9 Economic activity

9.1 The business community in Svalbard

Svalbard has a long tradition of economic activity. The economic activity began with hunting and trapping in the 1600s. In the 1900s, coal mining was initiated in Svalbard, and this industry has been the foundation of the inhabited locations in Svalbard. Through to the present day, this industry has made a significant contribution to stable, year-round activity in Longyearbyen.

The SNSK group’s activity in Svalbard has been an important element of the Svalbard policy. Through the 1990s and 2000s, the company’s role in Svalbard’s growing economy became less dominant. The challenges in the 1990s resulted in an active policy to modernise the community and stimulate a wider range of businesses. Steps have been taken to facilitate a more diversified business community during this period, with resultant growth in tourism, trade, higher education, research and space activity. This effort has proved successful.

The mining operation experienced an upsurge in the early 2000s, with plans for new operations at Svea at the same time the tourism industry was continuing to grow. In 2014 production started at Lunckefjell, but financial challenges linked to coal prices led to an operational halt at the Lunckefjell mine in 2015. Although employment has fluctuated from the 1990s to the present day, over time there has been significant growth in the total number of jobs in Longyearbyen.

The general trend visible in Svalbard today has been under way for a long time. A gradual broadening of Longyearbyen’s industrial structure has made the community less dependent on the coal industry. The businesses that have developed concurrently with coal mining are those that also have natural advantages in Svalbard. This is especially the case for tourism and research. But there are also other businesses with significant employment in Svalbard, such as construction, services and public sector activity. The gradual development of a more heterogeneous business community in Svalbard is an advantage for future economic development and the creation of new jobs. Activity in industries such as manufacturing, construction and hotel and restaurant services has brought about employment trends that in large part correspond with development in the mining operations. The coal-mining industry remains important, with about 100 employees at SNSK while the suspension of operations remains in effect.

Svalbard’s labour force, like that of Mainland-Norway, has become increasingly educated. Increased knowledge and the use of technology create new opportunities for economic activity and new, sustainable and profitable jobs in Svalbard as elsewhere. This means that jobs in future, even more than to date, will be focused in other fields, so that a broader effort is needed now to pave the way for new and diverse activities. There is reason to believe that such an approach will be the most effective way in the long run to stimulate new jobs and thereby contribute to the continued viability of the Longyearbyen community. There are also a number of specific challenges associated with facilitating new economic activity in Svalbard. This is a major reason there is a need for close communication on current challenges between the local actors and public policy instruments.

It is not the role of the authorities to point out which new enterprises and jobs may be relevant in future. The authorities’ role, in the framework of the Svalbard policy, is to facilitate the creation of new jobs in industries where Svalbard has natural advantages. Based on past experience and Svalbard’s position as a unique and exciting travel destination, there appear to be solid opportunities, especially in tourism, to develop new jobs and workplaces. But the potential for new jobs and increased value creation exists also in the service industry, infrastructure and logistical services, the maritime sector and retail.

9.2 Future economic development in Svalbard

A community with a heterogeneous business structure will be less vulnerable to changes in markets, individual industries and individual companies. Developing the breadth and complexity of Svalbard’s business community is therefore desirable.

It is naturally the case that new economic activity in Svalbard occurs by and large within industries that capitalise on either Svalbard’s unique natural environment or its location. Economic development and new activities in Svalbard must therefore take place within Svalbard’s overall environmental management framework.

The expanded economic activity will mainly be situated in Longyearbyen. The same applies for industries like tourism, whose actual activity, while based in Longyearbyen, may occur elsewhere in Svalbard. Public infrastructure is a foundation for developing a more diverse business community in Longyearbyen. New enterprises wishing to establish themselves need good infrastructure, logistical services and access to land. Good land-use planning is therefore important for economic development. By way of regulations and the exercise of authority over land-use management, as well as state ownership of land and infrastructure, the authorities will have a large degree of control over the establishment of new enterprises.

9.2.1 Measures to strengthen activity and the business community in Longyearbyen

The Storting has already approved a proposal by the Government to allocate NOK 50 million for restructuring measures to develop Longyearbyen and facilitate new economic activity and jobs. This gets the work of restructuring and economic development off to a good start. The restructuring funds are distributed to the Longyearbyen Community Council, the Svalbard Business Council and the industrial policy instruments of Innovation Norway. Further development of Longyearbyen is thus being facilitated with the help of actors with both sound local knowledge and experience in economic development and restructuring processes.

Longyearbyen Community Council

The Longyearbyen Community Council today plays an important role in restructuring the Longyearbyen community, and will do so going forward, too. The council is intimately familiar with local conditions and knows the business community well. It also has a special responsibility for development within the Svalbard policy framework, a responsibility also enshrined in section 29 of the Svalbard Act. On that basis, the Longyearbyen Community Council has been allocated NOK 4.5 million towards restructuring and economic development efforts, primarily in Longyearbyen.

Good infrastructure is essential for developing employment and stimulating economic development. There is currently a maintenance backlog for infrastructure measures in Longyearbyen. The Longyearbyen Community Council and the Ministry of Justice and Public Security have both been concerned about this for several years. To reduce this maintenance backlog and simultaneously contribute to new jobs in the construction sector, NOK 22 million of the NOK 50 million total was allotted to infrastructure projects in Longyearbyen.

Svalbard Business Council

It is important that those who know Longyearbyen and the needs of its business community be included in the development of business-promotion measures.

The Svalbard Business Council represents the business community and works to promote its interests in the archipelago. The council received NOK 0.5 million from the restructuring package to facilitate restructuring and economic development efforts in Longyearbyen. The funds will help generate collaboration between the local business community and local authorities.

Policy instruments – Innovation Norway

Innovation Norway is a key tool of the state and county authorities in their efforts to realise value creation and economic development. With its experience in regional restructuring, Innovation Norway can be an important contributor to the restructuring work Svalbard now faces. Innovation Norway has received NOK 20 million in total from the restructuring package to enhance its presence in Longyearbyen and to develop and fund projects. A strengthened presence makes Innovation Norway more visible and accessible to the local economic development actors. Special project funding to Innovation Norway, earmarked for Svalbard, can help the organisation provide support to specific local projects, thus contributing to economic development in Longyearbyen and helping to achieve the Svalbard policy’s key objectives. Depending on which projects are proposed, it may be possible to award funds from other national programmes administered by Innovation Norway. In its work promoting new economic development, Innovation Norway must coordinate and exploit the expertise within its own organisation and in other public policy instruments. The company will work closely with the Longyearbyen Community Council and the Svalbard Business Council on the progress and prospects for creating new enterprises and jobs that support the objectives of the Svalbard policy. Experience gained from restructuring in other local communities with special restructuring challenges indicates that success requires the participation and support of local actors and key policy instruments.

To strengthen the possibility of creating a new business community in Svalbard, new expertise in enterprise and innovation will be brought in. NOK 3 million has therefore been allocated to prepare a special business and innovation strategy for Svalbard. The aim of the strategy effort is to gather input and opinions from a variety of actors as a basis for reviewing and presenting the potential that exists for Svalbard’s economic development in the longer term. Input will be needed from relevant bodies of experts, including Innovation Norway and the Research Council of Norway, and from a partnership of local actors such as the Longyearbyen Community Council and the Svalbard Business Council. The Ministry of Trade, Industry and Fisheries will lead the strategy work, and the work will be anchored in the Interministerial Committee on the Polar Regions.

9.3 Objectives and framework for future economic development

Sustainability and predictability have long constituted a fundamental element of the Svalbard policy. That will continue to be the case. One of the key objectives of the policy is maintenance of Norwegian communities in the archipelago. Like communities elsewhere, Svalbard’s is changing, and the development of new economic activity must be based on the same principles that apply to the development of sustainable economic growth in general industrial policy. At the same time, consideration must be given to the special frameworks applicable to Svalbard. An adaptable business and community and employees with the right expertise provide the basis for developing new economic activity in Svalbard. Innovativeness and increased knowledge make it possible to adopt new technologies, which in turn can contribute to the development of new, sustainable enterprises and jobs.

The Government’s commitment to economic development, new jobs and enterprises in Svalbard will build on the main elements listed below.

The Government will:

• Facilitate development of existing and new industries within the overriding objectives of the Svalbard policy.

• Strengthen economic development efforts under the auspices of the Longyearbyen Community Council and the relevant national policy instruments in cooperation with existing business interests in Longyearbyen, using funds provided in the estimated accounts for 2015.

• Facilitate conditions for the development of a more diversified business community. Preferably, the new jobs should be stable, year-round and commercially profitable.

• Facilitate development of a new, forward-looking business and innovation strategy for Svalbard.

• Continuously assess the need for restructuring and economic development measures that support the Svalbard policy objectives.

9.4 Economic activity in more detail

9.4.1 The tourism industry

The tourism industry has long been one of Svalbard’s principal industries. In Report No. 50 (1990–1991) to the Storting on industrial policy measures in Svalbard, the Government wished to facilitate the development of tourism as an industry in Svalbard. The focus on tourism was followed up in Report No. 9 (1999–2000) to the Storting Svalbard and in Report No. 22 (2008–2009) to the Storting Svalbard, where it was asserted that the tourism industry had become an important foundation of economic activity in the archipelago, particularly in Longyearbyen. Even as the Government seeks to facilitate further development of tourism, it is an overriding objective that Svalbard shall be one of the world’s best-managed wilderness areas, and the best-preserved High Arctic destination in the world. The ambitious environmental objectives and strict environmental legislation pertaining to Svalbard will remain frameworks for the development of tourism.

Since the early 1990s, Svalbard has experienced gradual growth in tourism, as desired. The number of registered guest nights at hotels or guest houses has risen from barely 20,000 in 1991 to about 131,000 guest nights in 2015. That means, given an average stay per visitor of 2.24 days, that about 60,000 guests overnighted in the archipelago in 2015. The number of overnight stays is, nonetheless, modest compared with destinations on the mainland.

The latest available report, from 2014, shows an occupancy rate for overnight accommodation in Longyearbyen of 57 per cent. The tourism industry in 2014 employed 194 people directly and contributed to 103 full-time-equivalent positions in related activity. The industry had approximately NOK 363 million in sales and generated a turnover in local purchases equivalent to approximately NOK 137 million (Norwegian Institute for Urban and Regional Research/Longyearbyen Community Council).

Growth in the Svalbard tourism industry, in terms of visitors, employment and number of companies, has occurred in waves. Particularly strong growth was noted in the 1999–2001 period, before levelling out in 2001–2005. A new peak in 2008 was followed by decline and stagnation that lasted until March 2013, when competition in air travel to Svalbard contributed to renewed growth.

Cruise tourism is an important part of tourism in Svalbard. Cruise tourism can be divided into two main segments: overseas cruises, with ships arriving from afar, and expedition cruises, with Longyearbyen as the start and end point for cruise journeys in the waters around the archipelago. The ban on heavy fuel oil that was introduced with full effect from 2015 and compulsory pilotage, also introduced in 2015, have meant that ships using heavy fuel oil and those without a pilot on board are no longer permitted to sail in Svalbard’s protected areas.

Tourists and crew from overseas cruise ships are largely self-sufficient, but they contribute to the retail trade in Longyearbyen and Ny-Ålesund when they go ashore. Expedition cruises are generally combined with stays in Longyearbyen before and after undertaking expeditions, and therefore contribute somewhat to the local economy. The Association of Arctic Expedition Cruise Operators (AECO) is an international organisation for expedition cruise operators operating in the Arctic and for others with interests in this industry. AECO develops standards for responsible, environmentally friendly and safe operation of expedition cruises in the Arctic.

The Svalbard Cruise Network (SCN) is committed to the development of cruise tourism to Svalbard. One way cruise tourism can be used to create value in Longyearbyen is through product and destination development in the city and Isfjorden. Cruise customers have spending power. It is therefore important that provision is made for a wide range of available services that encourage cruise passengers to take advantage of the commercial and cultural activities in Longyearbyen. Improved port infrastructure in Longyearbyen should contribute to this.

Svalbard has received considerable attention in recent years. Nevertheless, the share of international visitors has declined. Targeted international marketing efforts have led to signs of an increase in the percentage of international visitors. If Svalbard is to perform well against the international competition, the promotion of Svalbard as a destination and the marketing and development of travel products must be correctly packaged and market-appropriate.

Photo: Margrete Keyser, Office of the Governor of Svalbard

Tourism products

Considering its size, Longyearbyen today offers a wide variety of tourism products. Many are experiences connected to nature, such as guided hikes in nearby areas, kayak trips, visits to caves under glaciers, and snowmobile and dogsled safaris. Surveys indicate that it is precisely these experiences, all related to pristine wilderness, that most tourists wish to seek out. Despite today’s varied offerings, the potential exists to develop additional products – anything from multi-day expeditions to outdoor adventures and excursions combined with activities in Longyearbyen. Examples of new tourism products developed in recent years include the conversion of Mine 3 into a museum and snowmobile trips to Svea that combine industrial history with experiences of the magnificent natural environment.

Amidst rising international competition, continuing development of tourism products is crucial. As pointed out in section 6.3.2, Svalbard’s cultural scene is also a resource in developing the tourism industry. The field of culture is a resource in terms of both the cultural expertise used in developing goods and services and the experiences and content of tourism products. For example, the museum and library are sources of insight into history, cultural heritage and cultural expression. The cultural institutions have extensive experience in presentation and communication. Artists can supplement the tourism industry’s outdoors offerings with cultural experiences in the form of concerts, exhibitions and stage performances. Practitioners of most of the arts come to Svalbard. Cultural actors are also showing growing interest in various issues and challenges relevant to the High North and Arctic areas.

Food culture is of interest in this regard. Several businesses in Svalbard would like to offer their customers local food, such as Svalbard reindeer meat and fish from Isfjorden. Such offerings help improve the tourism product and can reduce the environmental impact associated with transporting food. Environmental objectives and regulations, however, limit the harvesting of such resources. Beer brewing in Svalbard illustrates the consumer demand for locally sourced food and drink. Consideration will be given to the possibility of adapting regulations in this area to better meet the tourism industry’s need and desire to use local food resources. Any changes must be consistent with the legislation governing Svalbard’s environment.

There is no doubt that the cultural sector as a whole could make a major contribution to strengthening the tourism industry. A potential challenge exists, however, in the fact that the cultural and tourism communities both lack the mutual insight and understanding needed to appreciate what cooperation can mean for them both. It is therefore important to make the added-value potential more visible and to encourage knowledge development and exchange, and, by extension, to encourage cooperation between Svalbard’s cultural and tourism actors.

One of the overriding objectives of the Svalbard policy is to maintain Norwegian communities in the archipelago. A greater number of attractive experiential opportunities might entice tourists to stay longer than they do today. Prolonged stays would result in increased revenue per visitor, which is positive for the business community in Longyearbyen. Moreover, the relationship between revenue and the environmental impact of tourist transport to and from the archipelago would improve.

There has been significant growth in new tourist offerings based on the use of sled dogs, and the opportunity exists for further development and growth in these products. Activities on the snow cover generally have less environmental impact than activities on dry land. It is therefore desirable to encourage greater use of the large snowmobile-free area, for both dogsled and ski trips. Increased activity and job creation in the tourism industry require that good air travel services be maintained. At the same time, increased tourism will help improve the basis for maintaining and further developing communications and other important societal functions in Longyearbyen.

The tourism industry is to some extent seasonal. This means that labour demand is reduced during the polar night and that it can be a challenge to create year-round jobs in Longyearbyen that contribute to the maintenance of a viable local community. Statistics in recent years indicate a positive trend towards year-round tourism, partly as a result of aurora borealis tourism, but the polar night is still a low season. In order to facilitate year-round tourism, products must be developed that are attractive even in the dark. Since the polar night greatly limits the potential for activity outside the Longyearbyen area, varying the activities and experiences available to visitors in the greater Longyearbyen area could help make the polar night more attractive and create more year-round jobs. Several popular products are already offered during the polar night, such as Polarjazz and Dark Season Blues, but continued efforts are needed to develop year-round tourism in Longyearbyen. Developing visitor experiences and activities in the central district could help strengthen Longyearbyen as an attractive destination even during the polar night.

The environmental objectives and legislation relating to Svalbard limit the activities that can be pursued. Increased activity in the Svalbard tourism industry must take place within these limits. Nature-based tourism, which is the core of what Svalbard can offer, depends on frameworks ensuring that Svalbard’s unique and unspoiled natural environment is preserved in future. The tourism industry in Longyearbyen is working towards having Longyearbyen awarded a quality label for sustainable destinations where the environment and the welfare of local communities are protected. To achieve this, the tourism industry must develop in a way that preserves natural and cultural heritage sites, ensures considerate and safe travel across the natural landscape and attends to local community needs, all while strengthening the foundation for profitable enterprises. In connection with a 2014 revision of the regulations on tourism, the Governor emphasised that there are very few conflicts on record between modern organised tourism and Svalbard’s natural and cultural assets. This is partly attributable to the industry’s internal discipline, which, along with the Svalbard Guide Training Course, leads operators to emphasise cautious and considerate traffic. It can nevertheless be hard to reach individual travellers with sufficient information about regulations and essential safety measures.

Developing new tourism products and getting them established takes a long time in many cases. Over and above promotion and marketing, it is crucial that tourists enjoy their visit to Svalbard and the activities they engage in while there. Good communications, infrastructure and facilities are key to the experience. Predictability and stable framework conditions, moreover, are essential for the tourism industry’s ability to offer tourists positive experiences. A clear framework for land use, local resource management and facilitation of activities is crucial to the development of good tourism products and sustainable tourism in Svalbard.

The tourism industry in Svalbard will be concentrated largely in the inhabied locations and in Management Area 10. To facilitate further development of the tourism industry it is essential to provide tourism operators with sound, predictable framework conditions within the constraints established by existing regulations. Not least, it is important to find satisfactory solutions for the tourism industry when ice conditions or wildlife considerations make traffic adjustments necessary. An example of this is the proposal that the environmental management authorities have circulated for public consultation to expand the area where visitors may drive snowmobiles when participating in organised tours or when accompanied by permanent residents. The proposal addresses both the tourism industry’s need to be able to operate tours to Pyramiden and the need to avoid disturbing polar bears and seals at a vulnerable time of year.

Tourism is one of the activities that can help Longyearbyen be a viable local community of high quality in future. The aim is to develop Longyearbyen as an arena for both visitors and permanent residents with a diverse range of activities and experiences that are better arranged for guests than is the case today. Increased activity and new jobs in the tourism industry will help to create a better foundation for maintaining communications and important social functions for the local community. At the same time, good communications to and from the archipelago are a precondition for further development of tourism in Svalbard.

The Government will:

• Ensure sound, predictable framework conditions that provide a basis for growth in the tourism industry, by facilitating the development of tourism products.

• Facilitate the development of tourism products in Management Area 10.

• Further develop Visit Svalbard as a developer of tourism in Svalbard, and Visit Svalbard’s coordinating role for the tourism industry.

9.4.2 Mineral activity

Coal has been extracted in Svalbard since the early 1900s. Apart from coal, there have been surveys and trial operations for other minerals such as phosphorus, gold, zinc, lead, copper, gypsum and marble. These efforts have not resulted in any profitable operations. No commercially viable deposits of minerals other than coal have been proven.

Today there are coal operations in Longyearbyen and Barentsburg. Store Norske Spitsbergen Grubekompani (SNSG), a subsidiary of Store Norske Spitsbergen Kulkompani AS (SNSK), is the company that runs the coal operation in Longyearbyen, while the coal operation in Barentsburg is run by Trust Arktikugol. Previously, there was also activity in Ny-Ålesund and Pyramiden, but the mines there closed down in 1962 and 1998 respectively. SNSG’s coal operation in the Svea Nord mine has been in regular operation since 2002. When production in the final panel at Svea Nord is completed in the spring of 2016, SNSG will carry out preparatory activities and measures needed to suspend mining operations in the Svea area for up to three years, from 2017.

Mining Code for Svalbard

The right to search for, acquire and exploit natural deposits is regulated by the Mining Code for Svalbard, as stipulated in the Royal Decree of 7 August 1925. Only persons from, or companies domiciled in, states which are parties to the Svalbard Treaty have the right to obtain mining rights in Svalbard. The Mining Code is based on the principle of first finder’s right. Whoever first discovers a mineral deposit has first right to the find and to demand a land claim (mining rights).

The owner of land where a claim has been awarded has a right to participate in the operation at a level of up to 25 per cent.

The Mining Code sets minimum requirements for the effort that must be expended to retain a claim. The obligation to work a claim is not absolute. On specified terms set forth in the Mining Code, dispensation may be granted from the work obligation. Upon application by the claim holder and recommendation by the Directorate of Mining, a dispensation from the work obligation is granted by the Ministry of Trade, Industry and Fisheries for five years, which constitutes a work-obligation period.

If a claim holder has not fulfilled the work obligation and also has not applied for and been granted dispensation, the claim lapses at the end of the following calendar year. Others may then apply for new claims in the freed-up area.

Possession of a claim does not confer the right to encroach on Svalbard’s natural environment. The establishment of mining operations in Svalbard requires permission under the Svalbard Environmental Protection Act. This legislation is described in greater detail in Chapter 7, ‘Environmental protection’.

At the end of 2015 there were a total of 371 registered claims in Svalbard, and the SNSK group possessed 324 of them.

9.4.3 Store Norske Spitsbergen Kulkompani

About Store Norske Spitsbergen Kulkompani

Store Norske Spitsbergen Kulkompani was founded in 1916, and its principal activity is coal mining in Svalbard. In 1973 the state acquired one-third of the shares in the company, and from 1976 the state owned 99.94 per cent (see Proposition No. 125 (1975–1976) to the Storting). Today the state owns 100 per cent of the shares, after the remaining shares were redeemed in June 2015 (see Proposition 118 S (2014–2015) to the Storting).

The group consists of the parent company, Store Norske Spitsbergen Kulkompani AS (SNSK), and its wholly owned subsidiaries, Store Norske Spitsbergen Grubekompani AS (SNSG) and Store Norske Boliger (SNB). SNSK also owns 65 per cent of the shares in the subsidiary Pole Position Logistics AS. The SNSK group is also the largest holder of mining claims in Svalbard, with 324. The group currently has about 170 employees, but due to financial difficulties the company has decided to downsize to just under 100 employees.

SNSG now has operations in two mines: Mine 7, near Longyearbyen, and Svea Nord, which is located 60 km south of Longyearbyen. Coal production in Mine 7 has remained relatively stable in recent years. In 2014, 61,462 tonnes of saleable coal were produced, as against 64,687 tonnes in 2013. About 35 per cent of the coal from Mine 7 is sold to the local power plant, which the Longyearbyen Community Council operates in Longyearbyen. The rest is exported abroad. By the company’s assessment, Mine 7 had 1.9 million tonnes of total coal reserves at the end of 2014 and an expected operational life, assuming two shifts, of about 10 years. An additional 2.0 million tonnes of resources are indicated. The indicated resources are expected to have higher sulphur content and hence lower quality than today’s coal reserves. Assuming it is deemed commercially profitable to extract the indicated resources, there could be production taking place in Mine 7 even after 2025. Lunckefjellgruva, located northeast of Svea Nord, was to have been in production according to its business plan, but this has been discontinued.

In Svea, the coal operation was mainly related to Svea Nord. The mine has been in regular operation since 2002. Operation in the core area of Svea Nord is coming to an end, and production is now taking place at the outer edge of the resources, which means production conditions are more demanding. When production in the final panel is completed in the spring of 2016, SNSG will carry out preparatory activities and measures needed to suspend mining operations in the Svea area for up to three years, from 2017.

Lunckefjellgruva opened in February 2014. The mine has access from Svea Nord, and SNSG’s coal operation was to have continued at Lunckefjell after Svea Nord. As a result of the difficult market outlook, however, SNSG has ceased production at Lunckefjell. There are about 8 million tonnes of coal reserves at Lunckefjell, and the quality of the coal there is such that it could be sold for metallurgical application (PCI coal), achieving a higher price than coal for electricity production. Lunckefjell is still regarded as a natural project to pursue if coal prices develop positively.

Challenging market conditions

In the 2004–2013 period the SNSK group had an accumulated profit of about NOK 1.5 billion, and it paid out nearly NOK 500 million in dividends. Relatively favourable coal prices and the positive impact of financial hedging contracts contributed to the results in this period. In recent years, as a result of a significant drop in coal prices combined with large unrealised losses on currency hedging contracts and poor market prospects for coal, SNSG has found itself in a very challenging economic situation.

The SNSK board and the ownership ministry, the Ministry of Trade, Industry and Fisheries, have been in close dialogue about the company’s situation. In May 2015 the Government put forward a proposition to the Storting (Proposition 118 S (2014–2015)) whose main elements were that the state would strengthen SNSG’s liquidity by NOK 500 million. Of this amount, NOK 295 million went to the purchase of real property and infrastructure then owned by the SNSK group, and NOK 205 million was provided as a subordinated loan to SNSK from the state. The funds were to be made available for operations in SNSG. The Storting approved the Government’s proposal on 11 June 2015 (see Recommendation No. 343 S (2014–2015)). The funds SNSK was provided by the state were intended to help finance a minimum level of operations by SNSG in 2015 and 2016. It was also evident that coal operations at SNSG were at high risk of having to be wound down after year-end 2016 if market conditions did not improve.

With coal prices continuing to decline through the autumn of 2015, the situation for SNSK became even more difficult. In September 2015 the SNSK board contacted the Ministry of Trade, Industry and Fisheries about the deteriorating situation and the options for continued operation. The company saw no economic basis for further operation at Lunckefjell, and production was discontinued in the autumn of 2015. The board recommended to the owner that the operation of Mine 7 continue in two shifts, and that a suspension of operations for up to three years be facilitated at Svea and Lunckefjell.

There are several considerations behind state ownership of SNSK. After a comprehensive assessment – with strict attention paid to issues of maintenance, further development, and community restructuring in Longyearbyen of a kind that supports the overriding objectives of the Svalbard policy – the Government proposed (in Proposition 52 S (2015–2016) to the Storting; see Recommendation No. 214 S (2015–2016)) that the state as owner contribute capital to facilitate a suspension of operations at Svea and Lunckefjell for up to three years and that the operation of Mine 7 near Longyearbyen be continued and expanded to two shifts, in line with the board’s recommendation. The ministry’s proposal entails an allocation of NOK 112 million to SNSK in the central government budget for 2016.

The Government acknowledges that there is considerable uncertainty associated with business developments at SNSG and the SNSK group, including a low probability that it will be rational from a business point of view to resume production at Svea and Lunckefjell in the current three-year period. The liquidity made available to SNSG must therefore be regarded as risk capital with a high risk of being lost. The ministry also proposed converting the subordinated loan of NOK 205 million plus interest to equity in SNSK. The proposition also makes it evident that there is considerable uncertainty as to further development in the SNSK Group and that the Government will evaluate this in more detail.

Although the Svalbard community has developed several legs to stand on and can absorb the ongoing reduction in the number of SNSK group employees, a potential winding down of coal mining operations at Svea and Lunckefjell would have consequences for the community. The SNSK group still holds great significance for the Svalbard community. The financial cost of a suspension in operations must be weighed against the benefits of continued Norwegian activity related to the Svea area coal mines after the period of minimal operations runs out 2016. Overall, the Government sees good reasons for choosing suspended operations rather than a winding down, especially given the consideration of providing the Svalbard community more time for restructuring and the objective of maintaining Norwegian communities in the archipelago.

If prices had provided a sufficient financial basis, coal deposits proven in the Svea area could have supported operations through 2023. Market conditions for coal mining have shown a negative trend in the past year, and the outlook appears challenging. For the coal resources in Svalbard to be produced profitably from an economic point of view in future, market conditions have to improve significantly. The special conditions in Svalbard also make it very expensive to run coal operations. The high cost level can to some extent be explained by factors such as location, operating conditions, security requirements and general wage pressure. SNSK today has claims in several places in Svalbard. These are deposits that can be used as reserves if coal operations beyond the one at Mine 7 become likely.

The Government will consider alternative solutions and the structural framework for the SNSK group’s further activity, including alternative solutions for any continuation of activity at Svea and Lunckefjell, and it will consult with the board in this regard.

Future activity in the company

The operation of Mine 7 is scheduled to continue and to deliver coal to Longyearbyen. This may continue for several years. Beyond coal mining, the SNSK group also manages housing and property in Svalbard. Through the subsidiary Store Norske Boliger AS (SNB), the SNSK group owns about 380 housing units in Longyearbyen. The company’s purpose is to own and rent out real property. Primarily, SNB rents out homes to companies in the group and to partners. The largest tenant is SNSG, which rents out housing to employees. In line with the state’s objective of contributing, through its ownership in SNSG, to the maintenance of the community in Longyearbyen, the company has applied to increase the number of family homes to make it attractive for the company’s employees to settle in Longyearbyen with their families. According to the company, the price level in SNB is set on the basis of what it costs to invest in housing construction in Longyearbyen, as well as to cover municipal fees, district heating/heating and continuing and periodic maintenance.

The downsizing of SNSG in 2013 freed up several housing units, leading to a marked increase in external rentals. This development continued in 2014 and into 2015. As of February 2016, SNB was renting out about 35 per cent of its housing stock externally. This includes rentals to partners. SNSK wants to help develop the market for both residential and commercial property in step with local needs. The company’s housing and property management activity will depend on the activity level in other areas of business and community life in Longyearbyen, and on financial resources. Currently, SNSK also rents the state’s land at Hotellneset in Longyearbyen. SNSK is also considering further development of Hotellneset for commercial use of the area in the longer term.

When production at Svea Nord ends in the spring of 2016, SNSG will carry out preparatory activities to suspend mining operations at Svea for up to three years, starting in 2017. During the period of suspended operations, SNSK will continue to rent land and infrastructure from the state as well as to oversee management and maintenance of Svea on behalf of the state. In this period SNSK will also work for the development of new, commercially profitable activities tied to the existing infrastructure at Svea which can be combined with any future resumption of mining operations. This applies both to research activities under the direction of Svea Arctic Research Infrastructure (SARI), collaborative projects with UNIS, and facilitation of tourism activity.

As landowner and owner of the infrastructure in Svea, the state will have certain expenses in managing and maintaining the properties. The costs related to Svea are costs that the state will have to fund regardless of the SNSK group’s further development. An important job ahead will therefore be to examine how Svea can be managed further if mining operations at Svea are wound down.

Changed purposes and categorisation

The state must attend to several purposes through its ownership of the SNSK group. On the one hand, the ownership is supposed to help support the overriding Svalbard policy objectives. For many years, the company’s mining operations have contributed significantly to stable, year-round Norwegian activity and presence in Svalbard. SNSK has also signed agreements with the state on operation and maintenance of parts of the state’s real properties in Svalbard. On the other hand, the state’s purpose in owning SNSK has been for the company to operate on a commercial basis and with a view to delivering competitive returns. This has proved difficult in recent years.

To better reflect the state’s various interests as owner of SNSK, the Government has changed the categorisation of the state’s ownership in the company. The Government has moved SNSK from Category 3 (commercial objectives and other specifically defined objectives) to Category 4 (sectoral policy objectives). Apart from this, today’s framework for corporate governance of the company is to be extended. Requirements have been set for efficient operations.

The Government will:

• Assess the situation for continued SNSK operations in light of developments in the price and market outlook for coal.

• Administer ownership in SNSK so that it contributes to the Longyearbyen community in a way that supports the overriding objectives of the Svalbard policy.

• Assess future development and activity in Svea in light of the state’s role as landowner and infrastructure owner.

9.4.4 Space activity

Svalbard is Norway’s foremost advantage as a space nation. The archipelago’s geographical location is ideal for space activity, both for exploration of the atmosphere and downlinking of satellite data. Its northern position gives Svalbard a competitive advantage with regard to downlinking information from satellites in polar orbits. Svalbard is the only easily accessible place where it is possible to communicate with satellites in polar orbits during each orbit that such satellites make around the earth. Downlinking satellite data from Svalbard thus helps to make the operation of polar-orbit satellites more efficient. As a result, the services provided by the station in Longyearbyen are in high demand.

Svalbard plays a key role in Norwegian space activity, and the space activity in Svalbard continues to develop strongly. Space activity is an important part of the economic base in Svalbard. Svalbard’s accessibility and northern location, along with the communities associated with the University Centre in Svalbard (UNIS), result in an active research community. UNIS is involved in research into Arctic geophysics and studies of the aurora borealis.

The European Incoherent Scatter Scientific Association (EISCAT) is an international scientific organisation that operates three radar facilities for ionospheric studies. EISCAT has four stations, including one in Svalbard outside Longyearbyen. Norway is a member along with five other countries.

Photo: ©KSAT – Kongsberg Satellite Services

SvalSat and SvalRak

The cornerstones of space activity in Svalbard are the Svalbard Satellite Station (SvalSat) ground station and the Svalbard Rocket Range (SvalRak). SvalSat downlinks information from satellites in polar orbits, and SvalRak provides launch services for scientific balloons and rockets. SvalSat has about 30 employees and is owned by Kongsberg Satellite Services (KSAT). The state, through Space Norway AS, owns 50 per cent of KSAT. Space Norway AS also operates the fibre optic cable to Svalbard. SvalRak is owned by Andøya Space Center AS (ASC). ASC is a state company under the Ministry of Trade, Industry and Fisheries.

Svalbard Satellite Station, located on Platåberget at Longyearbyen, is the northernmost satellite downlink station in the world. Through effective utilisation of SvalSat, Norway is exploiting its geographical advantage. This has made Norway a major international player in the satellite downlink market. SvalSat is currently the largest commercial satellite ground station in the world and a global leader in downlinking meteorological data from polar-orbit satellites. With its downlink services at Svalbard and at the Troll station in Dronning Maud Land in Antarctica, KSAT is the only company in the world that can offer downlinking of information near the North Pole and the South Pole alike. This permits quick access to observational data from polar-orbit satellites, providing KSAT with a competitive advantage.

SvalRak is a launch station for research rockets at Ny-Ålesund. Because Svalbard is situated very close to the magnetic north pole, the rocket-launching range is particularly well suited for studies of the aurora borealis and other phenomena specific to the Arctic. Along with Norwegian researchers, the users of the facility are primarily Japanese and American. There is also increased interest in the release of large stratospheric research balloons from Svalbard.

Major international actors such as the US, European and Japanese space agencies, as well as several other major actors in space activity, make use of the services and infrastructure at SvalSat. The European Space Agency (ESA) uses the installations at Platåberget near Longyearbyen for both commercial and research-related activity. SvalSat operates antennas for NASA, the European meteorological organisation EUMETSAT and the ESA, among others. Many earth observation satellites travel in polar orbits, so from positions near the poles it is possible to communicate with and downlink data from these satellites at relatively short intervals. Services based on earth observation data are of great administrative and commercial significance to Norway, especially in the management of marine areas in the far north. SvalSat also operates antennas for the Galileo, EGNOS and Copernicus EU programmes, thereby helping to strengthen the programmes’ coverage and performance in Norwegian areas of interest.

Large investments have been made to strengthen SvalSat’s position as a leading provider of space-based services. In 2004, fibre optic cables were introduced for transmitting data from Svalbard to the mainland. As a result, real-time access to data from the satellites is also available on the mainland. The development was funded through an agreement with the US aerospace and meteorological agencies, NASA and NOAA; the fibre optic cables are owned by Space Norway AS.

Future opportunities

There is reason to believe that international interest in the use of Svalbard’s space infrastructure will continue to grow. Satellite data downlinked in Svalbard is used operationally in the monitoring of sea-ice conditions, oil pollution and maritime traffic. This information is critical to preventing and detecting accidents and environmental crime at sea.

Svalbard’s geographical location provides unique opportunities for space research, including research on space weather. Space weather research is research into the sun’s effect on the earth. It is common for space weather to affect the earth, but in most cases the effect manifests itself in the form of remarkable natural phenomena: aurora borealis and aurora australis. It is the truly powerful solar storms that may have consequences for us, because such storms can affect our systems on earth, interfering with satellite signals, for example, as well as other technologies and infrastructure. Vulnerability rises in step with society’s adoption of increasingly sensitive technology. Norway is a leader in aurora borealis research, and the Kjell Henriksen Observatory (KHO) outside Longyearbyen represents the core of Norwegian and international research into the aurora borealis. Together with rocket and satellite measurements and the EISCAT and Super-DARN radar facilities, this research infrastructure is unique to Svalbard. This research infrastructure puts Norway in a strong position to participate in international collaboration in this field.

Efforts are under way to integrate the space activity with other observational platforms, such as SIOS, whose contributions include improved availability of climatic, environmental and earth observation data from Svalbard from satellites.

In this way Norway will also be able to help explore the solar system. Norwegian researchers’ understanding of satellite data and field measurements from glaciers in Svalbard could be important to an understanding of glaciers and any potential biological life on Mars and other planets. NASA and the ESA use Svalbard regularly to test equipment employed in space missions for solar system exploration.

Substantial funds have been allocated to encourage Norwegian companies to take part in research and innovation efforts in a European context. It is important that Norwegian space activity actors also take part in European collaboration, so as to exploit the competitive advantages that Svalbard’s location and attributes provide in space-related research, innovation and economic development.

The earth’s curvature and Svalbard’s location far from other land masses limit opportunities for coverage by conventional communication channels, such as marine VHF radio and satellites in geostationary orbit over the equator. Existing systems that provide satellite communications in areas north of 75° N have limited performance and capacity. This can present a challenge in operations such as search and rescue. The Government will look into the possibility of a solution for a satellite-based communications system in the High North.

Space activity creates high-technology jobs in the northernmost counties and in Svalbard. Continued growth in space-based activity in Svalbard will lead to increased interest from domestic and international communities alike. Space infrastructure and space activity in general have great potential to contribute to future sustainable activity and value creation in Svalbard.

The space activity exploits Svalbard’s geographical advantages, and navigation and earth observation satellites are particularly useful in these areas, as they can cover large areas with relatively little infrastructure without harming the environment. Space-based infrastructure provides useful and cost-effective benefits to the population and business community in Svalbard. Good examples include environmental monitoring and maritime emergency preparedness, which are particularly important for the High North, including Svalbard. The need for space-based services will continue to grow in fields related to civil protection, the environment and climate, among others. The fibre optic cable link to Svalbard is an example of infrastructure put into place because of the commitment to space activity in Svalbard, and which benefits residents and scientists in Svalbard by enabling fast and secure internet access.

The Government will:

• Facilitate space activity as part of the future economic base in Svalbard.

• Assess the need and possibility of a satellite-based communications system in the High North.

9.4.5 Electronic communications services

Electronic communications were liberalised in Norway in 1998. The electronic services legislation – the Act of 4 July 2003 No. 83 relating to electronic communications (the Electronic Communications Act) – is applicable in Svalbard, with the exception of the competition rules in chapters 3 and 4 as well as section 9–3. The permit system on the mainland is also applicable in Svalbard, with the exception of permits relating to the establishment and use of satellite ground stations, for which special rules are needed out of concern for provisions in the Svalbard Treaty. The regulations for establishing, operating and using satellite ground stations in Svalbard are being revised to make them up-to-date and forward-looking. The aim is to reorganise and strengthen the supervisory activities.

Access to frequency resources in Svalbard is now administered so that special licences are awarded for Svalbard regardless of corresponding frequency licences for the Norwegian mainland. In Svalbard, growing interest is focused mainly on research activity involving the use of radio frequencies and the need for allocation of frequency licences.

Under the electronic communications legislation, the opportunity exists for a number of commercial actors to take part, but Telenor ASA remains the most important provider of electronic communications networks and services to Svalbard.

The fibre optic cable to Svalbard provides the business community, the public sector, the research and education community and the general population with electronic communications at least as good as those on the mainland, due to the virtually unlimited capacity of these fibre optic cables. It is natural to envisage the creation of additional initiatives for utilising the capacity of the fibre optic cables to the mainland in future.

The Svalbard cable’s service interruption in June 2014 showed how dependent all communications to and from Svalbard are on this transport channel. The interruption led the owner to conduct a value assessment and a risk and vulnerability analysis of the connection, including the cable landing point and the linkage of data streams into the commercial electronic communications networks. The relevant actors are now following up on these efforts.

Because of Longyearbyen’s limited geographic area, it has been used as a testing ground for new technology. As a result, residents have had access to advanced services before most other Norwegians. Apart from providing modern services to the business community and public administration, Telenor Svalbard today offers modern ‘triple play’ solutions (telephony, IPTV and broadband access) to the populations of Longyearbyen and Ny-Ålesund. There is full fibre optic coverage, and the typical broadband line to a household has a transfer rate of at least 50 Mbit/s.

A fibre optic connection between Ny-Ålesund and Longyearbyen was recently established. The connection is redundant, with two separate cables. The connection was put into operation in May 2015 and is the world’s northernmost high-speed connection. The radio link that previously served as the communications connection is being terminated. The technology is now present to allow the activity in Ny-Ålesund to link up to the rest of the world with high-speed connectivity via the new cable and the fibre optic connection between Longyearbyen and the Norwegian mainland. Between Longyearbyen and Svea, the connection is via radio link.

Both NetCom and Telenor offer mobile telephone services and mobile broadband (3G and 4G) in Longyearbyen, Svea and Barentsburg. Both providers also cover large parts of Adventdalen, Van Mijenfjorden and Isfjordbassenget.

The Government will:

• Revise the regulations governing the establishment and operation of satellite ground stations in Svalbard.

9.4.6 Maritime activity

Norway has a long tradition of shipping in the Arctic and the High North, and the Norwegian maritime industry has extensive expertise in the special conditions and challenges of Arctic waters. The maritime traffic around Svalbard consists mainly of cruise and cargo traffic, research-related shipping and fishing.

The number of overseas cruise ships coming to Svalbard has varied between 21 and 34 per year since 1997, but the number of passengers has almost trebled in the same period. Since the peak year, 2012, there has been a slight decline in arrivals to Svalbard by the large cruise vessels. The decline may be related to several factors: economic conditions, the introduction of a ban on heavy fuel oil in the protected areas, the introduction of compulsory pilotage, and limited port capacity in Longyearbyen.

The large overseas cruise vessels visit only the west coast of Svalbard. The ban on heavy fuel oil is discussed further in section 7.3.4. In addition to the overseas cruise vessels, much of today’s cruise tourism takes place using small and medium-sized vessels. These vessels do not use heavy fuel oil, and can travel throughout Svalbard, including the large nature reserves in the east.

Spills of heavy fuel oil in the event of ship accidents could have serious negative consequences for the environment in the vulnerable and valuable areas around Svalbard. A ban on heavy fuel oil was therefore introduced in the nature reserves on the east side of Svalbard in 2007 and in the national parks on the west side in 2009, with a few time-limited exceptions (see over). The ban on heavy fuel oil is not applicable in Isfjorden, among other places, and imposes no restrictions on cruise traffic there.

Future opportunities

The northern marine areas are undergoing change, and the melting ice could provide opportunities for expanded economic activity and wealth creation in Svalbard. The growth potential for the maritime industry will be affected by growth in other industries and by any new activity that is begun in or around Svalbard and that depends on maritime transport. This also presents new environmental and security challenges. A well-functioning infrastructure is a premise for increased value creation, improved security and reduced environmental risk.

The High North, including Svalbard, is not sufficiently prepared to accommodate a potential activity increase in a safe, environmentally friendly and efficient manner. Norway is nevertheless the Arctic coastal state that must be regarded as having the most developed infrastructure in the area, not least as regards ocean surveillance. This gives Norway, with its geographical position and existing and planned infrastructure, an advantage with regard to international collaboration and potential localisation of international operations.

The capacity of the port facility in Longyearbyen is limited at present. New port infrastructure will be an important measure for further development in fields such as research, tourism, logistics and maritime services. In the National Transport Plan 2014–2023, up to NOK 200 million has been set aside for new port infrastructure in Longyearbyen. A more detailed account of the Norwegian Coastal Administration’s work studying different port infrastructure solutions for Longyearbyen is presented in Chapter 6.

The Ministry of Trade, Industry and Fisheries has issued rules expanding the trade area for NIS-registered cargo ships and passenger ships so that they receive operational access to Svalbard from 1 January 2016. This contributes to a strengthening of the Norwegian-registered fleet and promotes the Norwegian maritime business community in Svalbard.

The Government will:

• Decide on further work to develop port infrastructure in Longyearbyen.

9.4.7 Fisheries activity

Regulation of fisheries resources

Fishing takes place in the territorial sea around Svalbard and in the Fisheries Protection Zone outside. The fishing in the territorial sea is far less extensive than in the Fisheries Protection Zone around Svalbard. Several of the stocks outside Svalbard migrate between Norwegian, foreign and international waters. For migrating stocks it is important to ensure protection and management throughout their area of distribution. Pursuant to the Act of 17 December 1976 No. 91 relating to the economic zone of Norway, a Fisheries Protection Zone of 200 nautical miles was established around Svalbard by the Royal Decree of 3 June 1977. Thus, the reason for establishing a non-discriminatory Fisheries Protection Zone around Svalbard was primarily to achieve control of fishing in the area in order to preserve the resources and avoid unregulated fishing.

Today, fishing for cod, haddock, capelin, redfish, Greenland halibut, shrimp, Norwegian spring-spawning herring and snow crab is regulated in this area. Different regulations have been issued for the various fisheries, including quota regulation and effort regulation. The regulations are issued pursuant to the Act relating to management of wild living marine resources (Marine Resources Act). In addition, regulations on fishing in the territorial sea of Svalbard are issued pursuant to the Svalbard Act, while regulations on fishing in the Fisheries Protection Zone around Svalbard are issued pursuant to the Act relating to the economic zone of Norway. Uniform rules have been issued for fishing in the territorial sea around Svalbard and in the Fisheries Protection Zone around Svalbard. This includes reporting rules, rules for keeping a catch logbook, provisions on mesh size in fishing gear, the use of sorting grids and minimum sizes for fish, etc. Inside the three original national parks and the nature reserves from 1973, the seabed is protected. Excluded from the protection is shrimp fishing at depths exceeding 100 metres.

The Coast Guard and the Directorate of Fisheries are jointly responsible for the practical aspects of exercising resource control in areas under Norwegian fisheries jurisdiction. A significant part of the Coast Guard’s resources are used in the northern marine areas. The Coast Guard is part of the Armed Forces, and provisions relating to the Coast Guard’s tasks and administrative duties are found in the Coast Guard Act and the Coast Guard Instructions. The Coast Guard’s exercise of control and enforcement measures in the territorial sea of Svalbard shall be in accordance with directives issued by the Governor of Svalbard.

It is essential to manage living marine resources in such a way that they can continue to be harvested in future. Control over fishing in the territorial sea and Fisheries Protection Zone around Svalbard must therefore be as good as in other areas under Norwegian jurisdiction. International obligations with respect to resource management and resource control must also be carried out there. It is in the interest of all fishing nations that genuine control is exercised over the outtake of fish from these areas, and that illegal fishing is avoided.

Landing of catch

Svalbard has no tradition of commercial landing or processing of fish and seafood, and the seafood sold and consumed there has come in large part from the mainland. Recently, interest has grown in establishing fish processing plants and developing various tourism concepts related to local food that would involve commercial landing of fish and seafood in Svalbard. The Government will facilitate such seafood industry related to local food and tourism. For the time being, however, the likelihood of demand to land catches in Svalbard is uncertain. The likelihood will depend on the fish species and the nature of the fishing fleet in the area.

Landing and sale of seafood on the mainland are subject to detailed regulation through acts and regulations, including the Marine Resources Act, the Act relating to first-hand sales of wild marine resources (the Fishermen’s Sales Organisation Act) and the Act relating to food production and food safety (the Food Act). The land territory in Svalbard has previously been exempt from these regulations. Legislation outside fisheries legislation, including environmental legislation, may also have a bearing on the establishment of fish processing plants.

To ensure that considerations of resource control and food safety are addressed in Svalbard as elsewhere, processes have been initiated to implement the necessary regulations. The application of such a framework would be an important contribution to facilitating the regulation of sales of locally caught fish for commercial use in Longyearbyen.

The Food Act’s scope of application was extended to Svalbard and Jan Mayen in October 2015. None of the Food Act’s regulations were made applicable at the same time. Interministerial consideration is currently being given to decide which of these regulations, including those related to fishing, should be made applicable. The Norwegian Food Safety Authority holds supervisory authority under the Svalbard Act.

The Marine Resources Act’s scope of application was extended in January 2016 to include the land territory of Svalbard. The Directorate of Fisheries is the competent supervisory authority under the act. Previously, the act was applicable in all Norwegian maritime zones, on Norwegian land territory with the exceptions of Svalbard and Jan Mayen, on the Norwegian Continental Shelf, and on all Norwegian fishing vessels wherever they happen to be. The act provides for, inter alia, regulations on purchase registration and regulations on landing and sales notes that impose obligations upon landing of catches, as well as for requirements applicable to those who operate fish processing plants. The regulations to date have not been made applicable in Svalbard. If a fish processing plant is established in Svalbard, these regulations may be defined more precisely by issuing regulations for this purpose. The Directorate of Fisheries is the competent supervisory authority under the act. Regulations outside the fisheries regulations may also have a bearing on the establishment of fish processing plants.

The third main act of relevance to the topic, the Fishermen’s Sales Organisation Act, requires first-hand sales through fish sales organisations by all who land fish in Mainland-Norway and by Norwegian fishermen wherever they land their raw catch. It is forbidden to sell, export or process fish except through or with the approval of a competent sales organisation. As of today, the act is applicable in the marine areas around Svalbard, but not on the land territory. No requirements are therefore imposed under the Fishermen’s Sales Organisation Act with regard to the establishment of fish processing plants in Svalbard today. Whether it will be necessary to extend the applicability of parts of the act to the land territory of Svalbard will be assessed on an ongoing basis as warranted by developments involving new activity.

Reference is made to the Storting’s resolution from its consideration of a white paper on seafood industry competitiveness (Meld. St. 10 (2015–2016), see Recommendation No. 215 S (2015–2016)), the recommendation’s resolution I, which reads as follows: ‘The Storting requests the Government to make proposals in the upcoming Svalbard white paper regarding how increased fishing and other harvesting of marine resources can have positive ripple effects for Svalbard.’ The white paper was processed by the Storting on 5 April of this year, so it has not been possible in the time since then to prepare such proposals. The Government will return to the Storting on this matter.

The Government will:

• Facilitate conditions for the seafood industry in connection with local food and tourism.

9.4.8 Air transport activity

Svalbard Airport, Longyear, is owned and operated by Avinor and was officially opened in 1975. In 2007, the airport was expanded with a new terminal. As a result of the highly seasonal influx of tourists, Svalbard Airport’s traffic patterns vary. It is nevertheless organised and operated in the same manner as Avinor’s airports on the mainland. It has also been upgraded in recent years, including with the creation of expanded security areas both alongside and at the ends of the runway, in accordance with regulatory requirements. The new terminal building that opened in 2007 is also dimensioned with a view to expected growth in air traffic.

The general increase in activity in Svalbard is also evident in the increase in the number of passengers at the airport. The trend in air traffic is presented in Table 9.2. Avinor expects stable and moderate growth ahead. In recent years there has been a steady increase in the number of passengers, particularly since Norwegian began regular flights in 2013. According to Avinor, the number of passengers is rising because aircraft passenger counts are higher, and because the types of aircraft deployed on some flights have more capacity than before.

There are also airports in Ny-Ålesund and Svea, and a heliport at Kapp Heer, Barentsburg. The airport at Ny-Ålesund, Hamnerabben, is owned and operated by Kings Bay AS. Flights are operated between Ny-Ålesund and Longyearbyen once or twice weekly in winter and two or three times weekly in summer. The flights carry scientists and employees to and from Ny-Ålesund. Svea Airport is situated at the inner reach of Van Mijenfjorden. The airport is owned by the Ministry of Trade, Industry and Fisheries and operated by Store Norske Spitsbergen Grubekompani AS.

All flights to and from Svalbard, according to the regulations on aviation in Svalbard, must go via Svalbard Airport, Longyear, so this airport receives all direct flights to the archipelago. Both SAS and Norwegian operate scheduled services to Svalbard from the mainland. In addition, West Air flies regular cargo flights on contract with Norway Post. Beyond this, in recent years there has been a slight increase in charter flights for tourists to Svalbard.

The use of unmanned aircraft has increased rapidly and sharply, and such craft are thought to be of potential use in Svalbard, for research purposes in particular. Norway takes part in international cooperation on unmanned aircraft use for scientific purposes through the Arctic Monitoring and Assessment Program (AMAP) in connection with the Arctic Council. The Civil Aviation Authority of Norway has issued regulations specifically on the use of unmanned aircraft. The regulations came into force on 1 January 2016, and are applicable in Svalbard. The European Commission is working to develop common European rules in this area.

Regulation of air traffic

All air traffic in Svalbard is subject to the provisions of the Aviation Act and the Regulations of 23 November 1973 concerning aviation in Svalbard.

Large parts of Norway’s aviation legislation implement into Norwegian law EU legislative acts that have been incorporated into the EEA Agreement. Since Svalbard is not covered by the EEA Agreement, the question of whether EU aviation provisions should be made applicable in the archipelago is subject to special consideration. Regulations implementing EU legislative acts are applied to Svalbard where relevant. This ensures that regulations exist for all forms of aviation in Svalbard.

There is no scheduled air service to Svalbard from abroad. As mentioned, the archipelago is not covered by the EEA Agreement, and according to the regulations on aviation in Svalbard, everyone conducting flights to Svalbard must have permission from the Civil Aviation Authority. It follows from these regulations that permission may be granted on set conditions, including time period, aircraft type to be employed, and limitations on use. Applications for the establishment of routes to Svalbard from abroad are given thorough and consistent consideration, and the Norwegian authorities so far not have not given consent for such routes.

Helicopter traffic

Helicopter traffic represents a significant part of the air traffic in Svalbard. Lufttransport AS provides helicopter services for the Governor of Svalbard in accordance with the agreement of 1 April 2014. The service is carried out using two Super Puma helicopters. The helicopters may also be hired by others when the Governor’s needs pose no hindrance. During the summer months, Lufttransport AS also operates other helicopters for clients in Svalbard.

Commercial aviation is not covered by the equal-treatment obligation under the Svalbard Treaty. This is reflected in Norwegian legislation as well as in long-term, consistent practice. Under the Aviation Act, only aircraft with Norwegian nationality can engage in air transport in Norwegian territory. The Civil Aviation Authority may grant dispensation from the nationality requirement, however, if there are special reasons for doing so. For years, Russian helicopter operators have been granted dispensation to conduct helicopter flights in association with the mining operation in Barentsburg. For other missions, permission must be applied for in each individual case. The outcome of such applications is determined by the aviation authorities on the basis of a specific assessment.

Passenger lists for flights to and from Svalbard

Passenger lists for all flights to and from Svalbard shall be delivered to the Governor of Svalbard. This follows from the regulations on aviation in Svalbard. The provision was incorporated into the regulations in 1996, but was not followed up for all flights. On 3 July 2015, therefore, the Civil Aviation Authority issued an announcement (Aeronautical Information Circular – AIC) amending the administrative practice and ensuring that the provisions of the regulations are complied with, so that the passenger lists are routinely submitted to the Governor. The passenger lists are to be sent to the Civil Aviation Authority together with applications for permission to fly to and from Svalbard, and the authority forwards the passenger lists to the Governor. The amendment entered into force on 4 July 2015 for charter flights and on 25 October 2015 for scheduled air services.

9.4.9 Petroleum activity

The marine areas surrounding Svalbard have not been opened for petroleum activity. There has been drilling for petroleum on land in Svalbard, but without any commercially recoverable discoveries. Permission has not been granted for exploratory drilling in the territorial sea surround Svalbard. Nor has permission been granted to drill on land since the Svalbard Environmental Protection Act came into force in 2002. In the vicinity of the island of Hopen and along the west coast of Spitsbergen, certain claims have been granted on the basis of indications of petroleum deposits. A claim is a preferential right to exploit the natural resources within a specifically defined area, but provides no right to begin activity unless permission is granted in accordance with the Svalbard Environmental Protection Act and other regulations that apply to Svalbard. The Government expects that current policies will be continued with regard to petroleum activity in the territorial sea of Svalbard.

9.5 Summary

The Government will:

• Facilitate the development of existing and new businesses within the overriding objectives of the Svalbard policy.

• Strengthen economic development efforts under the auspices of the Longyearbyen Community Council and relevant national policy instruments in cooperation with existing business interests in Longyearbyen, using funds provided in the estimated accounts for the 2015 central government budget.

• Facilitate conditions for the development of a more diversified business community. Preferably, the new jobs should be stable, year-round and commercially profitable.

• Facilitate development of a new, forward-looking business and innovation strategy for Svalbard.

• Continuously assess the need for restructuring and economic development measures that support the Svalbard policy objectives.

• Ensure sound, predictable framework conditions that provide a basis for growth in the tourism industry, by facilitating the development of tourism products.

• Facilitate the development of tourism products in Management Area 10.

• Further develop Visit Svalbard as a developer of tourism in Svalbard, and Visit Svalbard’s coordinating role in the tourism industry.

• Assess the situation for continued SNSK operations in light of developments in the price and market outlook for coal.

• Administer ownership in SNSK so that it contributes to the Longyearbyen community in a way that supports the overriding objectives of the Svalbard policy.

• Assess future development and activity in Svea in light of the state’s role as landowner and infrastructure owner.

• Facilitate space activity as part of the future economic base in Svalbard.

• Assess the need and possibility of a satellite-based communications system in the High North.

• Revise the regulations governing the establishment and operation of satellite ground stations in Svalbard.

• Decide on further work to develop port infrastructure in Longyearbyen once the Norwegian Coastal Administration’s conceptual study is completed.

• Facilitate conditions for the seafood industry in connection with local food and tourism.