Norway should review its generous tax regime on oil drilling because of climate change, the opposition Labour party said on Aug. 21, three weeks before a parliamentary election which opinion polls suggest it is on course to win.

Labour's Marianne Marthinsen, a member of parliament's Finance Committee, told daily Aftenposten that Western Europe's top oil producer should look at changing rules that allow oil firms to reclaim costs of "failed exploration campaigns.”

She later told Reuters that Labour did not have "any intentions of making changes in the oil taxation regime in the next parliament's term,” but wanted to hold a broad discussion about climate policy risk for the Norwegian economy.

"The taxation regime is one of many risk factors that naturally belongs to such a discussion," she added.

The issue could have a bearing on the Sept. 11 election, in which the Green party, which advocates a total exploration ban, could hold the balance of power.

A system allowing oil companies to immediately reclaim 78% of the cost of dry exploration wells from the state was introduced in 2005, the loss being borne by taxpayers.

In the case of an oil or gas discovery, the companies can still deduct the costs over a number of years, but pay 78% on the profit. The measure works as a risk-reducing incentive to draw new players to Norway and was credited with boosting drilling activity by small and medium-sized players.

The oil industry and the Conservative party of Prime Minister Erna Solberg have strongly rejected even suggestions that it could be changed.

Oil and Energy Minister Terje Soeviknes said a stable and predictable framework was important.

Tina Bru, an energy spokeswoman for the Conservative party in parliament, said in an email to Reuters: "We do not in any way agree with this new proposal."