Instrument out of tune : Using a National Oil Company as a policy instrument

Abstract

The petroleum sector is one of the most interest based political sectors in both domestic and international affairs. This analysis focuses on the government’s ability to use the national oil companies to assert influence over the sector, and to ensure national interests. The state anno 2007 is perceived as being a lot smaller, and a lot less powerful than its predecessors, it is the aim of this thesis to investigate this claim by looking at the potential for government control through National Oil Companies. This is a case study of the Norwegian government’s ability to use StatoilHydro as a policy instrument in the Norwegian petroleum sector. In analyzing the research question: To what extent can the Norwegian government utilize the StatoilHydro as a policy instrument, and under which conditions could this happen? We find that the Norwegian government’s ability to effectively use this mechanism is in fact constrained by participating in rigid international regimes – thus subjecting itself to the effects of increased economic interdependence. However, we find that using a representative agent-principal model for exerting influence and control, the government can use the NOC as a policy instrument – albeit in attaining long-term national economic and political interests. This can happen if the government participates actively in the selection of board members, and in that way ensures that the basic understanding of the current political goals are present in the board. The current international climate – emphasizing energy security and security of supply, as well as the trend toward increased national control in some of the competitors of the Norwegian oil and gas industry may also prove to be a crucial circumstance. From the case of Norway, whose membership in the EEA agreement makes the country especially vulnerable to the constraining effects of economic globalization, we can stipulate that the theories of Linda Weiss is a good explanatory tool for understanding the state anno 2007 – in that while the state is weaker, it is not as powerless as it is presented as in the globalization discourse.