarding the predictability and stability of the fiscal framework for long-term investments on the Norwegian continental shelf," he said in a statement.

The Norwegian statistics bureau in March said it expected investments in the oil and natural gas sector to be lower than anticipated for 2013. It said it expected most of the investments for 2013 to focus on fields that are already producing oil and natural gas.

Norway is the largest oil producer in Europe and the second-largest exporter of natural gas after Russia.