While oil and gas reserves have brought Norway considerable wealth, allowed the country to stay out of the European Union and not adopt the euro as a common currency, the sector is not free from conflicts.
The months of June and July this year saw a massive 16-day strike of oil workers in Norway, demanding better pay and earlier retirement schemes. The strike put upward pressure on oil prices, crimped the nation’s oil revenue and left the peaceful Scandinavian country in shock.
Norway is among the world’s top 15 oil producers, with reserves of about 7.3 billion barrels, according to the country’s Petroleum Directorate, which regulates the industry from its headquarters in Stavanger. Norway has been used to a steady inflow of petrodollars to feed its sovereign wealth funds and other public welfare funds, so the strike has been a wake-up call for the country’s leading
“The strike had major consequences for the Norwegian society as a whole,” said Bard Glad Pedersen, spokesman at the state-owned oil monopoly Statoil, in a press release after Norway’s Labour Ministry intervened, stressing that a longer outage would have threatened Norway’s reputation as a reliable supplier of gas to Europe and oil to world markets. Norwegian Minister of Petroleum and Energy Ola Borten Moe has stressed on cost control in the industry being achieved through more “efficiency and technological improvements”.
The action halted all offshore oil and gas production on the continental shelf off Norway for the first time in 26 years, with the result that Norway’s oil production was “about 2 per cent below the cumulative prognosis this year”, Jan Bygdevoll, head of forecasting at the Norwegian Petroleum Directorate, told Bloomberg in October.
“Since the prognosis for the remaining year is relatively high, it might be a challenge to meet the oil production target for 2012,”
However, things are not as bad.> In September, Norway’s state-managed sovereign wealth funds, the Government Pension Fund, topped the list of global sovereign wealth funds for the first time, surpassing the Abu Dhabi Investment Authority (ADIA) by growing much faster than the Gulf’s fund over the past decades. Norway now holds $656.2 billion (Dh2.4 trillion) in assets in the fund, as compared to ADIA’s assets of around $627 billion, followed by China’s SAFE Investment Company (a subsidiary of the State Administration of Foreign Exchange) with $567.9 billion and the Saudi Arabian Monetary Agency (SAMA) Holdings with $532.8 billion, as per latest figures compiled by the US-based Sovereign Wealth
While ADIA, SAFE and SAMA are quite secretive about their global investments, Norway is highly transparent and lists all major investments, such as Royal Dutch Shell, Nestlé, HSBC, Apple, Novartis, Vodafone, BG Group, Exxon Mobil and Roche Holding, in its quarterly report.
According to the US Energy Information Administration, Norway was producing about 2.5 per cent of the world’s oil on a daily basis in 2011, most of which was for export. By comparison, Russia, Saudi Arabia and the US each produce more than 10 per cent of the world’s oil. Norway’s production is on par with Iraq, Kuwait and Venezuela.
About 80,000 people are employed in the petroleum sector in Norway today, and oil and gas comprise Norway’s biggest export with a 47 per cent share of the total export market, the country’s Petroleum Directorate says. The industry is also at the forefront in the areas of technology and environmental protection in the oil sector.
Two associations cover Norway’s domestic and international activities in the oil sector, Kristin Bremer Nebben, director of communication at the Norwegian Oil and Gas Association, tells GN Focus. While the association is concerned with activities on the Norwegian continental shelf, Norwegian Oil and Gas Partners (Intsok) was launched by the Norwegian government to expand business activities in the international oil and gas markets, on the basis of the industry’s leading-edge experience, technology and expertise, according to the company’s website. Intsok officials did not respond to requests by GN Focus to give details on Norway’s current activities in the UAE and the Gulf.
However, there are a number of Norwegian companies active in the UAE, including Statoil, which has a regional office in Abu Dhabi to assess opportunities in the oil business and mainly cooperates with Abu Dhabi National Oil Company. Det Norske Veritas (DNV) is a risk management and advisory company in the oil, maritime and energy business as well as in the business insurance sector, says Jorgen Traun, DNV’s Vice-President India and Middle East and also board member of the Norwegian Business Group in the UAE.
AGR Group (AGR) is a global services and technology company that provides integrated services and innovative technological solutions to the oil and gas industries. It opened an office in Abu Dhabi in 2010.
Other Norwegian companies active in the UAE are shipping firms Polarcus, Wilhelmsen Ships Service, the shipyard and industrial plant supplier Goltens, NCC Odfjell Chemical Tankers, safety services supplier MTI Middle East and Jotun, providing paints and coatings to the oil and shipping industry.
With advanced environmental technology in the oil and energy business, Norwegian companies are also sought-after as strategic partners for green
projects in the UAE, namely in Masdar City where carbon dioxide recovery projects kicked off in early 2010.