Introduction
The new Norwegian Government took office on the 19 ^th> of October. I had the honour and privilege to be appointed Minister for Petroleum and Energy. I am looking forward to be working on issues of vital importance to Norway.

It is a pleasure for me to address you here at my first official journey outside Norway. It is telling that this journey brings me to a country with which Norway has much in common – politically, historically and culturally – and with which we also share the petroleum resources in the North Sea. For some decades we have managed to co-operate in a constructive way to exploit these resources to the benefit for both countries.

Visions for the future

• The new Government has a vision to see Norwegian petroleum production extend well into the future based upon the oil and gas resources, develop and apply new technologies and the presence of competent Norwegian and international companies. This vision implies that the petroleum sector will continue to contribute to the financing of the Norwegian welfare state.
• We want to see Norwegian petroleum companies and the Norwegian petroleum industry among the leading companies in the world.
• Furthermore, the vision is to see the players on the Norwegian Continental Shelf as world leaders when it comes to increased oil and gas recovery.
• We want increased focus on research and development.
• Last, but not least, we want the Norwegian oil and gas industry to be in the forefront when it comes to protecting the environment and safety offshore. It is a major challenge to exploit the resources in the arctic zone, several hundred meters below sea level, with due regard to the environment. All petroleum activities must be within the concept of "sustainable development".

The Government will work constantly to adjust the Norwegian oil and gas framework conditions so that we attract the most qualified companies. We believe that the role of the government is to develop a framework within which the industry will find it attractive to work. At the same time the government has an objective to maximise the income for the state through the tax system and the state's economic interests.

I would like to remind you that significant changes have taken place in the framework for the Norwegian Continental Shelf during the last ten to fifteen years. The policies are constantly reviewed, renewed and adopted to the given situation. The participating companies are therefore faced with a different situation than in the early days of petroleum production in Norway. More decisions are left with the companies and the state's involvement is redefined. It has always been a guiding principle to attract the most competent international companies with knowledge and capital.

Production capacity
The production on the Norwegian Continental Shelf has surpassed even the most optimistic prognosis made in the seventies and the eighties. This year, we will produce 3,1 million barrels of oil a day and are expecting to produce the same volume until 2005. Our gas export will reach 63 billion cubic meters this year and we are committed to deliver 77 billion cubic meters in 2005. We expect that Norwegian gas sales in the coming years will increase well above these commitments.

We expect the next five years to represent the peak of our oil production, but it is important to note that we see a significant potential for further production and developments. The expected remaining petroleum resources on the Norwegian shelf amount to more than ten billion Sm3 oil equivalents. To put this figure in perspective, I would like to bring to your attention that during the past 30 years of production we only have recovered some three billion Sm3 oil equivalents. That means that Norway has a potential for another 50 years of oil production, and gas for 100 years to come. In my opinion, the prospects are looking good for an industry many seem to think is in rapid decline.

Opportunities through technology
About 50 % of the increased Non-Opec oil supply during the 90ies came from the UK and Norwegian part of the North Sea, and was to a large extent due to unforeseen enhanced oil recovery. A number of factors are involved, but technology is viewed as being the main contributing factor behind the improvements in productivity of the major fields, especially with respect to the use of new technology within drilling and reservoir characterisation.

Including existing plans for increased recovery, the average recovery rate is anticipated to reach 44 per cent. But we should be more ambitious. Thus our goal is to reach a recovery rate of 50 per cent for oil and 75 per cent for gas. The management of our gas resources is important in this respect. Gas is being used for injection to increase the oil recovery rate. Today, about 40 per cent of our gas production are used for injection. This volume will increase.

Common efforts are needed to obtain increased recovery rates. Decisions we make today will influence the future value creation and both the Government and the Industry will therefore benefit from research, improved technology and maintaining a competent labour force. This Government would like to see even more research and technology development in Norway and will seek to establish a framework that encourages this to happen.

Different stages of maturity
It is a fact that the resources on the Norwegian Continental Shelf have reached different stages of maturity. This is taken into consideration during our licensing rounds.

The North Sea basin is maturing, and hence future developments will have different characteristics compared to the ones we know. Developing smaller discoveries and increasing the recovery rate from existing fields is of crucial importance. These objectives have implications on how fields are developed and the way that we use existing infrastructure.

The Norwegian Sea is less mature than the North Sea. We hope to see new, significant discoveries in this area. Prospects are looking good both for oil and gas, but gas is expected to be dominant in new discoveries. The water depths reach 1500 meters and the climate is rough. The challenges related to gas infrastructure and to protecting the fishing interests and the environment must not be forgotten. Still we believe there is reason to be optimistic about the future. We aim for an announcement of the 17th licensing round in December for the Norwegian Sea.

Developments in the Barents Sea are linked to Statoils LNG-project, "Snøhvit". Let me add that we have seen encouraging exploration results in the Barents Sea lately. The Government is concerned about any possible environmental impact the petroleum activities may have and will evaluate consequences from exploration and production in the Barents Sea closely.

Statoil – a listed company
The petroleum sector has created enormous wealth for the Norwegian society. The sources of income for the state have been the tax system, its ownership of Statoil and the State's direct financial interests – the SDFI. It is our belief that the changes we have made with respect to Statoil and the SDFI this year will enhance the creation of wealth.

Statoil was partly privatised and listed on the New York and Oslo stock exchange earlier this year. At present private shareholders own 18,2 % of the company and the State owns 81,8 %. It is important to make clear that the company is operating according to commercial principles in line with its competitors. I also want to underline that the State's focus regarding the stake in Statoil is highest possible value creation and return on invested capital.

SDFI and Petoro – managing the petroleum wealth
The SDFI is a pillar in the management of the states revenues from petroleum production. More than 60 percent of the revenue is generated through the SDFI. In a broad based compromise this spring the Parliament decided to sell 21,5 percent of the value of the SDFI portfolio. About 15 percent were sold to Statoil. A new State-owned incorporated company, named Petoro, has been established for the future management of the SDFI portfolio on behalf of the Norwegian State. Petoro is not a new oil-company as such. The Norwegian State owns the SDFI interests directly as before. Petoro shall not apply for licenses on its own account. It will not be given operatorships.

Furthermore, the Parliament decided that about 6,5 percent would be sold to other companies. This is well under way. We aim for completion of the process by mid-February 2002.

A changing gas market
Another important change that has taken place is the termination of the Gas Negotiating Committee – GFU. It was temporary discontinued from June this year in the European Economic Area, and will be permanently terminated as of 1 January 2002. The decision is based upon considerations such as the increased maturity of the Norwegian Continental Shelf, the opening of the gas markets in Europe, and changes in company structures along the gas value chain. In these circumstances the producers in Norway should have freedom to act commercially.

Our gas resource situation is very comfortable. Many of the new stand-alone fields that are to be developed in Norway contain mainly gas. As I have mentioned, Norwegian producers are committed to supply about 80 billion cubic meters within a few years. Norway is, together with Russia and Algeria, among the most important suppliers of new gas into the European market. The Norwegian share of the gas supplies to Europe is about 12 percent. According to existing long-term contracts and the potential for new supplies from Norway, we expect this share to increase. Actual gas sales will of course depend on market developments and commercial considerations by the individual producing company.

UK – an interesting market for gas
In regard to market developments, the situation in the UK is particularly interesting. We expect a gradual and substantial increase in the demand for new gas. This market is a natural market for Norwegian producers in view of its proximity. The establishment of the Vesterled pipeline will be an important instrument in this respect. We have already seen new sales contracts involving considerable volumes of gas to UK. The need for transportation capacity can be met both by using available capacity in existing pipelines, and by development of new pipelines. The North Sea, with its resources and infrastructure, has a potential for further co-operation between the UK and the Norwegian partners. But let us not forget that traditions, laws and regulations will still be different in the two nations. However, based on commercial interests, we feel that co-operation will be of mutual benefit for the states as well as for the companies involved.

The Government will do further work to develop a stable framework for the gas industry in Norway, in order for the companies to have a good basis for entering into gas sales commitments and for taking commercial decisions about new field and pipeline developments.

Closing remarks
Given the resource base, the changes in the framework and the commitment from a strong and competent industry, I see a promising future for the oil- and gas sector in Norway. A future we invite you all to participate in.

Foils in pdf format
Total recoverable resources
Oil production estimate
Norwegian Gas Sales Commitments
Pipelines map