GREAT EXPECTATIONS FROM THE NATIONAL STRATEGY

A long-term strategy for the North Sea is underway, and Oil Gas Denmark is calling attention to Denmark possibly heading for a DKK 190 billion revenue from taxation.

Three key messages are important to Oil Gas Denmark while formulating a long-term development plan for the North Sea together with i.a. the Danish Energy Agency,the Ministry of Climate, Energy and Buildings, the Ministry of Finance and the Ministry of Business and Growth.
Increasing exploration, production from marginal fields and an increase in the percentage of recovery from the reservoirs are the decisive engines for growth, but succeeding that, the potential is considerable. The DEA has estimated a potential for producing some 1.4 billionbarrels of oil and gas corresponding to about 40% of
all the hydrocarbons having been produced since 1972.
That means pouring a sizable amount of money into the national treasury.
“In relation to our strategy work we and the authorities involved are looking at the still unproduced
potential of the Danish North Sea. Previous calculations show that the tax revenue could add up to DKK 190 billion – naturally depending on factors like the oil prices
and the rate of exchange of the dollar, but under all circumstances it makes up a considerable contribution to the Treasury,” states Director Oil Gas Denmark, Martin
Næsby, who is pleased that working out a national strategy has been launched to the benefit of the oil companies as well as to their supply industry. At the same time he is mentioning that the increasing demand for oil is a significant perspective when talking future of the branch.
“Oil and gas is a vital commodity, and it will stay so for many years from now. We expect an increasing demand for oil as well as gas in the years to come – especially as oil at the moment is difficult to replace.
One of the main challenges is transport. Our society is structured in such a way that we go on holiday by air, drive a car
and ship goods all over the world. Without oil and gas the world as we know it today would come to a standstill.
In addition to that we should not forget the welfare financed by the revenue from oil and gas. Last year the branch paid DKK 22 billion in direct taxes, provided
thousands of jobs, indirect taxes and a massive contribution to the balance of payment. So, we need oil in
Denmark. We need oil for energy, and we benefit from it as a contributing factor to the Danish society – that is what the strategy is to consider.
Production-wise the North Sea has culminated, but there still is a considerable potential to benefit from. I am pleased that we have launched a cooperation jointly looking at potentials as well as hindrances preventing continued growth,” warns Martin Næsby adding that there are still quite a number of challenges to be overcome.
“The number of wells being drilled have dropped to the 1960-level. If we compare ourselves with the other countries around the North Sea, then we are drilling
far less exploration and production wells. It is generally estimated that there is more oil and gas to be found – so
we have to clutch-in our exploration turbo charger if we want to find that oil. But finding is not enough – we
have to develop and produce. That is the next step. In spite of smaller amounts of hydrocarbons being found
and the costs of developing the fields increasing we haveto ensure that it pays to produce,” states Martin Næsby adding, that, consequently, we have to look at costs and
infrastructure.
“Here, we have to study other countries doing their best to reduce costs, and we have to consider our incentives.
There is no standard prescription,” concludes Martin Næsby stating that the mandate calls for presenting the recommendations to the Danish Government in May this year.
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