Statoil Cancel $10 Billion Projects In The UK

Statoil has put on hold two oil and gas projects in UK waters worth more than $10bn because of the government’s increased tax on oil production, the Financial Times reports. The Norwegian group said the tax rise, announced by George Osborne, chancellor of the exchequer, in last week’s Budget, was a “substantial setback” to the North Sea oil industry.

“The proposed tax change significantly impacts the economics of these projects.”

Statoil

 

It would “pause and reflect” on the future of its Mariner and Bressay fields to the south-east of Shetland in light of the decision, Statoil says in a statement: “The proposed tax change significantly impacts the economics of these projects. These are challenging fields, which were already economically marginal, so we need to assess how this tax increase impacts them and consider how to move forward.”

 

Statoil says it has been close to awarding engineering and design contracts for the Mariner field but this will now be suspended.

Mariner and Bressay hold several hundred million barrels of recoverable oil and Statoil have said erlier that their development would generate more than $10bn of investment.

Mr. Osborne dismissed suggestions that his £2bn tax grab on the oil industry would hit exploration: “Our expectation is it will not damage investment.”

The chancellor defends his plan to take money from the oil industry to keep down prices at the pump and dismiss warnings from MPs on the House of Commons Treasury committee that the move could cost thousands of jobs in the sector.

“With current oil prices, the prospects are for increased investment,” he says. “It’s still very profitable to invest to exploit these resources.”

Mr. Osborne said taxes on oil groups would decrease if the oil price fell to about $75 a barrel and would be recouped by a reintroduction of the fuel duty “escalator”, which progressively increases fuel duty.

The supplementary tax rate levied on oil and gas production has risen from 20 per cent to 32 per cent. This has increased the effective tax rate to at least 62 per cent, with some fields facing 81 per cent.

Statoil is to meet Treasury officials but Mr Osborne says it pays higher taxes in Norway.

 Well…technically, yes. However Statoil is in principle, and practice, run by the Norwegian government who also is the major shareholder. There’s lot’s of hidden subsidicies in the Statoil system, so that issue is almost irrelevant.

  

Related Articles

• Statoil North Sea Oil firm in pullout over George Osborne’s budget tax (dailymail.co.uk)
• Statoil halts North Sea oil development over windfall tax (guardian.co.uk)
• Oil giant puts £10bn North Sea development on hold after Osborne’s tax raid (dailymail.co.uk)

Norway Consider Veto EU’s Bank Deposit Guarantee Directive

The Norwegian government is considering to use its veto against a new EU directive, setting a limit to the European banks deposit insurance guarantee. The proposed limit is EUR 100.000. The Norwegians banks, however, guarantees for up to EUR 250.000 of private citizens bank deposits. Norwegian minister of finance, Sigbjørn Johnsen, refuse to accept the upcoming regulations from Brussels, and says that he is considering using Norway’s right to veto any new EU directives for a period of 12 months if an agreement is not possible. If that turns out to be the case, it will be the first time Norway use its veto rights in the EU parliament.

“Yes, the veto is even considered. But the main track is to get through with our views.”

Sigbjørn Johnsen

Norwegian minister of Finance, Sigbjørn Johnsen, met on Thursday afternoon with the German MEP, Peter Simon, who is preparing the new EU directive on bank insurance guarantees for the EU parliament. Mr. Johnsen also met with MEP Burkhard Balz. “They were both nice guys,” Johsens says. “They fully understand the arguments we have, but time will tell if we get through with our case.” the experienced minister adds.

Mr. Sigbjørn Johnsen was also minister of finance in the early 90’s, and was the one who had to deal with the Scandinavian bank crisis in Norway.

In an interview with the Norwegian newspaper “Nationen,” Friday, he says the Norwegian government will consider using its veto rights to block the upcoming new EU directive on European banks deposit insurance guarantee.

The new directive, which Norway is obligated to adapt according to The EEA Agreement of 1992, sets a limit to the banks deposit guarantee of 100.000 euro.

That’s about the above the average guarantee in most European Area countries, but Norway has the highest deposit guarantee of all, equal to about 250.000 euro.

The directive is being processed by the European Parliament at the moment, and EU’s Finance Committee is scheduled to submit its recommendations March 17.

According to Johnson that means that all political groups will conclude on the case by the end of February.

The newspaper Nationen also writes that Norway plans to contact several other groups, not just the Social Democrats and Christian Democrats – who are the two largest political parties in the EU parliament.

“What we’re doing now is using all the relations we have inside the EU system. When the EU finance commissioner, Michel Barnier, comes to visit Norway later on this winter, it will also be on the agenda. We have to see what the final result is. Then we’ll decide what to do – or not to do,” Johnsen says.

“Is it a veto relevant?”

“Yes, the veto is even considered. But our main track is to get through with our views.”

Fear of Flying Money

EU finance commissioner Michel Barnier has on several occasions said that he EU worries about the Norwegian deposit guarantee, that it will result in a flight of capital.

The possibility that such movements of small deposits, followed by large deposits, might lead to a domino effect of falling banks, according to the EU.

However, Mr. Johnsen argues that an investigation of capital movements between the Nordic countries show that the Norwegian insurance scheme, (which is substantially better than in the other Nordic countries), do not have anti-competitive effects.

A Bank Champions League

The Spanish professor of economics, Rosa Maria Lastra, who is an expert on international monetary law, points out three main reasons for the new directive: 

To will protect bank customers.

To prevent banking crises, and so-called “bank runs”, where a large number of customers pulling out money from a bank at risk simultaneously. 

To make it easier for the regulators to shut down a bank, who actually should have been closed, as customers know that their deposits are protected when the bank declare bankruptcy.

Lastra believes it is important to figure out how large national banks, with branches in several countries, both in and outside the EU,  should be handled.

She proposes a “Champions League” solution, in which large international banks have an EU deposit guarantee, while the national banks have a national deposit guarantee.

No Comments

No other members of the Norwegian government are willing to comment on the finance ministers statements.

 

Prime minister Jens Stoltenberg refuses to say whether it will be necessary to veto the EU proposal that will reduce the Norwegian guarantees on bank deposits by more than 50%.

“I will never answer that,” he says when asked about the possibility of a veto against the deposit insurance directive.

“We are in close dialogue with the EU on this matter. It is not right to speculate on whether we want to use the reservation clause or not. We have succeeded before in getting through our opinions through,” Mr. Stoltenberg says.

And it’s not the first time the Norwegian government consider veto new EU regulations. But somehow amazingly a solution has always been found in the last minutes.

In any way – it  will probably not matter much if the Norwegians refuse the directive or not.

The nation is not a full member of the European Union, and the right to veto a directive from Brussels is limited to 12 months.

And it is also an open question if the EU even will accept a Norwegian veto in this case.

Related by the Econotwist’s:

• Financial Authorities See No Point In Stress Testing Norwegian Bank
• People’s Confidence In The EU Drops To Record Low
• The EU Files: USA See Norways Military Proposal As Ridiculous
• Housing Bubbles In Australia, Canada, Norway, Sweden Worse Than In USA
• Norway’s Government Pension Fund Takes $25bn Hit

Related Articles:

• Another reason to flee north (ftalphaville.ft.com)
• Irish bank flight quickens despite EU rescue (jamblemag.com)
• Characteristics of a Certificate of Deposit (visualeconomics.com)

Hackers Attack Norwegian Government – Again

This week the Norwegian government have been under a severe hacker attack. The National Security authorities have raised the threat level to 3 – the highest since the Stuxnet attack against Norwegian oil installations and other crucial systems in June this year.

“The police are aware of vulnerabilities in PDF readers that’s  been exploited for hacking.”

Espen Strai

Norwegian Security Authorities

The Norwegian governments building in Oslo have this week been hit by the most serious hacker attack so far this year, Norwegian newspaper Aftenposten reports. This attack has been possible because the ministers and their staff still hasn’t updated their PDF software.

According to the norwegian newspaper Aftenposten, National Security Authorities discovered a flow of infected PDF files coming in through the governments email system, passing the firewall without any trouble.

The serious attack was kept a secret until the newspaper got hold of an internal note to the security personnel at the government building, warning against the hole in their security systems.

The National Security authorities (NSM) are still working on the case, trying to patch the holes and see if they can trace the perpetrators.

The attacks this week have led the NSM to raise the national threat level to level 3 – the highest since the Norwegian oil companies, utilities and other vital social structures were attacked by the dangerous Stuxnet worm earlier this summer.

NSM and the Norwegian government has kept this last attack a secret from the public. The reason is that they’re still working to resolve the problem,  and investigate who is behind, whether they are hackers, computer criminals or foreign intelligence, aftenposten.no writes.

Hackers and computer criminals have discovered that the ministers and their staff have done a classic amateur mistake – they have failed to update the computer program Adobe Reader, which is used to read PDF files.

That makes the government buildings an easy and tempting target.

Using a computer virus, a so-called “Trojan,” which uses known vulnerabilities in Adobe, the hackers tried to install software that would give them full access to the computers.

Every day more than 5 million emails passes through the governments firewalls that’s supposed to protect highly sensitive data, government notes and classified information, which can cause both individuals and Norwegian security concerns very much damage.

The Office of the Auditor General of Norway has previously criticized prime minister Jens Stoltenberg and his government for the very poor data security and, among other things, using old software.

Ministry of Government Administration and Church Secretary Rigmor Aasrud says that the government has implemented several measures.

“We can not comment on the different security ratings by NSM. However, we’re continuously assessing the measures that are necessary. We expect people to be vigilant and careful with what you do,” says communications manager Frode Jacobsen Minister of Government Administration and Reform.

“The police are aware of vulnerabilities in PDF readers have been exploited for hacking. We follow the situation around this carefully,” says communications director Espen Strai at the National Police Computing and Material Service.

Norwegian police have now taken steps to update the governments applications so that most attacks are stopped, aftenposten.no is told.

Related by The Swapper:

• Report: Details On China’s Internet Hijacking
• Hackers Attact Norway’s Peace Prize Institute
• Europe: Cyber Criminals Attack Critical Water, Oil and Gas Systems
• EU Respond To Cyber Threat Alarm
• Student Design Software to Combat Modern Cyber Crime
• The REAL Weapon of Mass Destruction

Related Articles:

• Norway Queries U.S. on Reports of Surveillance (nytimes.com)
• Scandinavia hit by US spying claims (newstatesman.com)
• US embassy accused of spying in Norway (telegraph.co.uk)
• Danny Ayalon to Norway: Why can’t you keep your artists under control? (coteret.com)
• Norway seeks U.S. explanation in surveillance row (reuters.com)
• Norway investigates reports of U.S. spying (cnn.com)
• Spies R Us (lewrockwell.com)
• Stuxnet virus: A guide (telegraph.co.uk)