Good idea for Canada? Norway's oil and gas revenues have provided Norwegians with $550 billion pension fund

Norway's oil and gas industry revenues have provided the country with a $550 billion pension fund. Why isn't Canada following their lead?

In Norway, oil strategy is carefully planned by people like Petroleum and Energy minister Ola Borton Moe | Photo by Berti Roald/MPE

With a world-class pension fund delivered by oil and gas revenues, Norway has mastered the balance between its oil and gas industry and its national interests. Now as debates heat up over Canada's oil sands and its economy, critics are calling on Harper's Tory government to learn from Norway's success story.

Norway's oil boom and smart energy strategy

Norway's oil and gas boom started in the late 1960s when exploration revealed huge offshore oil and gas deposits in the continental shelf. Since then, the nation has become known around the world for its bold energy strategy and policies—including high taxation rates for oil companies and permits that regulate the volume of extraction.

Through the State’s Direct Financial Interest (SDFI) arrangement, the Norwegian State participates directly in the petroleum sector as an investor, and reaps all the associated rewards. According to the Ministry of Petroleum and Energy website, “the net cash flow resulting from the SDFI portfolio constitutes a predictable, long term and secure revenue to the Norwegian State.”

With a population of just five million, the small Scandinavian country is now the second largest gas exporter and the seventh largest oil exporter globally. The government owns significant stakes in the international oil giant, Statoil, in addition to the state-owned company Petoro. Most importantly, the revenues generated by state involvement in oil and gas have allowed the country to not only eliminate its debt but also to create an impressive $550 billion government pension fund—one of the biggest in the world.

During a lecture last November at the University of Ottawa, Norwegian Minister of Petroleum and Energy Ola Borten Moe told Canadians how this arrangement has created a reputable balance between resource development, the national economy and the environment.

“The right to any subsea deposit of oil and gas is vested in the state. This is crucial when you want to manage the resources to the benefit of the people,” said Borten Moe. 

“We had the resources under the seabed. The companies contributed with their skills and knowledge, both to discover fields and produce them. At the same time, they were obliged to help us build national experience.”

While they invited the international oil industry to take the lead in development, the Ministry says the state has maintained a healthy relationship with industry stakeholders: the oil companies are seen as “helpers” in harnessing the country’s natural resources, but ultimately, the oil belongs to the nation and to citizens.

Despite 40 years of intensive production, the country has still got about 60 per cent of their resources left. And separating resource revenues from the rest of the economy has also helped Norway avoid the so-called “Dutch Disease”, said to occur when an oil-based economy raises the currency and displaces a crucial manufacturing sector.

 

Oil and gas resource management, done right

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Comments

Well done!

This is one of the best analyses out there on what a responsible model for resource development could look like in Canada. Thank you for breaking it down in a language that conservative folks can understand—dollars and cents. It's not that "lefties" don't want any development at all, it's just that there is a smarter way to do it. And rather than emulating successful models such as Norway's, we're following down the paths of Saudi Arabia and Iran. We're hollowing out our economy by putting all our eggs in one basket, all so a few fat cats can grow their big pile of money. And in the end, what are we left with? A dysfunctional petro-state with a lot of enemies.

NEP

P Trudeau wanted to start a similiar process called the NEP but was shot down. Alberta let American Corporations and influence cloud their selfish judgements amd now most of the money leaves Alberta and Canada, filling the pockets of the 1%. Way to go Alberta you got hosed by the thought of making 10 cents per $50 per barrel of oil vs $10 per barrel. Then again look what you sent to Ottawa as leader of Canada. The same party that robbed you will know continue to sell us out to the lowest bidder. Thanks again Alberta your a fine example of what not to emulate as a standard for the rest of us.

The Norway example of ensuring the future of the nation and its citizens is totally what needs to happen here in Canada.  It is precisely what Premier Lougheed set up in Alberta.  It is what Prime Minister Trudeau tried to make happen with the National Energy Program.  The thought of the NEP still makes many Albertans spitting mad.  B.C.'s Premier has said B.C.'s mountains and coastline belong to all of Canada.  Is it not then obvious that so do Canada's natural resources belong to all of Canada?  Of course Canadians should all benefit if these global warming, land and water destroying resources are "developed".  Never happen with oil crazed politicians from Alberta and their ideological colleagues in charge.    

Re NEP

Nep shot down in the eighties ? Are you serious ? Remember my mother locking in her mortgage at 13 % and that was a deal !! NEVER AGAIN !!! Oh, and we are talking about a country people, Alberta isnt a country last time I checked, it's a province. And furthermore, if we didnt have to pay out equalization payments to the rest of the country, maybe the fund would be a little bigger ???? Nice try though.

 

Why isn't Canada following their lead?

"Why isn't Canada following their lead?" You have to ask? The conservatives starting with Diefenbaker(Shut down the Arrow jet program in 1959 under American pressure) Molroney continued giving Canadas soverienty away by signing NAFTA with the Americans. Now Harper continues to give our resources away for next to nothing pushing for the Keystone Pipeline to Houston so the Americans can refine the oil and sell it on the open market, something we could do. Push to have the Enridge Northern Gateway pipeline to the westcoast,so other countries can refine our oil. While we take the risk of polution in BC. Now to help push the pipeline Harper is watering down the fisheries act, very convienient. Once he rams all of the rest of the worlds agendas, as a member of the The Bilderberg Group, look that one up. See what plum job he gets as his payback for selling Canada out when he gets turfed out. Same as Ex Premier Cambell from BC for pushing the HST through which nobody wanted and having to resign. He also belonged to the The Bilderberg Group and lo and behold Harper as a member of The Bilderberg Group, gives Cambell a plum job  as  "High" Commissioner to England. Now Harper sends "in Ken Boessenkool as Ms. Clark’s Chief of Staff? Mr. Boessenkool – besides having been a senior adviser to Stephen Harper - was also, like Harper (as prime minister), a lobbyist for Enbridge, proposer of the Gateway pipeline." I could go on, but can other put the dots together yet.

 

Why isn't Canada foiiowing the lead.

Blair Gott wrote:

Nep shot down in the eighties ? Are you serious ? Remember my mother locking in her mortgage at 13 % and that was a deal !! NEVER AGAIN !!! Oh, and we are talking about a country people, Alberta isnt a country last time I checked, it's a province. And furthermore, if we didnt have to pay out equalization payments to the rest of the country, maybe the fund would be a little bigger ???? Nice try though.

 

"Why isn't Canada following their lead?" You have to ask? The conservatives starting with Diefenbaker(Shut down the Arrow jet program in 1959 under American pressure) Molroney continued giving Canadas soverienty away by signing NAFTA with the Americans. Now Harper continues to give our resources away for next to nothing pushing for the Keystone Pipeline to Houston so the Americans can refine the oil and sell it on the open market, something we could do. Push to have the Enridge Northern Gateway pipeline to the westcoast,so other countries can refine our oil. While we take the risk of polution in BC. Now to help push the pipeline Harper is watering down the fisheries act, very convienient. Once he rams all of the rest of the worlds agendas, as a member of the The Bilderberg Group, look that one up. See what plum job he gets as his payback for selling Canada out when he gets turfed out. Same as Ex Premier Cambell from BC for pushing the HST through which nobody wanted and having to resign. He also belonged to the The Bilderberg Group and lo and behold Harper as a member of The Bilderberg Group, gives Cambell a plum job  as  "High" Commissioner to England. Now Harper sends "in Ken Boessenkool as Ms. Clark’s Chief of Staff? Mr. Boessenkool – besides having been a senior adviser to Stephen Harper - was also, like Harper (as prime minister), a lobbyist for Enbridge, proposer of the Gateway pipeline." I could go on, but  other can put the dots together .