Ladies and gentlemen,
It is a great pleasure for me to give some introductory remarks at the ONS Investment recovery seminar. This seminar is an important initiative highlighting an issue of increasing interest and importance to the oil and gas industry in the North Sea. I am under the impression that there is an increasing interest for reuse and investment recovery in the oil and gas industry. This is of course related to the growing number of fields being decommissioned in the North Sea.

Investment recovery or reuse of abandoned installations and equipment in the oil and gas industry can contribute to reduced decommissioning costs and reduced investment cost of new field developments. Reduced costs are of course beneficial to the oil companies and the Norwegian State as resource owner. These cost reductions can also initiate developments of new field developments and increased value creation. We have seen examples of marginal field developments where reused equipment has been an important factor in developing the field.

Investment recovery is also the foundation of a new industry where abandoned installations and equipment are refurbished and traded. This creates new economic activity and employment. On the other hand, reuse of equipment is a competitor to producers of new equipment and may therefore challenge parts of the established industry.

Yet, I have not mentioned another important part of investment recovery, and that is the environmental benefits. Reuse of oil and gas installations and equipment can be a more environmentally friendly solution than recycling.

These are strong arguments for investment recovery and reuse of equipment.

Investment recovery is a rather new concept for the oil and gas industry in the Norwegian part of the North Sea. So, why have not investment recovery been more prominent in the Norwegian oil and gas business?

I think this has to do with the maturity of the Norwegian Continental Shelf (NCS). During 30 years of oil and gas activities we have mainly developed and invested in large oil and gas fields with a production horizon of 20-30 years – sometimes even more. We have been in an investment phase building up the infrastructure on the NCS. Investment recovery and reuse have not been issues in this phase due to the long lifetime of the installations and lack of used equipment.

So far only a few installations on the NCS have ceased production. In coming years a large number of installations have to be removed from the NCS in accordance with the OSPAR decision on "Disposal of disused offshore installations". On the NCS a cessation plan has to be submitted to the Norwegian authorities two to five years before an installation is abandoned.

The timing of decommissioning installations is uncertain. Some of the factors influencing the timing are for instance:

• oil price changes,
• development in recoverable resources,
• operating costs,
• use of infrastructure for other developments in the area,
• new technology and
• introduction of new players on the NCS.

These uncertainties make it difficult to forecast the timing of decommissioning and availability for reuse.

Today, parts of the NCS are mature. The most readily-accessible resources have been developed and recovering those that are less accessible will be increasingly challenging. Still there are great perspectives for future oil and gas production on the NCS. In a long-term scenario for the development of NCS there are profitable projects which ensure production of oil in a 50 years perspective and gas in a century-long perspective. Three-quarters of total expected resources are still to be produced. It is the government's clear objective to achieve the long-term scenario. This will be very demanding and require innovative solutions.

Investment recovery contributes to reduced investment cost and is consistent with the long-term scenario.

A long-term development on the NCS represents opportunities for investment recovery and reuse of equipment in the Norwegian petroleum sector. Investment recovery is also an element in a sustainable development of the Norwegian petroleum resources, even though it is not clear that reuse always is the most environmentally friendly solution. Sometimes, new equipment based on new technology is more environmentally friendly than the equipment available for reuse. This issue has to be dealt with by the industry and in accordance with Norwegian environmental regulations.

A basic foundation for investment recovery is that it has to be based on commercial principles. A way to secure this is to create efficient marketplaces where installations and equipment can be traded. I know that there are several initiatives in the industry for creating these marketplaces.

At the same time it seems to me that there has to be a change in attitude towards investment recovery and reuse in the industry. There is a growing attention towards these opportunities and it can be a contribution to making the business more environmentally responsible. I see this seminar as a sign of the increasing interest in these business opportunities.

In future, investment recovery and reuse of installations and equipment has to be an integrated part of field developments on the NCS. To achieve this goal it is necessary that investment recovery is based on commercial principles.

Thank you for your attention.