Norway Labor Lawmaker Says He’s Open to Debate on Oil Policy

Jan 24 2019, 2:30 PMJan 24 2019, 4:29 PMJanuary 24 2019, 2:30 PMJanuary 24 2019, 4:29 PM

(Bloomberg) -- For establishment politicians in Norway, discussing changes to the country’s oil policies is akin to swearing in church.

That’s what happened when the top energy lawmaker of the opposition Labor Party, the country’s biggest political group, on Thursday said he was open to a debate about the taxes and incentives for oil companies, including a lucrative exploration cash refund. The comments carry extra weight because Labor, backed by powerful oil worker unions, has been an industry ally since Norway started producing petroleum in the 1970s.

Even if Labor’s Espen Barth Eide, a former foreign minister, sought to downplay the significance of his comments, saying in an interview with Bloomberg that no imminent changes are planned, Norway’s top oil lobbyist called the situation “very serious” and demanded a clarification from the party leadership.

“The oil industry is extremely vulnerable to uncertainty,” said Karl Eirik Schjott-Pedersen, the head of the Norwegian Oil and Gas Association, and himself a former Labor Party minister. “Investors aren’t just looking at the current term. Uncertainty about what might come from future governments will also have an impact on their investments.”

Other voices in the industry, including the head of the Confederation of Norwegian Enterprise and the chief economist of state-controlled oil company Equinor ASA, also denounced the “uncertainty” created by Barth Eide’s comments to daily Klassekampen.

The reactions underscore the mounting pressure facing the industry in Norway, western Europe’s biggest oil and gas producer. A debate about the future of fossil fuels is intensifying amid rising awareness of climate change and a number of smaller political parties are seeking to challenge Norway’s openness to drilling.

The country’s three biggest parties -- Labor on one side and the governing Conservative and Progress parties on the other -- have so far enforced the status quo. Stable and predictable terms have always been one of Norway’s main competitive assets in attracting investments from heavily-taxed oil companies.

But since Jonas Gahr Store succeeded Jens Stoltenberg as Labor leader, the party has adopted more climate-friendly positions. It was instrumental in enforcing a coal ban for the country’s massive sovereign wealth fund, and has become more restrictive in its views on opening oil drilling in the sensitive waters around the Lofoten islands.

Barth Eide’s comments echo suggestions from one of his party colleagues during the campaign for the 2017 election that Norway should review the cash refund it offers for exploration costs to companies that don’t yet have any income to deduct them from.

Questions over Labor’s commitment to the industry come in addition to potential electoral breakthroughs for oil opponents such as the Green Party, as well as legal challenges -- one of them against the exploration refund.

As recently as Jan. 10, the oil lobby’s Schjott-Pedersen said he was more worried about political risk than lower oil prices.

Even as Labor’s Barth Eide clarified the party would probably have the same oil policies at the next general election in 2021 as today, he said changes couldn’t be excluded down the line.

“The world will change, and you can’t give a sort of eternal guarantee for future policy,” Barth Eide said. “What was reasonable yesterday and is reasonable today isn’t necessarily reasonable in 15-20 years.”