Higher oil price yields extra revenue

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Prices for North Sea crude oil have been up around USD 84 a barrel lately, and that’s a lot more than state budget crunchers estimated when they calculated Norway’s expected oil revenues for 2010. That in turn is good news for the Finance Ministry.

If today’s oil prices hold up, billions of extra kroner will roll into the state treasury and into the so-called “Oil Fund,” where revenue is stashed away for future generations.

Newspaper Aftenposten reports that when finance ministry officials set up this year’s state budget, they estimated that oil revenues would amount to an average NOK 425 per barrel, or USD 71 at current exchange rates.

But Brent Crude oil has had an average price of USD 77 per barrel so far this year, and the price is currently seven to eight dollars higher than that.

All told, that yields an extra NOK 3 billion in oil revenues flowing into state coffers during the first three months of this year. If prices stay at USD 84-85, an extra NOK 30 billion could be pumped into the treasury by the end of the year, estimates Aftenposten.

Given the rules attached to use of the oil revenues, though, only an estimated NOK 1.3 billion could be added to the state budget.

Views and News staff