Statoil: The evolution of the norwegian model

Reacting to a request by IOCs for oil and gas concessions in 1962, the Norwegian government was initially unwilling to commit resources to an ostensibly highly risky venture and even openly discouraged Norwegian investors from doing so. The resulting legislative framework gave the government overall control but relied on foreign companies to undertake exploration and production. In 1970, after oil had been found and OPEC countries had insisted on equity participation, the Norwegian concession system shifted to include local content requirements and state participation with “carried interests” until commercial discoveries were made. Also the system of individual applications made ample information available to the Norwegian bureaucracy. By 1972, the Storting (national assembly) had agreed to “ten oil commandments” emphasizing Norway’s national control over all activities related to petroleum resources and the use of petrol in new industrial activities and the need for one state-owned, one parastatal and one private national player. The Ministry of Industry was charged with effecting legislation and concessions; the Oil Directorate with general administration and regulation; and Statoil with the government’s commercial interest. Norsk Hydro and Saga Petroleum were the parastatal and private operators, respectively.