Euro Exim Bank

A Drop in the Ocean – Norway’s Gift That Keeps on Giving

ImageSituated at the southern tip of Western Norway, Stavanger isn’t exactly a huge place – as you’d probably hope for a town that acts as the de facto gateway to the impossibly beautiful Fjords.  The population of 121,000 could never be confused with, say, Sao Paolo or Tokyo; metropolis just doesn’t enter into the equation. 


In fact, you only begin to square with Stavanger’s profile once you understand the city’s nick name: the Petroleum Capital of Norway.  Except there are no nodding-donkey pump jacks here – and even fewer JR Ewing wannabes.  Nope, the black gold, Texas Tea, or whichever name you favour for oil is around 320 km southwest of Stavanger in the Ekofisk oil field.


Stavanger’s fortunes were effectively transformed in December 1969, when Phillips Petroleum discovered oil in Norwegian waters in the central North Sea.  The city had originally boomed in the 19th Century on rich herring fisheries.  Of course, this oily fish was soon surpassed by crude as Stavanger was chosen to be the on-shore centre for the oil industry.  A period of hectic growth followed.  So much so that Stavanger is now twinned with Houston, Texas – the global hub for the energy industry and byword for cigar-chomping oilmen. 


But that’s as close as the gas-guzzling stereotype gets. 


In fact, the locals here are more likely to get excited over the annual and highly recommended Jazz festival than some oligarch’s ball.  Stavanger’s love of the arts was recently reflected in the decision to make it European Capital of Culture in 2008.  Still, that’s not to say oil isn’t taken seriously…


“The oil and gas industry has left its mark greatly during the last four decades and turned the Stavanger into the country’s undisputed oil and energy capital,” Says Mayor Leif Johan Sevland, Chairman of Greater Stavanger Economic Development.  “We have ambitions to preserve and further develop this position.”


ImageHe explains that North Sea oil has opened up businesses in the region with far more scope than just oil – shipping, finance, culture, food and renewable energy, to name just a few.  “No other part of Norway has seen stronger growth than the Stavanger region, with the population doubling in the years since oil was found.  But we believe that there are many years of growth ahead, and much of this lies in our energy production possibilities.”


Twenty billion barrels of oil have been pumped up from the Norwegian continental shelf since production started in June 1971.  Today there are 51 active oil and gas fields on the Norwegian continental shelf, which has a reputation as the most energy-efficient producing region in the world.  Regional C02 emissions from Norwegian production amount to less than one-third of the global average per unit produced, according to government stats.


The Norwegian sector of the North Sea remains one of the most important oil fields, and despite up to half the reserves being used, production is planned to continue until at least 2050.  The Norwegian Petroleum Directorate states that their sector alone contains 54% of the North Sea's oil reserves and 45% of its gas reserves.


Norway pumps three million barrels of oil from the North Sea daily, and is now the world’s third largest exporter of oil, after Saudi Arabia and Russia.  In addition there are probably many undiscovered fields. The Petroleum Directorate estimates that the undiscovered resources alone amounts to 7.3 billion barrels of oil. 


ImageBack on land, away from the hurly burly of the gale battered rigs, Stavanger is home to 280 oil service companies working in all parts of exploration and production.  On the face of it, Stavanger is quite deceiving – looking almost sleepy in the old part of town with its whitewashed clapperboard houses and shops huddled together, guarding itself against the North Sea gales.  Then, beside the Brybua Bridge, which sweeps elegantly across the Strømsteinsundet, clusters of squat offices contain the nerve centre which oversees the daily routines of the 80 000 people employed in the oil and gas sector.  They contribute a 47% share of the total Norwegian export market.

The nation was recently singled out as the world’s ‘best place to live’ in a report from UN Development Programme.

The oil industry has been good to Norway.  The nation was recently singled out as the world’s ‘best place to live’ in a report from UN Development Programme.  Norway’s consistently high rating for desirable living standards, comes as a direct the result of the discovery of offshore oil and gas deposits.


But the energy sector’s immensely good fortune has meant that a raft of other opportunities has ridden its wave.  With its excellent international airport and speedy direct connections to London, Frankfurt, Paris, Berlin, and Amsterdam, Stavanger could hardly be described as isolated.  However, it’s not necessarily the first place you’d look for venture capitalists.  But they are here – in surprisingly big numbers.


Statoil Kapitalforvaltning, SR-Bank Forvaltning, HitechVision, and the largest of all is the private investment companies, Skagen Funds.  This is Norway’s second largest fund management community outside of the capital city Oslo, with $15bn under investment, with Skagen accounting for almost half that amount.


The FT recently reported that Skagen’s Kon-Tiki fund for emerging markets has managed to return an annualised 21.2% in euro terms since it launched in 2002.  Oil, energy and shipping are all industries Skagen specialises in and the people in charge here are demonstrably not backwater hicks!


“Volume is not the point, we are doing quite all right” intones Kristoffer Stensrud, one of Skagen’s founders.  “However, I have a very clear ambition to improve the quality of everything we do, and that should be our main priority.  We sit here in Stavanger, far from the commercial channels. We have only seldom tried to sell ourselves through other things than our products and we have been good at keeping to the narrow path.”


“The finance industry today is where the petroleum industry was in the 1970s,” says Sveinung Hestnes, Executive Vice President at Capital Market and Sparebank 1 SR-Bank. “This industry has great potential. When the oil has been pumped out of the North Sea and converted into cash it has become another raw material to be husbanded. The key to it all is competence which we can contribute to maintaining the prosperity that has been created in this region.”


Over the past decade, a new breed of energy company has grown from the wealth generated by oil and the wealth of technological experience the energy industry in this region harbours.  Wind and tidal power are two sustainable energy sources that have had extensive R&D investment.




“The whole basis for what we are doing is because of our access to energy resources,” says Birger Haraldseid, manager of opportunity for energy development in the Greater Stavanger Economic Development. “We are one of the best wind resources offshore  in Europe, and we are one of the few regions with access to export  this capacity.”

Future potential in wind power, tidal energy, wind power, and other renewable sources clearly show that the Stavanger region is taking on its share of the obligations to improve the environment globally,”

StatoilHydro is a joint owner of the world’s first tidal power turbine delivering electricity to the onshore grid through its ownership in tidal-power developer Hammerfest Strøm.  StatoilHydro has also invested in tidal technology developed by Ocean Power Delivery (OPD), which will build the world’s first commercial wave power plant off the coast of Portugal.


“Future potential in wind power, tidal energy, wind power, and other renewable sources clearly show that the Stavanger region is taking on its share of the obligations to improve the environment globally,” Mayor Sevland concludes.


“We want Stavanger to be a city where there is always something to look forward to for those who live here permanently, those who come for a period of time, and those who just want to come for a visit.”