Rethinking Responsibility and Governance in Resource Extraction

Owen Logan and John-Andrew McNeish

In December 2009 Farouk al-Kasim was invited to give a seminar in Bergen. As a result of life's vicissitudes, al-Kasim, an Iraqi petroleum geologist, had settled in Norway in 1968. He found employment first as consultant for the Ministry of Industry and then in the early 1970s helped create the Norwegian Petroleum Directorate (NPC), becoming its director of resource management. The NPC is often credited in policy circles as the key example of effective management of state and corporate interests in the petroleum business. As a result 'the Norwegian model' has become a byword for avoiding the negative effects of large-scale oil and gas production on a nation's domestic markets and social fabric – an impact controversially captured in the hypothesis of 'the resource curse'. Al-Kasim's role in assisting the formation of Norway's regulatory framework did not receive much attention until August 2009, when the London Financial Times published a profile article under the headline, 'The Iraqi who saved Norway from oil'.

Al-Kasim's role in Norway's adaptation of the oil economy was of great interest to the audience at his seminar in Bergen. However, his experience and propositions about transparency and good governance did not go entirely unchallenged. Surely, it was asked by members of the audience, Norway's success story was not due to the influence of a single enlightened technocrat, and was Norway's governance of the petroleum economy really as transparent as al-Kasim implied? In answering these points al-Kasim humbly conceded that the development of NPC policy had always been conditioned by the possible reaction of the Norwegian Confederation of Trade Unions.

The Scandinavian labour movement has a rich ideological history and retains considerable strength in Norway, something not mentioned in the Financial Times profile, which alluded to the national character of Norwegians, not their differences. When the radical complexity of civil society is acknowledged – and there does tend to be a great degree of historical forgetfulness about labour militancy in Scandinavia – the same factor also calls into question technocratic thought on transparency and good governance. While such virtues may be planned for, and drafted as rules and codes of conduct, a genuinely empowered labour movement is won, not managed into historical existence. Moreover, the forces arrayed against labour power can hardly be made transparent, at least in any technocratic sense, since the struggle for social justice is never conducted on a level playing field.

It is only quite recently that an adequate picture of Norway's oil economy has come to light. New film documentaries, books and media articles in Norway have re-examined the past, in an effort to answer the question why in the space of 100 years Norway has gone from being one of the poorest to one of the richest countries in the world per capita. A key voice amongst these revisions has been the historical sociologist Helge Ryggvik, who has forcefully argued that 'there is no single Norwegian oil experience'. In concluding the English synopsis of earlier work, Ryggvik states that if there is a central lesson to be drawn from Norway, 'it must be the presence and significance of conflict between oil actors and society, and the importance of society's determination to secure its own power and position vis-à-vis the big companies'.

As Ryggvik explains, the dominant social-democratic attitude in Norwegian State policy was informed by an earlier contest over hydropower concessions, in which the state had managed to gain both control and technological know-how. The domination of the oil business by archetypal global corporations, the need to develop an off-shore industry and the fact that oil was a finite resource had all presented far greater challenges to the formation of a national oil company and the pursuance of social democratic policy. Arguably, the most profound manifestation of the public interest was, however, the political commitment (formed in the face of contrary market pressures in the 1970s) to a moderate pace of extraction. Not only did the adoption of this model of sustainability prolong the life of the oil fields and increase the total recoverable reserves, it has also allowed the domestic political and state actors to gain the necessary experience and knowledge before production peaks. Indeed without this sense of socio-economic timing, any commitment to defending 'the people's property' might well have missed the mark.

Yet, overall, the rate of production in Norway has not been especially moderate. From the 1980s neoliberal free-market policies put pressures on the social-democratic strategies at a number of levels. The emergence of a neo-corporate power elite, seen too in other oil-producing nations, added to the challenge of neoliberalism at global scale. In the Norwegian case this meant that Statoil quickly became regarded as a state within a state. Moreover, the tensions that have existed between private, state and public interests throughout the last 30 years tell us that the technocratic role of NPC, as a body overseeing the Norwegian public interest, was more complex, and certainly less glorious, than would appear from the above-mentioned Financial Times profile. The NPC has gone through significant internal crises and break-ups, which reflect the...