Energy firms criticise Norway plan to cut gas tariffs

Fri Mar 15, 2013 1:19pm EDT

* ExxonMobil, Total and Statoil critical of policy

* Proposal put forward to benefit their exploration efforts

* Proposal scheduled to come into force on May 1

By Gwladys Fouche

OSLO, March 15 (Reuters) - Top operators of Norwegian gas fields have criticised a government proposal to cut tariffs on gas transport for new contracts, even though the policy was suggested to help their exploration activities, adding pressure on Oslo to back down.

The plan was announced in January to encourage greater production in mature fields and more exploration in frontier areas of the Arctic.

But oil firms want assurances of future investment in pipeline infrastructure and fear that lower tariffs could slow the opening up of some fields off Norway.

At least three of the partners in the pipeline system, called Gassled, have protested against the proposal as it will greatly cut their profits.

The partners represent several international investment funds including the Abu Dhabi Investment Authority, the Canadian Pension Fund, German insurer Allianz, Swiss bank UBS and France's Caisse des Depots.

They have spent $5.1 billion in recent years acquiring stakes in Norwegian pipelines, which have long been considered a safe and steady investment bet.

On Friday, oil majors ExxonMobil, Total and Statoil said the proposal may reduce the incentive to invest in new pipelines and undermine the stability and predictability of the current arrangement - the same argument put forward by the aggrieved Gassled partners.

"(This) could complicate future merger processes and further it could reduce the incentive for investments in new infrastructure projects," wrote Total in a letter to the oil ministry published on Friday on the ministry's website.

ExxonMobil and Total used to be partners in Gassled but sold their interests in recent years to focus on exploration and production. Statoil is still a partner in Gassled but has reduced its stake significantly.

In a letter to the ministry, also published on Friday, ExxonMobil argued that investors in Gassled must feel confident in the tariff regulations.

"This is important to ensure a continued efficient Gassled ownership structure and avoid that the old Gassled owners will have to re-enter as 'micro' owners in Gassled," ExxonMobil wrote to the ministry.

BARENTS SEA

Even Statoil, by far the most important producer and explorer off Norway and arguably the main beneficiary of the policy were it to come into force, criticised the proposal.

"It is important to ensure transparent conditions that provide the right incentives to those who build new infrastructures and those who own Gassled," it wrote in its own letter to the ministry, while acknowledging the government's argument that lower tariffs would make it more economical to explore.

The government says its proposal would encourage exploration 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, it has argued.

Other firms have expressed their support for the policy, including Centrica and Wintershall, which are mostly license holders off Norway, rather than operators.

"All the incoming comments will be considered," an oil ministry spokesman said on Friday.

The government has previously said the proposed changes could come into force on May 1.

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