Who’s really winning from drilling in the Bight?

This article (part 1) examines how little the Australian public has to gain under current mining arrangement surrounding oil exploration permits in the Great Australian Bight, and the mounting risk it poses to the Australian public, as lower-risk oil reserves become less common.

Part 2 of this article will look into the well-documented potential disaster of an oil spill and the impact it would have on the Australian environment, economy and social fabric for years to come.

 

Equinor is a Norweigan oil company and 100% owner of the exploration permits EPP39 and EPP40 to drill for Oil in The Great Australian Bight (GAB). In 2016, BP walked away from holding these same permits, passing them on to (then) Norway’s Statoil, as the potentially catastrophic environmental risks for drilling in the GAB, were deemed too risky. Equinor however, continues to forge ahead with plans to drill for oil in the GAB.

 

Why this matters NOW!

Citizens of the earth, not just the Australian public, have until March 20th to leave a public comment on Equinor’s Draft Environmental Plan for drilling in the GAB. The public comment matters because Equinor has said, they will not pursue the exploration permit should they not receive ‘social license’ to operate (the ongoing approval within the local community and other stakeholders). Public comments are submitted to The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), an Australian government body who decide if Equinor’s Stromlo-1 exploration permit is to go ahead.

The public comment is the only official way to show the governing body NOPSEMA, that Equnior does not have that social license. It’s important that you have your say via the official public comment channel. If you’d like to read Equinor’s full Environment Plan, you can access it here (we encourage you to do so). If you have questions about the plan, you can call Equinor direct on 02 9434 1360.

Further reading:
How to Leave a comment on Equinor’s Environment Plan from the Wilderness Society of Australia

 

Please comment here

 

So why are we writing a two-part article?

While comments full of emotion and fine Australian swearwords are great (social media channels are providing some excellent entertainment of late), the public comment you leave on the official NOPSEMA channel should be well thought out to have maximum impact.

 

As you read the below, please ask yourself who is to benefit from drilling in The Great Australian Bight? While the environmental impact of an oil leak in The GAB is expected to far exceed the devastation seen in the disasters of Exxon Valdez in 1989 and Deep Water Horizon in 2010, the (economic) benefits that Australia is to receive, are minimal.

In our view, the risk is not worth the reward.

 

 

So who the fuck is Equinor?

In a sentence; they are a recent rebrand of Statoil, a commercial vehicle owned by the Government of Norway and established to collect royalties from mining within Norway’s North Sea. Following BP’s 2016 exit from the GAB project, Equinor are sole permit applicant for the newly proposed Stromlo-1 exploration drilling programme in the Great Australian Bight

Globally, 80% of Equinor’s employees are still Norweigan despite operations in over 30 countries.

 

The Norwegian state owns 67 % of the shares in Equinor, and receives dividends in the same way as other shareholders. In 2019, expected dividend paid to the state is NOK 16.6 billion.

– Source: Norweigan Petroleum, Government Revenues

 

 

How Norway amassed over US$1 trillion of assets from taxing ‘foreign oil investors’

Like Australia, Norway was fortunate to be blessed with extensive natural resources;

  • Early oil exploration in Norway’s North Sea was lead by foreign companies in the late 1960’s who discovered extensive oil reserves
  • Anticipating the resource boom to come, the Norwegian Government established ‘Statoil’, a company which it legislated would take a 50% ownership (and investment) in any North Sea oil mining operations.
  • Being entirely owned by the sovereignty/government of Norway, profit from these operations are held in the “Government Pension Fund of Norway” which by 2018 has amassed:
    • Around $195,000USD per Norwegian Citizen
    • Total value over $1 trillion in assets
    • This fund holds an estimated 1.3% of global stocks and shares (not including their extensive ownership of real estate across the world).

 

Thanks to natural resources, Norway is a country of five million trustifarians – with each person theoretically being a millionaire. In Australia, mining benefits a selected few.

– The Guardian, Sept 2014 Oil tax: Norway could teach Australia a thing or two about managing wealth

 

 

Between a rock and a hard place: a responsible corporate or disobedient branch of the Norwegian Government?

Over the past decades, being an oil company wholly owned by a progressive European nation hasn’t been easy. With interests in over 30 countries globally, business interests have conflicted EU and national policies.

 

In spite of the fact that Statoil is an oil company, it is the oil company of the Norwegian State, and it therefore has a special role to play in Norwegian foreign policy

Helge Rønning, University of Oslo, April 1998.

 

This report summarises a slew of allegations where Statoil ran at odds to the Norwegian Government’s foreign environmental or humanitarian policy.

In more recent times, Statoil continued to work and operate in Russia and Iran despite international sanctions imposed on trade in these countries. Indeed the blurry line of foreign policy/commercial interest has left the company and government representatives into hot water in the past.

 

So why does this history matter?

Norway as a country is a supporter of the Paris Agreement. It runs its country on 95% hydropower, has a carbon neutral pledge for 2030, and will transition all cars to electric. Yet it has been frequently called out as hypocritical as it continues to expand its North Sea oil drilling operations into the Arctic.

Ironically, the Norwegian Government has banned drilling in several environmentally sensitive areas including the Lofoten Archipelago and areas of the Norwegian Sea and the Barents Sea citing the importance of fisheries and tourism in these areas.

In any case, no drilling operation can be risk-free, but it’s clear that Norway and its people have benefitted handsomely from the consumption of their natural resources. There has been some risk but also a very generous reward.

 

In Norway, companies drilling for North Sea oil pay a 78% tax rate on income, compared with a (Australian) corporate tax rate of 28% (SS: AU corporate tax rate is stated as 30% in 2019).

– The Guardian, Sept 2014 Oil tax: Norway could teach Australia a thing or two about managing wealth

 

Now rebranded as Equinor, it’s hard to shake the feeling that weaker governance in Australia is being taken advantage of. Whilst they protect sensitive environments at home, they continue to pursue risky projects in environmentally sensitive areas abroad.

Under the current model, Australia will bear risks beyond financial description, and Norway stands to profit.

 

One day the oil will run out, but the return on the fund will continue to benefit the Norwegian population.

– The Norwegian Government, quoted in The Guardian, Sept 2014

 

In the balance – what are we really trading here?

Offshore drilling does happen widely across the world, often with clean environmental records. However, disasters are always possible, and in the past have proven catastrophic (this New York Times video is a good case study on the Exxon Valdez and Deep Water Horizon spills). In this instance, Australia and its people bear the environmental and economic burdens of any disaster through damage to our fisheries, natural environment and tourism.

When viewed in the context of the great potential risk, Australia and it’s people stand to receive very little benefit.

Neither the Australian government, NOPSEMA and/or Equinor are representing the interests of the Australian public. Oil will continue to be in demand in the short-term, but the risks of extraction need to be minimised and drilling offshore in some of the world’s most violent oceans should not be an option.

 

Further Reading:

Radio Canada International, May 2018 Seeking a greener image, Norway’s Statoil rebrands itself as Equinor
Reteurs March 2018, Statoil to rebrand as Equinor in green energy push
The Guardian, Sept 2014 Oil tax: Norway could teach Australia a thing or two about managing wealth

 

 

So why does Equinor want the Great Australian Bight?

  • It’s an effective way to export environmental risk from these activities, at home they have banned the drilling for oil in the Lofoten Archipelago on the basis of risks to fisheries and tourism.
  • It is highly profitable as Australian corporation taxation of foreign mining activities is only 30%
  • Whilst the Norwegian government has made each of its citizens millionaires (in NOK) from mining royalties, Australians stand to benefit very little, from the proposed drilling in the GAB.

 

So why are we, YOU, us all fighting for the Great Australian Bight?

The environmental, economic and social risks versus the short-term financial reward (for Australians) is simply too much. No one is sticking up for the Australian public and their best interests.

 

This is one of the reasons you need to comment on Equinor’s Oil Pollution Emergency Plan.

The public comment is the official way to show the governing body NOPSEMA, that Equnior does not have that social license. We have until March 20th to leave a comment.

 

Please comment here

 

The next part of this article will go into the already well documented environmental risks of drilling in The Great Australian Bight.

Header image by Craig Brokensha of Swellnet.

 


 

Still Stoked fully supports and advocates for renewable energies, but also acknowledges the need for a transition pathway for our current fossil fuel dependent industries. Fossil fuels will continue to be used in the near future, but these should not place our public, our livelihoods, and our natural assets at increasingly greater risk. 

About the author

Still Stoked (Alexa)

Hiya, I'm Alexa. Always on some sort of adventure! I'm excited to share my stories & introduce you to other rad women, also living the dream.
I'm here to inspire you to do the same :-)

Leave a Comment