Distinguished Audience, Ladies and Gentlemen!
It is with great honour and pleasure I address you today at the opening of Petrad's 8-weeks course. Welcome, all of you, to Norway. I hope you will have a pleasant and rewarding stay in our country!

Let me also express my acknowledgement to Petrad for their excellent work with the 8-weeks courses.

We consider Petrad an important tool in our petroleum policy when it comes to facilitating international co-operation. The Government will continue to support the work of Petrad. Last year, the Ministry of Petroleum and energy, in co-operation with the Ministry of Foreign affairs, took the initiative to improve the organisational structure and financial basis of Petrad. Measures to ensure financial stability have already been implemented. Besides, co-operation with both academic institutions and industry players are about to be developed further. I think this holds interesting prospects for the Petrad staff as well as Petrad's users and clients.

I am invited to speak to you on how the State organises the petroleum activities, and about the role and policy of the Ministry of Petroleum and Energy (MPE). Let me first highlight some facts about the Norwegian oil and gas activities:

Facts on the Norwegian oil and gas production
Oil was first discovered offshore Norway in the late sixties, and production started in 1971.

Since then we have continuously expanded our production capacity and will produce about 3 million barrels a day this year. Our domestic oil consumption is limited, and thus we export a large part of our production and are ranked as the world's third largest exporter of crude oil.

Norway is also an important supplier of natural gas to Western Europe.

We currently have a total market share of about 12 per cent and this is expected to continue to increase. Gas represents a more environmentally benign source of energy than both oil and coal and this adds to the future market potential for gas.

It is estimated that Norway has a potential for another 50 years of oil production, and gas for 100 years.

To illustrate the importance of the oil and gas sector to Norway, I can mention that the sector made up 19 % of the Gross Domestic Product in 2002.

Now, some words on how the Norwegian State organises the petroleum activities:

The organisation of the Norwegian petroleum policy
The Norwegian Parliament (Stortinget) determines the framework for petroleum operations in Norway. The opening of new areas for exploration activities, approval of major development projects or issues of principle must be considered and approved by the Parliament. However, authority is also delegated to the Government and is shared between three ministries.

The overall administrative responsibility for petroleum operations on the Norwegian Continental Shelf rests within the Ministry of Petroleum and Energy. The Ministry of Labour and Government Administration has overall responsibility for the working environment and safety aspects of the petroleum sector. The Ministry of Finance has overall responsibility for the Petroleum tax system and the Petroleum Fund.

The Norwegian Petroleum Directorate, in whose premises you are now, has control functions towards the industry and serves as an advisory body for the Ministries. Practically speaking, the Petroleum Directorate is mainly staffed with geologists and engineers, while the Ministries primarily employ personnel with experience in law or economics. The Petroleum Directorate is subordinated to the Ministry of Petroleum and Energy in resource management matters. Concerning safety and working environment, it reports to the Ministry of Labour and Local Government. This division of power is regarded an important feature of our petroleum policy.

On June 6 this year, the Norwegian Parliament (Storting) decided to split off the part of the Norwegian Petroleum Directorate that deals with safety and working environment into a separate supervisory body - the Petroleum Safety Authority (PSA). The new supervisory body will be in operation from 1 January 2004.

The resource section of the Norwegian Petroleum Directorate will continue its work as a directorate reporting to the Ministry of Petroleum and Energy, while the newly established Petroleum Safety Authority will report to the Ministry of Labour and Government Administration.

The reorganization of the Norwegian Petroleum Directorate is part of a wider scheme, regarding government supervision, where among other things independence and clarification of roles are emphasised.

Petroleum policy: Main elements and challenges
Let me now share with you some key elementsin the Norwegian oil and gas policy:

First, the Norwegian oil and gas resources are considered part of our national wealth. Thus, the whole population should benefit from the depletion of these resources. This implies that our petroleum revenues must be managed with the view of improving the welfare of present and future citizens of Norway. A Petroleum Fund has been established to this effect.

Second, the goal of developing a Norwegian oil and gas industry was defined at an early stage. One important element in this respect has been to attract the best of international expertise and competence, and to promote co-operation between domestic and international players. Thus, we invite the oil companies to compete for licences to explore and produce oil and gas.

Third, it has always been an overriding aim to reconcile the role of being a major energy producer with being in the environmental forefront. The government will continue to pursue ambitious environmental and resource management policies based on the goal of coexistence between the petroleum sector, other industries (fishing) and environmental considerations. With this in mind the continental shelf has been gradually opened up for exploration and production since the start.

A main challenge is to make sure that we obtain the maximum value of our petroleum resources. Even though the resource base is promising, certain conditions must be fulfilled:

• We have to make sure that the Norwegian Continental Shelf is competitive. i.e we must be able to compete with other petroleum provinces in attracting investments and the best human capital.
• Besides, the Norwegian oil and gas industry must be competitive on a global scale.

In order to meet these conditions the Government is among other things working to:

• Facilitate research and development of new technology
• Support the internationalisation of the Norwegian oil and gas industry
• Maintain an effective regulation regime and government ownership

As ownership in the oil and gas sector is one of the most important instruments at the Norwegian Government's disposal, I will concentrate on the recent changes regarding Statoil:

Statoil was established in June 1972 as a fully state-owned oil company. Statoil's objective is to carry out exploration, production, transport and refining and marketing of petroleum and petroleum-derived products.

During the recent years Statoil has undergone significant changes. The company was partially privatised and listed on the Oslo and New York stock exchanges in June 2001. The State is still the majority shareholder with 81.8% of the shares. Both Statoil and the Ministry consider this privatisation a successful achievement.

The change in Statoil's ownership structure has influenced the state's role and decision-making authority with respect to the company. The Provisions of the Public Limited Companies Act now apply in full.

The government intends to act as a professional owner in line with the other shareholders, focusing on long-term development of profitable operations and creating value for all shareholders.

Though partially privatised, Statoil is still in a special position holding important responsibilities in Norwegian oil and gas operations. Statoil operates most of the fields in which the SDFI (The State's Direct Financial Interest) has holdings. SDFI is a direct state ownership in the fields. Furthermore, the company is responsible for selling and marketing all of the state's oil and gas assets. The state will continue to be a substantial owner in the long term, ensuring an open-mannered and close dialogue with the company.

Before, as a wholly state-owned company, Statoil in the past provided commercial management of the SDFI. However, after Statoil's partial privatisation, this arrangement needed amendment. The solution was to set up a new company to manage the SDFI. In May 2001, this new "child" named Petoro AS was born.

Petoro is responsible for administering and managing the SDFI on the Norwegian Continental Shelf. The company's main objective is to maximise the economic value of the state's oil and gas portfolio. The SDFI assets are directly owned by the State. Thus, Petoro is not an oil company, but a pure management company acting on behalf of the State and fully owned by the State.

Conclusion
To conclude, let me underline that Norway has a vibrant petroleum sector which still holds great potentials. The resource base is promising and our industry has developed a strong competitive edge internationally. This has been obtained through the combined efforts of the industry and the Government through our policy regime. However, building a domestic petroleum industry had not been possible without the involvement of foreign oil companies and industry.

In this respect, I would like to underline the importance of transparency in all aspects of our petroleum activities. Transparency is instrumental for attracting foreing investment. It creates a predictable business environment and is conducive to sustainable economic growth, fair distribution and social development.

Thus, Norway is supporting the Extracting Industries Transparancy Initiative (EITI). Originally a British idea, the initiative encourages governments, extractive companies, international organisations and NGOs to work together voluntarily to promote transparancy of payments and revenues. This is an excellent example of global co-operation in which the petrolum sector plays an active role – an example which can be a source of inspiration to us all.

I wish all participants and the organiser good luck with the training course.

Thank you for your attention.