Farouk Abdul Aziz Al-Kasim, a migrant Iraqi geologist, and his Norwegian counterpart drafted Norway’s petroleum regulation during a fishing trip in 1970. Norway’s parliament wasted no time and unanimously approved it to govern the hydrocarbon sector. This created the Norwegian Petroleum Directorate, the oil industry regulator, and Statoil, the national oil company (now known as StatoilHydro).
The Norwegian regulatory model retained the private sector’s competitive drive and its expertise. It also ensured enough regulatory independence to rein in the state oil company as well as its private-sector peers. NPD had to fight to gain respect, and for that it needed enthusiasts with enough competence that they could not be dismissed by the market. That became Farouk al-Kasim’s mission – and his job for the next two decades – as the regulator’s director of resource management.
He has pushed the government to increase extraction rates; insisted that companies try new technologies, and threatened to withdraw operating licences from companies that balked. It spurred the development of technological expertise that has enabled Norwegian companies to compete with the best in the world. This, then, is a striking case of strong state regulation ultimately benefiting the private sector.
Norway is the world’s sixth-biggest net exporter of oil and the second-biggest net natural gas exporter. Since its maiden discovery in 1969, the country has exported oil and gas equivalent to some 30 billion barrels of crude – and the continental shelf still contains, by official estimates, almost twice as much again. Yet the country has escaped the problems that beset most other oil exporters.
Rather than stifling productivity, the oil sector has spawned world-class exploration, oil services and construction technology. Norway’s state oil company, StatoilHydro, is internationally recognised as a competitive commercial player and one of the most environmentally and socially conscious ones to boot.
Since 1996, every krone the government has earned from oil has gone into a savings fund, which now totals some £240bn – more than a year’s gross domestic product and equivalent to about £50,000 for each of Norway’s 4.8 million citizens.
Farouk is respected being such a great value creator of modern Norway. He enforced the culture of “squeezing the last drop out” from the oil reserves. The average extraction rate worldwide is around 25 per cent. Norway averages 45 per cent, and for that much of the credit goes to Farouk al-Kasim. Last week the Financial Times has published the amazing story of Farouk Abdul Aziz Al-Kasim.
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