13.10.2008
A plunge in oil prices to below the average foreseen in Norway's 2009 budget is unlikely to affect the public finances of the world's number four oil exporter, Oil and Energy Minister Terje Riis-Johansen said on Monday.
"Oil prices have been high for a long time and we have a considerable surplus from our oil sector," he told reporters during a conference about climate change in Oslo.
"We don't see any likely scenarios where oil price developments mean, for example, that we have to cut public budgets in the short term," he said. "But in the long term, income from the oil sector is decisive to finance the development of the welfare state," he added.
Norway runs big budget surpluses when oil money is included, but underlying deficits if oil revenues are not counted.
Brent crude in London was at $77.10 a barrel around 0955 GMT on Monday, down from peaks above $147 in July.
Norway's 2009 budget, which was issued this month, assumes an average 2009 price of 500 crowns ($90.50) a barrel, and 585 crowns ($95.96) for 2008.
"We have to remember that oil prices a few months ago were extremely high in a historic perspective," he said. "The fact that they have fallen from that level does not mean that oil prices are now extremely low."
He said that economic forecasts in the budget were "relatively conservative." He added: "based on these assumptions, the economic situation in Norway is very good when it comes to the financing of the public sector."
He also said that Norway was committed to shifting towards renewable energies and to funding projects such as capturing industrial carbon dioxide. Norway has set aside 2 billion crowns to projects for carbon capture and storage in 2009.
The financial crunch could make it "more demanding" for companies to carry out some environmental projects because of a lack of capital, he said.
But he said that the world should keep up efforts to combat climate change. "Climate challenges cannot be overlooked just because we have another serious issue on the agenda." - RIGZONE
