Foils from the Speech (pdf format)

Good morning ladies and gentlemen,
When oil was discovered in the North sea some 30 years ago, Norwegian industry had little knowledge of the oil and gas industry. Today it is our most important industry. The tables have turned; Norwegian companies are now providing experience and expertise in all corners of the oil and gas world. The oil and gas industry is a genuine international industry. In this global business an international approach is essential for developing business.

I have already had the chance to see that Norwegian companies are active outside the North sea. I have travelled with the industry to Algeria and Libya, and early next year I'm off to China with an Intsok delegation. I will also be visiting companies in Norway in order to get a better overview of the Norwegian oil and gas cluster. I can assure you that it is a priority for me and the Government to contribute to internationalisation of the oil and gas industry.

World Primary Energy Demand by Fuel
Over the next decades the global market potential for the oil and gas industry will be enormous.

In its brand new Energy Outlook the IEA predicts that if Governments stick to the policies in force as of mid-2004, the world’s energy needs will be almost 60% higher in 2030 than they are now. Fossil fuels will continue to dominate the global energy mix, meeting most of the increase in overall energy use.

The world is not running out of oil. Most estimates of proven oil reserves are high enough to meet the world demand projection over the next three decades. The IEA indicates that global production of conventional oil will not peak before 2030 if necessary investments are made. Proven reserves of gas and coal are even more plentiful than those of oil. And there is considerable potential for discovering more of all these fuels in the future.

Norway's contribution to future sustainable oil and gas needs will be to develop all economic resources on the NCS.

Investment requirements 2001 – 2030
Huge investments are needed to make the supplies of oil and gas available. I would like to share a few investment projections with you, made by the IEA in last years Investment Outlook.

• A little over 3 trillion dollars of investments will be needed in the oil sector.
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• Investments in the natural gas supply chain over the projection period will also be over 3 trillion dollars.
• The total investment requirement for energy-supply infrastructure worldwide is the inconceivable number 16 trillion dollars.

The international market is becoming more important for the supply industry
To put this into a Norwegian context, this means 2 billion kroner of investments each day in order to meet the demand for oil. The number is the same for gas. Total energy investments the next 30 years are 10 billion kroner each day.

No one claims that these figures will be precisely validated in thirty years time, but they definitely provide an indication of the global potential for oil and gas companies, contractors and suppliers. I think we should focus on the huge market opportunities these numbers point to and focus on the potential market for Norwegian Oil and Gas industry in particular. This is why we are gathered here in Stavanger today!

Prerequisites for a vital petroleum industry at the NCS
A key goal for our oil and gas policy is to facilitate the development of a Norwegian based petroleum industry that could contribute to value creation and employment in a long term perspective.

For this to become a reality, the industry must be internationally competitive. This means that Norwegian oil and gas companies, as well as the supply and service industry, must be able to compete both at home and abroad.

In a report prepared for the Ministry of Petroleum and Energy, the Institute for Research in Economics and Business Administration (SNF) in Bergen, indicates that the Norwegian cost level is an important reason for supply companies' decision when moving their production abroad. If the cost level becomes a more important driver for internationalisation than access to new markets, the consequence will be a deprived Norwegian oil and gas sector. This is a threat that must be taken seriously.

We all observe that a viable domestic market has been - and still is - essential for our industry's international competitiveness. The Norwegian oil and gas industry has developed its international competitiveness in a successful interaction with domestic and international oil companies. The industry is capitalising on this experience in their present internationalisation activities.

The supply industry is currently doing very well on the NCS. Norwegian deliveries to the Snøhvit and Ormen Lange developments are substantial. And not to forget, these contracts were awarded in international competition.

The NCS is still attractive
The NCS has, in addition to the Norwegian companies, traditionally been dominated by the largest international oil companies. As the NCS has matured and the challenges have diversified, we have seen the need for attracting a broader spectre of companies.

Since the introduction of the prequalification system, we have seen interest from many new companies. With a few exceptions, these companies have quickly become active participants at the NCS. Since 2000, 22 new companies have been prequalified or have established themselves at the NCS, and others are in the pipeline. This indicates that the NCS is still one of the world's most attractive petroleum provinces. I expect that a broader spectre of companies will supply new ideas and business models and help triggering new activity at the NCS.

However, it is also important to stress that the companies already present at the NCS will continue to play an important role. New companies will be a supplement to the ones already present – not replacements. It is therefore positive that the largest international companies confirm that they are committed to the NCS. The interest for the 18 ^th> licensing round and the predefined areas proves that the NCS, both mature and frontier parts, continues to be attractive and competitive, and that the international oil and gas industry finds it an interesting arena for investments in exploration and production.

The Government's policy towards keeping up the activities on the NCS will benefit internationalisation of the Norwegian based petroleum industry. The presence of companies working world wide gives the Norwegian supply industry opportunities also abroad.

OG21 – National Technology Strategy
Experience shows that focused, long term commitment to research and development is a necessary ingredient in the development of the oil and gas sector. For instance, technology development has been decisive in building up a competitive Norwegian based supply and service industry.

I believe that further research and development is essential for sustaining a strong competence base in Norway. This is both important for the value creation on the NCS and for the industry's ability to compete on a global scale. The main responsibility rests with the industry itself. However, the best results are achieved through close cooperation between the supply industry, oil companies, research institutions as well as the authorities.

OG21 is a very good example of such cooperation. Major oil companies on the NCS are responsible as Lead Parties for defining technology gaps and needs, and for defining and carrying out projects in cooperation with other industry parties and research institutions.

The priorities being developed by OG21 will be important for the research programs supported by the Government.

Significant increase in DEMO 2000 and PETROMAKS
The Government has proposed to increase the funds for petroleum research by over 80 % in next year's budget. Total budget is more than 300 million kroner in public funding.

Increased commitment to project orientated technology development is an important part of the Government's ambitions to increase value creation in the petroleum sector. The allocation for the DEMO 2000 program is proposed to increase by NOK 20 million, totalling NOK 50 million in 2005. DEMO 2000 is important for the development of new technological solutions and products both for the NCS and the global marketplace. I think a link between Intsok and the research community is important for the internationalisation of the petroleum cluster. I also see the Government support for R&D as a tool to build competence for the international markets.

Also, in 2004 the large program PETROMAKS was established. The Government proposes a significant growth in the budget appropriations for this program in 2005. The total commitment for PETROMAKS will amount to approximately 180 million NOK. PETROMAKS comprises both applied and long-term research. Emphasis will be on research related to increased oil recovery and more efficient exploration.

I have noted that Intsok emphasises cooperation with the applied research programs – such as Demo 2000.

MPEs contribution to internationalisation – 2005 budget
The Norwegian oil and gas industry are facing several new, but also demanding, business opportunities, with obvious implications for the individual company's business and strategies. It is primarily the industry and the individual company that must take responsibility for taking advantage of the international market opportunities and solving the challenges that comes with increased international competition. The role of the Government is first and foremost to secure a basis that makes it possible for Norwegian companies to compete internationally. The Government supports the internationalisation of the Norwegian oil and gas industry in several ways:

• By promoting Norwegian industry and technology through political "door opening". This is a priority for me. Intsok and Petrad are important partners in this respect. The Government has proposed an increase of 3.5 million kroner for this purpose, totalling 19.5 mill NOK in 2005 for supporting internationalisation.
• Further, the Government will work to secure international market access for the industry on equal terms as competing countries. The EU/EEA and the WTO are important venues for doing this.

Slide 10 : Norwegian Oil & Gas Competence
Several of the clusters listed on the picture behind me are world leaders. We have every reason to be proud of our clusters in the areas of subsea, reservoir & seismic as well as marine systems & equipment. In my view the Norwegian subsea cluster is especially worth mentioning. 80 % of the world subsea market is served by companies with close links to Norway - Aker Kværner, FMC Kongsberg Subsea and Vetco Aibel.

These companies could probably to a large extent market their products and services abroad without the help of Intsok, but often they accompany smaller Norwegian businesses when Intsok work towards potential customers abroad. Together they constitute a team. I am convinced that is a good sales pitch.

Intsok, the Norwegian Oil and gas Partners, has since 1997 assisted the Norwegian oil and gas industry in its efforts to gain access to markets outside of Norway. Intsok is doing an excellent job, and the recent user survey confirms this. Concerning the 2010 study made by Intsok they are following up its recommendations with the appropriate Ministries. The Government is considering the different proposals. It is also important that Intsok and Innovation Norway reach an agreement concerning the joint use of the various instruments.

Conclusion
To conclude, I think there is reason to be optimistic about the future:

First, the Norwegian oil and gas industry is faced with an increasing global market for petroleum related goods and services.

Second, Norwegian competence is in demand. This is not only the case for goods and service. There is also a growing demand for knowledge of petroleum administration and management, and other assets inherent in the Norwegian petroleum cluster.

I have an open mind towards discussing how the industry and Government could cooperate and find ways and means to market the Norwegian petroleum cluster. Energy markets are of strategic importance to the world economy and thus they are often subject to political considerations. In order for the industry to access these markets, political contacts and support are often helpful, if not necessary.

I will assure you that I as Minister for Petroleum and Energy am determined to contribute to the international success of the Norwegian petroleum industry.

Thank you for the attention and good luck with the conference!