Foils from the Speech ( pdf )

It is a great pleasure for me to address you at the opening of this seminar concerning the possibilities in the Russian oil and gas market.

As neighbours in the North, Norway and Russia have a long history of peaceful, cooperative solutions to common problems and challenges.

As neighbours, we see eye to eye on many issues. Over the last ten years, our common ground has been greatly expanded. There has been a tremendous deepening and broadening of the bilateral relations between our two countries. The strengthening of our energy dialogue is a good example of the evolving relations between the Russian and Norwegian Governments.

On the basis of the Memorandum of Cooperation signed on 1 July 1992 between the Norwegian Ministry of Petroleum and Energy and the Russian Ministry of Fuel and Energy, our two nations have now manifested their desire to develop their energy dialogue further.

Thus, in 2002 two Cooperation Programs were signed between my Ministry and the Russian Ministry of Industry and Energy, and the Russian Ministry of Natural Resources respectively. In 2004, a third Cooperation Program was signed between my Ministry and your Ministry of Economic Development and Trade.

During his visit to Oslo in November 2002, President Putin signed a Joint Declaration with Prime Minister which also underlines the importance the energy dialogue between Norway and Russia.

Cooperation Programs
Both the Cooperation Programs and the Joint Declaration stipulate that our two countries aim at:

• Developing the bilateral cooperation in the energy sector to the mutual benefit of both countries;
• Contributing to the realization of commercial cooperation in the energy sector by encouraging the active interplay between Norwegian and Russian companies with regard to exploration for, and production of hydrocarbons;
• The energy dialogue also includes issues like resource management, issues related to energy policy and legislation, energy related environmental issues and safety, technology exchange, and developments in the oil and natural gas markets.

An energy working group consisting of Norwegian and Russian representatives of both the Governments and the petroleum industry was also established in 2003 under the auspices of the energy dialogue between Norway and Russia. This working group was one of the measures agreed upon in the Joint Declaration signed in November 2002 with a view to further strengthening the relationship between our two countries.

The aim of the Energy Working Group is to promote the realization of projects for cooperation between the oil and gas industry of both countries on a commercial basis, as follows:

• Assist the commercial cooperation between Russian and Norwegian companies in the energy sector, by ensuring the active interaction in exploration, production, processing and transportation of oil and gas;
• Facilitate joint action for increasing the operational security of oil and gas fields, in due consideration of environmental issues;
• Promote cooperation in modern technology exchange regarding oil and gas exploration, development and production in Russia;
• Facilitate the cooperation between the energy supply industries of the two countries.

From the Norwegian side, we very much welcome the fact that our energy dialogue with Russia has been intensified, and I look forward to continuing and strengthening this dialogue in the time to come. As neighbours and significant producers and exporters of energy, good relations and a good understanding of each others' thinking and policies are important.

Industry co-operation
I strongly believe that a fundamental aspect of the energy dialogue is to promote co-operation between Norwegian oil and gas companies and the supply industry on one side, and similar industries in Russia on the other. Norwegian oil companies and suppliers consider Russia to be a very interesting market. Activities in the Barents Sea as well as the Sakhalin offshore development offer ample opportunities for a constructive interplay between Russian and Norwegian companies. Let me also mention that cooperation should not only be limited to operations in the Russian market. Russian companies are of course more than welcome to invest in Norway on the same terms and conditions as other international companies. Further, co-operation in 3 ^rd> countries also offers opportunities.

Norwegian competence
Norwegian companies have more than 30 years of experience with technology development and project management for offshore developments in demanding geological structures under harsh climatic conditions. The Norwegian Continental Shelf has been a testing ground for technology related to floating production, subsea systems and drilling to mention some key areas.

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. Today, skills, experience and technology developed on the NCS are utilized by the international oil and gas industry all over the world.

Snøhvit
The Snøhvit LNG development and the Ormen Lange development are two excellent examples of front end technology.

The Snøhvit field in the Norwegian part of the Barent Sea is currently under development. This is the first field development in Norway based on an LNG solution and the northernmost LNG development in the world. The gas reserves in Snøhvit will allow production for more than 20 years.

The development of Snøhvit will provide a basis for further field developments based on LNG in the area, and Snøhvit is therefore important for further exploration activities in the Barents Sea.

Ormen
The Ormen Lange field is Norway’s largest gas field, and was proven through drilling by Norsk Hydro in 1997. Hydro's subsea solutions and Ormen Lange are taking deep water technology development a significant step ahead. Nothing will be visible on the surface when the enormous gas field Ormen Lange comes on-stream in 2007. When it reaches full production, the field will meet 20 percent of the UK demand for gas.

Hydro has been working in Russia for a long period. Statoil also has a strong presence in Russia. Therefore I am very pleased that Gazprom has entered into a MoU with Statoil and Hydro respectively. I am confident that the agreements with Gazprom will be beneficial for the parties involved. The development of the Shtokman gas field in the Barents Sea is of great interest to both companies. Both Statoil and Hydro have significant experience and technology in developing offshore oil- and gas fields under challenging environmental and harsh climate conditions.

A number of firms within the Norwegian oil and gas supply industry are also participating in the Russian oil and gas sector. As stated in the joint declaration between Norway and Russia – there is a clear scope for further co-operation.

Hydro's supply development
In this respect, I would like to mention the supplier project initiated by Hydro, and supported by the local authorities of Murmansk and Arkhangelsk in Russia, and Finnmark and Sør-Varanger in Norway, the Russian oil and gas company Sevmorneftegaz, Innovation Norway and the Barents Sea secretariat. The project is aiming at charting companies in Finnmark that could supply services to the oil and gas industry in north-western Russia in collaboration with local Russian suppliers. In this way the supply industries on both sides of the Russian-Norwegian border can be better equipped for a future development of oil and gas fields in the Barents Sea.

The project has so far resulted in four Russian companies qualifying for work on the Norwegian and British continental shelf through the qualification system Achilles. Hydro has also recently started work on establishing a centre of expertise for suppliers in north-west Russia.

The supplier -project can also help to strengthen the position of companies in Finnmark relation to oil and gas operations in the north, by linking Russian supplier companies with companies in Finnmark.

I very much welcome this initiative and other initiatives that contribute to greater cooperation between the Norwegian and Russian supplier industry on projects in the northern areas.

Internationalisation
Having said that, I can not go on without emphasizing the excellent work INTSOK is doing in facilitating contact between Norwegian and Russian companies. As many of you know, INTSOK's objective is to work with companies throughout the industry to expand the business activities in the international oil and gas markets on the basis of the industry’s leading edge experience, technology and expertise.

The Norwegian Government supports INTSOK’s initiatives, and the activities are financed jointly by the industry and the government. Through INTSOK Norwegian oil and gas companies are actively seeking partnerships in international markets. Today INTSOK has 160 registered partner companies comprising the entire Norwegian petroleum cluster.

Last fall I headed a business delegation to Algeria and Libya, and I recently came back from China. We experienced great interest in the technology and competence developed on the Norwegian Continental Shelf. I am also prepared to head a business delegation to Russia as soon as possible.

Before concluding, I would like to address some issues regarding petroleum activities in the Norwegian part of the Barents Sea:

Petroleum activities in the Barents Sea
The Norwegian Barents Sea is the least explored petroleum province on the NCS and is characterized as a frontier province with a large petroleum potential yet to be found. Approximately 1/3 of the total recoverable undiscovered resources on the NCS, are estimated to be in the Norwegian part of the Barents Sea.

In 2001 the Government announced that it would "conduct an Environmental Impact Assessment (EIA) study of all-year petroleum activities in the northern seas from Lofoten and northward. Until such a plan is in place, the Barents Sea will not be opened for further petroleum activity." The main task was to investigate if there were ways to undertake all-year round petroleum activities in an environmentally sound manner and without conflicts with the fisheries.

During a one and a half year period in 2002-2003, an Environmental Impact Assessment study for Lofoten – Barents Sea was conducted. A total of 34 studies on different topics were carried out, and a report was made to sum up the results from the different studies.

In December 2003, in light of the results from the EIA - study, the Government decided to allow for further petroleum activity in already opened areas in the Barents Sea south, with some exceptions. The exceptions were the coastal areas of Troms and Finnmark and the especially valuable areas: the polar front, the ice edge, Bear Island and Tromsøflaket.

This decision was that no discharge to sea of produced water, drilling mud or cuttings was to be allowed for petroleum activity in the Lofoten – Barents Sea area from 2005. This represent to my knowledge one of the world's strictest regulations of petroleum activities offshore.

As a result of the Government's decision in December 2003, we are now experiencing an increased interest for the Barents Sea from many companies. I have responded to this renewed interest by recently awarding new licenses in areas close to Snøhvit in the annual Awards in Predefined Areas (APA).

I have also invited the oil companies to nominate blocks they think should be included in the 19th licensing round on the Norwegian Continental Shelf. The nominations may include most areas already opened for petroleum activities in the Norwegian Sea and in the Barents Sea south. The Barents Sea south is likely to be the main focus of this round.

The announcement of the 19th licensing round is intended to take place before the summer of 2005, with the award of new production licenses planned for the 1st quarter of 2006.

There is also currently ongoing exploration activity in the Norwegian part of the Barents Sea. Three exploration wells are planned to be drilled this year in existing production licenses in this area. Hydro is the operator for the first well, where the drilling has already commenced. Statoil is the operator for the two following wells.

Hopefully this drilling campaign and the 19th licensing round can make a substantial contribution to develop the Barents Sea into a future strong petroleum province.

Conclusion:
I am optimistic about the future for the cooperation between Russia and Norway in the energy sector, both on commercial and governmental level. I am convinced that co-operation between our two countries in the petroleum sector will continue to prove mutually beneficial. I am also optimistic about the further development of co-operation in the Norwegian part of the Barents Sea.

I hope you all will have two interesting and fruitful days at the conference!

Thank you for your attention.