Ministers, ladies and gentlemen,
It is an honor and pleasure to address you at this 4 ^th> INTSOK seminar about oil and gas developments in arctic and cold regions.

First of all, let me call attention to President Putin’s statement of June 20 ^th> last year where he stated that Russia and Norway are strategic partners in development of hydrocarbons in the North! The Norwegian Government strongly appreciates and endorses this statement.

Further, both Russia and Norway are important suppliers of oil and gas. It is important that Russia has put security of energy supply as a topic for the next G8 meeting.

In my presentation today, I will focus on the potential for further development of industry cooperation between our two countries. But, let me first say a few words about the Barents Sea.

Russia and Norway are among the world’s largest producers of oil and gas. Both countries have large undiscovered resources. According to some estimates almost one fourth of the world’s undiscovered petroleum resources may be located in the Arctic. We also know that forecasts from the International Energy Agency indicate a growth in energy demand by 50 % within 2030. Security of energy supply dimension has contributed to placing the northern areas high on the geopolitical agenda.

Norway and Russia share the Barents Sea. The relationship between Norway and Russia is therefore an important part of our policies concerning the Barents region. Norway and Russia have a long history of peaceful, cooperative solutions to shared problems and challenges. In recent years we have experienced a deepening of the bilateral relations between our two countries.

The Barents Sea is by far the least explored part of the NCS. The Norwegian Parliament decided to open the southern part of the Norwegian part of the Barents Sea for petroleum activities in 1980. Only 63 exploration wells have been drilled so far in this area. Two commercial discoveries have been made – the Snøhvit gas field and the Goliat oil field. The encouraging discoveries at the Goliat oil field have confirmed that there are more resources to be found in the Barents Sea, and that the Barents Sea also has an interesting potential as an oil province.

The Norwegian Government has an active policy for future exploration of the Norwegian part of the Barents Sea. The first step is the 19 ^th> licensing round, where we received applications the 15 ^th> of November last year. I am very pleased with the interest the industry is showing for the Barents Sea. The licences will be awarded in the first quarter this year.

The Barents Sea is by many described as the cleanest ocean of the world. This must be preserved. Value creation in the Barents Sea must therefore take place in such a manner as to ensure the good co-existence between the different users of the sea and the environment, and under strict rules of safety and environmental protection. The challenges in the north can only be solved if our two countries cooperate closely.

The energy dialogue betweenNorwayandRussia
Let me turn to the ongoing cooperation between our two countries in the energy field.

President Putin signed a Joint Declaration between Norway and Russia when he visited Oslo in 2002. This declaration underlines the importance of the energy dialogue between our two countries. Three cooperation Programs between the Norwegian Ministry of Petroleum and Energy and the Russian Ministry of Economic Development and Trade, the Russian Ministry of Natural resources and the Russian Ministry of Industry and Energy have also been entered into by my predecessors.

During former Prime Minister Bondevik’s visit to Moscow in June last year, President Putin once again confirmed the good relationship between our two countries when he announced Norway to be Russia’s strategic partner in development of hydrocarbons in the north. A joint declaration between Prime Minister Fradkov and Prime Minister Bondevik stating that both countries will work to further strengthen the energy dialogue was signed during the visit.

Both the Cooperation Programs and the Joint Declarations 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 cooperation between Norwegian and Russian companies with regard to exploration for, and production of hydrocarbons;
• The energy dialogue also includes issues such as resource management, energy policy and legislation, energy related environmental issues and safety, technology exchange, and developments in the oil and natural gas markets.

I very much welcome the fact that our energy dialogue with Russia has intensified, and I look forward to continue to strengthen and elaborate this dialogue with my colleagues this week. As neighbours and significant producers and exporters of energy, good relations and a thorough understanding of each others' thinking and policies are important.

Industrial co-operation
I strongly believe that a fundamental aspect of the energy dialogue is to promote co-operation between Russian and Norwegian oil and gas companies and supply industry. Activities in the Barents Sea, the Pechora Sea and the Sakhalin offshore developments offer ample opportunities for a constructive cooperation between Russian and Norwegian companies. Many Norwegian companies deliver goods and services to the Russian oil and gas sector. For example, Norwegian companies are awarded 25 % of the contracts on the Priraslomnoye oilfield in the Pechora Sea.

Still, Cooperation between Russian and Norwegian companies should not be limited to operations in the Russian market. Russian companies are more than welcome to invest and compete in Norway on the same terms and conditions as other international companies. Several Russian companies have found their partners in Norway and are involved in supplies to the Norwegian oil and gas industry. An example of fruitful co-operation is the deliveries from the Russian Zvesdoshka Yard to the Statoil operated Åsgaard field in Norway.

Norwegian competence
The Norwegian companies present here today have developed their competences and technological knowledge on the Norwegian Continental Shelf over the last 35 years. Today, technology developed on the NCS is utilized by the international oil and gas industry all over the world.

The two largest projects under development on the Norwegian Continental Shelf - the Hydro operated Ormen Lange field and the Statoil operated Snøhvit field are good examples of world class technologies developed in Norway over the last 35 years.

Statoil’s Snøhvit field in the Norwegian part of the Barent Sea is the first field development in Norway based on an LNG solution and the northernmost LNG development in the world.

The Ormen Lange field is a large gas field in the Norwegian Sea developed by Hydro. The sub sea solution at Ormen Lange takes deep water technology development a significant step ahead. Unprocessed gas is transported to shore where process facilities are located. When the field reaches full production, the field will meet 20 percent of the UK demand for gas.

Both the Ormen Lange and the Snøhvit LNG development are contributing to development and progress in the local communities.

Development of local industry
Since petroleum first was discovered on the Norwegian Continental Shelf, one of the Government’s objectives has been that the petroleum resources shall be administrated for the benefit of the Norwegian society as a whole. Development of national knowledge and competence was an important goal at an early stage. Through technology- and knowledge transfer and active cooperation between national and international companies a world class petroleum cluster developed on the Norwegian Continental Shelf.

Today, the petroleum sector has become Norway’s largest industry. It accounted for 21 per cent of gross domestic product in 2004.

To transform the oil and gas wealth into economic growth and to fully maximize the benefits from oil and gas activities, create employment and build a competent and capable local industry is challenging, but possible.

Norwegian companies have experience in developing local industry and accept social responsibility as a natural consequence of endorsing the principles of sustainable development. Having a long term perspective on activities and engagement in the Barents Region, issues related to local and regional community development at large, are an integrated part of the preparatory work for companies looking at opportunities in the Barents region.

I would like to mention Statoil’s ongoing dialogue with the regional authorities in Murmansk and Archangel Oblasts, targeting relevant industrial, labour and social issues to be addressed in order to prepare for a growing petroleum industry. Through constructive dialogues, the parties have found good solutions for the societies. In both oblasts, these initial exchanges of views and concerns have materialised in two Memorandums of Understanding between the oblasts and Statoil.

I would also like to say a few words about the Supplier Development Program carried out by Hydro in Russia since early 2003. The initiative has two main goals:

• to assist Russian supplier industry in preparations to a future large-scale offshore development in the Arctic region,
• to contribute to development of an efficient procurement system in the Russian oil and gas sector.

Hydro's program includes a number of projects aiming at identification and qualification of potential Russian suppliers. Promotion and facilitation of international collaboration across the Russian-Norwegian border, and the establishment of a joint qualification system for suppliers in Russia are also important elements of Hydro's program.

I can not continue 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. The Norwegian Government supports INTSOK’s initiatives, and the activities are financed jointly by the industry and the government. Today INTSOK has 160 registered partner companies comprising the entire Norwegian petroleum cluster.

I would also like to mention the ongoing Project for Partnership between the Russian and Norwegian oil and gas industry initiated by INTSOK. Gazprom, Semorneftegaz, Lukoil, Rubin are among the Russian partners in the project aiming at developing mutual beneficial cooperation between Norwegian technology suppliers and Russian companies.

I strongly believe that the initiatives taken by Hydro, Statoil and INTSOK and their Russian partners are important contributors to development of local industry related to offshore developments in Russia and Norway.

I am optimistic about future 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 hope you all will have two interesting and fruitful days at the conference!

Thank you for your attention.