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Oil in a Week – Norway's Model in Government Cooperation with Oil Companies
Published in AL HAYAT on 18 - 07 - 2010

The Norwegian petroleum model is characterized by a most fundamental feature: the constructive cooperation between the government and the national or international oil companies, thanks to conditions that are fair to both sides, in addition to the optimal exploitation of the companies' experience in developing a leading local industry, and the establishment of local service companies that support the oil sector.
Mr. Farouk al-Qassim, who is an Iraqi-Norwegian, participated in the development of the Norwegian oil industry since its beginnings in the sixties. In December 1990, the Norwegian Petroleum Directorate organized a ceremony honoring his retirement from his post as the Director-General of the Department of Petroleum Resources, which he occupied over two decades.
Al-Qassim wrote a book in Arabic entitled “Managing Petroleum Resources: The ‘Norwegian Model' in a Broad Perspective”, which was published as part of ‘Alam al-Ma'rifa [The World of Knowledge] series in Kuwait in March 2010. The book was translated from the English edition published by the Oxford Institute for Energy Studies.
In 1991, al-Qassim began working from the city of Stavanger, the Petroleum capital of Norway, as a consultant for several countries in Africa and Asia, including some Arab countries (such as Lebanon), as part of the delegations of specialists sent by the Norwegian government to assist these countries in exploring and managing their petroleum resources.
Al-Qassim studied geology at the Imperial College in London, and worked in the Basra Oil Company. For family reasons, he and his wife were forced to emigrate from Iraq to Norway, to seek treatment and care for their son.
The book likens the Norwegian petroleum model, in terms of the cooperation with national and international companies, to a car being steered by a foreigner in the beginning, while the car's owner is sitting in the backseat. After a while, the car's owner moves forward, and sits next to the foreign driver. Finally, the car's owner takes control through his national company, in cooperation with the foreign driver when the need arises.
Of course, most oil-producing countries have gone through this experience. But what distinguishes the book is its accurate portrayal of the know-how acquired by Norway from this oil experience, and how this knowledge was exploited in improving its interests and developing its management of the industry.
The book showcases the separation of roles and responsibilities among the Ministry of Petroleum, which is the regulatory body that also drafts policies, the Department of Petroleum Resources, which oversees the implementation of technical policy and the operations of companies, and the Sovereign Fund which manages oil revenues for future generations.
Al-Qassim summarizes his views and findings, after more than three decades of experience, and mentions the external and internal pressures experienced by oil-producing countries. Regarding external pressures, he says: it is clear that oil occupies a very important strategic position, especially in terms of the relations among major countries. Since petroleum is important for a given country's ability to beat its competitors, all countries, especially major ones, seek to use their political, diplomatic, commercial and even military influence to guarantee their control over the oil resources vital to them. Many claim that oil today has become the secret to explaining the conduct of major countries in the rivalry over geopolitical hotspots. In this regard, we must highlight some major shifts we have witnessed on the international scene, particularly the collapse of the Soviet Union and Russia's transformation into an oil-exporting country, in addition to the spread of globalization. Also, many claim that the aim of the U.S occupation of Iraq was the attempt to control its massive oil resources, and at the same time, to deter or at least weaken further trends for sovereignty among oil-exporting countries. [End]
Regarding the internal pressures faced by oil-producing countries, al-Qassim says: many countries also experience internal pressures. Basically, the majority of countries aspire to make oil discoveries in their territories as a way to liberate themselves from the heavy burdens of importing oil, which ravages their economies. For these countries, oil is a way out of poverty and a precious catalyst for the development of industry, know-how and growth in the future. However, the disaster that afflicts the majority of countries in the early stages of these aspirations lies in their haste to enter in agreements with oil companies before they lay the groundwork for their own sovereign control of oil operations, and subsequently, in the impact of these operations on the national economy and social development. Through such haste, these countries come under pressure at home from various groups and political parties, either for self-interests or for a variety of dubious factors, in such a manner that it becomes difficult for the country to arrive at well-thought guidelines, agreed upon by the majority, regarding the oil policy in the country. If we add to that the presence of certain companies that benefit from hasty licensing agreements, we become able to understand the unfortunate fate of the majority of the countries that entered the oil industry for the first time in the twentieth century. [End]
*. Mr. Khadduri is an energy expert


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