Your Majesty,

Your Excellences,

Honoured Guests,

Ladies and gentlemen,

Energy has been and will continue to be a vital part of international politics, economic development and environmental challenges in any foreseeable future. Energy is essential for growth and welfare. How we deal with energy issues in a global perspective will be decisive in achieving sustainable development. As I speak, world leaders are gathering in Johannesburg at the World Summit on Sustainable Development. This is a major event – addressing the needs of future generations and the world's poor. Ten years after Rio we once again need to address the links between energy, the environment and economic development, and I will actively take part in this debate in Johannesburg.

It is important to have a constructive debate on the links between these three elements. For the next twenty to thirty years at least, fossil fuels will continue to constitute a main source of energy in meeting the energy needs of the industrialised as well as the developing world. For developing countries to depart from poverty, economic growth and improved access to energy is vital. Efficient use of fossil fuels and increased use of renewables will play a decisive role in the coming decades. Norway, therefore, is in favour of increasing the use of renewable energy globally, and we will propose concrete measures to this effect in Johannesburg.

We have to realise that increased use of fossil fuels also poses immense challenges. For instance, coal, oil, and natural gas all contribute heavily to CO ₂ emissions, thereby contributing to increasing the level of greenhouse gases and other environmental problems.

During the last thirty years, Norway has become a major producer and exporter of oil and gas. Today, Norway is the sixth largest producer of oil in the world, the third largest exporter of oil, and an important exporter of natural gas to European markets. Since discovering petroleum on the Norwegian Continental Shelf forty years ago, we have emphasised the need to conduct the petroleum activities in coexistence with other interests, such as the fisheries. Furthermore, we have always aimed at combining the role of being a major oil and gas producer with that of being in the environmental forefront.

The Norwegian Continental Shelf still contains large petroleum resources. Based on these resources, Norway has the potential for at least another fifty years of oil production and more than a hundred years of gas production.

Needless to say, this puts Norway in a special position. As we expect economic growth to continue on a global scale, global dependence on energy will also increase in the future. Norway will continue to play a significant role in the global oil and gas picture. From a Norwegian perspective these global prospects do not only call for ample opportunities, but also for ample responsibilities. In the following, I would like to call attention to some of the trends and challenges ahead.

*

(Renewables)

At present, renewable energy sources only represent five per cent of the world's aggregate supply of primary energy. Renewable energy has the technical potential to meet large portions of the world's energy demand in the future. Under present market conditions, the economic potential of renewables is rather small. If very strong efforts are made by governments to promote and subsidise renewables, their share in OECD countries could be considerably increased in the years to come. To boost the role of renewables, further cost reductions are needed. As environmental concerns are vital, and will become increasingly important in the years to come. Norway will work actively to strengthen the focus on research and development in this field.

At the World Summit in Johannesburg Norway will support the goal that renewable energy sources should represent at least 15 per cent of the world’s aggregate supply of primary energy sources by 2010.

(Coal)

In many parts of the world, coal still is the main energy source. This is true in developing countries as well as in important developed countries. The environmental costs connected to the use of coal are tremendous, both for communities heavily affected by local pollution and globally as a main source for CO ₂ emissions. As today’s obvious aim is economic growth that is environmentally sustainable, we will have to see a shift towards other, more environmentally benign sources of energy in the longer term. Alternatively, a solution to the problem of CO ₂ emissions must be found.

(Oil)

Over the next few decades, oil is most likely to retain its position as the single largest source of primary energy. This implies that in absolute numbers, global oil production will have to increase. Growth in demand is most likely to come from the transportation sector, where prospects for replacing oil with other kinds of fuel seem limited in the medium term.

For the next twenty years, proven oil reserves are sufficient to satisfy this projected rise in demand. Looking a bit further ahead, however, large investments have to be made in order to secure supply in the long term. Discovering new resources, as well as enhancing production from existing fields are demanding tasks. I am confident that the oil industry will increase its research and development to increase the extraction of oil and make production more efficient.

(Natural gas)

Turning now to natural gas, global resources are abundant. Supply is expected to easily meet the steep increase in demand that we foresee in the coming years. Also, natural gas will most likely be the fastest growing primary energy source in the decades to come. Projections show that the growth of natural gas consumption in developing countries may be significantly higher than in the rest of the world. I am very pleased to see that natural gas is replacing the use of more polluting fuels in several countries. I say this not only because Norway is a major producer and exporter of natural gas, but also because I see this as part of a necessary step towards increased use of cleaner fuels in the future.

According to IEA’s World Energy Outlook, proven gas reserves have doubled over the past twenty years. Most of today's proven reserves were discovered in the course of exploration for oil. Looking forward, I am certain that as we start exploring specifically for natural gas, the increase in proven reserves will get even steeper. However, a substantial part of these reserves are located far from major markets. Thus, in order to ensure security of gas supply to the market, massive investments in production facilities and infrastructure are required. Gas to liquids solutions will be important in this respect.

To sum up, I see no substantial alternatives to using oil and gas in the medium term. Developing countries have to increase their use of energy to fight poverty and attain economic growth. The industrialised countries must continue their work to reduce demand through energy efficiency measures. Otherwise, global warming shall continue to be a large and unsolved problem. To solve this, two alternative strategies could be followed: One would be to reduce consumption of fossil fuels in such manner as to ensure that CO ₂ emissions are also reduced. The other would be the commercially viable sequestration and injection of CO ₂.

This constitutes a paradox to which both political leaders and business leaders need to find a solution.

*

We would all like to see a world characterised by sustainable economic growth and stability. In this respect no single sector holds a more significant position than energy. History has shown that the availability of energy and the application of energy use have been key factors in economic development and growth.

Energy is probably the most global commodity of all, - not global for its availability, but for what it represents: Energy is vital in order to provide the services and conveniences that an increasing number of people demand - at an ever increasing speed.

The increasing importance of energy in a global perspective, and the close interaction of energy markets require a continued focus on the multilateral co-operation between producing an consuming countries. As governments, our main task should be to create long term and stable frameworks to improve communication, transparency and efficiency so as to contribute to achieving the desired stability of the energy markets.

I will now address the paradox I briefly outlined earlier: The challenge of providing global access to and even supplies of energy, and the environmental challenges caused by emissions from the production and use of fossil fuels.

As I stated earlier, access to energy is a precondition for economic growth and social and political development. Yet two billion people currently go without the energy necessary for industrial and economic development, causing them to remain in the poverty trap. If the poor are to have greater access to modern energy supplies by, for instance being connected to electricity or gas grids, global production will have to increase. One of the main challenges for the global community today is therefore the question of how poverty may be reduced by means of sustainable growth. This includes both supporting and promoting the development of energy systems based on renewables and natural gas, as well as encouraging the development of technology for more efficient use of fossil energy sources.

However, even if access to energy is a necessary precondition for economic growth, it is not a sufficient condition for reducing poverty. Adequate infrastructure, both in terms of physical and institutional capacities as well as sound principles for pricing the energy products, are fundamental. The total costs of producing and distributing energy must be reflected in the price of the respective energy bearers to avoid distortions in consumption. In many countries today, this is not always the case. Subsidies are neither the answer to accomplish an effective market, nor to stimulate efficient use and even distribution of energy.

*

Global climate change is one of the most challenging environmental problems the world is facing today. It is also one of the main threats to sustainability. In a global perspective, we will have to deal with both the high level of consumption of energy in the developed world as well as the insufficiency of energy in parts of the developing world. A major challenge is to focus on energy efficiency in developing as well as in industrialised countries.

Clearly there is a need for a vision for the energy future aiming at sustainable economic growth and political stability. Key elements in such vision need to concentrate on security of energy supply, a more even distribution of these energy supplies and adequate infrastructure. Other necessary elements are long term and stable energy markets where predictability prevails, and the integration of environmental concerns throughout the energy cycle, including energy efficiency measures.

To establish the means enabling us to reach the desired objectives in the most efficient and cost-effective manner possible, international co-ordination and co-operation are needed. At the same time, distortion and imbalances in competition and, consequently, in trade must be avoided. The environmental cost should reflect the environmental damage.

As a developed country and a significant and long term producer and exporter of oil and gas, Norway definitely has an important responsibility when it comes to the issue of global climate change. We have a responsibility to both reduce our own contributions to the greenhouse effect, and to be a driving force in the international negotiations to address the challenge of climate change.

Norway will implement a significant part of its international commitments through domestic action. We are actively seeking to reduce our emissions through a broad set of policies and measures. Norway has had an extensive CO ₂ tax in place for a decade. We believe that a broad system for domestic emissions trading, linked to the Kyoto mechanisms, is the best tool available to ensure compliance with the Kyoto Protocol. The Government is planning to introduce a national system already in 2005.

The alarming signals from the IPCC, the international panel of scientists, points to the need to reach an effective global climate regime. The Convention on Climate Change and the Kyoto Protocol are important early steps. Norway ratified the Kyoto Protocol this Spring. I am pleased to see that a number of other important industrialised countries ratified before the Johannesburg-summit. I am, however, concerned that the Kyoto Protocol has not yet been ratified by the sufficient number of industrialised countries required for the entering into force of the Protocol. I would therefore like to emphasise the importance of even more industrialised countries acting responsibly to enable the prompt entry into force of the Protocol.

*

The global trends I have briefly outlined today, notably the increased demand for energy combined with the environmental challenges this constitutes, cannot be managed by governments alone. The business community and governments have a common responsibility to secure global energy distribution and even supplies, combined with the protection of the environment. To this end, the oil and gas industry can offer risk capital, competence and technology. Governments must provide long term and stable frameworks for their operations. To achieve security of energy supplies and environmental protection, stable markets and framework conditions are required.

In the era of globalisation, multinational companies – not least in the oil and gas business - are playing major economic roles in most countries of the world. The energy industries therefore have to act as responsible global citizens. More than ever before, governments, consumers, stockholders and the general public are more alert, not only to environmental concerns, but also to human rights issues. The international oil industry, therefore, not only has a moral obligation, but also an economic interest in promoting social progress and opposing human rights violations. Increasingly, good ethics is good business. It is no longer a viable option for companies to claim that "we do business, not politics".

My Government would like to increase the focus on the ethical and moral values that must form the basis of our future policies, both at home and abroad. Our starting point is clear: respect for the dignity and worth of each human being and the natural and social environment in which we all live.

*

Energy is essential for economic development, growth and welfare. In the decades to come, fossil fuels will play an increasingly important role in supplying this energy. However, increased use of energy does not come without costs. Thus, energy issues will continue to be a centre of attention for the global community. In this respect, as a large producer and exporter of oil and gas, Norway has a unique responsibility and possibility to play a significant part.

I do not consider it an easy task to solve the challenges I have briefly outlined here today. To achieve a sustainable solution, governments and the business community have to work together. Dialogue between governments and industry is essential as we lay the foundation for a common, co-operative energy future. I am optimistic with regard to our abilities to meet future global energy demands in a sustainable manner.