Norway, The Development And Significance Of Its Oil Industry With Emphasis On Current Trends In Politics And Economy

Abstract

Abstract In 1969, the first oil capable of exploitation was discovered on the Norwegian Continental Shelf. Being a developed industrialized country and now with an abundance of energy, Norway found itself in a unique and fortunate position. While the country possesses one-third of the West European reserves of oil and gas, it was decided to develop the resources at a moderate pace. It also became clear that the extraction of the resources does not necessarily bring revenues only, but also may disrupt the balance of the national economy, the pattern of settlement, and the social structure. pattern of settlement, and the social structure. The country decided that the oil wealth should be used to improve the qualities of the Norwegian way of life and to develop and strengthen the Norwegian economy and industries for the purpose of creating a healthy and viable foundation also for the post-oil age. Introduction How did Norway become an oil nation and what were the initial considerations? To Norway oil came as a great surprise. The idea of finding oil in the North Sea was in itself almost incomprehensible. However, when the Norwegian authorities were approached by the Phillips Petroleum Co. in 1962 with a request for permission to start petroleum exploration on the Norwegian Continental Shelf, fortunately there were people who understood that the situation required organized and careful thinking. Necessary laws were passed and Norway proclaimed sovereignty of its Continental Shelf in proclaimed sovereignty of its Continental Shelf in 1963 in respect of natural resources. The first production licences were granted in 1965, and in production licences were granted in 1965, and in 1969 it became clear that the Phillips Group had hit oil and gas in great volumes; the now well known Ekofisk Field had become a reality and Norway an oil nation. Being a developed, industrialized country and now with an abundance of energy, the Norwegians found themselves in a unique position in the world. Between 55 and 60% of Norway's total energy demand was covered by hydroelectric power, limiting the national consumption of oil to only about 8 million tons annually. in addition, there are considerable deposits of coal at Spitzbergen in the archipelago of Svalbard. Already the discovery of the Ekofisk Field made clear that Norway would be an exporter of oil and gas in volumes many times its domestic consumption. Later discoveries, of which the main ones are the Frigg and the Statfjord Fields, have confirmed that Norway will be an important supplier of oil and gas to the western nations, in particular to the Nordic countries and to the countries on the European Continent. Even though the country's proved reserves of 1300 million m.t.o.e., 50/50 oil and gas, are only about 1% of the global reserves known today, they constitute close to one-third of the West European reserves, and will provide 7% of the supply. The fact that only 5% of the Norwegian Continental Shelf has been explored so far gives an idea of the potential, especially considering that one-third of potential, especially considering that one-third of the total European Continental Shelf is Norwegian. And the unexplored areas north of the 620 latitude are several times the size of the Norwegian sector of the North Sea. However, it has become quite clear that development of the Norwegian resources is dependent on a high energy price level. Norway is, indeed, in a fortunate position. The discovery of oil and gas not only brings a surplus of energy, but also an increase in national wealth, as well as new sources of income. During 1978 to 2000, the anticipated oil revenues in terms of government take from proved reserves are in the magnitude of $75 billion (U.S.) covering fees, royalties, and taxes. In 1978, the government take was $1.8 billion (U.S.), exported to increase to about $3.5 billion (U.S.) in the early 1980's. In addition, the Norwegian State will gain a profit on its participations during 1978 to 2000, amounting roughly to $6 to $7 billion (U.S.), while the foreign and Norwegian oil companies are left with a profit of $15 to $17 billion (U.S.).