Capabilities of the Norwegian oil and gas industries. How can we increase cooperation between Mexico and Norway

Your Excellency, ladies and gentlemen.

It is a great honour for me to make a speech in this meeting which deals with important subjects for our two countries, namely the oil and gas sector and cooperation between Mexico and Norway in this field.

Both Mexico and Norway have roles to play on the global energy scene. According to IEA the demand for energy will increase by more than 50% from 2005 to 2030. Fossil fuels will continue to dominate energy supplies, meeting more than 80% of the projected increase in primary energy demand. Efficient production and use of energy is a prerequisite for fostering economic growth. The main theme today is related to how oil and gas resources best can be developed.

In my view the importance of cooperation is increasing due to the fact that most of the easiest available offshore oil and gas reserves in the world have already been found or extracted. The remaining oil and gas resources may be harder to find and will typically be small or located in deep and ultra deep water or in rough climate. For oil and gas fields in production the challenge is to develop technology that increases the recovery rate in each field.

Few companies can state that they alone are experts in all these areas, and none can state that they have nothing to learn from others. Cooperation on research, technology, know-how and experiences will lead to increased efficiency in extracting oil and gas. I think both cooperation and competition are necessary to cope with future challenges in exploration and production of oil and gas.

I would like to start with a few words about Norway as an energy producer. Although we are a small nation in terms of population, Norway was in  2006 ranked as the 5th largest exporter of oil and produced about 2.8 billion barrels a day of oil and NGL’s. Further, the Norwegian gas export exceeded 85 bcm (3 TCF) in 2006 and Norwegian gas cover 15% of the European Unions gas consumption.

However this has not come about by itself. Since we started the oil and gas activities about 40 years ago the Norwegian petroleum industry, in partnership with foreign companies, has step by step acquired the necessary technology and competence to meet the challenges on the Norwegian Continental Shelf.  

The recovery rate on the Norwegian shelf for fields in production is high compared with other areas in the world. The oil companies and the supply industry have continuously worked with developing technology to increase the output of fields in production, and to make it profitable to extract smaller deposits around the main field. The result is that estimated recoverable resources have increased significantly in producing fields. Our target is a recovery rate of 55% for oil and 75% for gas. We also have as an ambition to increase our oil reserves with 5 billion barrels in 2015. This is ambitious but a realistic target. 

Technology is also a key issue when it comes to extracting oil and gas in deep water and in rough climate. Over the years Norwegian companies have gained experience in these areas. The giant concrete platforms of the 1970ies and 1980ies have been followed by floating production and sub-sea systems. The oil companies together with the supply industry are currently developing sub-sea technology and processing onshore to extract gas from the Ormen Lange field located at more than 1 000 meters water depth. This field is also particularly challenging due to a rough seabed. In the development of the Snøhvit gasfield in the arctic area Norwegian companies are gaining valuable experiences in the development of technology to cope with extreme weather conditions and long distance multiphase pipeline transportation. Snøhvit is also the first LNG-project in Norway. 

I will also like to mention that HSE issues (Health, Safety, Environment) is an integrated part of the Norwegian petroleum activities with very high standards.  A comprehensive set of policy instruments have been developed to safeguard HSE in all phases of the activities from exploration to decommissioning.

In Norway 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. As a result of the strict environment requirements on the Norwegian Continental Shelf, Norwegian industry has developed specific competence on sustainable production as well as environmental technology. I believe this competence can be of use also in other petroleum provinces in the world.

To summarize, continuous development of technology in partnership with foreign companies, and a clear focus on safety and environmental issues, has been key elements in the petroleum activity at the Norwegian Continental shelf. In particular, the Norwegian oil and gas cluster proved competitiveness in areas such as improved oil recovery, floating production, subsea system, drilling equipment as well as project management and engineering. These qualities should make Norwegian companies attractive partners in the Mexican offshore sector.

In October 2003 a MoU between Mexico and Norway was signed here in Mexico. The MoU is extensive in character and compromise cooperation in most areas related to petroleum and energy, on both administrative and company level. Yesterday Her Excellency Georgina Kessel Martinez and I signed an addendum to the MoU. The main aim of the addendum is to bring the cooperation some steps further.

One of the goals of the MoU is to facilitate extended cooperation between companies in our two countries

we are pleased to share our experiences regarding framework conditions with Mexico.

Over the years Norway and Mexico have been cooperating in oil market issues on various occasions, often in order to limit the production of oil to increase the oil prices.  This time our main aim is to cooperate to increase future production of oil and gas.

There are already many Norwegian companies in various areas that are cooperating with Mexican counterparts. Many of you present today have taken part in the INTSOK/PEMEX seminar in Ciudad del Carmen. INTSOKS main aim is to facilitate and encourage cooperation between Norwegian oil and gas companies and the supply industry and foreign counterparts.  Also the Norwegian government will do our part to contribute to increased cooperation on political as well as company level.

Finally, I will like to say a few words about the electricity sector, which also is a part of the MoU. Norway has a more than 100 year long history of producing electricity from hydropower, and is with its 120 TWh annual production the 6th largest producer in the world. Our experience and advanced technology in this field makes Norwegian hydropower companies interesting partners. I would also like to mention the solar industry that curiously enough, as the solar conditions in Norway are far from ideal, is a big export sector. We are of course also interested in cooperation with Mexico in all issues regarding energy and energy efficiency.

Thank you for your attention