Speech in American Chamber of Commerce

Both the US and Norway have a broad energy agenda. We share the same interests and both our countries are affected by the global trends in the energy market. I will not cover all relevant issues, but instead concentrate on the petroleum sector and say a few words on the following:

• Development of the Norwegian Continental Shelf
• Norway's energy co-operation with Russia
• Some views on Iran, Libya and Iraq
• Bilateral R&D collaboration with the US
• The US as a market for oil and gas as well as petroleum related goods and services.

The petroleum sector has been a key driver in the development of the Norwegian economy for the last three decades. In 2003, a year with high oil prices and activity, the sector accounted for about one fifth of the gross domestic product.

Norway is the third largest exporter of natural gas - behind Russia and Canada, but ahead of Algeria. We are also the third largest exporter of oil - behind Saudi Arabia and Russia, but ahead of Iran.

Norway has the resource potential to remain a significant producer of petroleum in the next decades. Last year, almost 10 billion dollars were invested in exploration and production on the Norwegian Continental Shelf. US companies play an important role

The investment level is expected to remain high in the immediate future, but we foresee a decline from 2006. It is vital that we can meet this challenge in a proactive way:

First, we need a licensing policy that allows for safe and cost efficient exploration and production.

Second, we need to sustain activity by cutting costs. This must be achieved through more rational working procedures in all parts of the petroleum cluster, including government bodies.

Third, we need to strengthen our efforts to implement new technologies to exploit our resource base. For instance, we need to find new ways to maximise oil recovery and unlock the potential of undiscovered resources.

As you are probably all aware, the oil and gas industry has advocated changes in the petroleum tax system. The current tax system offers low risk and few distortions to pre-tax economics to investors. However, the industry claims that a tax change is necessary to realize the remaining potential. We will report to the Parliament after Easter on this issue.

Exploration Policies

A few words on our exploration policies:

The NCS ranges from areas of considerable maturity to large areas where practically no exploration has taken place.

As our continental shelf is maturing, the licensing policy must be adapted to the prevailing circumstances.

A major reform of the licensing system in mature areas was launched in 2003, when the Government established fixed, predefined exploration areas. This new system will provide improved predictability and transparency for the oil companies in mature areas.

In frontier areas, licensing rounds are carried out every second year.

March 15 was the application deadline for the 18th Licensing Round. With 95 blocks, or parts of blocks on offer, this is the largest licensing round in frontier areas since the 1 ^st> Licensing Round in 1965. Altogether, we have received applications from 18 qualified companies. I am very pleased with the interest that the companies have demonstrated. It lays the foundation for an extensive exploration of the frontier areas on the NCS.

Of the 18 companies that have applied, 10 did not participate in the 17 ^th> Licensing Round. This is an interesting and encouraging development. It is in line with the Government's ambitions to attract a broader range of companies to the NCS.

Energy dialogue:Norway- Russia

Let me then turn to our energy dialogue with Russia. Russia is quite important to Norway, not least in the energy sector. Apart from our common border in the Barents Sea there are several reasons for this:

• Russia and Norway are both significant exporters of gas to Europe, and thus competitors in that same market.
• There are ample business opportunities in Russia for Norwegian oil companies and supply industry.

• Both countries have a common interest in contributing to a stable and acceptable price level for crude oil.

• Energy will become an important part of the Barents Sea Cooperation.

In 2002 it was decided to intensify the energy dialogue and to adapt it to new governmental structures in Russia. For this reason, cooperation programs have been signed between the Norwegian Ministry of Petroleum and Energy and relevant Russian ministries.

Our energy dialogue includes:

• Oil and gas policies - including legislation and administration

• Issues related to the international oil and gas market

• Business opportunities for the Norwegian oil and gas industry in Russia

• Issues related to environmental concerns such as oil spill contingency and safety

Discussions are constructive and take place on a regular basis. In line with the desire expressed by Prime Minister Bondevik and President Putin in 2002, an Energy Working Group has been established. It comprises representatives of civil servants and industry from both sides. The aim is to facilitate the realisation of joint oil and gas projects on a commercial basis.

Some views onIran,Libyaand Iraq

In the last decade or so the Norwegian petroleum industry has to an increasing extent also become a global player. Resources and interesting markets for industry are often located in countries with different political systems, lack of democracy, transparency and infringement of human rights.

We believe that a sound dialogue and cooperation on transparent terms is the best way to achieve an improvement in these matters. Our job as politicians is also to bring difficult issues to the table in our cooperation with such countries. Together with the presence of companies demonstrating democratic values, respect for human rights and social corporate responsibility, such a dialogue is the best way of improving both the political climate and the business environment.

Today, the Norwegian government puts no restrictions on Norwegian companies dealing in the Middle East, but expect that they abide with national and international law and obligations, and the UN Security Council resolutions where this is relevant, as is the case for Iraq.

In our cooperation with countries, such as those subject to the U.S. Iran-Libyan Sanctions Act, we are informing and updating the U.S. Government.

R&D collaboration between theUSandNorway

The United States and Norway have a bilateral science and technology collaboration within Carbon Sequestration and Hydrogen based on fossil fuels.

Cooperation in these areas was initiated through a joint US Norwegian workshop in Washington DC in January 2003. The aim is to facilitate exchange and training of researchers in core competence areas and to initiate joint research and technology activities within focused disciplines.

A Memorandum of Understanding is now ready to be signed between the United States and Norway on a broader range of issues in the field of energy research and technology.

Further possibilities for co-operation are to be discussed in a workshop in New Orleans 10 & 11 May, including a possible extension within oil and gas technology.

Norway is also a participant in the US initiated Carbon Sequestration Leadership Forum (CSLF) and the International Partnership for the Hydrogen Economy (IPHE). Norway is dedicated to both initiatives and intends to offer our experience and competence within related technology areas.

US oil company participation in OG 21

I am happy to see that several US oil companies involved in E&P on the NCS also play an active part in OG 21, the national strategy for enhanced R&D in the petroleum sector. OG21 has started a process to identify technology gaps. Nine groups have been established to this effect. ExxonMobile and ConocoPhillips have taken lead positions regarding cost efficient drilling and emissions to the sea respectively.

Also ChevronTexaco takes an active part in the Norwegian R&D cluster.

US experience and competence have been and will always be vital for the oil and gas activities in Norway. New technologies developed on the NCS can also benefit US and other international oil and gas activities.

Let me also add that US contractors and service companies provide very valuable contributions to technology development in Norway.

Market opportunities in the US

Norwegian oil and gas industry considers the US Gulf of Mexico (GoM) to be a key market. To a large extent this is due to the increasing level of exploration and production taking place in the deepwater areas of the Gulf. Norwegian technology and competence have proven to be competitive when it comes to deepwater activities.

Houston has always been a major centre for technology development in the global exploration and production business. Moreover, many of the multinational oil companies run their international operations from Houston. In order to be part of such a strong petroleum cluster, the Norwegian supply industry has increased its presence in Houston over the past years. Today, the Gulf of Mexico is the most significant market for the Norwegian supply industry outside the North Sea.

Hydro entered into a joint venture agreement with Conoco in September 2001 and is engaged in exploration in the Gulf. The long term goal is to establish the Gulf of Mexico as a core area.

Statoil does not have any exploration and production activities in the U.S. as of today, but the company is listed on the New York Stock Exchange and has a trading office in Connecticut. The US will be a major market for gas from the Snøhvit field (0, 23 bcf/d). Based on LNG, Statoil will become a main marketer of gas in the US. To gain access to this market, Statoil has acquired capacity at the Cove Point terminal in Maryland. Norway will become a significant supplier of LNG to the US.

Conclusion

Norway is currently exporting more than 300.000 barrels of oil and NGL per day to the US. From 2006 the US will also receive Norwegian LNG.

It is our ambition to remain a reliable supplier of oil and gas to the world market.

The Government will continue to make sure that the NCS remains an attractive oil and gas province - through stable, flexible framework conditions. This includes elements like licensing policy and emphasis on R&D, which I have covered this evening. Not least, we will pursue a policy of sustaining an effective and innovative petroleum cluster based in Norway. More than ever, this implies focusing on cooperation with our international partners, both on the NCS and internationally.

I very much look forward to visiting the US later this spring. I plan to go to the OTC and hopefully Washington D.C. in May. The US is - and will always be - a major partner for Norway in the energy sector for many years to come. I am confident that the American Chamber of Commerce has a role to play in this very important process