Prime Minister Kjell Magne Bondevik

"Development of Oil Nations"

Nicon Hilton Hotel, Abuja
15 February 2000

Thirty Years of Experience as an Oil Nation. Political and structural changes for the next decade

Dear Ladies and gentlemen,

It is an honour and a great pleasure for me to address this round table meeting on "The Development of Oil Nations - Challenges and Opportunities".

Nigeria is in the middle of a very important transition process by which a democratically elected government that respects human rights and dignity has been re-established. The country has regained its rightful place as an important and respected partner in the international community.

I have just had a very interesting meeting with President Obasanjo, in which I expressed Norway's great appreciation of the new and positive developments that have taken place. I told the President that we would now welcome a much closer co-operation in all areas of common interest.

Norway literally means the way to the North, signifying the sea route along our coastline. Our livelihood and industries have always depended to a large extent on our relationship with the sea and what we could harvest from it. The treasures of the oceans are also important to the Nigerian economy. We are oceans apart, yet the oceans unite us. Historically, fisheries and shipping formed our most important commercial bonds. Today, we stand at the threshold of increased cooperation in the petroleum sector – two coastal nations once again harvesting from what our respective exclusive economic zones and seabeds have to offer.

Norway and Nigeria are both major producers and exporters of petroleum. I am convinced that we have a great deal of experience to share as regards the challenges of developing an efficient and competent national petroleum industry and how to make the best use of the revenue.

A modern welfare state is built on a fair distribution of economic resources. It is a priority to my government to make sure that the whole population benefits from the oil revenue. Also, we are in the process of safeguarding part of our petroleum assets for the future. I am aware of the increasing recognition in Nigeria of the need for all citizens to benefit from the oil income in order to promote a broad based and stable development of your country. At the same time it is important to invest in the future. The oil revenues should be put to work in the non oil industries in order to safeguard a diversified and sustainable economic development.

Norwegian petroleum policy has always focused on attracting the best international expertise while at the same time developing our own competence. There is a clear consensus that plurality in the petroleum sector is the most effective basis for developing a competitive domestic oil industry.

By involving foreign oil companies and forging links between research institutions, oil companies and related service industries, we have succeeded in developing knowledge clusters. These clusters are fundamental to the development of a sustainable industry.

In order to achieve plurality, we must ensure predictability, stability and equal conditions of competition for all parties involved. Also we must provide a framework that includes incentives acceptable both to the commercial actors in the market and to the public interest.

In addition, there is a need for flexibility to adapt to a changing industrial environment, both nationally and internationally. Recent structural changes in the global oil and gas industry, such as mergers and acquisitions, privatisation and the deregulation of several oil and gas companies, accentuate the need for flexibility.

Norway, like other petroleum-producing countries, is affected by these changes. Their implications need to be analysed, monitored and managed carefully.

With intensified competition from new petroleum-producing regions, and the deregulation of important markets, the following factors are of essence in order to remain attractive in the market:

Ensure conditions favourable to foreign direct investments,

maintain and enhance domestic research and development activities,

ensure cost-efficient exploration, production and disposal of discarded materials, and

capitalise on new export markets for our domestic service industry.

Later this year, the Norwegian Government will submit a white paper to the national assembly that will address some of these issues.

Various steps will be taken to enhance research and development, including a strengthening of the technology programme called DEMO 2000, which was launched last year. This programme reflects the joint commitment of the industry, the research institutions and the Government to sustained technology development. The primary objective of the programme is to sustain long-term competitiveness in exploration and production. The programme will also aim at developing world-class products for world-wide use offshore.

Joint industry and government allocations are being made to pilot projects that can produce rapid improvements in field economics, advances in technology and not least, new products for export.

Let me also touch upon an issue which in my opinion will become ever more important as we head towards deep water developments – and that is the issue of health, safety and environment. As the industry is approaching new frontiers, the best technology available will be required, both in the traditional offshore sector and the maritime sector. Only by merging the best of competence from both these sectors may exploration, production and eventually disposal, be handled safely and with minimal risk to health and the environment.

Norwegian companies have set ambitious environmental targets. They wish to operate in an environment-friendly manner and be among the international front-runners in the area of health, safety and environment. A number of technologies and services are available to meet the future health, safety and environment targets of the oil and gas industry. This includes avoidance of accidents and reductions of emissions and discharges to air, water and soil. A primary objective of the Norwegian government is to combine our role as a large energy producer with being at the forefront in protecting the environment. We believe there is a considerable potential for bilateral industrial cooperation in these important areas.

Nigeria is presently confronting the challenges posed by the ongoing structural changes in the petroleum industry. The current reform process in the National Nigerian Petroleum Corporation is a very positive and interesting development. Norway would like to work with Nigeria in this process. Norway and Nigeria have a common challenge, namely how to efficiently manage state-owned companies. Our own experience with Statoil and the ongoing debate in Norway on its privatisation and organisational structure, could be of value in such a dialogue.

In Norway we were fortunate to have an active, established shipping community that was able to meet the challenges of offshore exploration in the North Sea. The Norwegian offshore industry has since attained a leading international position. It has also developed expertise in virtually all the associated specialised services, and has gained a reputation for maintaining high safety and environmental standards. Our technology has proven to be applicable in other offshore oil regions in the world, such as Latin America and Asia. Our experience can certainly also be of use to you in Nigeria.

I believe that Norwegian companies are well positioned to take part in the development of the West African offshore oil industry. The operation of shuttle tankers, the floating of storage and production vessels, and the provision of service functions have all been thoroughly tested in the North Sea. They can readily be applied in West Africa, too.

The specialised workshops in Lagos tomorrow will demonstrate state-of-the-art solutions that Norwegian companies have developed to deal with complicated offshore problems. These problems are encountered throughout the world.

Statoil and Nigerian institutions like the Ministry of Petroleum and Energy, the National Nigerian Petroleum Corporation, the Department of Petroleum Resources and NAPIMS already have excellent relations.

Statoil has recently made interesting discoveries in the Nigerian offshore block where the company is operating. There are indications of substantial hydrocarbon reserves. This may prove to be one important pillar on which future co-operation can be built.

Norwegian oil and gas companies and companies in related offshore industries are increasingly interested in the Nigerian market. The attendance at this meeting testifies to this fact. Nigeria will also be the focus of special attention at the Offshore Northern Seas conference in Stavanger in August this year. I have today invited His Excellency President Obasanjo to visit Norway in connection with this conference.

The relevant Norwegian government agencies and oil companies should take considerable interest in an extensive exchange of views and information with their Nigerian counterparts.

As a follow-up to State Secretary Erlend Grimstad’s visit last year, we are in the process of finalising a Memorandum of Understanding. The Memorandum will highlight the importance that the Norwegian Government attaches to developing our relations with Nigeria in this field.

It is my hope that this Memorandum of Understanding - the first of its kind to be signed between our two countries - will provide the foundation for joint industrial and government co-operation.

Finally, let me express my gratitude to INTSOK for organising and hosting this meeting. It is my sincere hope that through this exchange of information and experience, we will learn more about each others' needs and capabilities. Today's round table meeting is therefore an important opportunity to bring our two countries closer together. I am confident that this meeting will be a success and pave the way for enhanced industrial cooperation.