North Sea Beyond 2000 conference

Minister, Ladies and Gentlemen,
It is a great pleasure for me to be here in London at the "North Sea Beyond 2000" conference and share with you some thoughts on the challenges confronting the Norwegian petroleum policy.

The conference programme is quite impressive and I would like to congratulate Trade Partners UK and Intsok with what seems to be a very successful collaboration in planning this event. I do hope this conference will be the first in a long series and develop to be an important meeting place for our oil and gas industries.

The oil and gas industry has always been international, and I believe it will be even more international in the years to come due to changes in Government policies and structural changes in the industry.

Let me mention:

• Liberalised energy markets

• Opening of new petroleum provinces
• The growing influence of international structures, such as the World Trade Organisation (WTO), OECD and the EU
• Increased concern for stability in the oil and energy market
• Consolidation trends with mergers and acquisitions bringing on a different set of players on the global energy arena.
• New Information and Communication technology will intensify international competition

The trends above illustrate that any government has to take on board the consequences of a more integrated world economy. To maintain one's competitive position it will be essential for a nation to adjust their national policy to the global economic environment.

Internationalisation
A more global economic environment will also create new possibilities for our oil and gas industry.

The experience gained by the British and Norwegian industry over the past 30 years, in finding solutions for a demanding North Sea market, has contributed to the development of internationally competitive technology. A more liberalised world economy, with access to new petroleum provinces, provides British and Norwegian industry with a huge potential for export of North Sea competence and technology.

At the beginning of the petroleum era of the North Sea we were depending on large international oil- and service companies in our petroleum sector. Such companies still play an important part on the Norwegian Continental Shelf. The presence of these companies has been crucial in developing a competitive national oil and gas industry.

I believe it is now time for our industry to play an equivalent role in other parts of the world. Most of the countries now opening up their petroleum activities will need foreign experience and competence to exploit their resources.

The total international market for petroleum related goods and services is estimated to be about 180 bill USD, of which Norwegian companies only have a share of between 1 and 2 per cent. In a longer term, it must be a fair ambition for the Norwegian industry to have 4 to 5 per cent of this market.

I know that the British industry has set an equivalent goal and I believe there could be synergies in collaboration between the British and Norwegian Industry in promoting North Sea technology in third markets.

The Norwegian Shelf
Despite growing attention on internationalisation, the home market will still be of great importance to the Norwegian industry. After some 30 years of production, the Norwegian resource base is still quite comfortable. So far, we have only produced 21 per cent of the expected petroleum resources. Of the remaining 79 per cent, we expect the gas reserves to last for about 80-100 years and the oil reserves for about 20-30 years. While parts of the Norwegian shelf are maturing, major discoveries are still made, particularly in the Norwegian Sea.

The main challenge is to make sure that we obtain maximum value of these resources. It is a goal for the Norwegian authorities to keep our continental shelf competitive, compared to other petroleum provinces. This means that we must be able to produce the reserves cost efficiently and provide a reasonable return on the investment for the industry, also when the surrounding conditions are changing.

Licensing policy
The licensing policy is one of the strongest government instruments in the petroleum sector and is therefore crucial in keeping a petroleum province competitive.

The Norwegian government recently published a White Paper on the petroleum activities on the Norwegian Continental Shelf. I would like to elaborate on three of the most important changes that the Government proposes in the exploration and licensing policy.

The players on the Norwegian Continental Shelf have besides the Norwegian companies traditionally been the major international oil companies. In addition, a few medium sized companies have been present.

In the White Paper, the government states that smaller oil companies, down stream companies and service companies are welcome as licensees on the Norwegian Continental Shelf. We believe that these kinds of companies can add to the value creation on the shelf. Companies that are not primarily in the energy business will still not be allowed to become licensees.

Another change in the licensing policy is to establish a pre-qualification system. The reasoning behind a pre-qualification system is to make entry to the Norwegian Continental Shelf for new companies less risky and consequently less costly. With a pre-qualification system in place, companies that might be interested in becoming a licensee or an operator can go through the pre-qualification process without having to take part in a licensing round or to go through lengthy negotiations to buy assets first.

Five or six companies that are not licensees on the Norwegian Continental Shelf are currently in close contact with both the Ministry and the Norwegian Petroleum Directorate in order to be pre-qualified as licensees and operators. I'm happy to say that we aim to finish the pre-qualification process with most of these companies in time for them to participate in the upcoming North Sea Awards.

The third change I will briefly comment on is the timing of licensing rounds. Historically, new licenses on the Norwegian Continental Shelf have been awarded irregularly. We will in the future try to make the licensing rounds more predictable. In the White Paper, we propose to have North Sea Awards every year, and to have ordinary licensing rounds in the Norwegian Sea every second year.

As for the upcoming North Sea Awards 2000, the deadline for submissions of applications is the 14 ^th> of December. The awards will take place during the first quarter of 2001. The next awards in the Norwegian Sea will be announced in third quarter of 2001.

Technology
International competitiveness is crucial in succeeding, both for our continental shelf and our oil and gas industry. The ability to develop and utilise new technology will in my opinion be the key area to achieve international success.

A demanding domestic market has made the oil companies operating in the North Sea used to finding new solutions by stimulating research, not only in the technological mainstream, but also at the very edge of technology. The operators on the Norwegian Continental Shelf have also shown a remarkable ability and willingness to utilise new technology.

Operating in a technology-driven domestic market has also made the Norwegian supply industry worldwide leaders in several areas. The Norwegian subsea suppliers, ABB, FMC Kongsberg Subsea and Kværner, are examples as to how the Norwegian industry has been a driving force in technology development globally.

I believe governments can play an important part in catalysing technology development. The Norwegian Ministry of Petroleum and Energy therefore supports Demo 2000, which is a joint development program between oil companies, the supply and service industry, research institutions and authorities.

The role of Demo 2000 is to bridge the gap between R&D projects and real implementation. Demo 2000 focuses on qualification and demonstration of new technological solutions. It is based on close collaboration between suppliers, research institutions and oil companies and involves prototype development and testing, deployment and pilots.

So far, development projects totalling close to USD 100 mill. have been launched within the most important technology areas of offshore exploration and production. Morten Wienche, project leader for Demo 2000, has been invited to say more on this subject in one of the workshops tomorrow.

Topleader Forum
The task to stay competitive in a broad sense is a major challenge for Norway as a nation. We made an effort some years ago with Norsok. To maintain this process we now have created a forum consisting of top leaders from oil companies, supply companies, labour organisations and from the Government. This Forum, which I lead, has two main objectives:

To strengthen the competitive position of the Norwegian Continental Shelf

To strengthen the competitiveness of the Norwegian Oil and Gas Industry in Norway and internationally

The Forum shall consider all aspects related to the petroleum activities with the aim to agree on strategies and solutions that are sustainable for all parties. Questions regarding framework conditions, technology, working processes, internationalisation, etc will be subject to discussions in the Forum.

Further, the Forum will identify and actuate processes to achieve these goals and also co-ordinate and ensure that all parties follow up the recommendations made by the Forum. Through this Forum I hope to vitalise the creativity in the industry in a way that makes a difference with respect to the future of our industry.

Conclusion
To conclude, there is no doubt that we are faced with a world economy that is becoming more and more inter-related. This will affect how we will shape our national oil and gas policy in the future.

A global economic environment will create new possibilities for our oil and gas industry. I believe that British and Norwegian oil and gas industry has the technology, skills and competence to take a larger part of the global petroleum market, and I believe jointly promoting North Sea technology in third markets can be an instrument in achieving this.

Thank you for your attention!