Frischseminar: Diderik Lund
Strong subsidies for Norwegian petroleum
In June 2020, Stortinget (the parliament of Norway) adopted temporary subsidies for investment in Norwegian petroleum activity. The background was low profitability following the corona pandemic and a simultaneous weakening of price cooperation. The stated purpose was to maintain activity, in particular in the supplier industry. Subsidies will last for several years, typically until the end of the 2020's. They imply that projects that are clearly unprofitable under zero tax, can be profitable for the companies. Total subsidies have been assessed at about 8 billion NOK in total present value for their duration. But this concerns projects that would have been carried out regardless of the subsidies. For projects that are carried out as a consequence of subsidies, subsidies can be several times as large. An estimate of this has not been presented to Stortinget. The arrangement will strengthen Norway's dependence on petroleum at a time when it should have been reduced. It may also lead to an unfortunate concentration of projects in time.