Testing the split of economic ownership for petroleum resources in Norway

Abstract

Based on the Norwegian experiences, a long-term average pattern is identified as regards the distribution of resource rent due to petroleum activities, which can be used to split the economic ownership of oil and gas between the government and the oil and gas sector in Norway. The splitting is suggested to be carried out in the year when extracting activities start and no further splitting is needed for the following years until significant changes in extraction arrangements take place. In addition, the actual flows of the resource rent as recorded in both the National Accounts and the Government Finance Statistics between the government and the extractor in each year are suggested not to be changed. Though the concrete implementation is conditional on the final choice of the definition and estimation of the resource rent and the resource value, splitting asset is feasible. Another conclusion from the paper is that the current practice in Norway for setting up and managing the GPFG fund is in line with a sustainability criterion.