The Norwegian government plans to make taxpayers rather than oil companies pay special UN fees for any offshore production from remote Arctic regions, according to letters sent to oil firms and seen by Reuters.
The plan could serve as an example for other nations looking to fund exploration of the seabed ever further from land.
It was criticized by opposition parties that want tighter limits on exploration in the fragile Arctic environment, days before an election in which the future of Norway’s big offshore oil and gas sector is a major issue.
Opinion polls show a neck-and-neck race between Norwegian Prime Minister Erna Solberg of the Conservative Party and Labour leader Jonas Gahr Stoere.
“There is too little risk on the companies and too much risk on the people of Norway,” said Ola Elvestuen, the head of parliament’s Energy and Environment Committee and a member of the Liberal Party.
“Neither me nor the committee were informed about this,” he said of the plans, outlined in letters provided to reporters by the Norwegian Oil and Energy Ministry, for implementing a dormant provision of the 1982 UN Convention on the Law of the Sea.
Under Article 82 of the treaty, rich nations are due to pay up to 7 percent a year of the value of any production — of oil, gas or other minerals — from their continental shelves more than 200 nautical miles (370 km) from land to a fund to help developing nations.
The money would be channeled to poor nations via the UN International Seabed Authority in Jamaica. The mechanism is untested as there is no production so far offshore.
The ministry included a warning about Article 82 when it offered parts of the Arctic Barents Sea, more than 200 nautical miles from land, for exploration in the latest licensing round awarded last year.
“The licensees could be required to cover certain costs in this connection,” it wrote in the letters to oil companies. “Any such cost will be deductible in the calculation of the petroleum tax.”
The ministry viewed the deductions as matching Norwegian petroleum policy, which includes a principle that “an investment project that is profitable before tax is also profitable after tax,” an official source said.
Last month, Statoil and partners Chevron, ConocoPhillips, Lundin Petroleum and Petoro drilled the first well in the Arctic Korpfjell prospect, 410km from land.
They found only small, non-commercial quantities of natural gas, but Statoil plans more drilling in the area next year.
The government has also offered three additional blocks behind the 200 nautical miles threshold in upcoming licensing rounds, with awards expected next year.
Of the 166 nations that have ratified the Law of the Sea, Norway has apparently gone furthest in outlining how it would apply Article 82, legal experts said.
The US, which has not signed up, tells bidders for oil and gas leases far offshore in the Gulf of Mexico that they might be at risk of extra charges if Washington were to join.
“Norway and the United States are the only two countries that have spent any time talking about Article 82,” said Wylie Spicer, a Canadian legal expert who has written reviews of Article 82 for the UN.
John Norton Moore, a law professor at the University of Virginia who helped draft Article 82, said Oslo was trying to balance the interests of its citizens, oil companies and developing nations.
“This strikes me as a sound decision by Norway. It recognizes that it is an obligation of the state” to pay any charges under Article 82, he said.
He said it was reasonable to give oil companies tax breaks for taking on the risks of operating so far from land.
Article 82 makes states responsible for payments, but lets them decide how to raise the cash.
Rasmus Hansson, the only lawmaker for the opposition Green Party and a member of the Energy and Environment Committee, criticized the government plan.
“This is yet another round of subsidizing Norway’s future contributions to global warming with taxpayers’ money,” Hansson said.
Environmental group Greenpeace also criticized the plan, saying that oil and gas in the high north was simply too risky.
“There is no anchor in the democratic process,” Greenpeace Norway head Truls Gulowsen said.
Legal academics say Article 82 is based on the idea that the high seas, owned by no nation, usually start 200 nautical miles offshore, the limit of each nation’s exclusive economic zone.
Article 82 lets rich nations exploit resources beyond their economic zones in offshore areas where, such as in Arctic Norway, a shallow continental shelf extends beyond 200 nautical miles.
Under Article 82, nations have to start paying 1 percent of the value or volume of any production after five years, with the annual rate rising to a plateau of 7 percent after 12 years.
The Norwegian parliament debated and ratified the Convention on the Law of the Sea in 1996, and included an assessment that any application of Article 82 was unlikely to have a big economic impact.
The pitch is a classic: A young celebrity with no climbing experience spends a year in hard training and scales Mount Everest, succeeding against some — if not all — odds. French YouTuber Ines Benazzouz, known as Inoxtag, brought the story to life with a two-hour-plus documentary about his year preparing for the ultimate challenge. The film, titled Kaizen, proved a smash hit on its release last weekend. Young fans queued around the block to get into a preview screening in Paris, with Inoxtag’s management on Monday saying the film had smashed the box office record for a special cinema
CRITICISM: ‘One has to choose the lesser of two evils,’ Pope Francis said, as he criticized Trump’s anti-immigrant policies and Harris’ pro-choice position Pope Francis on Friday accused both former US president Donald Trump and US Vice President Kamala Harris of being “against life” as he returned to Rome from a 12-day tour of the Asia-Pacific region. The 87-year-old pontiff’s comments on the US presidential hopefuls came as he defied health concerns to connect with believers from the jungle of Papua New Guinea to the skyscrapers of Singapore. It was Francis’ longest trip in duration and distance since becoming head of the world’s nearly 1.4 billion Roman Catholics more than 11 years ago. Despite the marathon visit, he held a long and spirited
‘DISAPPEARED COMPLETELY’: The melting of thousands of glaciers is a major threat to people in the landlocked region that already suffers from a water shortage Near a wooden hut high up in the Kyrgyz mountains, scientist Gulbara Omorova walked to a pile of gray rocks, reminiscing how the same spot was a glacier just a few years ago. At an altitude of 4,000m, the 35-year-old researcher is surrounded by the giant peaks of the towering Tian Shan range that also stretches into China, Kazakhstan and Uzbekistan. The area is home to thousands of glaciers that are melting at an alarming rate in Central Asia, already hard-hit by climate change. A glaciologist, Omarova is recording that process — worried about the future. She hiked six hours to get to
The number of people in Japan aged 100 or older has hit a record high of more than 95,000, almost 90 percent of whom are women, government data showed yesterday. The figures further highlight the slow-burning demographic crisis gripping the world’s fourth-biggest economy as its population ages and shrinks. As of Sept. 1, Japan had 95,119 centenarians, up 2,980 year-on-year, with 83,958 of them women and 11,161 men, the Japanese Ministry of Health said in a statement. On Sunday, separate government data showed that the number of over-65s has hit a record high of 36.25 million, accounting for 29.3 percent of