Norway’s successful oil and gas policy
Norway’s offshore oil achievements have hinged largely on sound and visionary management decisions. Much of the credit for crafting a successful oil and gas policy has to go to Petoro, the licensee for the Norwegian state' s direct financial interest in the country’s petroleum operations. The portfolio managed by Petoro is the largest on the Norwegian continental shelf (NCS), embracing 90 production licenses and 18 partnerships/companies.
During Wednesday morning’s session at the ONS Conference, Petoro CEO Kjell Pedersen shared some of Petoro’s keys to success. These included: acknowledging the value of IOCs; using a predictable framework; building a national petro cluster; sound resource management; remembering that oil and gas belongs to the people; and establishing an oil fund to protect the economy and share with future generations.
Pedersen explained that while the energy industry in Norway was attempting to pursue goals that were environmentally friendly, a significant part of ensuring that companies would follow such a strategy was the introduction of the carbon tax.
“The Norway politicians made s decision very early to have a consensus around the fact that this natural resource belonged to the state, to the people,” Pedersen said. “The bold decision of the politicians was to build the sovereign fund, to avoid overheating the economy, like ‘the Dutch disease’ [in The Netherlands]. Saving money in an oil fund had a positive effect on our industry and our country. The fund is being filled up every year by return of investments abroad and tax income from the petroleum industry; those two combined together is about $50-60 billion every year.”
On the subject of safety, Pedersen said Norway can rightly pride itself for having standards beyond most countries. But such a positive framework does not come by itself. It came because of accidents in the past and a desire improve. One of the biggest impetuses for a change in the safety culture came after Norway’s Alexander L. Kielland tragedy. The semi-submersible drilling rig capsized while working in the Ekofisk oil field in March 1980 killing 123 people.
“We need to include learning from the Gulf of Mexico today,” Pedersen said. “But we should honor the quality of the system currently in place and then justify changes.”