Equinor has gone from paying “the most taxes in Europe” to putting a deep stop – E24

Equinor has been a tax machine that Norway will hardly ever experience again. Since the turn of the millennium and up to and including 2019, the company has paid NOK 1,483 billion in taxes.

Most of the money has gone to the Kingdom of Norway. The peak year was 2008 when Equinor paid NOK 140 billion in taxes.

On average, Equinor has paid out NOK 71 billion per year. And that’s the 20-year average (see figure).

The lowest in at least ten years

But now Equinor’s tax machine may be paralyzed. After the first nine months of 2020, the company has paid only NOK 25 billion.

The year 2020 is forecast to be Equinor’s weakest in terms of taxes since the company went public in 2001.

The vast majority of tax payments in 2020 came from the first two quarters of the year. In the third quarter, the tax authorities took into account the lowest amount for at least 10 years (see figure below).

Then only one billion Norwegian kroner was paid in taxes.

Debris on machinery or end point?

Equinor’s Eldar Sætre, recently resigned, is not afraid that 2020 will mark a crossroads. He rejects that Norway should expect much less tax from the energy company in the future.

– This is a very special situation, where, among other things, changes in the Norwegian tax system come into force.

Sætre told Aftenposten / E24 this when he presented the third quarter accounts last week.

To give oil companies an incentive to develop more fields to help the Norwegian supplier industry during the corona pandemic, the Storting approved temporary tax cuts this year.

But according to Equinor, these changes will only postpone the tax cost to the company.

Explained by the crown

But in addition to temporary relief in the tax system, Equinor also earns much less from operations. This is due to low oil and gas prices.

– 2020 has been a special year in the oil and gas markets, partly due to the corona pandemic. This has significantly lowered oil and gas prices. This, in turn, has led to weaker results for Equinor and therefore lower taxes as well.

Write to communications consultant Rikke Høistad Sjøberg at Equinor in an email.

However, you would like to add the following:

– Equinor pays taxes based on our results and is the company that has paid the most taxes in Europe in recent years.

Much less valuable than Ørsted

Equinor shares are now the lowest in nearly five years, if we ignore the rapid decline just as the corona pandemic hit the world hard in March. Equinor’s market capitalization is NOK 395 billion.

This is a sign that the stock market believes in lower earnings in the next few years and therefore lower tax costs. Of course, not as little tax as the tax cost is likely to be now in 2020.

The Danish innovation trend Ørsted Comparison price now 60 percent higher. The market capitalization is NOK 635 billion. Because while Ørsted’s share price has risen 75% in the last year, Equinor has fallen 30%.

In both companies, the state of the respective country of origin is the majority shareholder.

Still pay the multiple in taxes

But stock market values ​​are only one measure of a company. The tax paid is another.

As recently as 2018, Equinor paid more in taxes than total turnover to Ørsted in 2017.

In the last three years, Equinor has paid a total of NOK 194 billion in taxes. In the same three years, Ørsted has paid a fraction more. They have paid the equivalent of 13.5 billion Norwegian crowns.

Even now, in 2020, Equinor has paid NOK 25 billion in taxes, while Ørsted’s payment is much more modest NOK 2 billion.

He then wonders if 2020 is an indication of Equinor’s permanently much lower taxes, or if 2020 is very special in that field as well.