Commerce and Politics. Statoil and Equinor 1972–2001 by Universitetsforlaget

Equinor was established in 1972 as Den norske stats oljeselskap a.s., and quickly became known as Statoil. The company was founded as a wholly state-owned operative oil company – a means of achieving political goals. In the years leading up to its partial privatisation in 2001, the company was carried forward, shaped and defined by its role as an instrument of the state. Statoil’s development was influenced by the objectives the state set for the company: Statoil would both spearhead and facilitate a new, Norwegian oil-based industry, while simultaneously safeguarding the state’s commercial interests within the oil industry. These were objectives that would come to pull in different directions in encounters with market changes, technology and politics. Out of tensions and conflicts, a new understanding of the company’s objectives and its role as a state instrument would take shape.

Commerce and Politics. Statoil and Equinor 1972–2001 tells the story of the establishment and development of the most important company in Norway. Eivind Thomassen (b. 1986) is Associate Professor of History at the University of South-Eastern Norway. He has researched several topics within Norwegian economic and political history in the twentieth century.

Commerce and politics

Eivind Thomassen

Statoil and Equinor 1972–2001

ISBN 978-82-15-06228-0

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Commerce and Politics

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Commerce and Politics

Eivind Thomassen

Statoil and Equinor 1972–2001

Universitetsforlaget 12194 BD1 Statoil_Equinor Content 23.indd 3

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© Universitetsforlaget 2022 English translation copyright © Alison McCullough 2022 ISBN 978-82-15-06228-0 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise, without the prior permission of Universitetsforlaget. Enquiries should be sent to the Rights Department, Universitetsforlaget, Oslo, at the address below. www.universitetsforlaget.no Universitetsforlaget AS P.O. Box 508 Sentrum NO-0105 Oslo Norway Design: Modest [Rune Døli] Photo Editor: Tone Svinningen Typeset: Lyon Text 10/15,117 pt Paper: 120 g Munken Pure Binding: Bokbinderiet Johnsen Printed in Norway by 07 Media – www.07.no Cover, front: Øyvind Hagen/Equinor Cover, back: unknown/Equinor Arbeiderbevegelsens arkiv og bibliotek: p. 20/21, 70 and 112 unknown; p. 196 Arne Ove Bergo Equinor: p. 58/59 and 116/117 unknown; p. 118 Leif Berge; p. 129 unknown; p. 132, 149, 154/155, 160 and 162 Leif Berge; p. 168 unknown; p. 173 Leif Berge; p. 176 unknown; p. 179 Leif Berge; p. 181 unknown; p. 185 Øyvind Hagen; p. 188 Leif Berge; p. 192/193, 200/201, 204 and 206 unknown; p. 208 and 213 Leif Berge; p. 215 Øyvind Hagen; p. 219, 222, 226, 230 and 245 unknown;

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p. 249 Leif Berge; p. 254 unknown; p. 260/261 Øyvind Hagen; p. 277 Leif Berge; p. 278 Øyvind Hagen;p. 282 Leif Berge; p. 285 Tor Erik Stranna; p. 289 Leif Berge; p. 292 Bjørn Vidar Lerøen; p. 295 Øyvind Hagen; p. 300 (Ruhrgas; p. 302 Dag Magne Søyland; p. 307 and 308 Øyvind Hagen; p. 312/313 Leif Berge; p. 321 Øyvind Hagen; p. 336 unknown; p. 341 Øyvind Hagen; p. 346 Titus E. Czerski; p. 353 Øyvind Hagen; p. 367 Heine Schølberg; p. 370 Svein Harald Ledaal; p. 374/375 Øyvind Hagen Groven, Rolf: p. 29 Oljeferden i Hardanger, 1975 © Rolf Groven/BONO, Oslo 2022. Photo: O. Væring Eftf. AS Grødum, Inge: p. 26 Lervåg, Atle: p. 98 Norsk Industriarbeidermuseum: p. 63 and 65 Herøya Industripark Norsk Oljemuseum: p. 51 Henry Munkejord; p. 326 Olav Indreberg; p. 329 Equinor Norsk Teknisk Museum: p. 34/35 Knudsens fotosenter/ DEXTRA Photo NTB: p. 10 unknown; p. 13 and 16 Ivar Aaserud/ Aktuell; p. 38 Sverre A. Børretzen/Aktuell; p. 42/43 and 49 unknown; p. 53 and 56 Jan Dahl; p. 69 unknown: p. 74 Terje Gustavsen/Aftenposten; p. 92/93 Sverre A. Børretzen/Aktuell; p. 104/105 Svein Kløvig/Aktuell; p. 107 unknown; p. 122 and 127 Rolf M. Aagaard/Aftenposten; p. 135 Erik Berglund/ Aftenposten; p. 138/139 Erik Thorberg; p. 142 Henrik Laurvik; p. 217 Finn Erik Strømberg/Aftenposten; p. 233 Per Richard Løchen; p. 238 Erik Thorberg; p. 241 Dag Bæverfjord/VG; p. 258 Eystein Hansen; p. 263 Knut S. Vindfallet; p. 267 Ingar Storfjell; p. 268 Bjørn Sigurdsøn; p. 315 unknown; p. 331 Berit Roald; p. 344 Morten Holm; p. 350 Cornelius Poppe; p. 357 Morten Holm Resser, Tor: p. 144/145 Statsarkivet, Stavanger: p. 86; p. 107 unknown Stavanger Aftenblad: p. 79, 88 and 110 unknown; p. 318 Pål S. Vindfallet Stavanger Byarkiv: p. 83 Rogalands Avis; p. 360/361 Kim A. Aksnes/Rogalands Avis

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Contents 6

Preface Chapter 1

Introduction Chapter 2

The dream of an oil-based industry Chapter 3

Ambition and confrontation Chapter 4

119

The great Norwegianisation Chapter 5

163

The dream becomes reality Chapter 6

209

Statoil takes shape Chapter 7

255

The next great leap Chapter 8

303

Into the technological frontier Chapter 9

347

Conclusion

377 378 382 403

Appendix Bibliography Endnotes Index

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Preface This book is the first in a two-volume work about Equinor’s history, and covers the period 1972–2022. Volume 2 is written by Marten Boon and discusses the period 2001–22. The work is a product of the research project “Equinor’s history 1972–2022”, which was begun in 2016. The project was initiated by Equinor but has been jointly financed by the company and the Department of Archaeology, Conservation and History (DACH) at the University of Oslo. The project has been led and undertaken within the department under the leadership of Einar Lie. I was employed by the department in 2017–22. In addition to this two-volume work, the project has resulted in a number of research contributions, articles, contributions to anthologies, and master’s theses – many of which serve as the foundations for this book. This volume builds upon the PhD thesis “The crude means to mastery: Norwegian national oil company Statoil/Equinor and the Norwegian state, 1972–2001”, which I wrote as a research fellow linked to the project in 2017– 20. The themes and general outline are for the most part the same, with some adjustments. The book has been supplemented with certain themes that were not covered by the thesis, mainly those linked to labour relations and technological developments. In some areas, the interpretation has been somewhat further developed. A number of historiographical and theoretical discussions have been simplified or omitted – those who are interested in reading further will find them in the PhD thesis. A great number of people have helped to make this book possible. I would like to thank my esteemed colleagues at the Department of Archaeology, Conservation and History and the doctoral programme, which has provided a stimulating working environment. Special thanks is due to all those who have contributed to the “Equinor’s history” project as participants. In 2017–20, the project provided the most important framework for my work on my PhD thesis. All those who participated in the project meetings have in various ways helped to make the work enjoyable and meaningful. A list of all the individuals I have had the pleasure of meeting through department and project-related events is unfortunately too long to reproduce here. I would, however, like to mention a few people by name. Jonas Fossli 6

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Gjersø and Ada Nissen, along with project manager Einar Lie, have been my closest colleagues, and made important and weighty contributions to my professional development and well-being. Marten Boon has been far away in geographic terms, but with his advice and input has also been a great help and a pleasure to work with. Dag Harald Claes, Petter Nore, Espen Storli and Mats Ingulstad have provided important feedback by reading and commenting on the work at various stages. Thanks to Hans-Aasmund Frisak and Anne Aae from Equinor for all their hard work in facilitating the project and my involvement in it, in addition to providing tips and input in connection with project meetings. I would especially like to thank the students who have participated in the project. Through the writing of their assignments, the master’s students have made a number of important contributions to my own knowledge. In particular, I would like to mention Wallied Færevik Aarab, Andreas Brandt, Ingunn Elvekrok, Mauricio Nicolas Villaroel Flores, Synnøve Gimse, Vilde Sletbakken Hauglie, Julie Lovise Green Holten, Alexander Fossen Lange, Steffen Larsen, Øyvind Nordbotten, Sondre Eftedal Steinsholt, Aslak Versto Storsletten and Lars Magne Tungland. Alexander Fossen Lange has also written a paper that forms part of the background material for Chapter 8. Øyvind Nordbotten provided valuable assistance during the manuscript’s final stage. I would also like to thank everyone who has shown enthusiasm for the project and shared their knowledge and experience. This applies in particular to individuals who have worked at various levels within Statoil/Equinor but also to representatives of other companies, politicians and civil servants. I have spoken to many of you personally; many more have spoken with students and other project participants. Here, too, it would be difficult to provide an exhaustive list. The conversations are only referenced in the notes to the extent that they have been used as sources of specific information, but every contribution has been valuable. Throughout my work on the manuscript, a reference group has read and commented on the various drafts. I am grateful not only for the many useful suggestions provided by the group, but also for their understanding during a challenging time. The group consisted of members Bjørn Tore Godal, Jon Arnt Jacobsen, Karl-Edwin Manshaus and Espen Storli. Hans-Aasmund Frisak and Anne Aae have participated in the meetings, together with representatives from the publisher. The meetings have been chaired by Einar Lie. A number of persons outside the Equinor project have also made contributions large and small. This applies to the Ministry of Petroleum and Energy, 7

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who have kindly made available the contents of their archive. Elisabeth Berge provided excellent support here. The National Archives, where the Ministry’s archive is stored, and the Regional State Archives in Stavanger, where Statoil’s archive is kept, have shown great flexibility towards the project’s members. I would especially like to thank Eivind Skarung at the Regional State Archives and Ole Myhre Hansen and Mohamed Odowa at the National Archives. Without them, the project’s complex archival work would have been impossible. Equinor’s document centre has also been an important source of support for the project. Among the project’s “external” supporters I would also like to mention the Norwegian Petroleum Museum in Stavanger, which has enriched the project in various ways. Tore Li has written a biography of Finn Lied in parallel with my work, and my contact with Tore has been a great pleasure and source of help. Scandinavian University Press has played a central role in finalising the manuscript. Heidi Norland deserves praise for the way in which she has managed the process – with the support of Jenny Holmsen, she has kept a tight grip on the project’s many threads. Tone has done a superb job as the book’s image editor. Scandinavian University Press’s network of copy editors, proofreaders and translators must also be thanked for their contributions in bringing the text up to the necessary quality within the scheduled time. Still, the individual to whom I owe the greatest thanks is my friend and project manager Einar Lie. Einar has read through the entire text at various stages a number of times. With his countless reflections, questions and suggestions, he has influenced my decisions more deeply than anyone else. Einar’s experience, good humour and care have been crucial in ensuring that the project, despite its various challenges, has been completed smoothly and more or less as planned. Finally, I would like to thank my family. During the work on this book, Marita, Alfred and I have welcomed our newest addition, Karoline. During the final phase of this project, I demanded greater sacrifices and more understanding from you all than is reasonable, but the thought of being able to return to normal family life at project’s end has kept my spirits up. Now we are there – at last. My gratitude towards all the project’s contributors and supporters is especially great due to the short time I have had at my disposal. That the books must be available by Equinor’s 50th anniversary in the autumn of 2022 has always been a condition of the work. Due to a previous professional 8

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commitment, I began work on this book somewhat later than I would have liked; parental leave and life as the father of two young children have also eaten into the time available to me. A complex publishing process has also set its limitations. All this made the completion of the manuscript throughout 2021 a fairly breathless affair. For a historian, archived documents are usually the most important source. The Statoil archive unfortunately proved to be a less useful source than expected; the work with the Ministry’s archive also posed challenges due to its system and arrangement. Much valuable research time was therefore spent fumbling through long archive series, with meagre results. The archive situation is another reason that I am grateful to everyone who has enabled me to complete this work. In closing, it is also worth mentioning that throughout 2020 and 2021 the world was battling a global pandemic. Norway was shut down several times, and at one point I myself became infected. With its associated restrictions, sick days, isolation and requirement that children stay at home, the pandemic complicated the practical aspects of my work in various ways. In this situation, all goodwill, understanding and assistance were tremendously welcome. The book you are now holding in your hands was formed by choices. Its topic is vast, and much has been excluded by necessity. Some things will no doubt be missed. My choices have been influenced by certain practical circumstances, as previously mentioned, but also by active and conscious deliberation in a situation marked by limited time. Delimitation and prioritisation are among the historian’s core tasks. As is interpretation – how the various events are understood and depicted. Although those who have assisted me are numerous, I alone bear the responsibility for these decisions. Eivind Thomassen Oslo, 20.01.2022

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Chapter 1 Introduction

The Ocean Viking drilling rig under construction at Akers Mekaniske Verksted in Oslo, 1966. The rig, shown here at an early stage, gave Oslo’s inhabitants a glimpse of the exploration activities taking place in the North Sea. It was Ocean Viking that would detect the Ekofisk field, thereby firing the starting shot for Norway’s age of oil.

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orway became an oil nation at the dawn of the 1970s. After a number of years spent searching the Norwegian side of the North Sea, international oil companies found oil late in 1969. In the spring of

1970, the companies established that the oil belonged to a vast, commercially exploitable oil and gas field – one of the largest in the world to be discovered offshore. This field quickly became known as Ekofisk. Following the discovery of Ekofisk, new fields and promising formations were rapidly discovered. Along with a number of discoveries on the British side, the Norwegian fields made the North Sea one of the oil industry’s most attractive areas. A short time later, due to events over which nobody in Norway had any control, the oil price experienced a significant jump. In 1973–74, the Arab oil nations’ boycott of Western oil buyers resulted in an almost quadrupling of the oil price, which until this point had remained remarkably stable. This new oil wealth would completely change the Norwegian economy and society. Over the decades that followed, Norway went from being a fairly comfortable little country to becoming an extremely rich one. The scope of opportunity for political influence and an increase in welfare was dramatically altered. Before the full effect of these changes would be seen, a number of new operational challenges had to be overcome, and in the encounter with the new oil industry these were managed through a steep learning curve. The solutions were partly found within established traditions and ways of thinking within Norwegian industry and community development, and were partly effected by a number of situation-specific conditions in the early 1970s.

The years 1971 and 1972, when much of the institutional framework was created, were strongly impacted by the debate surrounding whether Norway should join the European Communities and the questions this gave rise to. The right of disposal over national resources – especially natural resources – was a central issue, as was a pronounced scepticism of far-reaching multinational companies. In this situation, the political challenge created by the oil and gas deposits was met with a broad and ambitious state programme of democratically elected management and control. An important reason why this programme would prove possible to implement was the fact that the influence of its opponents – the international oil companies – was abating in the early 1970s, pushed back by a growing and, in effect, far more successful resource nationalism in important oil-producing countries, many of them members of OPEC. 12

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The Arab countries’ oil boycott in the winter of 1973–74 gave rise to a supply crisis in Norway as in many other countries. Car-free weekends became one of the implemented measures, when the roads could instead be used for traditional Norwegian winter activities. The new price level established for oil would, however, make significant contributions to the development of Norwegian prosperity.

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The prehistoric natural resources on the Norwegian side of the North Sea were therefore discovered at an extremely favourable point in time. The success of the OPEC countries made it possible for the Norwegian state to exercise significant control over activities and assets. OPEC’s organisation also provided a far higher oil price, which meant that the resources could be extracted for sums that soon became staggering. At the same time, the political situation in Norway in 1971–72 facilitated significant political involvement by the state, to ensure national control over the oil industry and its industrial ripple effects. If one were to undertake a thought experiment, imagining that the oil was discovered and extracted a couple of decades later, within the framework of European competition rules and a more liberally oriented national and international regulatory regime, many of the Norwegian measures of the 1970s would hardly have been possible. However, the oil was not discovered earlier or later, but at the start of the 1970s, when ambitions for state-driven industrial growth were high, resource nationalism found fertile soil, and opportunities for aggressive state involvement were exceptionally pronounced. The oil policy programme launched in the early 1970s was, roughly speaking, an extension of the post-war period’s administrative thinking. The desire for democratically elected management was made concrete through the establishment of a number of new institutions, in order to obtain knowledge and means for the state. A state petroleum directorate would be established, and an oil bureaucracy built up within what would eventually become known as the Ministry of Petroleum and Energy. Around these and other institutions, a dense network of legislation, laws and regulations was created. It is among the new oil institutions of the early 1970s that we find Den norske stats oljeselskap A/S – the company that would eventually come to call itself Statoil and that in 2018 took the name Equinor. The company was established within the framework of the democratically elected programme of control, partly to ensure the state and society income from the oil and gas industry, but above all to contribute to the development of a new Norwegian industry in connection with the new petroleum resources. Statoil was established as a tool – a means of achieving political objectives. But an independent company quickly develops its own distinctive characteristics in terms of its culture, organisation, alignment and mode of operation. This was certainly true for Statoil, which experienced extremely rapid financial and organisational growth and made its mark on the direction that both the company and the oil industry would take. 14

Introduction

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Statoil was established as a wholly owned state oil company, primarily intended as a means of continuing the existing policy for industrial growth into a new sector and a new age. Over the period covered by this book, from the discovery of oil up to the company’s partial privatisation in 2001, Statoil developed into a more or less “normal” international oil and gas company, concerned with growth and profits. This development culminated in the company’s partial privatisation and its listing on the stock exchange in 2001. How could a state instrument of political management and control develop in this way? What conditions at the political level, within the oil industry in general, and within Statoil itself might explain this development?

The rise and fall of the industry-building state? It is tempting to see Statoil’s development as the result of the broad political changes that took place regarding the view of the state’s role in economic and industrial development. This view changed significantly over the course of the period in which the Norwegian state oil company grew and advanced. Statoil was introduced as an instrument of the state in the early 1970s, in a period characterised by strong general faith in the state’s ability to manage the development of the economy. Not least, optimism was great when it came to the state’s ability to develop modern, large-scale industry through the establishment of state industrial companies. Statoil is rightly regarded as having become more like other, privately owned oil companies, and this became especially explicit and pronounced from the latter half of the 1980s – in a period characterised by liberal reforms, in which the state dismantled many of its instruments of control and toned down its own capabilities relating to management and industrial development. The overarching changes in the state’s role in the economy and industrial development provide a relevant framework if we wish to understand the development of Statoil between 1972 and 2001. Many of the ideas and notions that characterised the general optimism surrounding state control in Norway, Europe and other parts of the world in the early 1970s directly influenced Statoil’s establishment. The origins of this state optimism can be traced back to the 1930s, when growing modern heavy industries, often relating to the energy- and capital-intensive processing of natural resources, were regarded as the key to increased welfare and civilisational progress. At this time, a strong and active state was also launched in earnest as the 15

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The Norwegian state played an active role in the development of industry after World War II, and the Labour Party was a key driving force in this area. Here, Einar Gerhardsen (right) – leader of the Labour Party and prime minister throughout much of the period 1945–65 – is visiting Bjarne Hurlen and Kongsberg Våpenfabrikk, one of the state’s flagship industrial projects.

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guarantor for national industrialisation at a time when the private capitalist system had led to crises and unemployment.1 These viewpoints firmly took root over the next decades, not least among socialist and social democratic parties in a number of countries. Among them was the Norwegian Labour Party, which was the dominant party in Norway throughout the entire post-war period and whose government founded Statoil in 1972. As the party in power from 1973 to 1981, Labour would have the greatest impact on the company’s development. The ties between the Labour Party and Statoil would become close. In many countries, in the transition to the 1970s, oil became the most powerful expression of state optimism. As early as the 1930s, the oil industry had stood out as an industry in which the private capitalist system had given rise to especially problematic outcomes, with enormous power concentrated in a small cluster of gigantic – and mainly privately owned – international oil companies. This tendency had intensified throughout the post-war period. The companies had long enjoyed what amounted to the sole right of disposal over national oil resources but were not subject to effective national control.2 In the 1970s, Norwegian Statoil was one of the many new state-owned oil companies that were established in as good as all oil-producing countries as a counterweight to the international private giants.3 In 1972, a Norwegian parliamentary majority was in agreement regarding the blessings of modern large-scale industry. Norwegian politicians saw the new Norwegian oil resources discovered with Ekofisk from this perspective, first and foremost: as a foundation for finance, raw materials and energy for the development of Norwegian industry. There were no existing companies with sufficient capacity or legitimacy to take on the task of industrial development alone4, and there was therefore, despite certain nuanced differences of opinion, broad agreement that the state had to step in. The state was both obligated and able to facilitate the development of an oil-based industry. While the resources and situation might be new, these were principles of industrial policy that had dominated the views of a majority of Norwegian politicians since 1945. In much the same way, the changes to Statoil’s role that took place during the 1990s would be closely linked to the general reassessment of the state and state-management optimism that occurred during the same period. This reassessment is often viewed in the context of the advance of parties on the political right – parties that had always been sceptical of the great state optimism and that in many areas obtained greater support during the 1970s and 1980s. This was also the case in Norway, where the Conservatives made advances 17

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in the 1970s and became the governing party in 1981–86 with the support of right-leaning centrist parties. But in the 1980s, some of the criticism and scepticism also rubbed off on other parties – not least the Labour Party, which despite setbacks remained Norway’s largest party – and influenced the Labour governments from 1986 and in the 1990s. Weakened faith in the state’s industrial development capabilities played a role in many of the changes to the relationship between Statoil and the state in the 1980s and 1990s.

The reassessment of the wide-reaching, international state and state-management optimism towards the end of the century obtained a significant jump-start from the social sciences. From the 1970s, economists and political scientists claimed, with a combination of theoretical arguments and empirical findings, that states were unable to generate effective industrial development and good financial results for society and the common good.5 Indeed, the weak results of many state industrial companies seemed to prove them right. Whereas the decades after 1945 had been characterised by unusual political and economic stability, the decades after 1975 were characterised by greater instability. Many of the modern heavy industries, among which the most important state companies were established, were hit hard. Both industrial results and state finances weakened and from the 1980s, therefore, fostered reforms and changes along a broad front.6 Like the state oil companies in a number of other countries, Statoil became an important target for the critics of post-war state-management optimism.7 Along with monopolies and the privileges the companies were afforded, the value and importance of oil meant that the state oil companies became particularly inefficient, claimed the economists and political scientists, with poor results as a consequence.8 At the same time, the state oil companies became tremendously powerful and difficult for politicians to deal with.9 Such arguments characterised criticism of Statoil in Norway by Conservative MPs. Due to the significant oil findings and increase in the oil price, it soon became clear that the privileged state oil company would become a huge participant in what was undoubtedly Norway’s most important industry – in a country otherwise characterised by small players. Statoil’s size brought all the fundamental problems associated with state-run industry to a head. On top of acute financial problems, from the 1980s onwards such arguments provided important grounds for a number of states entirely or partly discontinuing their direct engagement with what in the 1930s had been growing, but now appeared to be more stagnant, large-scale industry. This was also the case in Norway, where the state ownership in a number of industrial 18

Introduction

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Equinor was established in 1972 as Den norske stats oljeselskap a.s., and quickly became known as Statoil. The company was founded as a wholly state-owned operative oil company – a means of achieving political goals. In the years leading up to its partial privatisation in 2001, the company was carried forward, shaped and defined by its role as an instrument of the state. Statoil’s development was influenced by the objectives the state set for the company: Statoil would both spearhead and facilitate a new Norwegian oil-based industry, while simultaneously safeguarding the state’s commercial interests within the oil industry. These were objectives that would come to pull in different directions in encounters with market changes, technology and politics. Out of tensions and conflicts, a new understanding of the company’s objectives and its role as a state instrument would take shape.

Commerce and politics

Eivind Thomassen

Statoil and Equinor 1972–2001

ISBN 978-82-15-06228-0

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