Offshore Oil and Gas in Canada and Norway

Introduction

The acknowledgement and management of First Nations rights in areas of high mineral and clean energy value are often at the bottom of development consideration lists. However, when prioritised, they can provide much more than wellbeing and economic development opportunities for First Nations communities, they can attract environmental, social, and governance (ESG) benefits and social license for corporations.

Many Indigenous and non-Indigenous communities across the world have developed financial structures to secure long term economic development from mineral resource extraction opportunities. In development, considerations are placed on the nature of investment and allocation of revenue often determining the form of the structure itself.

Long term economic stability for Traditional Owner entities, facilitating connection to Country and protection of culture, and community prosperity should be the purpose of any self-sustaining fund built on the extraction of resources from Country. Social investment capacity is required for disbursements to entities to develop programs and functions whilst ongoing investment management is required to ensure the longevity of this support.

The economic development opportunities and acknowledgement of First Nations rights in Canada and Norway hold unique approaches. Consideration of existing international examples is critical to progressing Australia's work in the area.  The Sea Country Alliance of Australian Traditional Owners and National Native Title Council have developed the concept of a Climate Resilience Fund, to similarly provide economic development opportunities for their communities.

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Canada

Acknowledgement of First Nations Rights

The system of mineral and petroleum titles in Canada is similar to that in Australia, in that most usually mineral and energy rights are reserved to the Crown in any land grant and administered under a separate system of (Torrens) titles. Granting of leases of exclusive rights to mine are also similar to Australia¹ and, as such, First Nations Peoples' involvement in the industry is on a consultation and cultural heritage basis.

Increasingly, First Nations’ project equity is being considered as a means for economic development for use of land and extraction of resources.

The experience in Canada has been that several high-profile pipeline projects have had equity investment by First Nations groups built into them. In some quarters this may be seen to merely ‘black wash’ the projects and make the projects more palatable to broader investment, adding ESG and social license.

Regardless of the effectiveness of this approach, the projects have not continued to the implementation stage, largely due to environmental forces and dissident First Nations opposition.²  

Supporting the development of new projects benefitting First Nations communities is the First Nations Major Project Coalition (FNMPC), a national 130+ Indigenous nation collective working towards the enhancement of the economic well-being of its members. FNMPC supports its members to:

• Safeguard air, land, water and medicine sources from the impacts of resource development by asserting its members’ influence and traditional laws on environmental, regulatory and negotiation processes;
• Receive a fair share of benefits from projects undertaken in the traditional territories of its members, and;
• Explore ownership opportunities of projects proposed in the traditional territories of its members.

FNMPC is currently providing business capacity support to its members on 8 major projects located across Canada, each with a First Nations equity investment component, and a portfolio exceeding a combined total capital cost of over $20 billion. FNMPC’s business capacity support includes tools that help First Nations inform their decisions on both the economic and environmental considerations associated with major project development.³

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Indigenous Growth Fund

Canadian First Nations communities have been able to leverage wealth generation from the huge economic development opportunities provided by the sectors land use and extraction of resources.

Canada’s Indigenous Growth Fund is built around social principles, providing access to capital for Indigenous business and seeking philanthropic support to establish its own $150m capital base.

Developed as an evergreen model in 2021, the fund was established to ensure social investment supports Indigenous businesses.

The Fund is structured to accept investments from Accredited Investors, such as:

• Public and Private Foundation
• Indigenous Trusts
• Corporate Canada
• Other Institutional Investors.

The $150m investment fund provides access to capital for Indigenous small- and medium-sized enterprises. Indigenous entrepreneurs across all industries access the Fund via business loans from a network of Aboriginal Financial Institutions (AFIs) throughout the country. AFIs will access the IGF for capital to build on their 30-year track record of lending to Indigenous-led small and medium-sized businesses.

Once fully utilised, the Fund will increase lending by $75m annually with loans to roughly 500 businesses.

Lead investments in the IGF come from the Government of Canada and the Business Development Bank of Canada, with further commitments made by Export Development Canada and Farm Credit Canada. The structure relies on AFIs’ ability to deploy capital based on their unique understanding of, and connection to, the communities they serve.

Similar and smaller social investment initiatives exist in Australia, such as Indigenous Capital Limited and First Australians Capital with philanthropic support and social impact missions.

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Norway

Acknowledgement of First Nations Rights

Although wind power currently accounts for only a small part of total power production in Norway, it has become an increasingly important source of renewable energy and the number of turbines has risen tenfold during the last decade.⁴  Norway also has one of the largest offshore wind potentials in the world and aims to majorly expand its offshore wind by 2040. The zones planned for offshore wind are all along the coast of the entire country.⁵  

The northern part of Norway is a part of the Sáami area, which spans Norway, Sweden, Finland and the Russian Kola Peninsula. The Sáami area is the traditional land of the Sami people, who have maintained their culture and traditional livelihood, including reindeer husbandry, which has been a crucial part of the Sáami culture for thousands of years.⁶  

At the domestic level, the recognition and protection of Sáami culture, livelihood and language is found in the Norwegian Constitution at article 110a and a statute concerning the Sami Parliament and other matters pertaining to the Sáami. The Constitution states that it is the responsibility of the state to create conditions enabling the Sáami people to preserve and develop their language, culture and way of life.⁷    

In 2005, the Norwegian government and the Sáami Parliament entered into an agreement which outlines consultation requirements that must be complied with concerning matters that may directly affect the Sáami. These consultation provisions are in line with those set out in the  International Labour Organization Convention Convention 169.⁸  

Withdrawals from the Fund to the government’s budget must be limited to the expected real return on the Fund. Only the return is spent, not the fund’s capital. Although this return is generally around 3-4%, the fund is so large that this contributes almost 20% of the Norwegian government budget.⁹  

Fosen Vind

The most significant case concerning the impacts of renewable energy on the Sáami people is that of the Fosen Vind project. In a historic ruling by the Norwegian Supreme Court in October 2021, the licenses granted to two wind farm projects were deemed invalid as the constructions were found to violate the rights of the Sáami to enjoy their culture.

Complaints were made by the Sáami prior to the commencement of the project on the basis that the land for two of the planned wind farms, in the Storheia and Roan areas, were areas designated for reindeer grazing. The Sáami argued that the turbines adversely affect reindeer husbandry in those areas and infringe on their indigenous rights and the enjoyment of their culture.

After unsuccessful attempts to stop the construction through legal action and demonstrations, the Sáami council filed a complaint about the Stroheim project to the UN Committee on the Elimination of Racial Discrimination. In response, the Committee appealed to the Norwegian state in 2018 to halt the project until the impact on reindeer grazing could be thoroughly investigated. Despite this, the Norwegian government saw no reason to delay the project and construction began as scheduled.¹⁰  

The case was ultimately brought to the Norwegian Supreme Court after several appeals and cases in the lower courts. In October 2021, after the wind farms were already set up and running, the Supreme Court ruled that the licenses for the 151 wind turbines in Storheia and Roan were invalid as the construction had “a significant adverse effect” on reindeer husbandry in breach of Article 27of the International Covenant on Civil and Political Rights which protects the rights to cultural enjoyment.¹¹   Despite the Supreme Court ruling, the two wind farms are still operating and Statkraft AS, the owner of Fosen Vind, is currently applying for new licences.

Norwegian Sovereign Wealth Fund (Statens Pensjonsfond)

The Norwegian Sovereign Wealth Fund provides a significant contribution to the government’s net cash flow, has an ethical investment framework that has moved away from the fossil fuel investment at its establishment but has no particular social targets.

Although this Fund supports the whole Norwegian community and not First Nations peoples specifically, it can be explored as an excellent example of how wealth generated from minerals extraction can be effectively used for long term financial stability.

Approaching mineral resources as a shared resource that should provide long-term stability and security for all, the fund was established in 1990 to invest Norway’s then high oil and gas revenues.¹²  

Investing the revenues from fossil fuel industries into more sustainable sectors, provides security for the country and its people into the future. The Fund is entirely owned by the Government of Norway and is administered by the Ministry of Finance and the Norwegian Central Bank (Norges Bank).¹³  

The Government Pension Fund Act stipulates the Government’s entire net cash flow from the petroleum industry shall be transferred to the Fund,¹⁴ currently valued at NOK 11.6 trillion (A$1.7 trillion).

Although the Fund has been built with petroleum revenue, petroleum deposits now only make up less than half its value.¹⁵ The majority of value in the Fund now consists of revenue earned from investments in equities, fixed income, real estate, and renewable energy assets.

Withdrawals from the Fund to the government’s budget must be limited to the expected real return on the Fund. Only the return is spent, not the fund’s capital. Although this return is generally around 3-4%, the fund is so large that this contributes almost 20% of the Norwegian government budget.¹⁶

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Australia

Acknowledgement of First Nations Rights

Much recent commentary on the issue of Traditional Owners and Offshore Energy Projects has focussed on the issue of potential impact on the First Nations Cultural Heritage aspects of the offshore marine environment. It is important to continue to bear in mind that Traditional Owner interests in Sea Country are broader than this and extend to rights in respect of economic and social activities and the rights that First Nations peoples derive as the Traditional Owners of their Sea Country.

Increasingly, the pressure of offshore project consultation requests on Traditional Owner Representative Institutions (TORIs) has become unmanageable. Both the volume of requests and unrealistic consultation timeframes have highlighted the need for reform of the regulatory environment of agreement making. This is similarly experienced by First Nations communities globally, most recently articulated by Arctic communities at the Arctic Congress Bodø 2024.

Current Australian legislation and regulatory structures such as the Native Title Act 1993 and the consultation provisions of offshore energy regulation both at a State and Commonwealth level, acknowledge Traditional Owner rights and responsibilities. However, these regimes lack genuine manifestation of the principles of Free, Prior and Informed Consent (FPIC) as set out in UNDRIP.

Together, the Sea Country Alliance (SCA) and National Native Title Council (NNTC) speak for both sea and terrestrial rights to Country.

All coastal state and territories of Australia are represented on the 56 member SCA, ensuring that the complexity of the diverse seas, oceans and coastal areas is recognised. Similarly, the NNTC is the peak body for the native title sector with 73 members made up of the Traditional Owners of Australia’s lands, waters and resources, and their TORIs.

Climate Resilience Fund

It is posited by the NNTC and SCA that the establishment of any fund in Australia would be advanced through allocation of funds from offshore minerals extraction and clean energy generation.

The current regulatory regimes in Australia consider affected Traditional Owner communities as either being directly or indirectly (in the Environment that May Be Affected (EMBA)) impacted by a project.

The approach developed would benefit both directly, and potentially affected, Traditional Owner communities, aggregating the potential benefit on a national basis and developing a distribution mechanism that would maximise outcomes from the benefit on both a social (and cultural) and economic basis.

In this approach, this national aggregation would take the form of a Traditional Owner Climate Resilience Fund (Fund). The Fund would receive payments from proponents which would be aggregated for the benefit of Traditional Owners through their TORIs. The payments could:

• either be statutorily required (although this may raise Constitutional issues),
• form a component of an agreement with directly affected Traditional Owners, or (and)
• be based in existing arrangements such as those pursuant to Good Standing Agreements in the context of work bids in the current offshore gas regime.

Like the current Good Standing Agreement arrangements, the structure would still be one of “a voluntary policy mechanism available for the title holder and their directors, to maintain ‘good standing’ with the Joint Authority.”  However, unlike the current Good Standing Agreements arrangements, payments would not necessarily be dependent upon default of expenditure under a work bid.

Specifics around the Fund will be further developed as regulatory and statutory discussions progress between the SCA, NNTC and the Australian Commonwealth Government. The examples of similar funds detailed earlier in this paper will be drawn upon in the development of these specifics.

At this stage, it is contemplated that the Fund would take the form of a trust managed by a company limited by guarantee and established specifically for the purpose of managing the Fund. The members of the corporation so established would be both TORIs as well as organisations representative of relevant industry and government. The Board would reflect this tripartite basis and ensure relevant high level fund management expertise.

Access to the benefits of the Fund would be restricted to TORIs. It would be on an application basis with allocation based on demonstration of satisfaction of (social, cultural and economic) merit criteria. Such criteria would be determined by the Board and published. The arrangement is not dissimilar in concept and operation to the recently established Northern Territory Aboriginal Investment Corporation (NTAIC) – although NTAIC is established pursuant to a statutory regime.

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Footnotes

1. https://open.alberta.ca/dataset/93d8715b-30e3-46ad-989a-e220ea5c023d/resource/21c8a6fc-90d8-4e60-87aa-cd123f8ff4fb/download/energy-mineral-ownership-fact-sheet.pdf
2. https://www.fraserinstitute.org/sites/default/files/first-nations-and-the-petroleum-industry-from-conflict-to-cooperation.pdf
3. https://fnmpc.ca/
4. https://www.regjeringen.no/en/topics/energy/renewable-energy/renewable-energyproductionin-norway/id2343462/
5. https://publikasjoner.nve.no/diverse/2013/havvindsummary2013.pd
6. https://www.ihrb.org/focus-areas/just-transitions/community-ownership-of-renewable-energy-how-it-works-in-nine-countries
7. https://www.constituteproject.org/constitution/Norway_2016.pdf?lang=en
8. https://www.ohchr.org/sites/default/files/Documents/Issues/IPeoples/SR/A-HRC-18-35-Add2_en.pdf
9. Norges Bank (2019) About the Fund,https://www.nbim.no/en/the-fund/about-the-fund/
10. https://www.ihrb.org/focus-areas/just-transitions/community-ownership-of-renewable-energy-how-it-works-in-nine-countries
11. https://www.domstol.no/en/supremecourt/rulings/2021/supreme-court-civilcases/hr-2021-1975-s/
12. Bleakley,D., and Venketasubramanian, S., Managing Resource Booms: The NorwegianSovereign Wealth Fund, Nordic Policy Centre, 2022
13. Özgül(2019) Sovereign Wealth Funds: The Case of Norway https://www.researchgate.net/publication/336605854_Sovereign_Wealth_Funds_the_Case_of_Norway
14. NorwegianMinistry of Finance (2022) The Norwegian Fiscal Policy Framework https://www.regjeringen.no/en/topics/the-economy/economic-policy/economic-policy/id418083/  
15. NorgesBank (2019) How does the fund grow?,https://www.nbim.no/en/the-fund/about-the-fund/
16. Norges Bank (2019) About the Fund,https://www.nbim.no/en/the-fund/about-the-fund/

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