Norway’s petro-wealth is making its investments riskier and its workforce less competitive
Some news about Norway today offers a glimpse at a unique collision of economic clichés: the “resource curse” hitting the “welfare state.”Here's the story linked at "considering slashing the prices".
Apparently, the Norwegian government is considering slashing the prices that it charges shippers to transport gas through its pipelines. Investors in those pipelines—and they’re a powerful bunch—are really annoyed at what this will do to their profits. What’s more, the government is risking legal reprisals, investor flight and higher future borrowing costs on its infrastructure projects.
What would make Norway’s government crazy enough to earn comparisons to Venezuela or Russia?
For one thing, its oil production has fallen by around half in the last decade, and it needs to keep raising gas output to offset that. Lowering the tariff encourages gas producers (which are dominated by Norway’s Statoil) to explore more gas deposits and get more out of them.
But more generally, Norway needs to up its gas production to support its economy. Though the country’s non-energy GDP rose more than its overall GDP did last year—3.5%, compared with 3.2%—its workers are becoming less productive and its economy less competitive....MORE
From Bloomberg:
Norway Becomes Petro-State as Investors Balk at Hidden AAA Risks
Norway, home to the world’s biggest sovereign wealth fund, is betting it can afford to ignore investor outrage.Possibly related:
After shocking global credit markets in 2011 by pulling support from the once AAA and now junk-rated lender Eksportfinans ASA, the government unveiled plans in January to cut tariffs on gas transport by 90 percent, sapping income for those funding the venture by as much as $7 billion.
Investors are now asking themselves how much risk they’re willing to accept to gain access to western Europe’s biggest oil and gas reserves. And while Norway boasts a stable AAA rating and the world’s smallest default risk, the government’s decision to ride roughshod over investors is starting to resemble actions seen in less stable democracies such as Venezuela and Russia.
The planned tariff cut “undermines Norway’s reputation as a stable and predictable country for investments,” Solveig Gas Norway AS and Silex Gas Norway AS, two of the companies backing the pipeline network that charges the tariffs, Gassled, said in a March 15 letter. It “represents an unauthorized intervention in the infrastructure owners’ legally protected rights and expectations,” they said....MORE
Why Africa won't be the new Norway
Catchy headline, huh?Family Office consultant Graycourt Capital:
It's from the Private Sector Development blog at the World Bank. The PSD blog has this on their sidebar:
Most popular last monthBest targets for bribe-seekers
Here's the Afro-Nordic fusion delusion post...
Big Money: Yale vs. Norway
"The Great Norway Diaper Racket Is the Best Arbitrage Ever"
