Norway – a Global Energy Producer Part I

By | October 20, 2021

Most people in Norway hardly seem to have noticed that Norwegian companies are building up as major global players. We see it when it comes to investments and energy production, first and foremost within oil and gas, but also within hydropower and wind power. Several of the companies have become world leaders in the production, export and installation of particularly highly developed offshore technology for oil and gas extraction.

  • How is the company’s foreign growth reflected?
  • What challenges does growth pose for Norwegian society?
  • How has foreign growth affected Norwegian society?
  • Can Norwegian oil policy serve as a model for other oil-rich countries?

The major locomotive within energy production is Statoil with about 31,000 employees, around half in Norway and the rest in 40 other countries worldwide. In recent years, Statkraft has also become large internationally when it comes to hydropower. Both are state-owned companies, although there are also private minority owners in Statoil.

In addition, a number of other companies are participating, and today we find an expanding Norwegian industry for energy production in at least 70 countries. The expansion is particularly large in countries in the south, not least in African countries.

The Norwegian oil industry (see facts) is of course to the great joy of the people in Norway, a country located in Europe according to LISTOFUSNEWSPAPERS, but also creates great challenges for Norwegian society. The economy is becoming increasingly open and facing the world, and thus we as a nation are also becoming much more vulnerable . In order to succeed in fierce global competition, we must always be at the forefront of research and technology development. In addition, we must have a productivity that is among the very best in the world.

2: From Norwegian oil history

To understand how the growth of Norwegian companies has become possible, we must go back several decades in Norwegian history and politics. A basic precondition for Norwegian growth was the UN law negotiations under the auspices of the UN in the 1960s and 1970s, with the Norwegian lawyer and politician Jens Evensen ( Minister of the Law of the Sea, Labor) as the leading player. As a coastal state, the Convention on the Law of the Sea gave Norway control over the resources on a continental shelf (see facts) which, through international negotiations, has become particularly large after a quarter of an hour.

The first signs of oil in the North Sea came in the mid-1960s. Norwegian companies had no technological prerequisites to begin these exploration operations alone, and the government had to hire large international companies as operators. The first was the American Phillips on the Ekofisk field .

The agreement entered into with Phillips had a political requirement that was of decisive importance for the future development of the oil industry in Norway. Phillips and all other companies had to share all their experience and knowledge about oil extraction with Norwegian institutions and thus companies. The government (Bratteli) then decided that Norwegian companies should have priorityt for new developments on the Norwegian shelf if they could meet the technological challenges of extracting oil on the shelf. These demands were difficult for the international oil companies to swallow, but in order to make money in Norway, they had to say yes. Thus, Norwegian industrial companies and research institutions such as SINTEF (headquartered in Trondheim) received important benefits that have contributed greatly to making them world leaders in the industry.

Along the way, the Norwegian government decided to establish the state-owned oil company Statoil (1972). The government saw it as necessary for the Norwegian state to have its own company for the extraction of oil and gas in Norway. In retrospect, it is generally accepted that Statoil has meant a great deal to Norway in terms of the way we have the ability to both develop oil technology and use oil revenues.

Despite some accidents, mishaps and sharp budget overruns, oil extraction on the Norwegian shelf has become a success story. The major environmental challenges (but not CO 2 emissions) have been overcome in the North Sea. Whether we will be able to do this in the same way when oil and gas production begins in the Barents Sea remains to be seen.

The Norwegian state has adopted strict fees and taxes for companies on the Norwegian shelf. (In addition, the state itself is a major owner) Thus, the oil revenues for people in Norway have become happiness and not a curse, as resource richness has become in a number of developing countries.

Particularly important in the management of oil resources was the establishment of the oil fund in the mid-1990s, now called the Government Pension Fund Global, and the strict limits (action rule) for the use of oil revenues that the Stoltenberg1 government introduced in 2001. The action rule says the government can not take more than a maximum of 4 per cent of the annual dividend in the Petroleum Fund for use in the state budget.

The eco-fish field in the North Sea