In 1974 - The Ministry of Finance submits the parliamentary report “The role of petroleum activity in Norwegian society” discussing how the country’s oil wealth should be used.
As a small nation
lacking experience in oil and gas but with considerable expertise in hydropower, Norway enacted
a revolutionary regulatory framework. Indeed, the seeds of sustainability and subsequent transition
to renewable energy were planted by the Storting enacting the “10 oil commandments” in 1971.
This legislation shaped Norwegian oil policy for decades by acting as an “oil constitution” which
guided and shaped political decisions about oil. It also emphasized the importance of national
control over oil and gas resources as well as ensuring a strong emphasis on sustainability.
Furthermore, the “go slow” policy played a dual role to both enforce control over oil production
and increase the Norway’s bargaining power with big oil companies.
and the principle of realist
sustainability.
Ten commandments that they set themselves to:
Box 1.1 The 10 Oil Commandments The 10 Oil Commandments are items in a declaration of principles underpinning Norwegian oil policy, submitted by the Standing Committee on Industry in a Storting White Paper dated 14 June 1971. These principles have subsequently been dubbed the 10 Oil Commandments, and represented a clarification of what was needed to make sure that the oil activities would “benefit the entire nation”:
1. That national supervision and control of all activity on the Norwegian continental shelf must be ensured.
2. That the petroleum discoveries must be exploited in a manner designed to ensure maximum independence for Norway in terms of reliance on others for supply of crude oil.
3. That new business activity must be developed, based on petroleum.
4. That the development of an oil industry must take place with necessary consideration for existing commercial activity, as well as protection of nature and the environment.
5. That flaring of exploitable gas on the Norwegian continental shelf must only be allowed in limited test periods.
6. That petroleum from the Norwegian continental shelf must, as a main rule, be landed in Norway, with the exception of special cases in which socio-political considerations warrant a different solution.
7. That the State involves itself at all reasonable levels, contributes to coordinating Norwegian interests within the Norwegian petroleum industry, and to developing an integrated Norwegian oil community with both national and international objectives.
8. That a state-owned oil company be established to safeguard the State’s commercial interests, and to pursue expedient cooperation with domestic and foreign oil stakeholders.
9. That an activity plan must be adopted for the area north of the 62nd parallel which satisfies the unique socio-political factors associated with that part of the country.
10. That Norwegian petroleum discoveries could present new tasks to Norway’s foreign policy.
Norway’s management of its petroleum revenues is often referred to as an example of successful
organisation
The Petroleum Fund is a very long-term savings plan. The notion of a fund arose in the early 1980s, and the Fund was adopted in 1990 before the government had received any positive net cash flow from petroleum activities. Up to 1995, government investments in petroleum activities were so large that all the revenues were used for investment and to cover budget deficits during the recession around 1990
Norway is one of the largest oil producers in the world, but an unconventional one as it has
gradually transitioned to renewable sources of energy as a source of income instead of oil. This
process has not been without controversy as the Norwegian legal system favours environmental
protection and sustainable use of natural resources while also supporting its petroleum industry
In 2015, a look back:
The petroleum activities have been key to the emergence of Norway’s current welfare state. Few believed the industry would have such an immense impact on the Norwegian economy when the first production licences were awarded in the mid-1960s.
The Norwegian authorities refused to sign over the entire shelf to a single company. If the areas were to be opened for exploration, more than one company would be needed. In May 1963, the Government proclaimed sovereignty over the Norwegian continental shelf.
The Norwegian oil era started with the discovery of Ekofisk in
1969. Production from the field started on 15 June 1971, and several
large discoveries were made in the following years. In the 1970s,
exploration activities were concentrated in the North Sea. The area
north of the 62nd parallel was opened for petroleum activity in 1979
and exploration was gradually initiated. Only a limited number of
blocks were announced for each licensing round, and the most promising areas were explored first. This led to world-class discoveries,
and production from the Norwegian continental shelf has been
dominated by these large fields. They were given names such as
Ekofisk, Statfjord, Oseberg, Gullfaks and Troll. These fields have been,
and are still, very important for the development of petroleum activities in Norway. Development of these large fields has also led to the
establishment of infrastructure, enabling tie-in of a number of other
fields. Production from several of the major fields is now in decline,
and the trend is now development of and production from new,
smaller fields. Current Norwegian petroleum production is therefore
divided among a larger number of fields than before.
In the early days, the authorities chose a model where the petroleum activities were primarily carried out by foreign companies. They
dominated exploration activities and developed the first oil and gas
fields. Norwegian participation gradually grew over time with the
addition of Norsk Hydro, Saga Petroleum. Statoil was established in
1972 with the State as sole owner. A principle was also established to
give the State a 50 per cent ownership interest in each production
licence. In 1993, this principle was changed so that an assessment is
made in each individual case as to whether there will be State participation, and whether the ownership interest will be higher or lower.
In 1999, Saga was acquired by Norsk Hydro, and Statoil was partially
privatised in 2001. This led to the establishment of Petoro. Petoro took
over administration of the State’s Direct Financial Interest (SDFI), established in 1985, from Statoil. In 2007, Statoil merged with Norsk
Hydro’s oil and gas division, and today, about 50 Norwegian and
foreign companies are active on the shelf.
Interesting: "The Norwegian regulatory framework requires oil and gas companies to submit core samples from the drilling of wildcat wells on the Norwegian
continental shelf to the Norwegian Petroleum Directorate (NPD). The NPD stores 140 kilometres of core samples and drill cuttings from exploration
and production wells in their core store. The industry uses these samples to learn more about the subsurface."
Intyeresting links
https://qmro.qmul.ac.uk/xmlui/bitstream/handle/123456789/72468/3.%20Gociu.pdf?sequence=4
https://www.regjeringen.no/globalassets/upload/oed/pdf_filer_2/faktaheftet/fakta2014og/facts_2014_nett_.pdf
https://snf.no/media/41bep0kg/a02_08.pdf
