-Oil has been produced from the NCS for over 30 years. More than 60 percent of the total oil resources remains to be produced and could provide the basis for another 50 years of oil production. Even though the potential for future value creation from the remaining oil resources is great, it will require dedication and rethinking from all involved parties to realise this potential, says Mr. Einar Steensnæs, Minister of Petroleum and Energy.

-Improved oil recovery from the mature areas on the NCS is time-critical, and will hence be a main challenge in the years to come, says Minister Steensnæs.

The average estimated recovery factor for oil on the NCS, i.e. the part of the resources to be produced, is now 44 percent after a continuous period of yearly increases throughout the 1990s. Many of the fields that are producing today are of such a magnitude that even a small increase in the recovery factor will give substantial extra oil volumes. On this basis the government proposes that the authorities and the industry should have a joint objective to increase the average recovery factor to at least 50 percent. Given the assumptions in the revised national budget, such an increase would equivalent a gross production value of some 500 billion NOK.

A huge part of the remaining oil reserves are in fields already producing. Declining production and increasing unit costs characterize many of these fields and production is likely to be terminated in a relatively short time if no effort is made to counteract this development. It is first and foremost the licencees, and particularly the operating companies, that must answer to this challenge and secure future value creation. The licencees have to evaluate a broad specter of measures to increase efficiency and reduce costs to maintain profitability. Actions of interest can be strengthening the co- operation between production licences, renewing working methods or moving tasks onshore. In some cases it is necessary to consider completely new ways of operating fields. The most important is still the licencees' will and capability to implement measures for increasing recovery before it is too late. This, together with tecnological development and new knowledge, is very important for the future value creation from the oil resources on the NCS. Huge values are likely to erode if we do not answer to the challenges from oil fields in mature areas.

The Ministry of Petroleum and Energy established in the summer of 2000 the OG21 – forum (Oil and Gas in the 21st century) to produce recommendations on a national strategy for the overall commitment to technology and research in the petroleum sector. OG21 has identified a huge potential for value creation on the NCS, and defines increased oil recovery as one of five priority areas.

-The government believes that the licencees on the NCS has the competence and will to secure an optimal exploitation of the oil resources. We will underline the importance of the joint commitment for value creation efforts from all parties in the petroleum industry, says Mr. Einar Steensnæs, Minister of Petroleum and Energy. The government will actively use available means where adjustments in framework can contribute to increase value creation for the Norwegian community. Evaluations on the environmental effects and increased recovery will be part of these considerations.