Norway to Boost Oil Project Oversight after Cost Overruns

From REUTERS

(Reuters) – Norway is growing increasingly intolerant of delays and cost overruns at offshore oil projects and plans to keep a closer eye on operators, intervening when necessary, the head of the oil directorate said.

A growing number of inexperienced firms are working on projects, which is a big risk for the government because it offers big development subsidies, regulator Bente Nyland said on Tuesday.

As a result, the directorate will start to get involved earlier and stay involved throughout, she said.

“This regulatory tightening is a signal that we’re watching you,” Nyland told Reuters on the sidelines of the conference. “With the tax regime, the state is a big risk taker … so we need to have better control.”

The entire global oil sector has suffered from cost increases, but Norway has fared worse than most. Nyland earlier estimated that the per unit development and production cost in Norway has risen by 10 times over the past 10 years.

Last year the government commissioned a report to find out why so many projects were delayed. It also cut both the amount and the time limit for cost write-offs.

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