(THIS ARTICLE IS MACHINE TRANSLATED by Google from Norwegian)
The oil sources that have been discovered off the Norwegian coast obviously have extremely valuable natural resources from which Norway can benefit greatly economically. But this presupposes that we take care of the opportunities we have. It is impossible if we choose to hold on to the situation as it is in the oil sector today. The international oil companies handle close to 97 percent of the turnover, and when they sell crude oil and crude oil products to their subsidiaries in Norway, they take overprices that cost us close to NOK 350 million a year.
Norwegian import prices have been at European top level, and settlement prices have led to billions in currency losses. The overpricing of the annual oil imports to Esso's refinery results in a currency loss that in three years amounts to sums corresponding to the total costs of building the entire refinery. The amount includes a tax evasion which in 5-6 years amounts to more than what the refinery is worth. The premiums cost each inhabitant in Norway around NOK 100 a year.
Now we are powerless
Several international companies are looking for or drilling for oil along the coast. Oil sources have already been found that can cover our crude oil needs and more for decades. In Svalbard, too, foreign companies are looking for oil. South of the 62nd parallel off the Norwegian coast, 9 joint ventures of the company have been drilling in recent years. Oil has been found in at least four places: Philips has made two significant discoveries, Esso a minor discovery and the Amoco group has found oil deposits. Gas has been found by the Murphy Group and Philips. The state has granted license permits, and the agreement leaves the companies free to decide their own business plans. Apart from the central government's share of revenue and landings, Norway has not set any other requirements than we do for ordinary licenses to foreigners. As before, the companies can operate freely.
Opposite trends are prevailing in the oil sector in many other countries. If foreign oil companies are invited to establish themselves in developing countries, it takes place in such forms of cooperation that do not always give the country greater income, but provide more direct control of the business arrangement, e.g. domestic and foreign sales policy, pricing policy, possible development of further processing. One of the most tempting things for the oil companies was probably the freedom we offered, and the fact that the value of crude oil, when taxes and fees are to be calculated, is determined by world market prices – which is not uncommon (except in the big oil countries, where one uses agreed prices). We also do not control the prices to Norway from our "own" fields: "Which prices the oil companies will charge depends primarily on the prices on the world market." (Nils Gulnes at the State Oil Office.)
And the companies will be fairly free, the world market is so motley in terms of prices that it is difficult to "take an argument" with them. But so much we can say today: The prices of crude oil that Shell and Esso import (and refine in this country) will be significantly higher than the price of the oil Philips will sell on the world market. In few countries, as is well known, are monopoly prices as unshakable as in Norway. Repeated in another way: It is already crystal clear that if Esso and Shell are allowed to continue as now, we will import crude oil from other places that are more expensive than our own oil from the Ekofisk field, for example.
In some of the groups that received licenses in the mid-sixties, Norwegian companies participate (Hydro with now 6,7% in the Philips group, for example). In the announcements made in 1968, the state has been allowed to participate as interested parties; this thus provides a somewhat closer contact, at the same time as the revenue share has increased from around 56% to in some cases 63% (eg in Esso's blocks). Oil countries in the Middle East are up to 75%, and many "fresh" oil countries have also achieved government shares of up to 70%, sometimes more.
The state revenues from the Ekofisk field have been mentioned by the authorities to be able to stay somewhere between NOK 100 and 500 million. This is not in the order of magnitude more than we lose in currency on the overpricing in total. It is therefore crucial that we can use the crude oil off our coast to reduce this loss; Yes, it must be one of the most important purposes.
Property or gift?
In order to be able to make the best use of the economic opportunities that now present themselves, Norwegian oil policy must have a minimum objective:
- The income from oil extraction should to the greatest possible extent benefit the country's population, and the oil from the sources off the Norwegian coast should be further processed by us.
- The overprice on imports of crude oil and oil products must be removed.
- The Norwegian oil industry must be developed so that it does not lead to Norwegian economic dependence on large international groups, but to increased economic independence and freedom of action for Norway.
If nothing is done by the state either in terms of overpricing or to promote oil initiatives, we will get into this situation:
Crude oil off the Norwegian coast is extracted by foreign companies.
Foreign companies build up further processing of our crude oil abroad or, in the "best" case, a collaboration is made with Norwegian capital or the Norwegian state on the location of a further processing plant here and then reduces most of the production itself.
The profit on our oil ends up abroad and the currency loss that results from the overprices will continue.
What can be done to avoid such a situation? How can Norway get greater economic benefits from the oil industry and a more independent position? Three options stand out. Moderate regulatory and control measures can probably lead to lower prices, but can not save the country from the embrace of oil monopolies. A nationally independent oil company that in the long run will facilitate a nationalization of the entire oil industry is the alternative that stands out. But an active government policy can lead to counter-reactions when we intervene against established companies. The backlash can be of many types: Retaliation in the form of less freight for Norwegian tanker shipowners, a decline in the export industry's orders (from the USA, for example, which Sweden barely felt recently). Foreign authorities can raise major trade barriers (higher tariffs, smaller quotas), they can put pressure on us in international forums, restrict our access to credit for monetary purposes, and for various types of investment, both from private sources and international financial institutions such as the World Bank. More drastic examples are e.g. trade boycott and confiscation of Norwegian property abroad, e.g. ship. With an abrupt and end-to-end nationalization overnight, we could probably experience something like this today. Compensation for the expropriation we make would be difficult to agree on.
A Norwegian-owned company
A first step is to create a Norwegian-owned company that refines and sells oil in Norway on the basis of independent imports, or based on Norwegian-produced crude oil. Such a company will be able to create the price competition that is necessary to reduce oil prices. The prerequisite is that the company gets a certain size. The company can also provide the basis for the development of the petrochemical industry in Norway. If we have a national oil industry that includes both refining, distribution and the petrochemical industry, we can to a greater extent than before demand that all oil from our oil fields be landed in Norway. In competition with a Norwegian independent company, the prices of oil products will be pushed down. This will create fewer international complications than a price dictation. The same has been done in other countries.
The aim must be to build a state-owned oil industry that includes production, refining and distribution. In this way, the state can eventually take over the entire oil industry.
What has happened in recent years is that licenses have been "sold" to the highest bidder, and the most important advantage of the Norwegian oil licenses was the lack of interference from the authorities. There was free access to incorporate the Norwegian resources as part of the oil companies' global monopolistic strategy. Under the conditions provided by Norway, the oil companies are free to calculate such prices for internal services and deliveries of goods that the profit occurs in places where the tax burden is least. The companies are also free in their pricing policy and their production and further processing policy. It can hardly be better.
Mobilize public opinion
Norwegian oil is in danger of becoming a supplement to the oil giants' oil sources, thereby helping to strengthen their monopoly positions. But Norwegian oil can also have another meaning, namely to be an oil source that is independent of the oil companies, and thus contribute to weakening the oil monopolies' overpowering position.
A state oil industry in Norway will immediately mean just such a completely independent source of oil supply in the world. It would further eliminate the overpricing problem and provide a basis for further processing activities in Norway.
A state oil industry will ensure that the revenues benefit the entire population and not just foreign capitalists. Seen in a broader perspective, state oil production will ensure Norwegian economic independence. Norway has an enormous international responsibility because huge oil deposits may be found off our coast. These really belong to everyone in this world. What we have done so far has strengthened the large international groups. The fight that other countries are waging precisely against these groups can, in the worst case, be fruitless if Norway's oil becomes a weapon that the oil monopolies take care of. It is therefore our duty to gain control of the oil from our oil fields.
The international reactions will be very strong to such a nationalization policy.
Many of the previously mentioned countermeasures from abroad can then be implemented. This will require that the public is fully mobilized, that one prepares for the fact that it will cost a fight, and that people are convinced that the results will more than outweigh the costs.
By John E. Andersson