Oil Companies In Court To Win Tax Relief From Norway

by Ulrika Lomas, Tax-News.com, Brussels

08 December 2005

Several major oil extraction firms have begun what promises to be a lengthy legal battle against the Norwegian government in order to win the right to offset the costs of oil platform decommissioning against tax.

The companies, including Norsk Hydro ASA, ConocoPhillips, Total SA, and ExxonMobil are arguing that they should be allowed tax relief on the billions of kroner that they must set aside to pay for the expensive decommissioning of the ageing oil rigs and platforms.

Despite the fact Royal Dutch Shell won a test case in the Norwegian High Court last year which apparently settled the issue, industry insiders say that doubts remain about exactly when companies can claim tax relief on the decommissioning costs and the Norwegian government is prepared to let the courts reach a conclusion.

"Obviously, it's worth billions, but the big question is timing: when you are allowed to get the tax relief," Norsk Hydro spokesman Tor Steinum was quoted by Dow Jones Newswires as observing.

However, the case is likely run for several years before a final outcome is reached.

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