Foils from the speech i pdf

Distinguished Audience, Ladies and Gentlemen!
It is a pleasure to address you today at the opening of this Chinese-Norwegian Offshore Conference, arranged by Intsok in co-operation with CNPC, CNOOC, and Sinopec. The conference is also supported by the National Development and Reform Commission and the Ministry of Land and Resources.

I will use this opportunity to briefly inform you about the Norwegian petroleum policies, as well as share some thoughts with you concerning the competence and technology we have in Norway within the petroleum industry.

Facts on the Norwegian oil and gas production Oil was first discovered offshore Norway in the late sixties, and production started in 1971. Since then we have continuously expanded our production capacity and expect to produce about 3 million barrels of oil and liquids a day this year. Norway’s domestic oil consumption is limited, and thus we are ranked as the world's third largest exporter of crude oil. China produces more oil than Norway, but due to your populous country and growing economy, there is obviously a need for import of oil to China. China matters in the world oil market and the demand in China is one of the key elements in the oil market.

This year we expect to produce almost 90 billion scm of natural gas, of which approximately the whole volume is exported. Norway is an important supplier of natural gas to Western Europe. We currently have a total market share of about 15 per cent and this will continue to increase in the years to come. There is a growing need for energy in Europe and gas has proven to be competitive. Gas represents a more environmentally benign source of energy than both oil and coal, which adds to the future market potential for gas. Two new pipelines from Norway to the United Kingdom are currently being finalized, and production from the first LNG based field development in Norway, Snøhvit, will start in 2007. This will bring the total Norwegian gas export capacity to about 130 bcm/year. Gas production could reach this level early in the next decade.

Petroleum policy and importance of the petroleum sector
Ever since the petroleum production started, it has been a main objective for the Norwegian government to ensure that the natural resources are administered for the benefit of the Norwegian society as a whole. The main principle underpinning the petroleum policy is that the right to the petroleum resources is vested in the state. The goal has been and still is to maximize the national value creation.

Today, the petroleum industry is the largest industry in Norway. In 2005, the sector accounted for 25% of the value creation in the country. Through direct and indirect taxes and direct ownership, the state is ensured a high proportion of the values created from the petroleum activities.

An important element in the Norwegian petroleum policy has been to attract the best of the international expertise and to promote cooperation between domestic and international players. Technology and experience transfer from international companies became key ingredients in the development of our national petroleum capabilities. The openness towards international companies was combined with strong focus on national value creation. This benefited the development of the Norwegian oil and gas industry.

It is important to emphasize the future potential that lies within the supply and service industry based in Norway. A large resource base and the competence and technology level in the sector are our most important assets. We continue to focus on long term activity on the Norwegian Continental Shelf and at the same time give attention to international markets for the supply and service industries. This is necessary to maintain high value creation from this sector.

The various elements in our petroleum policy have developed over time and in close dialogue between the different interests. Generally, it has been very important to pursue a sustainable petroleum policy that allows for the considerations to the environment and our concern for future generations.

Statoil
The development of Statoil has been important to meet the goal of national value creation and control in the petroleum sector in Norway. Statoil was established as a fully state-owned oil company in June 1972. During Statoil’s first years of operation the company was given special treatment with regard to new acreage and operatorships. Gradually the state's role towards the company has become less of a policy instrument. Today the aim of the government is to act as a professional owner in line with the other shareholders, focusing on long-term development of profitable operations and creating value for all shareholders. There is a sharp distinction between the government as an owner of Statoil and as regulator of the petroleum industry. During the recent years Statoil has undergone significant changes. The company was partially privatised and listed on the Oslo and New York stock exchanges in June 2001. As of today the state owns a 70.9 per cent stake of Statoil. The state will continue to be a substantial owner in the long term.

Exploration and licensing system
The Norwegian Continental Shelf has a large resource base that is still not developed and produced. Only about a third of our expected resources have been produced. To prove new discoveries and to get more out of our existing resources are necessary in order to secure long-term value creation on the Norwegian Continental Shelf.

The undiscovered resources of oil and gas on the Norwegian Continental Shelf are estimated to be roughly equal to the volumes that have already been produced. It has been a guiding principle for the Norwegian resource management to open up the Norwegian Continental Shelf gradually, from south moving north. The reason is that this makes us able to learn from one area and gain more knowledge before opening up new areas. There are considerable variations regarding the degree of maturity in the different areas of the Norwegian Continental Shelf, with the Barents Sea in the north of Norway being the least explored part of the Norwegian Continental Shelf.

With one third of the resource base estimated to be undiscovered, access to acreage is vital for materialising the full petroleum potential on the Norwegian Continental Shelf. There has been a sharp increase in access to acreage in Norway during the last couple of years. Out of all acreage awarded on the Norwegian Continental Shelf since 1965, 40 % has been awarded the last six years.

Enhanced Oil Recovery
There is considerable potential for further value creation in the mature areas of the Norwegian Continental Shelf – especially if we are able to increase the recovery rate. The green bars over the line illustrates, on the basis of present plans, that significant oil resources will remain in the ground after the planned shutdown of the fields. Orginally, many of the large oil fields on the Norwegian Continental Shelf should have been closed by now. However, a deliberate commitment to research, development and development of new technology has made it possible to increase the recovery rate. Increased recovery from existing fields is a priority. We have already set an ambitious target of a recovery rate of 55 % for oil and 75 % for gas. This is ambitious, but not unrealistic. The expertise in the Norwegian petroleum industry combined with active government support to research on enhanced oil recovery can generate significant values for the society and gives the Norwegian industry special competence in dealing with enhanced oil recovery. This competence can of course be useful for other petroleum provinces with maturing areas.

Technology
Technology development has been fundamental to the development of Norwegian petroleum resources. Through targeted R&D efforts we have managed to overcome the technological challenges and barriers that exploitation of the resources on the Norwegian Continental Shelf have represented. Technological development is important in order to exploit our petroleum resources more efficiently but also to seek new and improved solutions with regard to environmental challenges.

The government is committed to research and development in the petroleum sector. One major principle of the government has been to encourage links between the oil companies, supply industry and research institutions.

Snøhvit and Ormen Lange
I would like to mention two examples that illustrate the latest technology leaps made in Norway - the Snøhvit Project in the Barents Sea developed by Statoil and the Ormen Lange Project in the Norwegian Sea developed by Hydro. Both will start producing gas next year. Snøhvit represents a new era in the Norwegian petroleum history, as the first development in the Barents Sea, as well as the first large-scale LNG facility for export in Europe. Ormen Lange may be seen as an ambassador for the significance of technology development, as cutting-edge technology has been employed in the development of the field located in deep waters. Both these projects are made possible by using new technology, such as multiphase transportation of gas.

Petroleum related exports After petroleum was first discovered on the Norwegian Continental Shelf, one of our key objectives has been to secure that the petroleum resources shall be managed for the benefit of the Norwegian society as a whole. Development of national knowledge and competence was an important goal at an early stage. We have developed a world class petroleum cluster in Norway through transfer of technology and knowledge and active cooperation between national and international companies.

I am very pleased to see that the Norwegian supply and service industry succeeds internationally. Since 1995, turnover from international markets has tripled. This is remarkable when activity in the home market has never been higher. The industry has managed to maximize value creation in Norway and to expand internationally. During the last decade, the Norwegian petroleum industry has managed to win market positions in petroleum provinces all over the world. A significant trend is that the turnover from geographically distant regions is increasing considerably. Looking at the Norwegian petroleum industry’s turnover abroad, the largest regional market is South-east Asia, China and Australia together, accounting for 22 % of the international turnover.

Conclusion
Let me conclude: A crucial element in our petroleum policy has been the openness towards international companies combined with a strong focus on national value creation. The Norwegian petroleum industry has gathered experience that can benefit other petroleum regions, in areas such as subsea solutions, enhanced oil recovery and environmental technology. I would be pleased to see closer cooperation between Chinese and Norwegian companies within the petroleum sector.

I hope you all will have two fruitful days at this Chinese-Norwegian Offshore Conference.

Thank you for your attention!