Aker BP has awarded a 1 billion Norwegian crowns (£85 million) contract to oil service firm Kvaerner to build an unmanned oil platform for the Hod field, the two companies said on Tuesday.

The decision follows an agreement between the ruling minority government and the main opposition parties the previous day to grant more tax incentives for the oil industry hit by a fall in demand amid the COVID-19 pandemic.

Aker BP had previously decided to postpone the Hod field redevelopment project, citing the need to cut costs and preserve cash.

The tax measures approved by a majority of parliamentary parties will temporarily shield a portion of oil companies' income from taxes in order to save jobs.

"The Hod development in the Valhall area is the first project to be launched as a direct result of the tax changes," Aker BP said in a separate statement.

The move has been criticised by environmentalists and some opposition parties, who said the country should have boosted investments in renewable energy instead.

The Hod platform will be produced at Kvaerner's Verdal yard in central Norway, employing about 400 workers at its peak, with delivery expected in summer 2021, Kvaerner said.

Both Aker BP and Kvaerner are controlled by Aker ASA, the investment firm of Norwegian billionaire Kjell Inge Roekke.

Norway is western Europe's biggest oil and natural gas producer, representing about 2% of global crude output.

(Reporting by Nerijus Adomaitis, editing by Terje Solsvik)