The Brink of Abandonment
By late 1969, the North Sea was widely considered a “dry” graveyard for the oil industry. Phillips Petroleum had already drilled 32 unsuccessful wells on the Norwegian Continental Shelf and was hemorrhaging cash. The company sought permission from the Norwegian government to abandon its program and pack up. But the Norwegians, led by a small, three-man petroleum administration, possessed a singular focus: contract enforcement.
The Norwegian administration had been mentored by British officials who warned that contracts based on “dollars spent” allow companies to escape early. Consequently, Norway specified work programs based on drilling depth, not cost. Because Phillips could not find another operator to take over its rig lease, and because the Norwegians remained unyielding on the contractual depth obligations, they were forced to take one final “roll of the dice”.
On August 30, 1969, the Ocean Viking began drilling the 33rd well. At 3,000 meters below the seabed, they struck a reservoir so pressurized that it gushed out of the borehole. Evaluating the results took until December 23, 1969—a date that has since entered Norwegian mythology as the ultimate Christmas gift. The Ekofisk field was found to hold 3.5 billion barrels of oil and 162 billion cubic meters of gas, making it one of the largest offshore discoveries in history.
The Legislative Shield
The discovery of Ekofisk presented a paradox: a middle-income country, then with a per-capita GDP barely ahead of Greece, now possessed wealth that could potentially destroy its social fabric. The Norwegian response was not to celebrate, but to regulate. They realized they needed a set of laws to ensure the nation remained the master, not the servant, of “Big Oil”.
Mechanism: The Socialization of Production
In 1971, the Norwegian parliament adopted the “Ten Commandments” for oil policy. These were not mere rhetoric; they were a roadmap for total state control. Principle 8 mandated the creation of a state-owned oil company, Statoil, to safeguard commercial interests. This ensured that the government was not just a tax collector, but an active participant with an “inside running” on every development. By taking direct equity stakes—often between 5 to 40%—the state socialized the profits of production while the companies carried the exploration risks.
The Interdisciplinary Lens: Geopolitics and Geology
Norway’s success relied on the intersection of brilliant diplomacy and technical expertise. Jens Evensen, a Harvard-educated lawyer, moved quickly to establish maritime boundaries based on the “median line” principle. This was a far-sighted move; even though a deep trench sat off the Norwegian coast, Evensen convinced the UK to ignore it in favor of a 50-50 split. Simultaneously, Farouk Al-Kasim, an Iraqi-born geologist who had worked in the Iraqi oil industry, became the country’s most valuable immigrant. He provided the technical “willpower” to tell Phillips exactly where to drill to avoid gas chimneys.
Cascade of Effects: Avoiding the Dutch Disease
The “Ten Commandments” explicitly banned the flaring of natural gas (Principle 5) and required that petroleum be landed in Norway to drive onshore industrialization (Principle 6). This forced the development of a high-tech domestic service industry. While the “Dutch Disease” ruined the Netherlands’ economy by causing inflation and currency spikes, Norway’s “go slow” extraction policy (90 million tonnes per year limit) acted as a brake. This discipline ensured that the oil sector didn’t “crowd out” traditional manufacturing.
The Architecture of Sovereignty
The contrast between Norway and the UK during this period is a study in determination vs. indifference. In the UK, the oil boom was met with “public indifference” and a lack of parliamentary debate. The UK rushed to develop its resources to fix a trade deficit, leading to a “reticent revolution” with few long-term institutions. Norway, conversely, held late-night briefings for ministers that lasted until 10 PM.
Norway proved that a small nation could face “David and Goliath” odds by utilizing a “few good men” with Harvard degrees and Iraqi field experience. They didn’t just find oil; they found a way to keep it. By insisting that Phillips honor its 33rd well, they turned a potential abandonment into a trillion-dollar future. This was not a fairy tale; it was a triumph of the administrative state over corporate fatigue.