Tax worries halt major gas field

Concern over illegal tax breaks has stopped work at the gigantic "Snow White" offshore field near Norway.

A financial watchdog is worried the project receives tax breaks which violate European agreements.

The European Free Trade Association's surveillance authority believes the tax arrangements can amount to illegal state support in violation of European trade agreements.

State funding was a vital ingredient in convincing the participating oil companies - Statoil, Norsk Hydro, TotalFinaElf and Gaz de France - to take part.

The development partners have now decided to stop work until the matter is decided after receiving a letter from EFTA's surveillance authority (ESA).

Work on an offshore gas field and a gas treatment plant outside Hammerfest is now halted.

Statoil is working hard to play down the significance of the ESA letter while trying to ensure sales of about 5 billion cubic meters of gas per year to clients in the USA and Spain - a deal worth about 5bn Norwegian kroner (€650,000).

The oil field, which is off the coast of Finnmark in northern Norway, has angered conservationists.

The environmental foundation Bellona filed the complaint with the Brussels based ESA.

"We are pleased that construction is now stopped and we eagerly await the government's reply. We have more cards up our sleeve than a complaint to ESA," said Bellona president Frederic Hauge.