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Monthly archives "May 2014"

Invest in Norway – Oil and Gas

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Norway is the world’s second biggest exporter of natural gas and the fifth biggest exporter of oil. Hence, the petroleum industry is the most important industry in Norway. Not only does it contribute to the wealth in the country, but it is also a very important driver for the innovation and technology development in other sectors.

The petroleum sector is vital for the country’s economy, representing some 25% of the gross domestic product, 30% of the state income, more than 50% of export earnings and providing some 250,000 jobs, directly and indirectly. Export earnings are no longer only the revenues from the export of oil and gas to global customers. The export of goods and services is also making major contributions.
The Norwegian oil and gas cluster

A recently finished research project in Norway, A knowledge-based Norway, concludes the following on the Norwegian oil and gas cluster; “The Norwegian oil and gas industry was built upon established Norwegian competences in mining (geophysics), maritime operations and maritime construction (yards), with invaluable inputs from foreign operators and suppliers.

At present, the industry is a complete cluster of 136,000 employees divided into several sectors: Operators (22,000), Geo & Seismics (4,000), Drill & Well (20,000), Topside (43,000), Subsea (13,000) and Operations Support (34,000).

The supplier industry is Norway’s biggest mainland industry. Turnover is approximately NOK 360 billion a year, almost half of which is from international markets. The world’s offshore oil and gas activities are taking place in deeper and deeper waters, and it is becoming increasingly complicated to operate offshore wells. The Norwegian supplier industry has a leading position in the global subsea oil and gas industry.

The Norwegian petroleum cluster is expanding into global markets with advanced, cost effective technologies, delivering front edge reservoir and seismic technologies, subsea technology, floating production, multiphase flow solutions, technologies for cleaner production and new ways to increase oil recovery.

Norway has one of the world’s most environmentally friendly oil and gas industry. There are high environmental standards and there is continued work on reducing emissions and avoiding accidents and spills.

Norwegian R&D institutions, suppliers and service companies have played a significant part in developing systems and equipment to meet the new standards increasingly required in oil and gas provinces around the world.
Regional clusters

Even though Norway is not large, different specialist competence is found in different areas of the country, resulting in several Norwegian Centres of Expertice (NCE) and other important clusters within oil and gas.

For banking supervision

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The reform of banking supervision is just off the table. Apparently, we have learned nothing from the past. It has long been clear that the financial crisis has failed spectacularly. In these points is need political action. The one-sided look at the rules ignores one thing, namely that rules are only in certain cases. Banking supervision has the task to identify and prevent violations of the rules. In the current legal form BaFin fights but with blunt weapons. A transfer of the BaFin in a GmbH would be an important step. For a limited liability, company can pay salaries and acquire marketable Sun competent staff.

In addition, the supervision given more independence. Third, they should with an independent commission /similar to the Monopolies Commission/ to enter into a technical debate. Thus, a strong oversight will be ensured. Of course, one could also make the rules so easily, and then you do not need expensive and lobby-prone regulatory apparatus in principle. Here is an example:

  • Separation of investment banking, retail banking and mortgage banks
  • Prohibition of the transactions of these groups to each other (and transitive)
  • Prohibition on proprietary trading by retail banks in the securities business
  • Limiting the total assets of an individual institution to e.g. 50% of the GDPs
  • Increase in reserve ratios at the ECB
  • Negotiations on new provisioning requirements for banks

Negotiations on new provisioning requirements for banks

Dr. Matthes from the Institute of the German Economy in Cologne is sceptical. The width of reform proposals, this time enormously and probably unique in history. Negotiations on new provisioning requirements for banks show more transparency in derivatives trading. The same is true with respect to reforms of executive compensation and accounting rules to increased involvement of hedge funds and credit rating agencies in regulatory and supervisory structures, as well as regular monitoring of the implementation of already adopted reforms.

Nevertheless, the prospects for significant reform progress yet is bleak. The casus Knaxus is here to get all the states under a regulation hat. However, this will be difficult. The bank tax and regulatory rules only work if all countries participate. Otherwise, it will open new loopholes, which could make things worse.