Foils from the speech

It is a great pleasure for me to visit Eni's corporate headquarters here in Milan. As your company has been active on the Norwegian Continental Shelf for a very long time, we feel we know relatively well your Norwegian branch. However, the visit here today provides a very good opportunity to be updated also on Eni's activities elsewhere around the world.

In addition, we appreciate this opportunity to present some of the Norwegian service and supply companies within our sector and some of the competence that might be of interest to both ENI and other Italian companies in the petroleum sector. I hope and expect that the extensive program later today and for the rest of this week focusing on this – both here in Milan and in Ravenna – will prove successful and fruitful for companies from both countries.

World Energy Demand
The oil and gas sector is a long term and growing industry on a global basis. As can be seen from the NASA picture of the world at night, the global society needs a lot of energy. Expectations are that large countries like China and India will gradually improve living standards, and consequently increase their energy consumption. As the developing countries with their huge populations modernise, the world will need more energy than today. According to IEA, nearly 6 trillion US dollars will have to be invested in oil and gas over the next 3 decades.

Production on the NCS
My point of departure is that the NCS will continue to play a vital role in supplying the world with the energy it needs for many decades to come.

Only a year ago, many were pessimistic about the future of the Norwegian domestic oil and gas industry. Exploration activity was low, no major discoveries had been made for quite some time, and the oil companies claimed that the frame work conditions on the NCS were not competitive.

Investments on the Norwegian Continental Shelf
Today the situation seems quite different. Most indicators are positive. The oil companies and the global financial community operate with higher oil price expectations, generating more exploration and higher investments. There has been a notable increase in the activity level on the Norwegian Continental Shelf since last year's estimates of investments. Over the five next years upward adjustments in investment estimates total about 6 bill Euro. As for the year 2005 we expect the investment level to be in the range of 11 bill Euro. As for exploration activity, this year we expect the number of exploration wells to double compared to 2004.

19. Licensing Round
The NPD estimates that around 1/3 of the undiscovered resources on the Shelf are to be found in the Barents Sea. However, due to the limited geological knowledge about the region, there is considerable uncertainty about these estimates. 2005 and 2006 will be important years for the exploration of the Barents Sea. Hydro has just finished one well and Statoil is going to undertake two more drillings this year. Also, I have been informed that ENI is planning a campaign of three wells. Obviously I see this as a very positive contribution from your company.

The next licensing round in frontier parts of the NCS, the 19. Licensing Round, will concentrate on the northernmost parts of the Shelf. In October 2004 the industry were invited to nominate blocks they wanted included in the round. The deadline for this nomination was 23 February. The map behind me shows the blocks that were nominated by two or more companies. In addition to this, many blocks were nominated by only one company. All together 19 companies nominated blocks. We see this extensive nomination as proof of a renewed interest for the Barents Sea.

Two out of the three areas that ENI nominated in the Barents Sea were also nominated by at least one other company. However, this does not mean that the area ENI nominated alone will not be included in the round. We are now in a process of evaluating which blocks to include and we expect to announce the round before summer 2005, with application deadline before Christmas this year. Awards are planed in first quarter 2006.

We hope that ENI will follow up its nomination with an extensive application. ENI is today one of the leading players in the Norwegian part of the Barents Sea and your knowledge and experience can give important contribution to the unveiling of the resource potential in this region.

Awards in Predefined Areas
In 2003 we changed the licensing system in mature parts of the NCS through the introduction of the so called Awards in Predefined Areas (APA).

With the awards in pre-defined areas (APA) all acreage close to existing and planned infrastructure is made available for the industry. This ensures that time-critical acreage can be explored and new fields put in production in a timely manner. The introduction of the new system has also increased the predictability for companies with regard to what acreage will be available in the coming years.

The interest from the industry in the APA rounds has been very good. Last year a total of 28 production licenses were awarded to 21 different companies. ENI participated in two of these 28 production licenses. This substantial increase in awards from previous years and the feedback from the industry tells us that the changes made in 2003 were the right ones.

Gas Resources and Production
Let me say a few words about Norway as a gas producer, a role in which Norway is still relatively young. The diagram on the left shows the gas resources on the Norwegian Continental Shelf, which could comprise about 6000 billion cubic metres in total. As you can see, only around 13 % of the estimated resources have been produced so far, so there is a great potential for gas production on the NCS. However, a substantial part of the resources, around 30 %, has not yet been discovered. There is still a job to be done.

Norwegian gas production is currently at around 80 billion cubic metres per year. Production is expected to increase further in the short to medium term as new fields are developed. 99% of Norwegian gas sales are exported. As we can see on the graph to the right, there is a potential for increased sales, and total sales of about 120 billion cubic metres per year is possible within this decade. It should be noted that in order to maintain this level, a significant exploration success rate is required.

Gas Transportation and Sales toItaly
There are approximately 50 fields producing gas on the Norwegian Continental Shelf. With over 6 600 kilometres of pipelines, we have the world’s most extensive offshore transportation system. The gas is transported to three landfalls on the Continent, and there will be two landfalls in Britain when the new pipeline Langeled has been built in connection with the Ormen Lange field.

Of all the gas consumed in Europe, 14 percent is produced on the Norwegian Continental Shelf. Italy is an important market for Norway. ENI has been a significant customer for years, and will continue to be so. Close to 10 percent of Norwegian gas production is delivered under long-term gas sales contracts between Norwegian sellers of gas and ENI. These contracts were entered into years ago, and have been important for new gas developments on the Norwegian Continental Shelf.

The Service and Supply Industry
The Norwegian Government see research and development as fundamental in developing further the petroleum activities on the NCS, and I believe it is fair to say that the companies operating at the NCS have always been in the forefront in taking the risk to use new technologies. This has generated significant value creation. The ability and willingness to apply new technologies will be a significant driving force in developing our oil and gas industry. I see this as an important element in the competitiveness of the NCS.

The Norwegian service and supply industry – including the research institutions – is steadily increasing its international activity level. This slide gives a good impression, I think, of the progress we have seen in offshore technology over the last few decades. Norwegian companies have been heavily involved in making this progress happen. They possess a strong competence and technology base.

There is no doubt in my mind that Norwegian service and supply companies, including the research institutions, have the skills and abilities to make a positive contribution in the developments ENI is responsible for around the world. This includes the Kashagan development – which is a good example of a development where Norwegian competence might prove highly valuable, with its harsh arctic-like conditions and tremendous challenges.

Norway – your energy partner
I would like to conclude this short introduction by saying that we see Eni as a very important company in all stages of the value chain – a company that is making a positive contribution on the NCS.

We hope Eni will continue to be active in exploration activities on the NCS, and follow up your nominations with a broad application in the 19th Licensing Round.

Also, Eni is an important buyer of gas from the NCS. And I see many reasons why you should continue to buy gas from Norway.

As for the close and constructive relationship between Eni and Norwegian supply and service industry, I am in no doubt that this cooperation has that potential to be strengthened even further in the years to come.

And with those words I would like to thank you for your attention. I look forward to an interesting day here in your offices in Milan.