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Interview

with Martin Næsby, Managing Director, Oil Gas Denmark

06.02.2013 / Energyboardroom

How do you see the development of the American-Norwegian relationship in terms of AmCham’s activity over the last few years?

At AmCham, we now have 24 different industry groups actively building upon the relationship. Our Oslo-based organization tends to be less energy industry-centric in our day-to-day operations than Stavanger, even though we do have Chevron‘s head office here.

One of the most important issues we deal with in the relationship is the influence of the Norwegian Petroleum Fund in terms of their investments in the United States. Investment from this fund raises important ethical questions in relation to how they invest in different companies and how much control the wealth fund tries to exert. For example, Walmart, was blacklisted seven years ago when the Norwegian government tried to affect change in the company’s labor practices.

Development also comes in the form of mergers, such as Microsoft’s purchase of Fast Search & Transfer or when Cisco bought Tandberg. The question often associated with these events is whether an American company buying a local company is beneficial. There are supporters and naysayers; in general, we are supportive of these endeavours as we are when Statoil makes purchases in the States.

Specifically regarding the energy sector, the business relationship is interesting to observe today because as American domestic production increases, the export of Norwegian products could potentially decrease. We could even see the USA switching from imports to exports, with the mired development of the Cove Point Gas Terminal as a good case-in-point.

Norway and the U.S. share a historic link with waves of immigration from Norway into the U.S running up to the 1940s. Yet at the same time the two countries have a high number of trade disputes compared to other Scandinavian countries. How do you explain this apparent paradox?

Norway’s wealth enables it to do what it wants. Norway often characterizes itself by what other places are not or feels empowered to do things its own way – for better or worse – because of this wealth. Unlike other Scandinavian countries where there is no need, there are annual trade negotiations between Norway and the States. Some of these problems do eventually get resolved, such as the tariffs on Norwegian salmon. International pharmaceutical companies, however, continue to take a beating in Norway because the country is not interested in paying a fair price for research intense medications. In general Norway is very focused on abiding by international regulations but not necessarily by international norms. It sees itself as a trendsetter, for better or worse.

Do you think this is true of the U.S. as well, and does it create a conflict of two business cultures?

I do think so. In that sense, the relationship of business culture is perceived as being a flat structure vs. hierarchical, but I think these sorts of perceptions can be overstated. You cannot simply characterize the States through one business culture and Norway through another. In fact, the differences between east coast vs. west coast companies operating in Norway are fascinating. Regarding the energy industry, there are few places in the US that are more different in business culture than Texas vs. Norway, where we can contrast the cultures as a hierarchical and controlled system in Texas and an extremely flat organization in Norway.

Does the east vs. west coast divide have anything to do with where Norwegians settled in the States?

Google’s main campus on the West Coast would be much more easily transferred to Norway than a financial institution on the East Coast. In my view it has to do with the culture of the area. Norwegians settled in the Midwest and scattered across the country through to Washington State. However, we are so transient in the States that it has more to do with present-day culture.

Norwegians that settled in the States are now second and third generation and have dispersed. In fact, Norway shut down its consulate in Minneapolis a couple of years ago on the basis that Norwegians there are so far removed from the characteristics of present-day Norway. At AmCham we argued that it should not be shut down, as 90 of the US Fortune 500 companies were located in the area that the Minneapolis consulate covered. Despite the dilution of the Norwegian culture, there remained a natural fan base for Norway and Norway should have made better use of this conglomeration.

When we talked to former representatives of Statoil, they are now talking about the Americanization of the company. To what extent do you see American business influences affecting Norwegian enterprise?

If we are talking of Statoil, I would say that it is an international player now, rather than an American actor. They were always going to have to change to make it more of an international organization. There were lots of growing pains when Statoil and Norsk Hydro merged, and creating uniformity required a more international approach. Statoil’s Jason Nye during ONS for example, who heads the US offshore operations, was clearly provided a more succinct voice compared to what we had heard previously. It is very interesting to hear an American representing Statoil in Norway at that level.

We have heard that it is hard for Norwegian businesses to internationalize.

Norwegians, though they like to live in other places, very often come back to Norway eventually. Despite Norwegian engineers being specially trained and expected to work long term on international projects, they are just not interested in working in other places forever. They have it very good here and they know it. Statoil and other companies find difficulty in having their Norwegian employees moving abroad to live as expats for long periods of time, unlike American employees in Chevron and Exxon. If you have a management-level individual who is able to successfully perform and operate in foreign cultures that is a golden quality and you want to capitalize on that throughout that individual’s career rather than having them in the field for only a couple of years.

Looking at the $10 billion trade balance. What percentage of this is down to the energy sector?

The energy share represents the majority of this trade balance. Looking at a chart, energy represents significantly more than anything else. Within the $10 billion trade balance, roughly $5.8 billion is exported to the States and $4.2 billion worth makes its way to Norway. Much of these figures have to do with the export of oil and gas.

The percentage mix will shrink a little as U.S. domestic production increases. However, we are not worried about the overall number decreasing. I think it will be a closer trade balance. That being said, places like Germany and other EU states are doing very well in building their trade relations with Norway. The US is beginning to understand that trade does not happen automatically, that it actually has to compete for investment. It sounds rather intuitive but a new State Department initiative encourages US diplomats to support bilateral economic relationships, particularly in relation to Germany’s example.

With the US election approaching, do you see any impact on US-Norway energy relations as a result of one candidate being elected or the other?

No; regardless of who the President is, our foreign policy does not vary that greatly. During the Bush years, the American government was less popular than the last four years, but during that time business collaboration continued at a solid rate. This is an opportune situation, because regardless of politics, if you are a Norwegian you still have personal contacts with American businesspeople on a regular basis. Specifically, both of these candidates are for increased domestic production. Until recently, it has been kind of a joke in terms of how it would be done; but as of today, domestic production is a far more serious topic that is actually underway.

We see Norway engaging in a lot of similar issues to the States in terms of energy production. Where do you see the main points of collaboration between the US and Norwegian companies, especially in the service sector?

Technology development, particularly in automation, particularly to counteract extremely high Norwegian labor costs, is a huge mutual concern. NASA is now talking to Norwegian companies on a regular basis about developing joint operations in drilling technology development. Norway is very good at robust engineering and in general building things that need a relatively small amount of maintenance and that can survive by themselves for long periods of time, which is mainly due to the climate and the long-term planning mentality of Norwegians.

Can Norway maintain its position as a beacon for R&D development considering increasing international competition?

As long as there is money to be made in the backyard of Norway, the necessary knowhow and R&D will be there. People often ask what would happen if the current oilfields were smaller or found less frequently. Personally, I dislike this question because Norwegians were unaware of the oil and gas possibilities prior to 1965. Rather, we should focus on ensuring that the platform upon which we can build future business is sound and that we have a solid, no-surprises tax structure. We do not know, is the answer to that question, and we cannot make it happen. Norway did not decide one day to develop the NCS; essentially they had to be persuaded quite convincingly by Conoco to take part in seismic studies in the first place. They truly believed nothing was out there. Since then Norway has done very well in creating a leadership position in oil and gas technology and it all comes down to the uniquely Norwegian long-term planning mentality.

Having been here for ten years, what would you say is your personal motivation for developing these business ties?

I have been in Norway for thirteen years and at the Chamber for ten. I love Norway and America, and every day I have the opportunity to bring these countries together. My idea of a utopian state would actually be something like a cross between Norway and the States. However, I get to bring together commerce between the two countries, dispel myths about each and make real person-to-person introductions.

Norwegians who have never visited the United States might have a certain perception based on local media, just like an American might have about Europe. If a Norwegian is willing to say to me that he or she does not like the States, my first question is whether they have visited. 95% of the time the answer is no. It is hard to go to a place like America and not fall in love with certain aspects of its culture or heritage. We have to be careful in terms of having a picture of the States only based on Norwegian media and American soft power’s influence abroad.

What would be your final message on behalf of AmCham?

Do not judge Norway only by the facts and figures; come and see it for yourself. Also, do not worry about how much a Big Mac costs!

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