Norway, Ireland, oil and gas: a comment on the O’Toole – Rabbitte debate

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On Europe’s northwestern fringes there are two small countries, each with populations of 4-5 million, and an economic background of small farming and fishing, with large-scale emigration in the second half of the nineteenth century and the first half of the twentieth, independence in the early twentieth century from a larger and more powerful neighbour and even minor details like a two-language situation inherited from this past.

One, with all its faults, is regularly identified as one of the world’s most equal societies and is one of the few northern countries to be weathering the economic crisis. The other, with all its good sides, remains massively unequal and is suffering the effects of a burst speculation bubble. In one, national control over energy resources has been consciously used as part of a programme of social development over decades. In the other, the military gets sent in to enforce the handover of energy resources to multinationals.

Small wonder that Fintan O’Toole recently called for a strategy of joint ownership with Norway so that the Irish people would see some benefit from offshore gas: the Norwegians seem to know something we don’t. Nonsense, says Pat Rabbitte, it has nothing to do with politics but is all about geology. Sorry, Minister, you’re wrong. Cian O’Callaghan has demolished some of Rabbitte’s claims, but there is more to be said.

Gas and oil production is often a curse: as Norway’s leading critical expert on the industry Helge Ryggvik notes, the “curse of oil” (and gas) means that states where these resources, so often massively lucrative for multinationals, can be found are often deeply corrupt and hugely unequal: so different from our own dearly beloved country, of course. Norway is not a paradise, and Statoil is not an ideal: but compared to Ireland Norway is far less unequal and massively less corrupt, and the gulf between the two countries in these terms has grown over time.


What made the difference, as Ryggvik shows in The Norwegian oil experience, was political will and courage in facing up to the energy multinationals. No more than Ireland did Norway start out with its own capacity to exploit these resources, or with multinationals that were too nice to threaten to move if politicians didn’t do exactly what they wanted. (The seriousness of such threats can be gauged by the fact that Shell and Statoil are still pushing the state to help them force the Corrib gas project through, over a decade after they first started and several times over budget: the profits involved are astronomical.)

Norway had to find ways not just of extracting taxes and royalties from multinational production in the Norwegian sector, but much more importantly develop an independent technical capacity to carry out exploration and extraction itself. It wasn’t easy, or obvious; but it is strategically central to ensuring a real benefit to society as a whole.

Ryggvik wrote The Norwegian oil experience as a primer for trade unionists, NGOs and activists in majority world countries which are now having to deal with the multinational energy companies around oil and gas extraction and where people want to know how to face up to the companies and win. It doesn’t romanticise the Norwegian experience, but it highlights what can usefully be learned for other countries by thinking seriously about how Norway avoided the usual fate of having oil and gas resources simply benefit the multinationals along with a handful of local elites. Its first Irish publication can be found here on ILR.

There is no iron law of geology that forces us to hand over ownership of these resources to Shell (and Statoil, whose role in the Rossport conflict shows among other things just how successful the Norwegian strategy was). There is no law of small countries that says they have to sign away the profits from offshore resources (Ray Burke), use the military against their own population to enforce multinational control of these resources against massive popular opposition (Eamon Ryan and others in the last government), or keep up this process during an economic meltdown where the majority are being made to pick up the tab for the sins of bankers and property speculators (Rabbitte and others in the current government).

It takes political choices – the choice to do what the energy multinationals want, or the choice to put the wider interests of society first. As Ryggvik documents, these were not easy choices for Norway. They seem to be all too easy ones for Irish politicians.

Read The Norwegian oil experienceand weep – and then think what you can do about it.

Notes
Image is of the cover sheet of the Union of Students in Ireland‘s 1973 pamphlet which makes the case for the public ownership of Ireland’s natural resources. It is co-signed by USI President, Pat Rabbitte. Full document is available on Dublin Opinion.

 

2 Responses

  1. Simon

    August 19, 2011 8:36 am

    So Ireland is basically giving multinationals oil and gas reserves away for free. And Ireland has loads of oil and gas. Question. Why is the coast not ringed with oil rigs?

  2. Laurence Cox

    August 19, 2011 9:34 am

    Because as Cian O’Callaghan says the attractiveness or otherwise of oil and gas reserves is historical. There are two key issues: one is purely technical (the ability to locate and extract oil and gas).

    The other is to do with the capitalist basis of fossil fuel extraction: a field has not only to contain oil and gas. It not only has to contain them in commercially relevant quantities which can be extracted at a profit. It also has to contain them in quantities which can be extracted with a higher rate of profits than can be gained by investing in other fields.

    This is why older Norwegian fields are now being run down (in the same way British coal mines were a couple of decades back) so that Statoil can invest elsewhere. They still contain reserves, but there are now greater profits to be generated by investing elsewhere.

    Ireland seems (and such things are always impossible to know for certain except in retrospect) to be moving into a period where because of a combination of factors it makes sense to invest in exploration (the costs are not trivial) and extraction. This is why we have the Corrib gas project now and not thirty years back; and it is why Rabbitte is now overseeing the allocation of a new round of blocks for exploration (the first stage of the process).

    This is not new – the process of moving from field to field, and between different types of field, has a long history. It now makes financial sense (but is ecologically disastrous) to extract oil from tar sands, for example, in a way that it did not four decades back.

    That’s the short answer. For the long one, read Ryggvik.