The Ministry of Petroleum and Energy has asked that viewpoints regarding changes in the regulations stipulating norm prices for oil sales be submitted by 19 May 2006.
Pertra agrees that the changes proposed by the Ministry will increase the efficiency of the Petroleum Price Council. However, Pertra suggests that a rule enabling advance sales of oil cargoes also from the Norwegian Shelf be incorporated into the regulation.
Advance sale of oil constitutes an important instrument in risk reduction related to the financing of new developments, especially where small oil companies become involved in marginal field developments. Consequently, Pertra is of the opinion that it is pivotal that more precise definitions now be incorporated into the Norm Price Council’s mandate, restricting the Council’s potential possibility of determining a price deviating from market price, where the actual price is determined by independent parties interacting at an obvious arm’s length.
With the proposed set of rules, companies such as Pertra may use a high market price as the calculation basis for the profitability of a field development, without risking that a potential future higher price shall constitute the basis of calculation for taxation.