Communication on energy: The Norwegian taxation debate

A working group of the Norwegian Ministry of Finance has recently produced a report on possible structural changes to the fiscal system applied to petroleum exploitation. This report recommended that two types of changes be seriously examined and the oil companies have recently presented their views on these proposals. Here a comparison is made between the two proposed systems and the current one as applied to very marginal fields. The comparative effects on investors depend on the size of discount rate employed and the proportion of debt finance utilized. It is unlikely that the proposed changes will significantly improve incentives to develop marginal fields.