Mikkelsen A., Langhelle O. (eds.) Arctic Oil and Gas. Sustanability at Risk?

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226 Ove Heitmann Hansen and Mette Ravn Midtgard

the director at The Resource Centre for the Rights of Indigenous Peoples, who

offers this solution:

One possibility is to establish a petroleum fund for employment, education,

the establishment of business etc for the Sámi people. The Sámi people

demand ‘benefit sharing’ from the profits of oil and gas activity in the North.

In southern Norway, they think that the Sámi live on public subsidies. It

depends on whose resources these really are; if they are Sámi resources,

which are being used for the general public, then perhaps it is the Sámi

people who are gradually are sponsoring southern Norway.

This statement is disputable. Many people in Norway consider the Sámi people

as part of Norwegian society and, therefore, feel that they should not gain more

benefits from the oil and gas activity than other Norwegians. A member of the

Social Left Party, who is also a member of the Energy and Environmental

Committee in Parliament, stated that she does not understand any Sámi demands,

especially rights concerning oil and gas. She said: ‘These resources belong the

nation as a whole. Assignment of special privileges on an ethnic foundation is

completely out of the question’.

The NSR wants adequate participation in the processes that affect the Northern

areas. They say:

All operations in the Barents Sea and coastal areas are in Sámi interests.

Therefore, mechanisms must be established that secure considerable value

supplied to the Sámi society from existing and future extraction of non-

renewable resources in Sámi areas. The Sámi people have on many occasions

said that they want part of the money from oil and gas activity off Finnmark

to be spent in Sámi areas.

The Sámi hold both a right to self-determination and the right to manage their

own natural resources.

The right to self-determination means the right to veto for

the Sámi parliaments, said Professor Carsten Smith, leader of the expert group that

prepared the draft for the convention, which also stated that the convention deter-

mines minimum rights and that each national state is at liberty to expand them.

Issues of major importance to the Sámi must be subject to negotiations with the

Sámi parliament prior to any public authority decision, the convention draft states,

adding that such negotiations must be scheduled to give the Sámi parliaments

ample time to influence the process and the outcome. Neither Norway, Sweden nor

Finland have granted such negotiation rights to the Sámi parliaments. Bjarne

Håkon Hanssen, the Norwegian Minister of Labour and Social Affairs, believes

that it is politically and formally important that the nation-states and Sámi parlia-

ments agree on the convention before it is implemented. Mr Hanssen said, ‘Most

of the convention could be implemented without major problems. However, veto

rights for the Sámi parliament, as presented by Carsten Smith, would create a

debate over fundamental principles in Norway’.

President Aili Keskitalo

demands that Norway involve the Sámi parliament in all stages of the investigation

process. She claims that the Sámi should receive funding from the Foreign

Ministry to help them protect their rights, and she hopes that the oil companies will

take their own ethical guidelines seriously.

The international dimension

The US Geological Survey World Petroleum Assessment 2000 announced that 25

per cent of the remaining petroleum deposit was to be found in Arctic waters.

This, in combination with political instability in other major oil-producing

regions, has put the Norwegian Arctic on the international political agenda.

Decisions made by Norway and Russia on petroleum activity in the Barents Sea

are followed with great interest in the United States (US) and in Europe. Norway’s

focus is to ensure political stability and sustainable development through energy

delivery. The Norwegian Foreign Minister, Jonas Gahr Støre, explained:

We will continue to make our contribution to cooperation, stability and

predictability in the region. We will position ourselves in the technological

and industrial forefront of this historic chapter of oil and gas exploration that

is being opened in the Barents Sea. And we will do this in a way that takes

due account of the needs of the vulnerable Arctic environment.

Opportunities and responsibilities are what the Foreign Minister emphasizes in

the attempt to consolidate a new perspective for Norway and for the whole of

Northern Europe. It is about the Norwegian responsibility towards the environ-

ment and natural resources, and for the continuation/development of peace and

security. The metaphor ‘a sea of opportunities’ is centred around possibilities

for the whole Northern areas, and he further stated, ‘The High North needs a

sound policy’.

Previous Norwegian Foreign Ministers have travelled to the Barents region, but

Gahr Støre went to the High North. It is difficult to find a definition of what the High

North is, and yet the term is used more and more both by the Ministry of Foreign

Affairs and by the international community. In a Norwegian context, it is often

referred to as ‘Our High North’. In a 2005 speech about Foreign Policy to the

Storting, Foreign Minister Støre said, ‘Our High North policy involves our relation-

ship with Russia, the environment and climate issues in vulnerable Arctic areas, the

rights of indigenous people, and important aspects of our relationship with our

neighbours and partners’.

It seems clear that ‘Our High North’ involves most of the

story lines presented in this chapter, and the phrase has become a geographical term.

The government’s vision for the High North is for it to be a sea of cooperation with

clear boundaries, clear rules for economic activity and high environmental standards,

where Norway is recognized by its neighbours as a predictable and reliable coastal

state that meets its management responsibilities.

Norway needs to combine and unite the requirements of different countries,

counties, municipalities and the indigenous people in its policy-making.

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228 Ove Heitmann Hansen and Mette Ravn Midtgard

The policy must also include the utilization of the fisheries and petroleum in a

way that takes into account the vulnerability of the Arctic environment. On the

departmental level, the energy issue has overshadowed other issues and changed

Norway’s perspective. Norwegian authorities have given new emphasis to the

High North, making the Barents Sea a vital part of foreign policy priorities.

Foreign Minister Støre also said:

Our main challenge now is to see the High North not as an area with historic

security limitations but one with future economic opportunities. Technology

makes it possible to strike a balance between industrial activity and environ-

mental concerns.

This petroleum debate is a classic conflict between the interests of industry and

environmental groups. In the story line of ‘Drilling to help the environment’, one

finds statements arguing that it is critical to start the exploration as soon as possi-

ble, primarily to set an environmental standard that will help to maintain/conserve

the environment in the Arctic Ocean. Statements about the environment have

traditionally been used by stakeholders who are against drilling in the Arctic, but

now supporters of oil and gas activities in the Arctic use the same arguments and

are challenging the validity of their opponents’ claims.

Environmental concerns about the possibility of a Russian entrance

Together, the Russian and Norwegian authorities govern important fish resources

in the Barents Sea. The Russians have discovered some of the largest offshore gas

resources in the world in this common sea. Therefore, it is natural for the

Norwegian petroleum discourse to debate where environmental issues overlap with

the Russian petroleum industry, and the Foreign Minister is using concepts like

sustainable or reasonable development in this context. The Norwegian Foreign

Minister formulated the cautiousness required by the situation like this in Moscow:

Both our countries extend into the High North, and we are both responsible

for harvesting and managing its resources – fish and energy – in such a way

that they will benefit future generations. This is our common future.

One research report explained how the supporters of drilling in the Barents Sea

have taken the environmental rhetoric and turned it into an argument in favour of

oil exploration.

In this way, it could seem as though the environmental movement

has lost its own arguments in the battle over the Barents Sea. A representative

from the Ministry of Environment says:

It is a common understanding in the steering committee (of the Integrated

Management Plan) that absence of or no activity on the Norwegian part of

the Barents Sea would be unfavourable or negative seen from an environmen-

tal point of view.

Finnmark County officials share the same opinion: ‘It is important to have a close

cooperation between Russia and Norway. This, we think will be of benefit to the oil

and gas industry, but most of all the environment will benefit from this too’.

These

arguments are repeated often, and because they have never been directly challenged,

they are accepted as true. The Norwegian Pollution Control Authority is sceptical

about these arguments, which suggest that drilling will help the environment. They

say: ‘We have nothing to teach the Russians. The Russian have stricter regulations on

discharge than Norway. They demand absolutely zero discharge’.

The Social Left

Party opposes the direction of this debate and maintains:

The argument ‘Drilling to help the environment’ is nonsense. Stakeholders

that want to increase the activity in the North always bring this argument

forward. This is about Norwegian stakeholders trying to get positioned to the

Shtokman field.

Russia is the second largest petroleum producer in the world and, although

Russia has great experience, Russian petroleum production has mainly been

onshore. The resources in the Barents Sea are at the bottom of a rough, cold sea,

so petroleum activity in this kind of environment is relatively new to Russia. In

his Moscow speech, the Norwegian Foreign Minister said:

No one can match the Norwegian experience of petroleum production

in rough northern waters under extreme conditions. This is why it makes

such good sense for us to work together with Russian partners in the Barents

Sea. The combined experience and know-how of Norwegian and Russian

oil companies and authorities will create the best possible conditions

for efficient development of petroleum resources in these northern

waters.

The petroleum industry in the Norwegian Barents Sea must meet the highest

environmental and safety standards in the world. As the Norwegian Conservative

Party has said:

It is very important with respect to the environment that we participate

together with Russia. Through cooperation we can influence and introduce

technological solutions and set standards. The Russians are far behind us

when it become to handling such questions (co-existence between oil, envi-

ronment, indigenous people, etc). It is important that we set the international

standards for how the companies can carry out their activities.

Norway considers that it has something to offer and is prepared to transfer

their state-of-the-art knowledge and technology within all areas of offshore

exploration and production in Northern waters. This is probably also why two

Norwegian companies, Statoil and Hydro, were on Gazprom’s short list of possi-

ble foreign partners in the Shtokman field, ‘and later got access to as the merged

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230 Ove Heitmann Hansen and Mette Ravn Midtgard

company StatoilHydro’: They are willing to trade their offshore expertise and

technology with Russian partners with regard to access in the gas field.

Using more energy to help the developing countries

The Norwegian oil company, Hydro, claims that we have to find more oil and gas

and produce more energy to solve the energy crises and to help the poor countries

to develop.

However, both the Minister of the Environment and several NGOs,

like the WWF, claim that these assumptions are wrong and that it would be the

wrong method, either for helping the world’s poorest or for tackling pollution.

According to the secretary-general of the WWF, the argument about greater use

of oil and gas is a ‘recipe for how to go to hell by first class’.

The former

Petroleum and Energy Minister, Torhild Widvey, has said that Norway has a

global responsibility to provide the world with more energy, which will contribute

to increased wealth in the developing countries:

In the next 25 years the poorest countries will be next in line to want their

energy needs satisfied. With what justice can we say that once we have satis-

fied our energy requirements, then it is time to shut down, and not let other

countries take part in a similar wealth development.

The International Energy Agency (IEA) assumes that the world’s energy needs

will rise by 60 per cent until 2030. Eighty per cent of this increase will come from

petroleum. Today 20 per cent of the world’s populations live in the rich

Organisation for Economic Co-operation and Development (OECD) countries,

which use 50 per cent of the world’s energy resources. Torhild Widvey says that

it cannot continue like this and has further said:

The developing countries must get a larger proportion of the energy

resources, and Norway possesses a large part of the undiscovered natural

resources in the world. It is the Barents Sea and the Lofoten area, along with

the Middle East, that will be the future energy regions. We have to use our

competence to explore and produce the petroleum resources in an environ-

mentally friendly way. Therefore, an increased activity in the North will

contribute to a fairer world.

This statement is considered as irresponsible, disloyal and selfish, according to

Hallgeir Langeland, the Social Left Party’s spokesman on environmental issues.

Langeland underlines that climate change has to be considered when talking

about energy production and further petroleum activity in the North.

The world’s need for energy supply

The IEA is urging the Norwegian government to consider opening up currently

closed areas in the Lofoten area in Northern Norway for oil and gas exploration.

The issue of exploration activities in the Lofoten area, an important area for the

Norwegian fishing industry, is a contentious one in Norway. One viewpoint is that it

is ill-suited to the environmental agenda in Norway and the political framework of

the current coalition government, as formulated in the Soria Moria Declaration.

Claude Mandil, IEA Director, said in 2005 that the IEA’s view is that exploration

activities can live side by side with fishing activities: ‘We think it is absolutely

compatible to explore and produce oil and gas without harming the environment and

fisheries’

, Mandil stated, adding that the IEA is eager to ensure there is enough

exploration and production worldwide, as constraints have recently increased oil

prices and deliveries do not seem secure. From this, it appeared that the IEA was

asking the Norwegian government to consider opening up Lofoten (which in

practical terms means the Nordland VI block) for exploration activity.

The Norwegian Petroleum and Energy Minister, Odd Roger Enoksen, said that

there are three key words for the government in the context of policies for the

North: activity, presence and knowledge. The Norwegian Arctic is a strategic,

main interest for Norway. The Northern strategy is also part of an international

policy. The Energy Minister has also stated that Norway’s political goal is to be a

good and responsible actor or stakeholder in the North, which also means on the

international stage. International politics involves regulation, management of

values and exchange of viewpoints, which will all influence our national interests

and access to resources. Norway will discuss the Barents Sea not only with

Russia, but also with everyone who is affected. Talks have already been initiated

with France, Germany, the European Commission and Finland, and there will also

be talks with the US and Canada.

The global demand for oil and gas products will increase, even if the price of

crude oil doubles. China’s increasing oil consumption and the US’s inability to

stabilize their consumption are important driving forces behind this demand

(GEO Year Book, 2006).

As global energy demand increases, so does pressure to explore and develop

undiscovered energy resources that may reside in the Arctic. The lifting of an

embargo on offshore hydrocarbon exploration in the Norwegian Barents

Sea in 2004 has renewed activity there. Regulation of exploration is an

important political issue. Debate in 2005 focused on environmental

protection and establishing areas free of oil development. According to

the International Energy Agency (IEA), if existing energy policies continue,

the world’s energy needs will be almost 60 per cent higher in 2030 than in

2004. Arguably, this increase in demand could be met from present known

fossil fuel reserves.

(IEA, 2006a)

Oil and gas will probably continue to dominate the global energy mix for the

foreseeable future, unless alternatives to fossil fuels are found. Alternatively,

major changes in global energy patterns may be driven by concerns about energy

security, access and the negative impact of current patterns of energy

Going North 231

use – particularly on climate change and the health issues associated with air

pollution. Already, there is some action in this direction. Norway’s Minister of

Petroleum and Energy, Odd Roger Enoksen, has said that there are many joint

challenges needed to be identified and acted upon, the two most important

elements being security of energy supply, and the need to further increase sustain-

able and environmentally sound oil and gas activities. This will contribute to an

improvement of the political and public perception of the oil and gas sector. He

has also expressed a concern for establishing a sustainable energy agenda for the

North, as this region may prove to become a new petroleum province in Europe

and thus become important in ensuring the security of the petroleum supply.

The European Union (EU) and Russia have agreed to strengthen the links

between them. This is of major importance since Russia is the largest exporter of

gas to the EU. But several of the member states have reminded Norway, as the

second largest gas exporter to the EU, that it also plays an important role. One of

the points highlighted by the EU is that the development of the Barents Sea, on

both the Norwegian and Russian sides, is important for future energy supplies,

because there is an increasing dependence on imported energy in the EU.

Russia is the most important country for Norway to have a dialogue with on

opportunities and responsibilities in the North. However, as the government

recommended in 2007, Norway must also engage our European and American

partners in a close dialogue. This process has already started. The countries have

responded positively to the Norwegian invitation to participate in what Norway

calls ‘The High North dialogues’, most likely because they realize that energy

security gives new substance to the concept of geopolitics. An industrialized

country that is unable to secure stable energy deliveries is heading for big

trouble. On this matter, the Norwegian Foreign Minister, Jonas Gahr Støre, said:

Now it is the energy issue that is overshadowing other issues and changing

our perspective, not only here in Norway and in neighbouring Russia, but in

all countries that are concerned with energy production, supply security and

climate and environmental challenges.

It’s all contradictions – it’s about values

This chapter has shown the major discourses concerning petroleum development

activities in Northern Norway. Some stakeholders are more prominent and some

have more urgency than others. Urgency is connected to power, and money rules.

The economic considerations are an important part in the debates for regional

development and for the Sámi’s claims. The politicians in Northern Norway are

working hard to defend the region from just being a raw materials supplier. The

petroleum activity is known to include risk and, therefore, benefits are demanded.

But still the most active stakeholder in several of the discourses are the environ-

mental organizations, and what they lack in urgency they have in legitimacy; at

minimum, they have support among the technical elite and in the Southern part

of Norway.

232 Ove Heitmann Hansen and Mette Ravn Midtgard

The discourses are basically about people, values and the facts. But facts and

values cannot be separated, and there are several uncertainties, including about

ethics. At stake are, among other things, multiple values and a diversity of percep-

tions, including landscape value, cultural value, economic value, ecological

values and political legitimacy.

Regarding ecological values, is there any reason to believe that Norwegians

share a common perception in how they value different parts of the environment?

For instance, concerning visual pollution, do the locals define oil rigs on the hori-

zon as having a negative impact, or is it their concern for tourism that counts the

most? From earlier environmental conflicts, we know there are dividing lines

between urban and rural, between left- and right-wing political views, between

the educated and the less educated, and so on. To elaborate on that observation,

our research did not find one single instance of Northern Norwegian protests

based on ecological values. Their major concern is about the conditions for the

fishermen, whereas the numbers of Northern Norwegian fishermen and the

economic value are not of severe importance. The whole debate surrounding fish

is really a debate about cultural values.

Their identity, the feeling of being a Northerner, is strongly tied to being a

fisherman, yet today only 6 per cent of them are employed in the marine sector

in Finnmark. The numbers have fallen dramatically over the last 20 years,

and first reduced their urgency and then their legitimacy as an important

stakeholder. Therefore, their voice is not often heard, and the Fishermen’s

Association even tend to be positive. This needs further investigation, but

clearly the cultural transformation, based on the earlier economic transformation,

is now paving the way for the petroleum industry to open and explore the

High North.

Above or below these community transformation processes are the geopoliti-

cal realities. In the government’s Soria Moria Declaration,

the High North is

defined as the ‘most important strategic target area in the years to come’.

The

semantic change in how the region is referred to is mainly caused by the optimism

in the petroleum industry, but it is naive not to include the geopolitical dimen-

sions of this. The Norwegian Arctic is being called ‘a land of opportunity’, and

the government have started to use the High North as a synonym for the north-

ernmost part of Norway. The government has strongly entered the debate about

oil and gas activities in the Norwegian Arctic, and the Minister of Foreign Affairs,

Jonas Gahr Støre, has especially emphasized his department’s interest in the

province. He has tried to form a coalition across all the discourses brought

forwards in the Arctic oil and gas debate. In his speech at the EPC

Policy

Briefing in Brussels, he said:

The High North is not only the High North of Norway – and Russia. It is the

High North of Europe. Norway’s policy in this region – which covers fisheries,

the environment, transport, indigenous peoples – and, of course, energy – is at

the same time a key component of the Norwegian regional policy and

Norwegian European Policy.

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234 Ove Heitmann Hansen and Mette Ravn Midtgard

Oil and gas activity in the Norwegian Arctic is of great importance: It is about

energy, regional policy, the environment, employment and economic growth. In

the long term, it is about safety and sovereignty in an area where the world sees

renewable and non-renewable resources and opportunities. The Minister of

Foreign Affairs continued his speech in Brussels with these words:

Through cooperation with Russia, Norway is seeking a comprehensive and

coherent development of the Barents Sea as a petroleum province. ... It is

here that modern Norway is addressing the sustainable development of living

resources, including some of the world’s most precious fish stock and the

impact of climate change – as the polar ice melts. And it is here that we are

seeking to develop Europe’s youngest energy region side by side and in coop-

eration with our Russian neighbour.

The political landscape contains supporters, sceptics and opponents. Primarily

the more to the political right a group is, the more positive to oil and gas activity

they are. The social leftists and opponents against oil and gas activity are strongly

supported by the environmental organizations. These organizations all agree that

it is unsafe to open up the Lofoten area (Nordland VI/VII), and they are also scep-

tical of further development of the Barents Sea. They are especially against oil

and gas activity in the North Barents Sea. Politicians from Northern Norway

support further petroleum development, which they believe will lead to more

employment and industrial modernization.

The inhabitants of Northern Norway are mostly positive about increased oil and

gas activity, a view that also criss-crosses the political parties. Local people,

communities and municipalities in the Northern areas support increased oil

and gas activity, but at the same time, they speak for the value of the fisheries. This

means we have discourse coalitions that shift depending on the stories. Research

and education are important factors for all the stakeholders. If the oil companies

are to succeed, they must have a qualified labour force and adequate solutions for

development under harsh conditions. The challenges in the Arctic need new meth-

ods for carrying out that development. The oil and gas branch is, of course, an

important participant in the debate, and there is a constant demand by companies

for larger fields for exploration. The Sámi people have not been a prominent stake-

holder so far, but lately they have made statements about their indigenous rights.

As the indigenous people in Northern Norway, the Sámi have gained increased

power and legitimacy over the land during the last ten years. They have politi-

cians, and after the Snøhvit project was accepted, they realized how influenced

they were by petroleum development. Any type of increased business develop-

ment causes harm to a grassland that already is too small. They are learning step

by step; for instance, the Canadian agreements are often mentioned as an exam-

ple for them to follow, and they are raising their voices. The Finnmark Act was

implemented in 2006, and a detailed statement concerning the Sea Sámi’s civil

rights is expected. In an international setting, they have a high degree of

legitimacy, but still their urgency is limited.

The Norwegian Petroleum Directorate (2007) presented their scenarios for petro-

leum development through to 2046. Their presentation forecast four different

scenarios for developing Norwegian petroleum activity. The scenarios

range from big discoveries and activities in all sectors of the NCS, to ‘Sorry,

we’re closed’. The NPD’s basic concept is that all relevant areas, except the

area of overlapping claims, Jan Mayen and Antarctica, will be open for

exploration and production. The four-development path goes from A to D. A

(full gAs) assumes low oil and gas prices, but the whole NCS will be open

and large discoveries will be made. B (TechnolaB) has lasting high prices, the whole

NCS is open, and we will find more oil and gas. C (‘Sorry, we’re closed’) has high

prices, but the exploration result is so bad that the activity is closed.

The last one is D (BlooD, sweat and tears) has high prices, but too few discoveries,

and part of the NCS must be closed down owing to environmentalists’ demands.

The presentation of these scenarios has heated the debate among stake-

holders in the Norwegian discourses. In the news it was said that ‘Norway is

exhausting the oil and gas resources and coming generations will curse the

greed of our generation’.

The environmental organizations claim that we

must pay more attention to the climate. They say that we all know that production

will decline. The question is: how we can prepare for it? The environmentalists

say that the best thing for Norway and the climate is to prepare for phasing out

of the oil and gas activity, and not grant new licences for exploration areas. If

no new discoveries are made in the Norwegian or Barents Seas, and Norway

wants to maintain its income from the oil and gas activity, there is no doubt

that it must open up areas around Lofoten for exploration. NPD believes that,

without new discoveries, production will drop by 60 per cent over the next

20 years. A sudden drop in income will be unacceptable for the majority of

the Norwegian people; therefore, the government will be forced to change the

Integrated Management Plan in 2010 and open up the temporary closed areas.

But to do so, the government also need to satisfy climate targets and invest in

new and improved clean technology. One way to keep production high and

improve the recovery rates is to invest in new technology in existing fields.

The Norwegian Oil Industry Association has estimated that the potential from

implementing intelligent oilfields or integrated operations is 250 billion

NOK. The use of new technology and changes in organization will give the oil

companies opportunities to make better, faster and more accurate decisions.

But this development will also mean that it is possible to control both existing

and future oil and gas fields remotely, which means that this may not

generate many local jobs, or have large spillover effects and benefits to the

local inhabitants.

According to the IEA, global energy demands will increase by 53 per cent by

2030. All EU countries, including Great Britain, are today net importers of oil and

gas. The EU is importing more than 50 per cent of its present energy needs, a

figure that is estimated to increase to 70 per cent by 2030. And like other regions,

this increase is mainly due to a steadily rising need to import oil and gas.

Norway has been exporting most of its oil and almost all of its gas to Europe since

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