The Danish government said Wednesday that it will revise a contract on oil business granted to Danish oil and shipping company A.P. Moller-Maersk in the North Sea, in a bid to raise the state's revenues from oil and gas production.
"The government wishes to undertake a review of the economic parameters concerning oil and gas production in Denmark, including the North Sea agreement from 2003," the country's Ministry of Climate, Energy and Buildings Martin Lidegaard said in a statement.
The agreement, or concession, could be modified in keeping with the existing framework or by a new, negotiated deal, it added.
"The North Sea agreement will go for review. And the review can lead to re-opening of negotiations," Lidegaard told reporters Tuesday.
Denmark produces around 245,000 barrels of oil per day, ranking as Europe's third-biggest producer after Norway and Britain
The review is prompted by a rise in global oil prices, and the impact could have on the Danish state's earnings from hydrocarbon reserves in its sector of the North Sea.
"The government wants society to get the biggest possible returns from oil and gas resources," the ministry said.
"But at the same time, the terms should be competitive so that there is continued interest in investing here in Denmark," it added.
The North Sea concession dates back to 1962, when Denmark gave A. P. Moller-Maersk, which has interests in container-shipping, oil, drilling and port facilities, among others, exclusive rights to develop the country's oil and gas resources.
These are currently explored and extracted by the Danish Underground Consortium (DUC), comprising Maersk as operator, and global oil companies Shell and Chevron.
Maersk and other oil and gas companies operating in Denmark, pay between 60 and 70 percent tax on their oil income.
In 2003, Denmark's previous center-right government extended Maersk's North Sea concession until 2042. It ensured the Danish government received 60 percent of profits on the concession, up from a prior 50 percent.
However, the price per barrel of oil has also risen since then, from around 20 U.S. dollars in 2003, to over 110 dollars in 2011, representing a more than five-fold increase.
According to Concito, Denmark's leading climate think-tank, the Danish state has lost some 75 billion Danish kroner (around 15 billion U.S. dollars) in the process.
The energy ministry's review will determine whether the DUC's and government's shares should be revised, and whether the agreement itself can be changed before 2042.
For its part, Maersk said it would cooperate with the government on the review while expecting it to honor the existing agreement.
"The overall tax level for the period 2004-10 of over 60 percent of income corresponds to what the state required when entering the North Sea agreement," it said in a statement.
"Higher oil prices have meant higher incomes and therefore higher tax payments, which have benefited both the state and companies," it added.
A commission of officials from the energy, finance and tax ministries will complete the review by Aug. 31, 2012, the energy ministry said.
"The government wishes to undertake a review of the economic parameters concerning oil and gas production in Denmark, including the North Sea agreement from 2003," the country's Ministry of Climate, Energy and Buildings Martin Lidegaard said in a statement.
The agreement, or concession, could be modified in keeping with the existing framework or by a new, negotiated deal, it added.
"The North Sea agreement will go for review. And the review can lead to re-opening of negotiations," Lidegaard told reporters Tuesday.
Denmark produces around 245,000 barrels of oil per day, ranking as Europe's third-biggest producer after Norway and Britain
The review is prompted by a rise in global oil prices, and the impact could have on the Danish state's earnings from hydrocarbon reserves in its sector of the North Sea.
"The government wants society to get the biggest possible returns from oil and gas resources," the ministry said.
"But at the same time, the terms should be competitive so that there is continued interest in investing here in Denmark," it added.
The North Sea concession dates back to 1962, when Denmark gave A. P. Moller-Maersk, which has interests in container-shipping, oil, drilling and port facilities, among others, exclusive rights to develop the country's oil and gas resources.
These are currently explored and extracted by the Danish Underground Consortium (DUC), comprising Maersk as operator, and global oil companies Shell and Chevron.
Maersk and other oil and gas companies operating in Denmark, pay between 60 and 70 percent tax on their oil income.
In 2003, Denmark's previous center-right government extended Maersk's North Sea concession until 2042. It ensured the Danish government received 60 percent of profits on the concession, up from a prior 50 percent.
However, the price per barrel of oil has also risen since then, from around 20 U.S. dollars in 2003, to over 110 dollars in 2011, representing a more than five-fold increase.
According to Concito, Denmark's leading climate think-tank, the Danish state has lost some 75 billion Danish kroner (around 15 billion U.S. dollars) in the process.
The energy ministry's review will determine whether the DUC's and government's shares should be revised, and whether the agreement itself can be changed before 2042.
For its part, Maersk said it would cooperate with the government on the review while expecting it to honor the existing agreement.
"The overall tax level for the period 2004-10 of over 60 percent of income corresponds to what the state required when entering the North Sea agreement," it said in a statement.
"Higher oil prices have meant higher incomes and therefore higher tax payments, which have benefited both the state and companies," it added.
A commission of officials from the energy, finance and tax ministries will complete the review by Aug. 31, 2012, the energy ministry said.
