ENERGY WORLD: IT IN OIL AND GASStavanger Forum, 15 March 2018

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NORWEGIAN OIL :SCEPTICISM THAT TURNED INTO A

GREAT BLESSINGBy

Farouk Al-Kasim

Background and History

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PART ONE

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1. Effectiveandprudentnationalsteering.2. Highlyrespectedandeffectivestateadministrationofthesector.3. Constructivecooperationbetweentheauthoritiesandthelicensees.4. Varietyamongthelicenseesthathasenhancedbothefficiencyand

creativityinoperations.5. Ahighstandardinhealth,safetyandenvironmentalprotection.6. Aspectacularincreaseinoilrecoverywhichiswayoverworldaverage.7. Ahighdegreeofnationalparticipationinpetroleumoperations.

8. Fullsuccessinmitigatingthe Nocorruption.

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1963: OilcompaniesapproachedNorwayenthusiasticallytoobtainconcessionsdespiteNGU’srefusalofthepossibilityforHCs.

1965: IntheFirstRound,78blockswereallocatedonattractiveterms.

1966: ThefirstwellwasdrilledontheNorwegiansideoftheNorthSea.

1968: NoncommercialcondensatewasdiscoveredintheCodFieldbyPhillips.LuckyformeIarrivedinNorwayonMay28th thatyear.

1969: Ekofiskdiscoveryatendof1969removedalldoubtsonoilwealth.

1971: TheStortingadoptedthe10OilCommandments.

1972: NPDandStatoilwereestablishedwithdistinctlyseparateroles.

1974: WhitePaperNo.74warnedNorwayagainsttheOilCurseandurgedprudenceinavoidingrapidpaceinlicensing.

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§ In , Oil Minister and his State Secretary proposed a draft petroleum policy in 10 points.

§ The draft was discussed with the Industry Committee and later agreed by the .

§ The event represented three world class miracles:

1. Politiciansinademocraticcountryagreedswiftlyandunanimouslyonpolicyprinciplesformanagingpetroleum.

2. Allpoliticalpartiesvowednevertodiscusstheprinciplesofthepetroleumpolicyduringelectioncampaigns.

3. Allpartieshavesofarkepttheirvows.

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1. Ensure of petroleum operations.

2. Secure Norway’s .

3. Establish on the basis of oil.

4. Protect the and .

.

6. As a rule, crude oil and gas shall be .

7. The state shall actively co-ordinate Norwegian interests towards an with national and international objectives.

8. Establish a to look after the state's business interests and co-operate constructively with national and foreign oil interests,

9. Develop a suitable approach for areas north of the 62nd parallel.

10. Petroleum success will present to Norway’s .

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How the Oil Curse was avoided

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PART TWO

topetroleumoperationsreflectedagenuinefearthatNorwaywillbeoverwhelmedbyoiloperations.

§ Politicalconsensusontheneedforstrongnationalcontrolwasthemainreasonforthe (1971).

§ For10yearsaftertheEkofiskdiscovery,(1970until1980),Norwaymaintaineda policytoensure topetroleumoperations.DONTRUSHwastheslogan.

§ WhitePaperNo.25of bytheMinistryofFinancewarnedthenationagainstthedangersofthe andre-iteratedtheneedfora

inlicensingtoprotectNorwayagainstthesethreats.

§ Asthenationaleconomyadjusteditselftopetroleumactivitiesinthe1980s,thefocusturnedfromkeepingamoderatepaceinlicensingtomaintaininga“ ”inthepetroleumsector.Theobjectiveinthe1980swastoavoidshockstotheeconomy.

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§ The (1982-83)recommendedthattherestrictionsonthetempooflicensingcouldbegraduallyeasedoff.Butitalsoproposedtheestablishmentofan“ ”wherethepetroleumrevenuecouldonlybe

topreventariseinlocalspending.§ Thefinancingofnationalparticipationinpetroleumoperations

totheTreasuryby .Forthisreason,theOilFundwasnotestablisheduntil .TheFundwasagaininstructednottoinvestinNorway.

§ In2005,the wasrenamedthe .ThenameagainemphasisedthattheFundwasnotallowedtoinvestinNorway.

§ ThereispoliticalconsensusinNorwayonwhatiscalled“ ”.Therulestatesthatthenationalbudgetispermittedtohavea oftheorder

atthe ofanygivenexcluding .

§ In ,the4%deficitwasreducedto tobeonthesafeside

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How Oil Blessings were secured

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PART THREE

NON-OIL SECTORS OF THE INDUSTRY§ Inthe10OilCommandments,theStortingwas onusing

oilasa tothedevelopmentoftheNorwegianindustry.§ The in ledtoablossomingperiodin

theNorwegianindustryandinresearchanddevelopmentinstitutes.

§ Thepolicyof inlicensinghelped ofoiloperationsonnon-oilsectorsoftheNorwegianindustry.

§ Moreover,theroleplayedbythe inplanningthenationaleconomyhelpedminimisethepotentialdamagestotheeconomyasawhole.

§ Asanexample,aprudent hashelpedpreservecompetitivenesstothenon-oilsectorsoftheeconomy.

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PROACTIVE CONSEQUENCE EVALUATION

hasenabledNorwaytosafeguardthelong-terminterestinitsplanning

§ Controllingthe throughthelicensingpolicyhasthusensureda whichis

.§ Insistenceon aheadthestartof

petroleumoperationshasbeena inNorwegianlicensingpolicy

§ Thefocusonhealth,safetyandenvironment hasalmosteliminatedaccidentsinoperationsontheNorwegianContinentalShelfsincethe70s.

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OFFSHORE INDUSTRY

§ From theoilcompanieswererequiredtouseNorwegiangoodsandservicesaslongasthesewere

§ The inpetroleumoperationsinthe1970sgavetheNorwegianOffshoreIndustrysufficienttimeto

inoffshorepetroleumoperationsandsoontocontributetothe .

§ The quicklylearnedtheoilbusiness.Subsequently,theycontributedtodevelopinglocalcontentbyprovidingtheoffshoreindustrywith

intheNorthSea.§ Today,Norwayenjoys fromitsoffshore

industry.

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OPTIMAL RESOURCE MANAGEMENT§ By andmaintaining amongthem,

itwaspossibletoimproveresourceextractionandutilization.Theforthe ofpetroleumresourcesin enhancedtherequirementsforoptimalrecovery.

§ Thecreationofthe andthequickdevelopmentofitsexpertiseenabledittoconduct and .In

NPDconducted inorderto

§ Stortinget’sinsistenceonbeingthefinalstageforapprovingfielddevelopmentplansstrengthenedthe inenforcingtheprinciplesof

to ensure .§ Bybalancingbetween ithasbeen

possibletoachieveoptimal .§ Aspectacularincreasein from to

wasthuspossibletoachieveon basiswiththeoilcompanies.

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