UPDATE 1-Norway to cut gas transport charges to encourage output

Tue Jan 15, 2013 7:32am EST

* Pipeline returns have exceeded forecasts: govt

* Lower tariff could boost exploration in Arctic: govt

* Lower charge could result in higher volumes, revenues: govt

OSLO, Jan 15 (Reuters) - Norway plans to sharply reduce natural gas transport tariffs for new gas contracts, hoping to encourage higher production in mature fields and more exploration in the frontier areas of the Arctic, the oil ministry said on Tuesday.

The government also aims to reduce the charges for bookings from this spring as pipeline firm Gassled has been earning more than the desired return on its investment, while future returns are seen elevated for years to come, the ministry said in a consultation paper.

"The proposal to cut transportation costs for new gas volumes will facilitate more exploration, development and the implementation of several additional measures at existing fields," oil minister Ola Borten Moe said in a statement.

Norway is the world's second biggest piped gas exporter, selling over 100 billion cubic metres a year but output is seen falling this year as fields mature and new areas will take time to come onstream.

Pipeline charges are based on a complex formula that includes capital and operating costs and the ministry proposed a 90 percent reduction in the capital element for the majority of tariff areas.

The tariffs were set up to provide investors a 7 percent return on asset but the actual return was 10 percent in 2012 and was seen at 10.5 percent in 2028, the ministry said.

The lower tariffs would then encourage energy firms to explore for more gas in the Arctic Barents Sea, where only a few discoveries have been made so far.

Since the area lacks pipeline infrastructure, the new discoveries could then provide the volumes necessary to make a new gas pipeline financially viable and in turn encourage investment in new infrastructure, the ministry argued.

State-owned Petoro holds 45.8 percent of Gassled, whose ownership also includes oil companies such as Statoil, ConocoPhillips, DONG, GDF Suez and RWE, and a number of financial investment companies.

One of these, Njord Gas Infrastructure AS, said it was concerned about the implications of the proposed changes.

"Significant parts of the Gassled system are already booked for several years to come and so, the potential implications for the company are not substantial in the short to medium term, but will increase over time," it said.

Njord, which is the third-largest shareholder of Gassled with 8 percent, said the preliminary estimates showed it would generate sufficient cash to service its debts.

Gassled shareholders have two months to respond to the government's proposal.

Gassled tariff revenues totalled 24.3 billion Norwegian crowns ($4.41 billion)in 2011, gas system operator Gassco said.

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