The Norwegian Model

Seminar on the interaction between the Ministry and the industry. Arranged by the Ministry of Petroleum and Energy and The Norwegian Oil Industry Association (OLF)  30 May 2007

Welcome,
I take great pleasure in welcoming you all to this seminar. I am happy to see so many companies represented. I assume that we all share the same ambition; namely that this seminar will contribute to an even more comprehensive and topically enhanced communication between the authorities and the companies at large. In particular I invite the more recent entrants on the Norwegian continental Shelf to be more strongly and systematically included. I also hope the seminar will  contribute to strengthening the dialogue internally in the industry.

The competence of the Norwegian oil and gas industry is a result of cooperation and competition. The interaction between the different actors in the sector has been a prerequisite for developing the Norwegian competence and an oil and gas success story.

The main goal of the Norwegian Petroleum policy is to maximize value creation of the resources on the Norwegian continental shelf. This is obtained through:
• Petroleum policy
• The legal framework
• The licensing system
• R&D and industrial development

At the same time it is fundamental that the petroleum activities are performed in a sustainable manner, not least with strong emphasis on Health, Safety and Environment. This is a prerequisite for political and societal acceptance.

The authorities’ openness towards international companies has been combined with a strong focus on national control and value creation. This has benefitted the development of the petroleum sector.

Around seven years ago we experienced a decrease in exploration activities on the Norwegian Continental Shelf. This led to an opening up of the Norwegian Continental Shelf for new and smaller companies. The authorities presumed that these new companies could increase the exploration activities and consequently the future production, as they would contribute with new concepts, see the economic potential in smaller reserves and tail-end production and generally stimulate market efficiency.

By the end of 1999 there were 27 licensees on the Norwegian Continental Shelf. Today there are 48. The effect of the change in policy is underlined by 43 different companies having been pre-qualified by the authorities since 2000. In addition, 11 companies are under consideration for prequalification. This makes a total of 54 new petroleum companies with ambitions on the Norwegian Continental Shelf. One may conclude that the change of politics has been a success when it comes to increasing the number of licensees.

One natural follow-up question is then if the new policy has resulted in an increase of exploration activities - and more important by the production of petroleum. It is too early to be exact on this.

However, the percentage of petroleum production related to the newcomers is 2 %. The new companies are responsible for 15 % of the increase in exploration expenditure, so I think we are off to a good start. For the companies at large, this must also been seen as a result of the Norwegian Continental Shelf being attractive. We can offer access to both mature and unexplored acreage in a politically stable environment and on stable and predictable terms.  This is not the case many places in the world, where access to prospective acreage is getting more scarce.  The Ministry still expects the newcomers – and the established companies as well as important actors in the value creation – to show extensive creativity in exploring new areas and introducing innovative methods in the coming years. In this way we will see increased results in exploration and production on the continental shelf.

However, being valued actors in innovative and efficient resource management from a technical point of view must be supplemented by some surrounding issues. I will briefly mention some of them:

• Next week the Storting will discuss the merger between Statoil and Hydro. The Government has strong expectations to the other companies to increase their efforts in developing ideas and concepts relevant not only for a licence area, but for resource management at large. We expect more educated helicopter views from all actors including the new entrants.
• It is therefore important to give a stronger attention to the mutual benefit of a comprehensive dialogue with the authorities and with other companies, both individually and channelled through for instance the OLF.
• The petroleum sector is strongly integrated in the Norwegian economy and society. This gives rise to many important issues of political and public perception which require attention from us all.  Most often it is a strong advantage to approach such issues in a profylactic rather than a therapeutical manner. It is for instance a responsibility to safeguard sustainable petroleum activities, but I also encourage the companies as part of their corporate citizenship to actively communicate this and other aspects fo the petroleum activities to the society at large.

Once again, welcome to this seminar, which is meant to inspire further discussions about the potential for improving the communication and dialogue between the authorities and internally in the petroleum industry.

Thank you.