4. EMPIRICAL FINDINGS
4.2.2. Governmental structures
4.2.2. Governmental structures
To better understand the governments actions and situation we have found it important to present the changes made in the governmental structures, as well as new governmental
departments and regulations. The changes made in the period will be presented in this part of each period.
The Norwegian Petroleum law from May 1963 states in § 1-‐1 that the Norwegian state has superior ownership rights too all hydrocarbons found on NCS and has right to administrate them. Taken into account is also the Norwegian Constitution § 19, that the government should administrate the governmental property in such a way that it for the Norwegian populations best interest. The Petroleum law should therefore be in appliance these laws.
All changes in the petroleum law have to pass through the Parliament. The petroleum law further states that the resources should be administrated in a long-‐term perspective (Petroleum taxation act § 1-‐2). The reason for this is that it should be a good for all the Norwegian community, today and for generations to come. The revenue generated from the petroleum should secure welfare, steady employment and good environmental condition.
The petroleum politics should also take other industries into account. The administration of the petroleum industry should not be administrated in a way that has a negative effect, at an expense to other industries.
For administration of the enormous wealth that are produced on the NCS, there has to be a strict regulations and laws to meet the demands of the Parliament. Different departments within the public petroleum industry handled all the laws and regulations. To get a better understanding on how the system worked and works, we think it’s important to know what the different departments responsibility are. The Norwegian Parliament has the highest position in the hierarchy, and the overall responsibility for all underlying departments (NPD, 2009). The Parliaments main task is to regulate and develop all the laws and regulations for the petroleum industry. All major changes that are made in the petroleum politics have to be brought up in hearings in the Parliament. The Parliament also regulates areas for exploration and production activity. To make sure that the petroleum politics are followed accordingly, the Parliament uses the Government as a tool.
The Norwegian Government
The Government responsibility is to administrate policies given by the Parliament. Since
department to mange them all. Therefore, the Government has several Ministries and directorates that all have different responsibilities. The subdirectories responsibilities are divided into several different areas (NPD, 2009):
-‐ Resource management for the NCS is handled by The Ministry of Petroleum and Energy
-‐ The Ministry of Labour and Social Inclusion handle all regulations and managements regarding work environment, safety and health.
-‐ The Ministry of Finance has the overall responsibility for revenues generated by the petroleum industry. As well has handling all state revenue.
-‐ The Ministry of Fishery and Costal Affairs regulates the rules and regulations in regards of environmental spills, such as oil spills and pollution made by petroleum related activities.
-‐ The Ministry of Environment has the responsibility for the overall environmental effects petroleum activities may cause.
To limit this part of the thesis we are only going to look closer on the ministries that
influence the most on who are granted licenses, and therefore control which companies that are taking an active part on NCS. In our view, the main controller of this is The Ministry of Petroleum and Energy. The other Ministries also effects by comments and advises in regards of their fields of responsibilities.
In 1972, The Norwegian Petroleum Directorate’s (NPD) was established. NPDs main task is to handle all advisory that in regards of issues concerning the petroleum industry. NPD also has a responsibility to secure that all exploration and production on NCS are done according to the Norwegian rules and regulations issued by the Ministry.
The Ministry of Petroleum and Energy was established first later in 1978 by the Parliament.
The ministry administrates all the oil and gas resources on the NCS. The administration includes the responsibility to ensure that the companies on NCS follow the rules and
regulations of the Norwegian petroleum law. The main purpose of the ministry is to allocate access to specified areas on the NCS to be utilized for exploration. This is done through
dialogue with players and other stakeholders in the industry.
Economical experts often describe the key of success on the NCS by political stability, the broad competition and openness from the government. This has been a governmental goal since the beginning. The Norwegian petroleum model started from ten simple rules. The ten rules were the guidelines for what we today know as the Norwegian petroleum politics and have since then grown into a complex but sustainable framework of laws and regulations.
The politic is mostly grounded upon the objective to retain a wide measure of control over the industry (Parra, 2005).
The ten rules of oil (White paper 14th 1971)
1) National management and control of all activities on the Norwegian continental shelf.
2) The findings should be exploited in such a way that Norway is independently of others when it comes to crude oil.
3) The petroleum industry has to spur the development of new economic activity 4) The development of oil activities must be done taking into account the other industries and environmental protection.
5) Flaring of gas that can be exploited, are not acceptable, only except in the short test periods.
6) Petroleum from the Norwegian continental shelf will generally landed in Norway, unless the national interests call for a different solution.
7) The state is engaged at all appropriate levels and contribute to the coordination of Norwegian interests, and to build an integrated Norwegian oil environment with national and international objectives.
8) Create a state-‐run oil company that can protect the state's business interests and who can cooperate with domestic and foreign oil interests.
9) North of 62 latitude the activity pattern must be chosen in a satisfying way to specific societal factors that relate to the region.
10) Norwegian findings set a Norwegian foreign policy towards the new tasks.
The rules gives a good picture of what the government wanted to do to succeed with their further petroleum politics. From the rules, we can see that the government wanted to
of Statoil could have an impact on the foreign policy, and therefore lead to consequences in security within the fields of environment. Further, we can see that the government
expresses a wish of national control by using Statoil as a tool to gain both competence and knowledge in the petroleum industry.
“(...) Statoil would become an important player, and government was aware that the group of companies, and Statoil, needed to learn from the international companies to be able to grow.”
Helge Sørås, 2010 Sørås summarizes the policy making process in the governmental structures: You have to think at two, maybe three levels when it comes to policy making. When I worked with tax policies it became clear that it was very important to talk to those who worked at the “third level”. It was them who did the calculations and the economical analysis. To make sure that the bureaucrats at the “third level” had a shared understanding with the industry was an important affair. Then you had top bureaucrats, which act like a filter between their level and the politicians. The top bureaucrats were at times very important, as they from the political signals, governed the third level, but also in the sense that they, to a certain degree, controlled the information who went up to the political level. They functioned as a channel between the different levels. To only work with politicians can be quite futile, but they have an important role as well. It is important that the leaders of companies meet Norwegian politician on a high level and the top bureaucrats. It is through such meetings they get an understanding of what is and what is not possible in Norway. But it is on the third level the comprehension of the technical side is developed. And the technical aspects are produced to best coincide with political goals, such as diversity.
“It was all about the exchange of information, to create a common understanding. And creating a comprehension of the other side, I don’t like to call it counterpart, a understanding for their demands and problems.”
Helge Sørås, 2010