TORSHAVN: “Have you got a better Faroese word for oil discovery than “oljufundur”?”Statoil’s John Pedersen puts his head round the office door to Jan Müller, director of the Faroese Oil Industry Group (FOIB), the Island’s equivalent of Norway’s Oil Industry Association (OLF).
The problem is that the Faroese word for oil discovery – “oljufundur” – is confusing.
“Fundur” means “meeting” in Faroese. Consequently, the Faroese could come to believe that “oljufundur” refers to an oil meeting.
Everyone will become a millionaire
The Faroese language needs updating. The Islands’ history is at a crossroads. Bright green, bare ridges . Several hundred metre high cliffs. Endless ocean on all sides. No trees. Arriving on the Faroe Islands for the first time is like going to the Moon – topographically strange, but culturally familiar.
This green moon-like landscape midway between Norway and Iceland could be accommodating one of the richest communities in a few years. Statoil has started drilling 125 kilometres (about 67.5 nautical miles) off the coast of the Faroe Islands.
There is talk of significant amounts of oil if the company is successful. NTB estimates public revenues will be roughly NOK 3.4 million (about USD 568,500) for each of the approximately 49,000 people on the Faroe Islands – should the company find oil. The sum is five times more per capita than Norway’s Sovereign Wealth Fund.
There is little which reminds one of an oil boom in Torshavn for the time being. Jan Müller’s office is the closest you can get. He has a rusty drill bit on the windowsill; the walls are covered with pictures of platforms.“It’s almost impossible that we won’t find oil on our side when there are such large oil deposits as close to the border with the Shetlands as there are,” he says.
A country of realists
Most Faroese have a more cautious attitude to the possible oil adventure than Mr Müller has, should we believe in what he is saying.
“Its people are realistic and have both feet firmly planted on the ground,” he says.
People have learned. They know that drilling does not mean a guaranteed oil discovery. This is not the first time oil exploration has been conducted off the Faroe Islands, either. BP pitched high during exploration drilling in 2001, virtually promising giant discoveries. Former newspaper editor Jan Müller ran the headlines, people were hooked, but became disappointed. BP found oil, but the well was considered operationally unviable.
According to Wikipedia, the Faroe Islands are one of the world’s most overcast places, but the port of Torshavn is bathed in sunshine on this particular Tuesday at the end of June. Lis Í Niðristovu runs the Kaffihúsið cafe here on the Nyhavn-like pier, just a stone’s throw from Müller's office.
“I don’t think about the oil much. They’ve talked about this oil for 15 years. I just don’t quite believe in it,” she says.
Li's husband, Johan Niðristovu, joins in, saying, “Many people will be surprised if we find oil.”
Are the Faroe Islands prepared?
The Niðristovus’ attitude seems representative. All the Faroese we talk with on this particular day have the same inquiring, sceptical expression when we mention the word "oil." It is not like the fish for now; something you can touch, feel, and sell.
“I don’t notice any Klondike-like gold rush atmosphere,” Høgni Hoidal, leader of the Faroese Republican Party Tjóðveldi, says to Aftenbladet.
We meet him in the newly refurbished Lagting — the Faroese parliament - and ask: Are the Faroe Islands prepared? It is not just about an insufficient language. How should a remote country of 49,000 residents cope with the arrival of a global billion-dollar industry and thousands of migrant workers?
Høgni Hoydal is clear : the oil could quickly catch them unawares.“We tried to address the cultural and social issues related to an oil discovery when the first exploration drilling took place in 2001. We have always thought that discovering oil could probably take some time, and then another long time before the field comes onstream. Nevertheless, Statoil is here now and sounds optimistic. It’s dawned on us that we’ve actually neglected what we agreed to do in 2001.”
“The government must prepare the Faroe Islands for a possible oil discovery,” he said.
Several questions arise: What about an oil spill? What about the wealth? Høgni Hoydal momentarily snaps out of politician mode and looks me in the eyes.
“I've always been afraid of this, to be honest. The dimensions can become so great here that we end up with a purely materialistic society with large class differences.”
“We see what is happening to the fishery, where the rights are being divided amongst fewer and fewer hands. Tax revenues from the oil can obviously go towards collectively useful, social purposes, but history has shown that income flowing into the public sector could lead to greater differences. It’s more complex than just that there is enough for everyone,” he says.
We already have a good standard of living. We don’t need to become richer.Back at Kaffihúsið on the pier in Torshavn, a cafe that apparently serves as the social glue in the Faroese capital, the Gregersen family is gathered around one of its tables. Scepticism to oil is expressed once again.
“Finding oil can be both positive and negative. Everything is very expensive, and there are big differences between rich and poor,” says Eydna Gregerson, who has painful memories of the price levels in Stavanger.
“We already have a good standard of living. We don’t need to become richer,” says daughter Vár Gregersen, 19. She graduated from upper secondary school just a few hours ago, and is wearing the white student hat. It is a tradition the Faeroese share with sister nation Denmark.
Her 22-year-old brother Fróði is studying electrical engineering in Copenhagen, but the prospect of work on the Faroe Islands is uncertain.
“I’ll move home if I can get work here. I haven’t particularly thought about oil, but I'd like to work in the oil industry if there are jobs there.”
Fróði is the Faroe Islands’ biggest hope and biggest concern. According to Faroese politicians, the number one challenge is to get their youth back home after graduation. Fewer and fewer of them return after studying abroad.
The Faroese population decreases by 100 persons a year, something it has done since the financial crisis in 2008. It is worse when it comes to women. The country has a deficit of 2,200 of them.
Furthermore, the Islands have 1,400 unemployed people, which is well above the approximately 300 before the financial crisis.
“It’ll be more positive than negative if we find oil. The graduates from Denmark will then have something to return to. It’s too boring for them on the Faroe Islands today. Oil may be just what the Faroe Islands needs,” says cafe owner Lis Í Niðristovu.
Waiting for the boom
An hour's drive from Torshavn, we meet someone in the village of Runavik who could not agree more. Blinded by the evening sun, which has announced its arrival in between the bare, light green mountainsides, we get a glimpse of Eli Lassen. He is CEO of Atlantic Supply Base (ASB), and is exactly the type of thickset person you expect to encounter in an industrial harbour.
“We only had that corner of the pier in 2001,” he said, pointing towards where Statoil’s PSV KL Brofjord is moored.Nonetheless, today, eleven years later, Lassen's company has signed a contract with Statoil to be a supply base for their exploration well. The PSV KL shuttles between Runavík and the COSL Pioneer rig on the field, therefore.
This means expansion and currently 15 employees. ASB now has 10,000m2 (about 107,640 square feet) of outdoor space and 2,500 square meters (approximately 26,900 square feet) indoors at its disposal, and is "the heart of Runavík", according to Eli Lassen.
ASB is the Faroe Islands’ only operational supply base, and has been awarded contracts for all exploration wells in the current licensing round.
“It's very exciting that Statoil is drilling for hydrocarbons”, says Lassen, as he serves us coffee.
Do you think they will find any oil?
“They must find something if they’re going to spend this much money,” he says, well-knowing that the rumours say Statoil spends approximately DKK 1 million (about USD 166.46 million) on exploration drilling.
They need to think about nature and protecting salmon farming in the Faroe Islands.Lassen is different to most Faroese. He clearly and distinctly sees a flourishing oil industry, and Runavík and the Skálafjørður fjord — the longest in the Faroe Islands - play the lead role.
“This fjord is perfect for towing rigs in for repair, and we have a dry dock further in the fjord, says Lassen, adding that its depth allows testing of subsea equipment in the middle of the fjord.
Runavík municipality has further plans of establishing a new oil industrial area in the bay, with 600 metres of quay length.
However, for now, there is often a long time between drillings. Lassen therefore needs more strings to his bow, and wants to make a contingency base in Runavík for oil spills, a stock of booms, and other emergency equipment, but the authorities will not support the project.
“The politicians are afraid to spend money, but I say they need to think about nature and protecting salmon farming in the Faroe Islands. It’s no use calling Denmark for help if something were to happen, they don’t come at once. Nevertheless, you only have to push a button with this type of contingency base.
Absent environmental debate
And with this, Lassen raises another question that politicians must ask themselves now that the Faroe Islands are on the threshold of an oil age: what about the environment? The Faroe Islands are a communications advisor’s dream. Greenpeace campaigns and intense environmental debates are few and far between here – or rather the debate is non-existent, local politicians that Aftenbladet has spoken with admit.
In the meantime, there is one environmental organisation run by people in their spare time, the Færøyenes Naturvernsforening (Faroe Islands’ Conservation Association). Nevertheless, deputy leader Hansine Dahl told Aftenbladet that they have not concluded what to make of drilling. The association promised it would issue Aftenbladet a statement before we left the island.An email arrives approximately one day later, saying, “We have to seek out the best in this area to get the know-how, just as in the same way other countries do when they learn from the Faroe Islands’ results regarding farmed salmon, and not least separate consideration for the environment from economic interests in the industry. Money comes and goes, the environment does not.”
Hoping for a dry well
“The Faroese are lucky if no oil is found. It will be good for the Faroe Islands and good for the climate,” said Truls Gulowsen, head of Greenpeace Norway.
He points out that it is much harder to stop emissions as deep as is now being drilled off the Faroe Islands. Furthermore, fisheries and aquaculture represent over 90 percent of the Faroese exports. A discharge will hit the Faroese economy hard.
“The oil industry has managed to sell in that being an oil country is unilaterally positive, but these are small communities that have a hard time dealing with a hydrocarbon industry. The coffers are expected to overflow with money, but there is no experience in the rest of the world indicating that relating to the oil industry is that easy,” says Gulowsen.Faroe Islands’ anglers’ association chairperson Jan Højgaard, is far less pessimistic. The association has no clear position on oil, just like Friends of the Earth Norway (Naturvernforbundet).
“We have not discussed this issue with the authorities, but our initial conclusion is that safety must be top-rate to prevent spills, which is our major fear.”
Nonetheless, fish stocks are already on the wane. Retired angler Morten Johannessen has laid out the day's catch on the table at Torshavn pier’s modest fish market. Fortunately, fishing is now just a hobby for the 70-year-old, according to him.
“Statoil must discover oil. All the fish reservoirs are empty. Things will go badly for the Faroe Islands if we find no oil,” he said.It is primarily haddock and cod that have disappeared. Mackerel is the hope, but the Faroe Islands are currently at conflict with Norway and the EU over mackerel quotas. Admittedly, the situation is not quite so dramatic, if we are to believe anglers’ association leader Jan Højgaard. Nevertheless, fishing is a vulnerable industry, and catch and prices are better some years than others.
“The Faroe Islands needs new legs to stand on,” Faroese Minister of Industry for the Union Party (Sambandspartiet), Johan Dahl, tells Aftenbladet.
No more 1992
He glances out of the window from the Prime Minister’s office in Tinganes, Torshavn's government quarter. The Faroe Islands experienced its own financial crisis in 1992. Banks experienced a decline of 25 percent in one year. 15 percent of the population emigrated to Denmark.
“There mustn’t be a repeat of 1992. Sustainability in manufacturing is very important,” says Dahl.
Are you prepared for a giant discovery?
“Yes, I don’t think we're too late. Remember there’s a fair bit of time between the day oil is determined up until production can begin. Nevertheless, we are rapidly expanding hotels, homes and other institutions,” says Dahl.
Until that time comes, Jan Müller has been given the task of providing information about the oil business to the 49,000 Faeroese. As the sole head of the Faroese Oil Industry Group (FOIB), part of his job is to run the Oljan.fo website — but is not using big headlines this time. One should not count one’s chickens before they are hatched.
Müller leads us into a room at the end of the hall. The shelves are full of everything from ONS catalogues to oil history books. Welcome to the Faroe Islands’ oil archives. Müller is working on a book project about the Faroese oil story even before oil is discovered.
We need to think big. We’re certainly hoping for a major discovery!“Amongst other things, the book will deal with negotiations with Denmark and the right to our own substratum and border discussions with the UK. There wouldn’t have been a Faroese oil history if these things hadn’t fallen into place.”
Nonetheless, the oil boss hopes he can compile volume two: "After the oil discovery.”
Back at the office, Müller points to three or four elephant figurines, placed neatly in a row on the top shelf.
“We need to think big. We’re certainly hoping for a major discovery!”