ABSTRACT
In the North Sea, the rate of external financing could in some cases be up to 90 per cent. The external financing does not increase these risks, and as shown in the Norwegian examples, it can have a favourable impact on cash flows and rates of return, implying a transfer of income from the government-landowner to the concessionary companies, provided that interests on debts can be deducted from taxable income. Thus, increasing external financing can further improve the economic attraction of the North Sea oilfields. The international capital market has in general shown a considerable interest in financing North Sea oil development, in spite of rising costs. Since the discovery of gas in Groningen in the Netherlands the estimates of the petroleum potential of the North Sea have varied tremendously. The northern part was considered less promising until oil was found, and since then it has been thought of as rather promising.
