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Although the Government has no direct ownership of oil and gas production, it can learn from Norway in producing a world-class petroleum system and reaping any economic benefits, says Norwegian Petroteam president Farouk Al-Kasim, who was another keynote petroleum conference speaker.
As our oil and gas sectors continues to grow and diversify, it was an opportune time to look at how Norway transformed its economy through the successful exploitation of its share of North Sea oil. Norway’s petroleum sector, which had found total recoverable reserves of about 80.1 boe, was admired around the world because it had mastered offshore challenges, managed to protect the environment, maintained growth in non-oil sectors, developed a world-class offshore industry and improved ultimate oil recovery from 30 percent to 45 percent. There were 51 billion BOE of reserves left by the end of 2009. Al-Kasim says that there was early political consensus on full national control regarding the speed and direction of petroleum activities in Norway and all political parties agreed to keep oil and gas out of their election campaigns. Partnership between the government and industry has been a tradition in Norway and with fiscal terms that secured recovery of any investment and provided adequate rewards that reflected that investment risk. High state participation and taxation meant the Norwegian government secured the risk, but the total government take, including profits on state participation, reached up to 80 percent, and the government retained most of the windfall profits when oil prices went up. As in New Zealand in recent years, the Norwegian government played a proactive role in promoting exploration and licensing was based on open and competitive bidding, with a gradual expansion of exploration areas, with blocks offered at one time. With Norwegian academic and industrial institutions at the forefront of petroleum technologies, oil companies provided the incentive for new technological developments, in oil and non-oil sectors, and today the offshore industry provides the country with high export revenues. Al-Kasim says it is time for New Zealand to consider if political consensus on fundamental petroleum policies would help the long-term confidence of oil and gas investors. Was the Government willing to participate in the gas sector in order to promote long-term confidence and did it need to take the lead in gas infrastructure and optimising its utilisation? He also wondered if we had clear policy for the use of petroleum revenues, as the US$443 billion Norwegian Oil Fund (now called the Pension Fund) did for Norway, with oil revenues insulated from national spending?
Energy NZ Vol.4 No.6 November-December 2010 |
Although Norway has a large national investment in oil and gas production, he says we share similarities with Norway – both are small thin coastal nations, with small populations of about four million people.