Norway Upstream (Oil and Gas) Fiscal and Regulatory Guide

Norway governs upstream petroleum operations through a royalty and tax framework. In June 2020, the government approved an investment tax relief package that temporarily amends the rules on depreciation, tax-free income (uplift), and losses as defined in the Petroleum Tax Act. The package allows development expenses and uplift (temporarily increased to 24%) to be immediately deducted from the special tax base for 2020 and 2021. The tax value of losses incurred in 2020 and 2021 will also be refunded. After 2021, eligible projects will continue to benefit from the incentive. There have been early indications that the package will be effective in ensuring continued investment in Norway’s industry. To promote continued exploration, the government has also launched the APA 2020 licensing round. The deadline to apply for the round is September 22, 2020 and awards are expected in Q1 2021.

“Norway Upstream Fiscal and Regulatory Guide”, presents the essential information relating to the terms which govern investment into Norway’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Norway’s upstream oil and gas investment climate.


Overview of current fiscal terms governing upstream oil and gas operations in Norway

Assessment of the current fiscal regime’s state take and attractiveness to investors

Charts illustrating the regime structure, and legal and institutional frameworks

Detail on legal framework and governing bodies administering the industry

Levels of upfront payments and taxation applicable to oil and gas production

Information on application of fiscal and regulatory terms to specific licenses

Outlook on future of fiscal and regulatory terms in Norway

Reasons to buy

Understand the complex regulations and contractual requirements applicable to Norway’s upstream oil and gas sector

Evaluate factors determining profit levels in the industry

Identify potential regulatory issues facing investors in the country’s upstream sector

Utilize considered insight on future trends to inform decision-making

Table of Contents

Table of Contents

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1. Executive Summary

1.1 Regime Overview ─ Royalty Tax Agreement

1.2 Timeline

2. State Take Assessment

3. Key Fiscal Terms

3.1 Royalties, Bonuses and Fees

3.2 Abandonment and Decommissioning

3.3 Direct Taxation

3.4 Indirect Taxation

3.5 State Participation

4. Regulation and Licensing

4.1 Legal Framework

4.2 Institutional Framework

4.3 Licensing Process

4.4 License Terms

5. Appendix

5.1 References

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List of Tables

List of Tables

Table 1: Regime Overview

Table 2: Norway, Key Events since 2000

Table 3: Norway, Area Fees (NOK/km2), 2007 Onwards

Table 4: Norway, Area Fees (NOK/km2), 1965–2006

Table 5: Norway, Liquid Royalty Rates, 1972–2005

Table 6: Norway, Corporate Income Tax Rates (%), 1965–2019

Table 7: Norway, Special Petroleum Tax Rates (%), 1975–2019

Table 8: Norway, Uplift, 1992–2021

Table 9: Norway, Interest Rate on Losses Carried Forward (%), 2003–2020

Table 10: Norway, Environmental Taxes, 2015-2020

Table 11: References

List of Figures

List of Figures

Figure 1: Regime Flow Chart

Figure 2: Norway, Indicative NPV10/boe, IRR and State Take Comparison, and Price and Cost Sensitivity Analysis

Figure 3: Norway, Legal Framework

Figure 4: Norway, Institutional Framework


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