Local Content and Sustainable Development in Norway

Abstract

The chapter reviews the use of local content requirements (LCRs) in the Norwegian oil and gas legislation. Looking at the evolution of the regulation of LCRs over time and structured around two main phases, it intends to identify some best practice in terms of sustainability. In the primary phase of the development of the Norwegian petroleum sector (1970s to mid-1990s), the national legislation included explicit LCRs. The chapter provides a categorisation of the different forms of LCRs practised at that time under Norwegian law. In the second phase, the use of LCRs has been constrained by the obligations deriving from the entry into force of the European Economic Area (EEA) Agreement in 1994 (including the Licensing Directive 94/22/EC and internal market rules), and the application of the relevant WTO Agreements after Norway joined the WTO in 1995 (TRIMs agreement, GATS). Norway has also entered into a series of Bilateral Investment Treaties (BITs) which can restrain the country’s ability to include LCRs. The chapter consequently reviews the changes introduced by Norway’s accession to the EEA, to the WTO and the implementation of certain BITs for Norwegian practices. The final part of the chapter draws conclusions in terms of a sustainability framework for LCRs and the lessons that can be drawn from the Norwegian experience that can serve as effective transplants - both prerequisites and barriers - in other jurisdictions. Innovative legal approaches to promote such strategies are cited when applicable.