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Fiscal Comparison/Exploration Attractiveness
4.5 Norwegian fiscal terms
Summary of current fiscal terms
Norway has a concession fiscal regime where royalty has been abolished for all fields. Corporate income tax (28%) and
an additional profits tax (Special Tax, at 50%) are both payable and not deductible against each other, hence the total
marginal tax rate payable is 78%. Some minor Carbon Dioxide (CO2) and Nitrogen Oxide (NOx) levies are payable on
gas flared, gas or oil/condensate used for power generation and nitrous oxide emissions.
Introduction of exploration incentives in 2005 has encouraged new entrants, but no further changes in the fiscal system
are currently planned or known about.
Flowchart of Norwegian Fiscal System for new fields
4.5.1 Norwegian current fiscal terms
Licence Terms
Licensing of frontier exploration acreage in Norway is primarily carried out in formal licensing rounds, on a biannual
basis. In 1999, an additional system for licensing open acreage in mature parts of the shelf was introduced, known as
the Awards in Predefined Areas (APA), which are made available on an annual basis. APA licences were shortened,
have greatly reduced mandatory work commitments and a formal timeline of key milestones have to be reached for
retention of the acreage.
The exploration licence period is normally three to six years, with a possible four year extension. The Ministry of
Petroleum and Energy grants the licence which authorises the companies to carry out geological, geophysical,
geochemical and geotechnical surveys, including shallow drilling. The licence does not give exclusive right to explore in
the areas covered. An exploration licence cannot cover an area already granted as a production licence. The
exploration licence does not give the right to regular exploration drilling.
Initial production licence duration is generally 15 years. The authorities expect acreage to be relinquished if it is not
being commercially developed. All areas not being developed at the end of the exploration period must be relinquished.
Equity Participation
The State reserves the right to take direct participation, at varying rates, through state entity Petoro, which manages the
State’s Direct Financial Interest, or SDFI. The average SDFI in recent licensing rounds has been 20% and it pays its
share of costs from day one.
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