In 2011, the population of Norway was estimated to be around 5 million people. The economy of the country was largely dependent on oil and gas production, as well as services such as banking and shipping. In terms of foreign relations, Norway had strong ties with other European countries, as well as with the US and other countries in the region. In terms of politics, Norway had a multi-party democracy which allowed for free elections to take place regularly. The ruling party at the time was the Norwegian Labour Party (AP), which had been in power since 2005. See mathgeneral for Norway in the year of 2017.
Yearbook 2011
Norway. The year became the darkest and bloodiest for Norway since the Second World War. On July 22, the country was hit by Northern Europe’s worst terrorist act and the greatest mass murder of modern world history, committed by a lone perpetrator. Visit ABBREVIATIONFINDER for the acronym of NOR that stands for the country of Norway.
According to Countryaah official site, a 32-year-old right-wing extremist, Anders Behring Breivik, had been planning his crimes for months. With a very powerful car bomb, he blasted large parts of the central government headquarters in central Oslo, where eight people were killed and many injured. The car with the bomb was placed in front of the Prime Minister’s Office, but Jens Stoltenberg was not present. Because it was Friday afternoon and holiday time, many government employees were vacant, which limited the number of victims.
Disguised as a police officer, Breivik then drove through Oslo to Lake Tyrifjorden, northwest of the capital, where he took the ferry to the idyllic island of Utøya and the Labor Party’s youth camp’s summer camp. Breivik gathered camp participants around him on the pretext that he, as a police officer, would carry out a routine check on the occasion of the bombing in Oslo. Instead, he produced automatic weapons and shot down youth and leaders. For over an hour, the perpetrator was able to wander around the island, pursuing and shooting young people who tried to escape. Some of the swimmers who escaped from the island were also shot, while others were rescued by private individuals in boats.
Among other things, due to communication errors and transport problems, the police were delayed, and it took over an hour from the first alarm until Breivik could be arrested. By then he had killed 68 people at Utøya, most of them teenagers. One person later died in hospital, and many were treated for injuries.
The offender’s motive was political. He wanted to fight the Labor Party and its positive attitude towards immigration and a multicultural society. Prior to the terrorist attacks, Breivik e-mailed to more than 1,000 addresses an approximately 1,500-page manifesto written in English: “2083 A European Declaration of Independence”, describing his ultra-nationalist and Islamophobic worldview. Former Prime Minister Gro Harlem Brundtland was a main target for Breivik, who however was delayed and did not get to Utøya while Brundtland was in place during the day of the deed.
Prime Minister Jens Stoltenberg and King Harald spoke to the shocked and mourning nation. Stoltenberg emphasized that Norwegian democracy could not be silenced, saying that the attack on the political leadership and politically active youth would meet with more democracy. On the contrary to the perpetrator’s purpose, notifications of new members poured in to the political youth unions, mostly to the Labor Party. A study also showed that a quarter of the Norwegians said they had become more positive towards a multicultural society.
About 95% felt that Prime Minister Jens Stoltenberg handled the crisis well, and the Labor party stepped forward in public opinion. Anders Behring Breivik, who accused the Labor Party of “mass imports of Muslims”, had previously been a member of the Progress Party, which in turn warned against Islamization of Norwegian society.
In the municipal and county elections in September, the Labor Party went ahead and became, as before, the largest party. However, Høyre was the big winner and rose sharply, while the Progress Party lost third voters.
Gradually, criticism of the police’s actions grew in connection with the terrorist act. Above all, it was considered that it took too long to stop the mass murder on Utøya. A commission appointed by the government would investigate what happened in connection with the terrorist act and how the authorities handled their responsibilities. The result was to be presented in 2012. In November, Minister of Justice Knut Storberget resigned, who was hard pressed for the terrorist act. He was succeeded by former Defense Minister Grete Faremo.
In an opinion poll in November, the Labor Party and Høyre went back to 32 and 26.5%, respectively, while the Progress Party withdrew some of its previous opinion losses and received support of 17.8%.
The judicial investigation of the terrorist act was extremely extensive and went on throughout the year while Anders Behring Breivik was detained. The charges against Breivik were expected to be presented in early 2012, and the trial was scheduled to begin in April. In a forensic psychiatric examination, Breivik was declared paranoid schizophrenic and thus criminally unjustifiable, which means compulsory care instead of imprisonment. Breivik’s diagnosis was widely debated, and psychologists and a psychiatrist who did his own research on Breivik concluded that he was not schizophrenic.
The first oil exploration activity
In the Norwegian licensing round, a total of 278 blocks were announced. This was equivalent to 139,000 km², a gigantic area that corresponded to more than a third of Norway’s total surface content. A total of 78 blocks were allocated. It was significantly less than the number of blocks announced, but just as fully the largest allocation ever on the Norwegian continental shelf (40,000 km²).
Of the allocated blocks, Norwegian companies were represented at 21, everywhere in the form of modest minority shares. By comparison, British companies were represented on 283 of the total 346 blocks awarded in the first UK licensing round. (The British blocks were somewhat smaller than the Norwegian ones, so the number cannot be directly compared.)
The companies were obliged to carry out a significant number of drilling during a six-year period. Areas that did not start exploration within the deadline should be returned to the state.
The first drilling was carried out with Esso as responsible operator of the Ocean Traveler oil rig in July 1966. The drilling did not show any traces of oil, but it was confirmed that the same type of sedimentary rocks that found farther south in the North Sea also existed on the Norwegian continental shelf.
Esso’s second well (block 24/11) confirmed the challenges of drilling for oil in the North Sea. Ocean Traveler was damaged by the supply ship Smit-Lloyd 8 which collided with the rig in severe weather. The collision led to large water intrusions and punctured one of the rig’s pontoons. This created a dramatic situation where the rig was about to edge. Only a quick response from the crew on board pumping ballast water into other pontoons prevented the rig from bouncing. After this, the rig had to go in for repair. The damage to the platform was one of many near misses that could have led to a major accident involving many people who were killed.
After the rig came out on the field again, oil was found, but with the current costs and oil price, the field was not worthwhile. However, the field, later named Balder, would prove to be large enough to later defend production. Production in the field started in 1999.
Several other companies also found so-called “traces of hydrocarbons”. In June 1968, Philips confirmed that hydrocarbons had been found in block 7/11. The code field contained most gas, but also some oil and condensate. The discovery was substantial and was investigated for possible production, but in the winter of 1969 it was concluded that it was not large enough to economically defend production.
When Esso early closed the wells they had committed to drilling, the company pushed for a new licensing round to exploit its newly acquired geological information. Others were reluctant to start the drilling they were committed to, especially after it turned out that the Cod field was not viable. Several sources confirm that a certain pessimism spread over a period of time.
Nevertheless, the interest was large enough for several companies to enter into new drilling agreements in the second licensing round. It was wound up in the form of awards at various times in 1969. The round was less extensive than the first, and was different from the first in that Norwegian companies got a relatively larger share, and in that some companies agreed that the state could go as owner after a discovery without having contributed to the financing of exploration costs (carried interest).
The Phillips oil company considered postponing its drilling program in the summer of 1969, but no one wanted to sublet the rig Ocean Viking with which Phillips had contracted, so the company still started drilling on block 2/4. Already in September, Ocean Viking encountered large amounts of oil. Problems during drilling meant that the well had to be “plugged in” without being able to test how much it was.
New drilling in December 1969 confirmed that it was a huge field. A rough estimate from the drilling management was that it was about three billion barrels of oil. It turned out to agree quite well with later more accurate estimates. The field was named Ekofisk. It was a giant discovery, which in addition to oil also contained large quantities of gas.
National governance and control
With the Ekofisk discovery, the strength relationship between Norway and the foreign companies changed. The companies would go a long way to secure shares in what became one of the most interesting exploration areas in the world. The Norwegian continental shelf and the North Sea were also seen as a much more stable area than the Middle East. This allowed for a much more active oil policy.
In hindsight, the early oil policy has often been summed up by referring to ten points from the Storting’s Industrial Committee in 1971 (referred to as “the ten oil bids”). Some of these were situational. The first “bid”, a goal that Norwegian oil policy should ensure “national governance and control”, was influenced by the political rhetoric in the fight for Norwegian membership in the EC. The terms national governance and control provide just as well a good summary of the overall direction of oil policy.
The Industry Committee also stated that a state oil company should be set up and that an aim was to develop an “integrated Norwegian oil environment”. This meant that Norwegian industry should control all stages of the oil’s production chain. The Committee emphasized that the recovery should take place in an environmentally sound manner.
The industrial committee was based on a parliament where the middle parties had a majority with the Right. In the Right there was some opposition to a possible state oil company being given an operational, industrial role. Many felt that the company should be limited to managing state ownership.
Before the Borten government resigned in 1971, as a result of internal disputes over Norwegian membership in the EC, the Ministry of Industry and Industry attempted to facilitate Norsk Hydro to become the dominant, national, Norwegian oil company. A secret acquisition by Hambros Bank in London secured the state more than 50 percent of the shares.
When the Labor Party government under Trygve Bratteli took over in March 1971, plans to make Norsk Hydro a national major player in the oil business were shelved. The new Minister of Industry Finn Lied worked actively to create a new state company. Led the young Arve Johnsen as secretary of state. Lied had close relationships with Jens Chr. Hauge, who played a key role in shaping industrial policy in the postwar period.
The steeple government had to deal with the same parliamentary majority as the Borten government. It also passed as early as September 1972 as a result of the outcome of the referendum on EC membership. With the Storting’s endorsement of the proposal to establish Statoil on June 14, 1972, the three-leaf clover Lied, Hauge and Johnsen still managed to establish themselves in a position that would have their mark on Norwegian oil policy for many years to come.
When the company held its first general meeting on September 18, Jens Chr. Hauge became chairman. A short time later, Arve Johnsen became the state’s first director. He was in the position until 1988. When Hauge resigned as chairman in 1974, Lied assumed the position and held it until 1984.
The most pervasive political treatment of oil policy came in connection with the formulation and treatment of Stortingsmelding 25 (1974) on the place of petroleum activities in Norwegian society. It was still far ahead for the Norwegian authorities, Norwegian business and Norwegian oil workers to master all aspects of finding and extracting offshore oil reserves. Nevertheless, one could now clearly see the contours of what characterized the Norwegian oil experience until the early 1990s.
It can be summarized by six central beams:
- The largest possible share of the revenues or the “interest” from the oil should accrue to the state, and through it is distributed in an egalitarianmanner throughout Norwegian society.
- Establishment of a state oil company.
- Establishing a strong national supplier industry.
- Establishment of state regulatory institutions responsible for both socially responsible resource management and for the recovery to take place in a security and environmentally sound manner.
- That an industry that was otherwise known for its opposition to trade unionsestablished the same type of cooperation between employers, trade unions and the state that characterized other parts of Norwegian working life.
- An ambition that the recovery and investment rate should be “moderate”, so that other businesses should not be pushed aside and the resources will last a long time.
Efforts to achieve these goals were often characterized by open conflict, delicate balancing between conflicting interests and consensus.
Oil tax
With the licensing regime and tax cuts from 1965, Norway accounted for a share of the oil revenue from the Norwegian continental shelf, which was lower than, for example, the UK at the same time. In the event of a possible discovery, one could end up with a government take of less than 60 per cent.
The royalties that were the basis for the awards in the first two licensing rounds were part of an agreement and could hardly be changed. However, there were no formal rules that prevented the state from changing tax rates afterwards.
When the oil prices, as a result of the oil crisis, quadrupled to the winter of 1974, the oil companies with ownership interests in the Ekofisk field were inclined to collect profits far above the average in other industries. This prompted the Ministry of Finance to re-examine the financial conditions of the oil companies.
On June 13, 1975, the Storting passed a new petroleum tax law, which dramatically increased the tax level on the Norwegian continental shelf. The Act contained a production charge calculated on a sliding scale from 8 to 16 percent, an ordinary corporate tax equivalent to land-based operations (50.8 percent) and an ordinary special tax of 25 percent. At the same time, it was established that the authorities could set a norm price for use in the equation. However, the companies would have good opportunities to deduct costs from the tax. Norway would now secure a government take of close to 80 percent.
Prior to the tax law, the oil companies came with statements indicating that they were considering their future on the Norwegian continental shelf. The law first had immediate consequences for the Ekofisk field which was under start-up. Philips’ lawyers argued that it was unreasonable to grant retroactive effect to a law. Although a nearly unanimous decision supported the tax cuts, it was speculated whether the oil companies would sue the state and bring the decision to the Supreme Court.
The understanding that underpinned the tax cuts was the same as in the Norwegian hydropower regime: The state had to aim for as much as possible of the basic interest rate from large fields that Ekofisk should accrue to the community.
The Ministry of Finance assumed that as long as the companies made a profit similar to what was usual in other industries or more, they would choose to stay on the Norwegian continental shelf. With the establishment of a state-run Norwegian oil company, one would have an alternative if the companies were to take seriously the threats of withdrawing from the Norwegian shelf.
That ended with Phillips accepting the tax cut. Other foreign oil companies continued to work actively to secure new licenses. With minor adjustments, the law has remained standing since (see Petroleum Act).
Equinor
Finn Lied, Arve Johnsen and Jens Chr. Hauge were skeptical to let Hydro become the main company in the Norwegian oil business. This is because the company was a large, established organization with strong, independent self-interests. There was also political support for the establishment of a state oil company.
Arve Johnsen had a great influence on the design of the company when Statoil started its first full year with two employees in January 1973. From the beginning he had clear ambitions that Equinor (formerly Statoil) should develop into an integrated operating oil company. This meant that, in addition to managing the state’s stake in oil fields, the company was to develop an organization that could master all the technological challenges of finding oil itself, developing necessary installations and operating production.
By model of the very largest international oil companies, Johnsen thought it was crucial to establish himself on the ” downstream side”, that is, in the transport of oil and gas, the processing of resources at refineries and the sale of petroleum products through his own network of gas stations. Johnsen also wanted Statoil to establish itself in chemical industries where petroleum was a major resource.
During 1973, decisions and strategic measures were taken that strengthened Statoil’s ability to achieve its goals. Contrary to the Phillips oil company, Statoil secured ownership control over the pipeline network from the Ekofisk field to the continent. Statoil secured a 50 percent interest in the promising blocks, which in 1974 proved to contain the large Statfjord field. The US oil company Mobil was to be an operator in the field, but an agreement was entered into where Mobil undertook to train Statoil so that the company could take over operations on its own over a ten-year period.
During the 1970s, Statoil was granted an ownership interest of at least 50 percent in all allocations of new fields. These were so-called key blocks where seismic surveys indicated that there were great opportunities to find oil and gas. The indications struck. At the block that turned out to contain Gullfaks, Statoil had a 85% ownership interest. In the Gullfaks field, Statoil should have operator responsibility on its own at all stages. However, the company hired the experienced US oil company Esso as “technical assistant”.
It took time to develop Statoil as an operating company. In the Norwegian public in the 1970s, most people could get the impression that the company was bigger and more important for the activities in the North Sea than it really was. This is partly due to Statoil operating the information department for the development of Statfjord.
At the end of the 1970s, Statoil had operational responsibility for some drilling operations on its own. Statoil’s first major operator task was to lay a gas pipeline (Statpipe) from Statfjord to Kårstø in 1983–1985. Much of the work was done by experienced hired foreign companies, but it was Statoil who was responsible.
Statoil’s ambitions to establish independent downstream activity were partially blocked in the 1970s when the company, based on political compromises, was forced into the downstream company Norol together with Norsk Hydro and the private Norwegian oil company Saga Petroleum.
In the 1980s, Statoil established its own distribution apparatus under the Statoil name in Sweden and several other countries in Northern Europe. Statoil also took over Saga Petroleum’s shares in the petrochemical industry at Bamble in Telemark. From 1988, Statoil acquired Norsk Hydro’s ownership interests in the refinery at Mongstad.