Nevertheless the companies are all influenced and formed by their national culture and their history from before the "era of globalization". Here we take a closer look at the two Norwegian oil-and-gas giants Statoil and Hydro focusing on their impact on regional development. In 2007 the two companies merged to form StatoilHydro. This company is at present 67 % owned by the Norwegian state.
In terms of regional development two crucial incidents took place in Norway – in 1971 and 1972. First in 1971 the parliament of Norway established "The Ten Oil Commandments" (De ti oljebud). This laid down the rules on how to develop Norway's oil - and gas-resources while also providing a guide to the securing of oil-activities spread out among different regions in the country. Secondly, the state-owned oil-company Statoil was established in 1972. The purpose here was first and foremost to secure national control over oil and gas-resources. As such Statoil became a great success.
Statoil was also tasked with contributing to the realization of the Norwegian state's policies of development across various Norwegian regions. Therefore the company was dependent on the goodwill of local communities and mayors to secure political support from the central level. The political decisions which led to the establishment of Statoil and the Norwegian Petroleum Direc-torate in Stavanger were both important elements in the making of the southwest regions of Hordaland and Rogaland, the area that would become the centre for Norwegian Petroleum activity.
In the mid 1980's Norwegian compe-tence levels in respect of offshore installations and technical solutions had reached an internationally competitive standard. The need to further this capacity building was thus diminished. National control over resources and production had been accomplished. However, the political fear remained that Statoil would become too much of 'a state within'.
The development of new technological solutions has made the factor of distance in respect of the need to localise support close to the oil- and gas fields less important. However, due to the rediscovery of a tax instrument dating from the 17th century, most municipalities welcome new projects in the oil-and gas-industries. The clue here is that the level of local property-tax is related to the level of investment, and therefore large investments create larger municipal incomes.
Norsk Hydro began trading in 1906 in the production of fertilizer. During the 1940s the company expanded into metal, in particular aluminium. The key element in Norsk Hydro's early strategy was to utilize electric energy, which could be provided relatively cheaply from Norwegian waterfalls. The transfer of this type of energy was however rather expensive and complicated. Factories were usually located close to the hydro power-stations. Sites in Norwegian fjords constituted excellent locations in this respect combining waterfalls with facilities for deep-water and weather-protected ports.
As these developments occurred over several decades the ties between the industrial communities and Norsk Hydro became very close. More often than not, proposals to close reduce or change factories, were met with local political protest and industrial action. This became something of a trend in the 1980s and the 1990s, the decades in which Norsk Hydro expanded into oil and gas. Statoil on the other hand has thus far not found it necessary to close plants. As such then the company retains a good track record in industrial relations terms.
But Hydro have learned over time. Moving into oil and gas the company developed alternative regional strategies to those of Statoil. In particular they avoided establishing links of dependence between the company and the local communities. Their regional strategies were then rather passive.
Statoil or StatoilHydro is not the owner of Norwegian oil and gas resources. Legally ownership remains with the Norwegian State. Petoro, a company 100 % owned by the state manages the portfolio on behalf of the State. Petoro was established in 2001.
It is a small organization; nevertheless it has managed to generate operating incomes, on average, of around 100 billion NOK in recent years. The income of StatoilHydro in comparison was 137 billion NOK in 2007. The company employs today almost 30 000 people.
The establishment of Petoro enabled Statoil to refine the company's national as well as global strategies. The Snøhvit-project developed in the northernmost part of Norway from 2002-2008 demon-strated the company's new role and position. One reason to become engaged here was to demonstrate to the Russians (Gazprom) the company's competence in offshore gas-production in the Arctic with a view to tendering for rights in respect of Russia's Sthokman gas-field which holds reserves some ten-to-twenty times those of Snøhvit. As such then the development of the Snøhvit field became a part of Statoil's new global strategy.
In addition, the company moved away from its traditional communitarian approach by actively implementing contracts that were inconvenient to the rest of the domestically-based industry.
Rather Statoil continued with their policy of attempting to promote local and regional support for both individual projects and the company as a whole. This is very important, because if a region is negative towards a company and their plans for the area, it is likely that they will never be realized. Arctic oil- and gas activities need regional support from Northern regions, and Statoil understood the importance of this.
After the merger between Statoil and Norsk Hydro in 2007 the high level of expectations and demands from regions and municipalities with regard to social responsibilities and local efforts still needed to be met. It remains unclear, however, as to how they will respond in the future. At the same, it seems very likely that StatoilHydro will utilize their regional experience previously gained in Norway in the new global context.
The global oil-industry will develop towards a pattern where it is more important to handle resources under political control than to speculate on prices. Thus the experience of a Norwegian state-owned company and its record of regional national involvement will prove to be an important tool for StatoilHydro in the new era of global competition.
The 10 commandments accepted unanimously by the Norwegian parliament in 1971 (unofficial summary and translation).
1. National management and control of all activities on the Norwegian Continental Shelf.
2. Make Norway self-sufficient in raw oil.
3. Establish new businesses with a basis in petroleum.
4. Develop the oil industry in accordance with established industrial practices and environmental considerations.
5. Flaring of gas on the Norwegian Continental Shelf can only be accepted for short periods of time.
6. Petroleum from the Norwegian Continental Shelf shall, in principle, be landed in Norway
7. State involvement on all levels in order to ensure Norwegian interests and to
promote the establishment of a Norwegian industrial oil cluster.
8. Establish a state oil company to take care of the state's commercial interests.
9. Take care of the special conditions pertaining in the northern regions (north of the 62nd parallel).
10. Continuing Norwegian petroleum discoveries are expected to create new challenges for Norwegian foreign policy.
By Trond Nilsen (right) Researcher and Sveinung Eikeland, Director of Research at Northern Research Institute (Norut), Hammerfest and Alta