Presentation (in pdf-format).

Distinguished guests,
As State Secretary in the Norwegian Ministry of Petroleum and Energy, it is a pleasure for me to give the opening address at today’s Japan-Norway Energy Seminar. The programme is very interesting, and covers many aspects of energy that are of great importance both for Japan and Norway. I got a very good impression of the Japanese energy sector yesterday, when I visited Ohgishima LNG terminal and Mitsui’s Natural Gas Hydrate Pilot Plant together with an important Norwegian business delegation. I look forward to visiting EXPO 2005 in Aichi tomorrow.

My presentation today will give you a broad outline of Norway as a major energy nation. Also, I will say a few words about Norway as an LNG exporter and on LNG technology development - and I will elaborate on the integrated Nordic power market, of which Norway is obviously part. Finally I will also briefly comment on gas power plants and CO2 issues.

But first of all, for those who are not familiar with my country, Norway is a medium sized country in an European perspective, situated in the North-western corner of the European continent. With a population of 4,6 mill and a size of 325 000 sq. km, only slightly smaller than Japan, it is not at all as densely populated as Japan. However, with a very long coastline, we are, just like the Japanese, closely connected to the sea.

Let me share with you some key figures about the Norwegian petroleum sector. As indicated by from these macro-economic indicators, this is the single most important industry in Norway. For instance, in 2003 the sector made up 19 % of the Gross Domestic Product and about 45 per cent of the total export value. Further, it contributes to a quarter both of total state revenues and total investments.

Internationally Norway has an important role to play in the petroleum sector. We are currently the World’s seventh largest producer of oil and condensate. With a small domestic market, this makes us the third largest net exporter of crude oil in the world – only behind Russia and Saudi Arabia.

Up until now Europe has been the only market for European gas, as all export has been via pipelines to the UK and mainland Europe. This picture gives you an impression of our pipeline system.

In 2004 we exported 76 bcm. A realistic scenario is that this increases to 120 bcm by 2010.

We are a leading supplier to the European gas market, covering 14 percent of the European market. This makes us the second largest supplier, with only Russia being bigger. Also, when it comes to gas resources, in Europe we are second only to Russia.

With the Snøhvit LNG development now taking place in the Norwegian part of the Barents Sea, Norwegian gas will also be exported to the North American market, as you can see on this picture.

The Snøhvit field is located in an area where it is extremely difficult to develop petroleum resources. The climatic and environmental challenges are exceptionally.

The development is based on subsea installations taking the well stream with a pipeline to an onshore treatment plant, from where gas will be transported to the markets by LNG ships.

The development of Snøhvit will provide a basis for further field developments in the Norwegian part of the Barents Sea based on LNG, and Snøhvit is for that reason important also for further exploration activities in this region. There is potentially considerable amounts of gas still to be found in this area.

Gas production from Snøhvit is expected to be about 5,7 bcm/year. Reserves in Snøhvit will allow for more than 20 years of production.

I am confident that Statoil in their presentation later today will elaborate on the Snøhvit development and the LNG experience and technology they have acquired by being technically and commercially responsible for this project.

Combining experience and innovation from shipping and offshore industries has been very important in developing Norwegian LNG technologies.

I think the Aker Kværner group, who will give their presentation later today, serves as a very good example of a Norwegian company that has developed such expertise for the LNG value chain. Already in the early 1970ties they developed and designed LNG carriers with spherical tanks. This design now dominates the market, accounting for about 50 percent of the world fleet. So in fact, even if the tankers that will transport LNG from Snøhvit to Europe and the US are being built here in Japan, they are based on Norwegian design.

I am happy to see that Aker Kværner has been able to maintain their competitiveness within the LNG sector. Not so long ago they were awarded an EPC contract (engineering, procurement and construction) to perform management services for ChevronTexaco’s proposed Port Pelican and Baja California offshore LNG terminals in Mexico.

Aker Kwærner has also been awarded a contract to perform front-end engineering and design (FEED) work for ExxonMobil, Qatar Petroleum and Edison's LNG terminal in the North Adriatic Sea, located approximately 16 kilometers from shore in waters almost 30 meters deep.

Today, the Norwegian oil and gas industry consists of internationally competitive supply chains, covering most stages in the petroleum value chain from exploration via development to production and operation. The skills, experience and technology developed on the NCS are utilized by the international oil and gas industry all over the world.

A whole range of Norwegian companies and research institutions have built up their competence and acquired experience within the LNG sector. Annually between 1997 and 2003 Norwegian supply and service companies increased their international turnover by 10 percent. I am confident that the Norwegian market share will continue to increase over the coming years and that LNG competence will make an important contribution to this growth.

Technology development has been fundamental to the development of Norwegian petroleum resources.

Through targeted R&D efforts we have managed to overcome the numerous technological challenges and barriers that exploitation of the petroleum resources on the NCS have represented.

The giant concrete platforms of the 1970ties and 1980ties were followed by floating production and sub-sea systems. Already we see seabed separation and extended well stream transfer to onshore plants being developed, as in the case of Snøhvit, though this picture is from another major development going on right now - the Ormen Lange field that is being developed by the Norwegian oil company Hydro.

Over the past three years the government has doubled public spending on petroleum research. Today this amounts to approximately 300 million kroner or in excess of 5 bill Yen every year. However, the industry itself still provides most of the resources for R&D investments in the petroleum sector.

Let me then turn to the second part of my presentation, and in doing so give you an update on Norway as a hydropower producer.

Norway is the world's sixth largest hydropower producer, and the largest in Europe. The average annual production is about 119 Terawatt hours. The domestic demand for electricity is almost 100 per cent covered by this renewable and clean source of energy. This has been very beneficial to our environment, avoiding emissions from electricity generation.

Electricity plays a dominating role in stationary energy consumption (48 per cent), and nearly all electricity production in Norway is based on hydropower.

Today, the hydropower sector is the largest on-shore industry in Norway, with huge investments spread around the country.

Norway founded its industrial development on the early utilization of renewable energy sources. For more than one hundred years ago the first hydro power plants were constructed in the Norwegian mountains, which led to the formation of new industry clusters spread around the country. The first municipal company for electricity was actually founded in 1891.

The only disadvantage by being dependent on solely hydropower for our electricity production, is the vulnerability in years with little precipitation. The variations in hydropower production can be as much as +/- 30 Twh a year compared to the “normal year” production of 120 TWh.

Norway introduced the Energy Act in 1991. By this piece of legislation, we created a market for power production and trade. Another important step was taken in 1993, when the Power Exchange was established. Today, the power exchange is jointly owned by the Nordic countries except Iceland.

The security of supply is a common concern within the interlinked Nordic power market consisting of Norway, Sweden, Denmark and Finland. Apart from an increase of production capacity, an efficient use of the Nordic transmission capacity and the capacity to neighbouring countries is vital to secure a more reliable energy supply.

Such a market leads to an efficient use of the resources available and give signals to obtain the investment needed. We have to make sure that the transmission grid within Norway and to our neighbouring countries is sufficient and well-functioning. In this context, I will point out the responsibility the state owned enterprise Statnett has as the Transmission System Operator in Norway, and as the owner of the grid and interconnections to the neighbouring countries.

I would also like to mention the recently established agency; Gassnova. The Norwegian Government gives a high priority to the development of CO ₂ capture and storage technologies for gas fired power plants. The establishment of Gassnova - a new public facility to promote technologies for carbon emission abatement - will be a main instrument in developing these technologies.

CO ₂ capture and storage technologies can also be a major element in the development of hydrogen as an energy carrier. The Norwegian authorities and industry are now in the process of developing a national strategy in this area. Norway has high-quality research expertise within important niche areas, such as hydrogen storage and material technology.

Later today, the Director of Gassnova will give a comprehensive presentation of this new and important agency.

Norway has a large, unutilized, energy potential also in the so called “new renewables”. Closest to achieve a full market break through are wind power and bio energy. Norway has large wind resources especially along the coast and in Northern Norway. The high wind velocity and the large open areas in Norway makes wind power particularly favourable for production of renewable electricity.

Hydrogen can play an important role in the future energy system in the long run, both as a flexible energy carrier and as a tool for reducing undesirable emissions. Hydrogen technology will also make possible the utilization of local energy sources and improve the security of supply.

Norway has a 80 year long experience with industrial hydrogen production, both from renewable sources and fossil fuels. We have a well established industry and high quality research competence within important hydrogen areas. Norway also has large natural gas resources which could be a main source for large scale hydrogen production.

The Government will make an effort to increase the focus on research and development of hydrogen related technology and hydrogen as an energy carrier in Norway.

I will briefly mention that we are also carrying out work related to new and more “exotic” sources for energy such as salt-gradients, tidal power and solar enrgy.

Norway has a large, unutilized, energy potential also in the so called “new renewables”. Closest to achieve a full market break through are wind power and bio energy. Norway has large wind resources especially along the coast and in Northern Norway. The high wind velocity and the large open areas in Norway makes wind power particularly favourable for production of renewable electricity.

Hydrogen can play an important role in the future energy system in the long run, both as a flexible energy carrier and as a tool for reducing undesirable emissions. Hydrogen technology will also make possible the utilization of local energy sources and improve the security of supply.

Norway has a 80 year long experience with industrial hydrogen production, both from renewable sources and fossil fuels. We have a well established industry and high quality research competence within important hydrogen areas. Norway also has large natural gas resources which could be a main source for large scale hydrogen production.

The Government will make an effort to increase the focus on research and development of hydrogen related technology and hydrogen as an energy carrier in Norway.

I will briefly mention that we are also carrying out work related to new and more “exotic” sources for energy such as salt-gradients, tidal power and solar energy.