Today we are presenting a major package of measures to maintain activity in the oil and gas industry and the supply industry. We are doing this to safeguard jobs across the country.
The impacts of the COVID-19 pandemic and the fall in oil prices have put the industry in an extremely difficult situation.
Both companies and employees are facing a great deal of uncertainty.
And if there is one thing that is important to us, it’s to reduce uncertainty where we can. That is why we are announcing these proposals today, with the aim of maintaining activity in the oil and gas sector. The Government will submit its taxation proposals to the Storting together with this year’s revised national budget.
This is also part of our response to the Storting’s request for the Government to consider a range of instruments to stimulate investments in the oil and gas industry and the Norwegian supply industry.
We are also announcing a green restructuring package to strengthen competitiveness, facilitate restructuring and promote further emission cuts in the Norwegian business sector once the crisis is over. A successful exit strategy will require greener approaches, secure jobs, and a strong competitive position.
Our oil and gas resources have enabled us to create large numbers of jobs and build up a unique economic position, and they have made a huge contribution to our welfare and prosperity.
Now we must make sure that the industry that has been the engine of Norway’s economy does not grind to a halt.
The coronavirus crisis is hitting both the Norwegian and the global economy hard.
The oil market is highly volatile, which is why we announced cuts in production on the Norwegian shelf yesterday. Our aim is to promote stability in the oil market.
The situation is exacerbated because oil companies are also being hit hard by the crisis and have responded by putting planned development and maintenance projects on hold. Orders are being postponed or cancelled.
And the effects are being felt by people in this country, including those working in industrial enterprises all along the Norwegian coast and in the supply industry in all parts of the country. Many of these companies provide vital jobs in areas outside the major population centres, in communities from Kirkenes to Notodden to Karmøy.
The Government has been working for a long time to ensure the transformation of Norwegian business and industry. We were on the way to becoming less dependent on the oil and gas industry even before the crisis began.
The people, the knowledge and the expertise we have in our oil and gas industry will also be crucial to Norway’s green transformation. Unless we take steps now to support these jobs and companies, we risk losing what we have invested over the past 50-60 years.
There are two things we have to do now: we must make sure that companies and jobs survive the crisis, and at the same time we must retain Norwegian expertise, maintain our competitive position, and strengthen the basis for a green transformation process.
This is why we are proposing temporary, time-limited amendments to the tax system for oil and gas companies. The most important of these is that the depreciation rules for investments, or uplift rules, are being amended. This means that the companies’ tax bills will be postponed.
The companies can benefit from deductions from the tax base more quickly and their liquidity will improve.
This will make it easier to carry out development projects that create jobs and maintain activity, even though the tax rate is being kept at 78 %.
Our aim is to curb the decline in activity, to ensure that more people have a job to go to, and to keep valuable expertise in Norway.
The changes to the taxation system will give companies additional liquidity, estimated at NOK 100 billion this year and next year combined. This will help to reduce the decline in orders that the supply industry is experiencing.
The oil and gas industry has ambitious plans to cut emissions through electrification, and this work is vital. Minister of Children and Families Kjell Ingolf Ropstad will say a bit more about this afterwards.
The Government considers it important to ensure that the economic incentives for implementing planned electrification projects on the continental shelf are not weakened. We are therefore trying to ensure that companies’ emission costs in the time ahead remain at about the same level as before the crisis.
We want to help the business sector to become more adaptable, as this will be important for reducing emissions and finding new solutions. The supply industry will play a vital role here.
That is why we are now announcing a new green restructuring package for the business sector, which will be presented to the Storting towards the end of May.
This package will focus on how we can enhance our expertise, knowledge and technology. It will include increases in funding for Enova, for research, development and innovation, and for green shipping. Minister of Trade and Industry Iselin Nybø will say more about the green restructuring package.
The proposals we are announcing today have a dual purpose: to safeguard jobs today and to ensure progress in the green transformation we must seek to achieve in the future.