Caspian Oil and Gas Conference in Baku

Very happy and honoured to be here for the first time in Baku. I was honoured to attend the opening yesterday of the exhibition. When walking around I was struck by the breadth of experience on show, and it strikes me how this pays witness to the importance of Azerbaijan for the international oil industry.

Azerbaijan and Norway enjoy very close economic relations as witnessed by the fact that Azerbaijan is the no. 11 country in terms of outward direct investment from Norway.

Norway’s biggest company, Statoil, is the second largest investor in Azerbaijan. The Norwegian supply industry has also had substantial deliveries to the projects. I take great pride in this because over the last decade or so that we have put more emphasis on promoting the internationalisation of the Norwegian oil and gas cluster. Over these years the Norwegian supply industry has become internationally competitive, and in some instances world leading in its field, for instance in seismic, subsea and flow assurance.

The experience of the Norwegian companies from working with the local communities and local industry in Norway means that they are used to co-operating on a local and regional level, and are keen to contribute to the development of local industry.

For Statoil’s part the company took part in the “Deal of the Century”, and this was in fact the start of a successful internationalisation process, and where the latest development is the merger of Statoil and the oil and gas division of Norway’s second largest company Hydro. For Statoil the experience from Azerbaijan has been positive and essential for its development since the mid-nineties.

Statoil is committed to Azerbaijan. The company has a sizeable local organisation here. It is the commercial operator for the Azerbaijan Gas Supply Company and the chairman of the Shah Deniz Gas Commercial Committee.

All this underscores that Azerbaijan and Norway have common interests in energy policy, and to this end Azerbaijan and Norway have a Memorandum of Understanding on oil and gas issues that has been in place since 1994.  We consider the bilateral co-operation with Azerbaijan on energy issues to be important. Further, we are both major producers of oil and gas, and our activities contribute to better security of supply.

Energy security has re-emerged as a major issue of international politics. In gas matters Norway has for many years been cognisant of its role with regard to security of supply. Norway has been a very stable and secure supplier of oil and gas to the EU for more than thirty years, and will continue to be so for many years to come. Norway has steadily been exporting most of its oil to the world markets and almost all of its gas to Europe since the 1970ies. More than 7800 kilometres of gas transportation pipelines ensure the continuous exports of gas to landing points in Europe.

Today the IEA estimates that global energy demand will increase by 53 % in the period up to 2030, due to large increased demand in the developing countries in general, and in China and India in particular. The IEA estimates that 83 % of the increased energy demand will be met by fossil energy.

Another important message from the outlook is the huge investements needed. Projections call for cumulative investment in energy-supply infrastructure of just over $20 trillion (in year- 2005 dollars) over 2005-2030. Just over half of total investment will go simply to maintain the current level of supply capacity, the rest to meeting demand growth. Altogether the IEA estimates that more 8 trillion USD, or some 40 percent of total investment, will need to go into the oil and gas sectors.

To meet this increase in demand is a big challenge. It has led to an intensified global focus on of security of energy supply. In most parts of the world, security of supply is a key issue and a key driver for all energy related politics. For instance, every EU country is today a net importer of oil and gas. The EU imports more than 50 % of its present energy needs, and this figure is estimated to increase to 70 % by 2030. Like other regions, this increase is mainly due to a steadily rising need to import oil and gas.

For our part, the worldwide search for greater diversity of supply extends to the petroleum resources of the Norwegian Continental Shelf. Thus, the Norwegian energy chapter is now moving into the high North, beyond the Arctic Circle into the Barents Sea. Last year, the Norwegian Government presented its strategy for the High North, an important part of which is our plans to develop the petroleum resources in the Barents Sea.  We see  also  greater international attention being drawn to the High North. Sustainable development, taking into account the rich fisheries and environmental concerns, will be essential in developing this area.

Next year, the first tankers carrying LNG from the new Snøhvit field development in the Barents Sea will be heading for the US and Spain from our northernmost town of Hammerfest.

The other side of this coin is of course the climate challenge: how to meet the growing energy needs without contributing to global climate change and pollution of the marine environment. Part of the answer could be CO2 capture and storage. The Norwegian Government is focusing on developing this option for mitigating climate change, and CO2 capture and storage also receives considerable attention in many other countries around the world. If we succeed in developing this option, it would dramatically reduce emissions to air from fossil fuels, allowing the world to continue using fossil fuels to meet future energy needs without harming the environment.

Azerbaijan has already started to harvest the fruits of the investments in the Caspian, and in the years to come your national income will increase greatly. To be blessed with so much future wealth also means that you will have to face the challenge of how the incomes can be put to the best use. This is a choice that is for Azerbaidjan to make.

I support the efforts that Azerbaijan is making to promote transparency, and its role in the EITI. The promotion of good governance and the fight against corruption through measures such as transparency is very high on the Norwegian government’s foreign policy agenda. We see transparency as important and related to the issue of promoting sustainable development.

Azerbaijan as one of the implementing countries in the EITI will have an important role to play in the upcoming years, as the revenues accrue. For Norway the EITI is also important, and we have been honoured to be chosen to host the new international secretariat of the initiative. In this respect I would like to draw your attention to the EITI event tomorrow, where I have the honour of speaking together with His Excellency the Minister of Energy, Mr Aliyev.

I would like to close with some words on the future. The oil story in the Caspian has been going on for more than 120 years, and still has many more years to run. We see that the establishment of the BTC and now the SCP pipelines are opening up new possibilities for Azerbaijan. The Azerbaijan-Georgia-Turkey route is now a real alternative as an export route for new resources further east looking for a market, underscoring the long term importance of establishing transport infrastructure. Norway wishes to continue to work with Azerbaijan, and to together explore opportunities in the future that can benefit us both.

Thank you very much for the attention!