Polemic on Ireland’s oil delivers little despite a lot of boring
Book indulges its writers too much, and requires the reader to plough through a wealth of unrelated and obscure, and very boring, material
An oil rig operating in Barryroe, 50km from Co Cork. While 1,200 wells have been drilled in Norway, the figure for Ireland is 156. Photograph: PA
Own Our Oil, the Fight for Irish Economic Freedom.
Edited by Eddie Hobbs
Norway is the poster child for countries that have successfully managed the discovery of substantial oil reserves, and it is used in this book, and no doubt around the globe, as inspiration for what should be done in other jurisdictions.
Oil was discovered in Norwegian waters in 1969. Not only were the Norwegians lucky that substantial reserves existed, but the timing of the discovery was propitious given developments in the global oil market and other factors. Also, earlier in the 1960s, the Norwegians had given serious consideration to how they would entice foreign exploration companies to come to search for oil in their territorial waters, and to what their objectives should be if oil were discovered. They were prepared.
The key challenge was to get the right balance between incentivising the oil companies to come and drill wells in the first place, and ensuring that, if oil was found, the opportunity to get fair value from a national resource had not been given away.
Norway’s strategy involved very generous terms for the oil companies at the outset but, once oil had been discovered, the demands of the Norwegian authorities were increased. In an edited essay in this book, economic historian Helge Ryggvik says the key messages from the Norwegian experience are that not too much should be given away early in the process, time should be taken to set up a strong legal framework, and that that framework should be flexible enough to ensure the State can tighten the rules if the conditions change.
The Norwegians, as their oil finds developed, ensured that the oil was brought ashore (as against being piped direct from the wells to foreign markets), that a native oil industry developed, and that a large proportion of the profits from the oil went to the State. It also established Statoil, which gave the Norwegians clout in their dealings with multinational oil companies, and which has itself since gone on to become a multinational oil company (it has an interest in the Corrib gas development).
The objective of the whole exercise, as set out by the Norwegian government, was to secure the greatest possible share of the gains from oil for the State, which would distribute these in an egalitarian way across Norwegian society. It also was decided that the environment would be protected.
The Norwegians put aside a lot of the income from their oil and now have the world’s largest – and most transparent – sovereign wealth fund (worth more than $830 billion). Incidentally, Knut N Kjaer, a former chief executive of the massive Norwegian fund, is a member of the board, or commission, that oversees our own wealth fund, the now much-depleted National Pension Reserve Fund.