Oil and gas wealth to Norway
By: Arne Osmundsen and Elisabeth Hemnes , translator
The large income came simultaneously with production in the large oil and gas fields in the North Sea. This gave the Norwegian state a solid tax income. The Norwegian state decided to buy and be the major shareholder of Norsk Hydro, and the establishment of Statoil in the seventies which contributed to an increase of wealth in Norway. Today the country has no debts and the national budget shows positive numbers, a situation to share with few other countries.
The Ekofisk – field started production in 1971. In 1973, just after the oil crisis the search drills n the area later named the Statfjord-field. Statfjord was the largest offshore oil field.
Knowing that the country had access to large oil and gas resources entitled the Norwegian government to take loans abroad. This money was used to build the welfare society in Norway. Norwegians in general saw a material growth in their private economy before production on the Norwegian sector really had started.
I 1978 the debt to foreign countries was 80 billion Norwegian kroner, or half a gross national budget. In addition the state, Statoil and Mobil had spent huge amounts of money building the Statfjord- field. On November 24.1974 the production started. The worries of having so large expenses were without reason. After one year of production all the expenses were paid. 1. In January 1987 the complete operator responsibility on Statfjord was transferred to Statoil. Statoil became a billion industry magnet. In 2001 the company was listed on the stock exchange market in Oslo and in New York. The company was worth hundreds of billions in sales yearly. By now the state owned 70% of Statoil. The company became partly privatized. Today Statoil and Hydro has emerged in their oil and gas based businesses to StatoilHydro. (was renamed to Statoil in Nov. 2009) The company now operates in 30 countries on five continents. Now more than fifty percent of the search of oil is performed abroad.
In 2008 the Norwegian state reached a new peak by making 155 billion kroner on their engagement on the Norwegian sector. The summer of 2008 the oil prices showed the shocking price of 147 dollars per barrel. After the financial crisis the demand of oil has very much decreased, and in March 2009 the average price per barrel was 35 dollars. This naturally meant less income for the Norwegian state. In December 2009 the price is 80 dollars.
The Troll- field is one of the largest ”money engines” in the North Sea. During 2008 it pumped oil and gas worth 88 billion kroner from its wells, whereas 90% of this goes straight to the state.
Oil and gas industry has had major repercussions for the Norwegian business. A number of businesses are living from selling goods or services to business in the North Sea.
In 2006 yet another state pension fund was established. It came in addition to already existing pension funds with capital in Norway and abroad. The income of the abroad funds consists of the total petroleum income including the eventual earnings on the existing fund. This fund is responsible for 2600 billion kroner in funds today (Dec 2009). The purpose with this kind of management is to save for “a rainy day” without oil and gas. Hopefully the country will keep the wealth and still be able to serve the increasing number of senior citizens…….
Sources: Mainly NRK, and Haugesund Avis