The defense is based on NATO membership. In 1993, a
long-term, still valid defense decision was adopted in the
light of prevailing uncertainties in security policy
developments and the fact that, for example, The Russian
Federation reduced its combat forces and nuclear capability
considerably less in the north than in its other European
parts. The decision means a continued concentration in
Northern Norway and is based on general military duty with
an initial service of 12 months. The defense comprises
(2005) 26,000 men with 220,000 men in reserve and is
peacefully organized in an army of 15,000 men, 99,000 men
fully manned, with a brigade in high readiness grouped in
northern Norway. To see related acronyms about this country, please check ABBREVIATIONFINDER where you can see that NOR stands for Norway.
During mobilization, a division of three brigades and
three independent brigades is organized, one of which is in
southern Norway. The Navy comprises 5,700 men, 28,000 men
fully manned, with six submarines, three frigates and 15
patrol boats. The Air Force comprises 5,700 men, 30,000 men
fully manned, with 61 fighter aircraft, primarily F-16s, and
extensive sea surveillance resources. The reserves amount to
a total of 220,000 men, of which the home defense is 73,000
men. The equipment is modern by the standard NATO standard.
Norway is a member of NATO but does not allow the
stationing of foreign troops or nuclear weapons in peace;
heavy equipment for However, artillery units from the USA
are pre-stored at Trondheim. NATO's leadership organization
has changed significantly after the fall of the Berlin Wall
in 1989. Nowadays, the operational command center for
Northern Europe is located in Norway. Defense costs (2005)
amount to 1.7% of GDP. Norway participates in a number of
international efforts, including in Afghanistan (150 men),
in Bosnia and Herzegovina (125 men) and in Iraq (12 men).
At the end of the Napoleonic wars at the beginning of the
19th century, Denmark had to relinquish Norway to Sweden. In
1814 the Norwegians convened a constitutional assembly and
proclaimed the country's independence. Sweden responded by
forcing its supremacy by force. However, despite the union
with Sweden, most articles from the Constitution of 1814
remained in force. The Norwegian Constitution is thus one of
the oldest in the world, surpassed only by the United States
federal constitution. It is based on national supremacy,
sharing power and inalienable human rights. With a
constitutional change in 1884, the Norwegians introduced the
parliamentary monarchy as a form of government. (See
But the union with Sweden was very conflicted and in 1905
Norway finally gained its independence. The Danish prince
Carl was elected king of Norway under the name Haakon VII.
Until 1914, the country experienced high economic growth,
and its hydropower plants provided the basis for significant
industrial development. However, private Norwegian and
foreign companies' acquisition of waterfalls caused great
concern to the population. In 1906, 75% of the nation's
hydropower plants belonged to foreign capital, and in 1909
Parliament passed laws protecting the country's natural
In 1898, ordinary voting rights for men were introduced
and in 1907 and 1913 women were given the right to vote.
During World War I, Norway tried to stay neutral, but the
great powers forced it to interrupt trade with Germany. The
antithetical sentiments in the population were strong.
Especially due to a number of accidents caused by
submarines. At the same time, workers were affected by price
increases as a result of the war.
Between The Wars
One of the consequences of the industrialization of the
country and the introduction of universal suffrage was the
development of the Social Democracy (Labor Party). By the
end of the war, the left had the majority, and unlike the
social democracies of the other western European countries,
it was decided in 1918 to join the Communist International
(Comintern) when it was formed in the wake of the Russian
revolution. Nevertheless, the party refused to submit to
central government as required by the Soviet Communist
Party, and in 1923 it withdrew from the Comintern again.
The interwar period was characterized by a number of
economic problems and serious labor disputes. Despite a 20%
unemployment rate in 1938, the period was nevertheless
marked by aggressive industrial growth. In addition, the
government implemented social legislation, national pension,
the right to vacation and holiday pay, and unemployment
Like Denmark, Norway was invaded by Germany on April 9,
but Norway surrendered only after two months of fighting
against the force, and King Haakon and the government went
into exile in London, from which the resistance struggle was
coordinated. The country was liberated in 1945. Haakon died
in 1957 and was succeeded by his son, Olav V.
Norwegian oil history
Norwegian oil history is about discovering and extracting
petroleum on the Norwegian continental shelf from the 1960s
When the Ekofisk field was declared a worthy little
Christmas Eve in 1969, it marked the start of a new chapter
in Norwegian history. Several discoveries followed, more
fields were expanded and several fields were put into
production. A number of the major international oil players
established themselves, got licenses and invested. This
followed extensive technological development in several
areas and the establishment of educational and qualification
measures. Public administration was strengthened with laws
and regulations aimed at the petroleum industry. Norwegian
industry and the shipping industry adapted to operations in
the North Sea. In particular the restructuring within woe
rftsindustrien, and in parts of the shipping pervasive.
The oil business became a dominant factor in the
Norwegian economy and today is Norway's largest industry in
terms of value creation, government revenues, investments
and export value. In 2016, 185,000 people were directly or
indirectly employed in the petroleum sector in Norway.
The start of the oil and gas business in the North Sea
In 1959, after two dry wells were drilled, a large gas
discovery was made at Groningen in the Netherlands. The
discovery proved to be one of the largest gas deposits ever
found in the world. Geologically, it was obvious that
deposits could also exist in the North Sea. The US oil
company ExxonMobil and the Dutch-British Shell had been
involved in the discovery and later production from the gas
field. Both companies had extensive international experience
and soon afterwards started exploration activities off the
coast of the Netherlands.
The Gulf of Mexico already had experience in exploration
drilling and offshore production. The first drilling
operations in the North Sea started with the same type of
technology, but it soon became clear that conditions in the
North Sea set different requirements.
The findings in the Netherlands caused the oil companies
to contact the other North Sea countries to start
exploration for oil and gas deposits off their coasts.
Trygve Lie had as a special assignment from the
government to work to get foreign investment into Norwegian
business, and the first request from the oil company came
from Phillips on October 29, 1962.
The inquiry, which initially referred to permission to
start seismic investigations, was forwarded to Jens Evensen
in the Ministry of Foreign Affairs. By this time, oil and
gas operations had already started outside both the
Netherlands and the United Kingdom.
Norwegians had been involved in these areas as well.
Denmark had granted the Danish company AP Møller, which
operated together with the two major international oil
companies Gulf and Shell, exclusive rights in oil extraction
in the Danish sector. Phillips had also wanted such an
agreement. However, the attitude in Norway was skeptical of
such agreements. "The Act on Acquisition of Waterfalls,
Mining and Other Real Estate," which regulated ownership of
Norwegian hydropower, was based on the principle that energy
resources should be subject to Norwegian public control.
There was also a long tradition that Norway would have
control of the mining operations.
For all the North Sea countries, it was also clear that
the ownership of the bottom of the North Sea had to be
clarified. The coastal areas were not problematic, but the
areas further out had to be cleared with agreements. On May
31, 1963, Norway declared that the seabed and its deposits
were part of the Norwegian state high. Other North Sea
countries declared the areas off their coasts as their areas
and subject to their legal regulation. Denmark, Norway and
the United Kingdom signed an agreement on sharing the
continental shelf according to the centerline principle.
A royal resolution in force from April 9, 1965, came with
a licensing rule, and four days later the first licensing
round on the Norwegian continental shelf was announced. As a
result, 22 production licenses were granted for 78 blocks.
The licenses were granted to both individual companies and
groups of companies.
The first exploration wells were drilled in 1966 by Esso
with the American rig Ocean Traveler. But the first viable
discovery first came in 1969. The discovery was made on the
Ekofisk field by the sister rig Ocean Viking drilled for
Overview of the 1970s
The development of the first large oil and gas fields on
the Norwegian continental shelf was dominated by foreign
companies. However, the authorities aimed to build up a
Norwegian oil environment. A key instrument for
strengthening the development of a Norwegian oil environment
was the creation of Statoil.
Since its establishment in 1972, Statoil has played a
leading role in the Norwegian oil business. The company
received 50 per cent of all new allocations for a period.
Statoil's mandate, size and strategies have been the subject
of many controversies.
The authorities also wanted a competent Norwegian
industry-related player for exploration, development and
operation of the installations on the continental shelf, as
well as processing of petroleum as a resource. The
development of the oil supply industry has been
characterized by both crises and success.
A key objective in the early Norwegian oil policy was a
moderate oil pace to avoid becoming too dependent on the new
resource. In the early 1990s, this goal was abandoned. In
2013, it was discussed how far too high an investment level
would have made the Norwegian economy vulnerable.
As early as the 1970s, great emphasis was placed on the
oil business being designed in an environmentally sound
manner. In the 1970s, oil operations were concentrated in
the areas south of Stad in the North Sea. From the 1980s,
the business moved north to the Norwegian Sea and the
Barents Sea. The oil industry faced resistance from
environmental organizations and fishing interests who felt
vulnerable areas should be protected from petroleum
activities. In addition, there was concern about the
consequences the climate challenges could have for an
In the early 1960s, Norway had a fishing border that
stretched a modest twelve nautical miles (about 2.2 miles)
off the coast. The rest was considered international waters.
The fishing limits clarified the right to fish in the sea,
not to seabed activity.
The basis of international law for clarification was the
1958 Geneva Convention on the Continental Shelf. The
convention, which was based on a centerline principle, had a
wording that the continental shelf should be confined to
areas shallower than 200 meters deep. However, it also
stated that the boundary could be expanded if it was
possible to extract natural resources even deeper.
Foreign Ministry officials feared for a while that
neighboring states would argue that the Norwegian
continental shelf should be delimited by the Norwegian. On
May 31, 1963, Norway unilaterally stated in a royal decree
that the seabed and subsoil in the subsea areas off the
Norwegian coast were subject to Norwegian statehood as far
as exploitation and exploration of natural resources were
concerned, and that a delimitation to neighboring states
would be based on a centerline principle.
Such a unilateral declaration was dependent on acceptance
from other countries, primarily neighboring states. The
United Kingdom wanted an agreement as soon as possible, and
on March 10, 1965, a split-line agreement between Norway and
the United Kingdom was signed. The agreement was based on
the centerline principle. Both the British and Norwegian
coastlines were long, and with this the boundary was set in
large parts of the North Sea. On December 8, 1965, an
agreement with Denmark was also ready. With this, Norway had
acquired jurisdiction over a proportion of the North Sea
with an area that was almost as large as the Norwegian
There was still much that had to be clarified in
international sea law. Further north, it would take many
years before all important divisions were clarified. The
decisive factor for Norway was that they had obtained
sufficient clarification to start negotiations with the oil
companies who wanted to start exploration in what was the
Norwegian part of the North Sea.
The licensing system
By the resolution of 31 May 1963, the Norwegian state had
become the owner of possible natural deposits on a large
part of the continental shelf in the North Sea. The next
step was to design suitable legislation and regulations for
possible activities on the shelf. Work on this was added to
the newly created Continental Shelf Committee chaired by
Norway advocated the same system as the United Kingdom,
where groups of companies were allocated shares in
advertised blocks. The Norwegian blocks were squares of
around 500 km², calculated from latitudes and longitudes.
The state's revenue should come in the form of taxes and
possibly direct shares of the produced oil (royalty) after
production started. Many of the formulations that were
incorporated into what was to become a foundation wall in
the Norwegian licensing regime, Royal Resolution of April 9,
1965, were designed in close collaboration between Jens
Evensen and representatives of the foreign oil companies.
Despite the great interest in getting drilling started,
there was no public debate on the first oil policy.
Initially, the Storting was only involved when a special tax
relief for oil companies was passed by the Act of 11 June
1965. The law was passed after a very brief debate. It was
pointed out that if a tax cut were not adopted, the state
would not be able to operate with a royalty in the agreement
with the companies. The alternative that was set up was that
the industry was not willing to invest at all.
Both in the Royal Resolution and in the labor agreements
the companies had to sign in order to be awarded licenses,
there are provisions that guarantee the state a sovereign
right to intervene regulatively against the companies'
practices at a later date. The resolution contained no
security provisions, but stated that if the state were to
appoint inspectors, the companies had to give them full
access and comply with the orders they had to give (section
There were several similarities to the type of licensing
regime that was developed in connection with the development
of hydropower in the early 1900s. The principle of the right
of return was incorporated into several provisions.
Initially, production licenses were granted for a period of
six years. Already after three years, the companies
committed to give up a quarter of the allocated block (§
20). Given that the companies would retain an allocated
block after a six-year period, three years after that, they
had to divest another quarter of the original allocation.
Those parts of a block that were retained after an extended
allocation could be retained for a full 40 years (§ 22).
In the negotiations preceding the Royal Resolution and
the final allocations, the companies were most concerned
about the financial conditions. The companies expected a
12.5 per cent royalty, as was the case in the United
Kingdom. But Evensen made it 10 percent.
Royalty is a tax which means that the state receives a
certain percentage of the production value, not as for the
taxes; a percentage of profits. From a producer's point of
view, therefore, it was a potent source of income. A 2.5
percent reduction in royalty was worth more than a
corresponding reduction in taxes.
As early as April 13, 1965, four days after the Royal
Decree and before the final clarification of the tax issue,
the oil companies were invited to apply for a license to
operate oil on the Norwegian continental shelf. Prior to the
allocation, the Storting adopted exemption provisions that
provided reduced taxes for oil companies. Most satisfied
were the American companies. They were exempted from a
provision requiring the participating companies to establish
Norwegian subsidiaries. With current US tax rules, this
meant that all expenses for exploration on the Norwegian
continental shelf could be deducted from the tax in the USA.
Although Evensen ran an active game to solve the oil case
through the administration, there are no indications that he
broke with the overall assumptions of his political clients.
The overall objective was to get the foreign companies to
engage as much as possible. Thus, the probability of really
finding oil would be greatest.
At the same time, they were concerned with securing
access to foreign currency, and preventing foreign currency
from disappearing out of Norway. If Norwegian oil companies
were to account for much of the activity, they would have to
depend on hiring foreign specialty companies with oil
A small but significant group of Norwegian companies
wanted to focus on oil exploration in the North Sea right
from the start. This included Fred. Olsen and Norsk Hydro.
These felt the interest from the foreign companies was an
indication that the opportunity for discoveries was good.
But without special expertise, they depended on entering
into an alliance with the foreign companies.
However, Jens Evensen signaled to several large foreign
oil companies that an alliance with Norwegian companies
would not strengthen their application. All in all,
Norwegian participation in the licensing round was small,
not least compared to the first allocation on the British
side of the North Sea.
Without access to independent oil expertise and limited
investment funds, Norway's position in the 1960s was very
reminiscent of the many poor countries with potential
petroleum resources in the south.