In a letter to the Ministry of Foreign Affairs of February 1958 Norges Geologiske Undersøkelse wrote: "The possibility of carbon, oil or sulfur appearing on the continental shelf along the Norwegian coast can be ignored."

An event that opened people's eyes to the possibility of hydrocarbons in the North Sea was the discovery of Dutch gas in Groningen in 1959. The discovery sparked enthusiasm in a part of the world where energy consumption was largely based on coal and imported crude oil. Wanting to find more, the focus was on the North Sea. Norwegian geological surveys were negative for oil and gas, but that could not hold back enthusiasm following the discovery of gas in the Netherlands.

The offer was $ 160 per month

In October 1962, Phillips Petroleum sent a letter to the Norwegian authorities seeking permission to explore the North Sea. The company wanted to obtain a license for those parts of the North Sea that lay within the territory Norway and which will probably fall under Norwegian shelf. The offer was $160 per month. The offer was perceived as an attempt to obtain exclusive rights. The authorities could not leave the entire shelf to the company. If the land were to be opened to exploration, more companies would have to enter.

In May 1963, the Gerhardsen government declared Norway sovereignty over the Norwegian continental shelf. The new law stated that the land was owned by the state and only the king (government) could issue exploration and production permits. In the same year, the companies had the opportunity to conduct preparatory tests. Permits were given, among others, by right for seismic surveys, but not for drilling.

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The division of the continental shelf with Denmark and Great Britain

Although Norway has declared sovereignty over large sea areas, issues regarding the division of the continental shelf remain important to be clarified. These issues of agreement were mainly dealt with with Denmark and the United Kingdom. An agreement on the division of the continental shelf according to the center-line principle was concluded in March 1965. The first licensing round was announced on April 13, 1965. 22 production licenses for 78 blocks were awarded to oil companies or groups. Production concessions gave the exclusive right to explore, drill and produce in the concession area. The first exploration well was drilled in the summer of 1966, but proved to be dry. The first discovery of crude oil on the Norwegian shelf was Balder in 1967. However, this discovery was not sufficiently profitable at the time, and it took more than 30 years for the discovery to be developed.

On Christmas Eve 1969, the Norwegian authorities were informed about the discovery of Ekofiska

The Norwegian oil adventure began in earnest with the discovery of Ekofisk in 1969. On Christmas Eve 1969, Phillips informed the Norwegian authorities of the discovery of Ekofisk - one of the largest oil fields ever found at sea. Field production began on June 15, 1971. Many important discoveries were made in the following years.

In the 70s, exploration activities focused on the areas south of Stadt (62 degrees north). Production from the Norwegian continental shelf has been dominated by large deposits such as Ekofisk, Statfjord, Oseberg, Gullfaks and Troll. These fields were and still are very important for the development of the oil business in Norway.

In connection with the development, an infrastructure was created to which several fields were successfully connected. Production from several of these fields is declining and more new, smaller fields have been added. Therefore, today's production is spread over more fields than before.

Production in the Norwegian Sea began in 1993

In 1979, oil operations also began north of the 62nd parallel. Exploration activities in parts of the Norwegian Sea and the Barents Sea began in the early 80s and were later expanded as new sea areas were opened to oil activities. Production in the Norwegian Sea began in 1993, and in the Barents Sea in 2007.

The rule of 50% state participation has been established

In the start-up phase, the exploration activity was dominated by foreign companies, which were responsible for the development of the first oil and gas fields. Norway's involvement grew gradually with the addition of Norsk Hydro. Saga Petroleum, a private Norwegian company founded in 1972, did the same. In the same year, Statoil was also founded with the state as the sole owner. At that time, the rule of 50% state participation in each production concession was also established.

On January 1, 1985, the oil industry was reorganized. The state's participation was divided into two. The first is related to the company and the second is related to the direct financial involvement of the state in oil activities (SDØE). SDØE is a program in which the state holds shares in many oil and gas fields, pipelines and onshore facilities. The share is determined when you allocate production licenses, and the size of this share varies by field. As one of the few owners, the state covers its share of investments and costs, and receives a corresponding share of the income from production concessions. Statoil took care of the business aspects of SDØE on behalf of the state.

Sale of SDØE shares

In spring 2001, the Storting decided it could sell 21,5% of the value of SDØE shares. 15 percent was sold to Statoil and 6,5 percent to other licensees. The sale of SDØE shares to Statoil was seen as an important part of the successful IPO and privatization of the company. Statoil was listed on the stock exchange in June of the same year and is now operating on an equal footing with every other player on the NCS. The joint stock company Petoro was formed in May 2001, primarily to deal with SDØE on behalf of the state. In 2007, Statoil merged with the oil and gas business of Norsk Hydro. In 2018, Statoil changed its name to Equinor.

Due to good resource management, large international companies established in Norway were supplemented with other types of companies. They noticed other business opportunities in Norwegian oil deposits. Currently, there is great diversity on the Norwegian shelf and competition with Norwegian and foreign companies active on the shelf.

The oil industry has a lot to say about Norway's economic growth and the financing of the Norwegian welfare society. Undoubtedly, little was known about the importance of this industry for Norway when the first production licenses were granted. A clear picture of this is the expansion of the oil sector's contribution to value creation, investment, exports and revenues in Norway.

Activity on the NCS will continue to be of great importance to the Norwegian economy. This is all thanks to the large remaining resources and new significant development projects.

This is the story of Norwegian oil in 5 minutes.

It should be added that Polskie Górnictwo Naftowe i Gazownictwo (PGNiG) in Norway has interests in 62 concessions on the Norwegian Continental Shelf.

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Source: Ministry of Petroleum and Energy

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