Speech given at the Intsok’s International Oil and Gas Business Day

Speech given by State Secretary Geir Pollestad

Dear Audience – ladies and gentlemen,
I am very happy to be here this afternoon, speaking to such a distinguished audience attending Intsok’s International Oil and Gas Business Day. I wish to thank Gulbrand Wangen, the head of Intsok, for giving me this opportunity to address you all.

We have heard many interesting and thoughtful speeches today. We have been offered the opportunity to listen to the opportunities and challenges that other petroleum provinces and markets are experiencing. We have reaffirmed that we have many issues in common, such as the capacity constraints and cost pressures faced by the industry in general. Our responsibility to provide the world with energy is common. The climate challenge must be addressed. Norway for its part is very aware of her dual responsibility to supply the markets with the necessary fossil energy while working to reduce the environmental impact, for instance by our focus on Carbon Capture and Storage.

Norway has over the last couple of years celebrated two anniversaries. The first was the 40th anniversary of the first well drilled on the Norwegian Continental Shelf. This marked the start of the development of the Norwegian Continental Shelf as an important petroleum province, and of the Norwegian petroleum industry.

The second anniversary, in 2007, was the tenth anniversary of the foundation of Intsok, the organiser of today’s event. The establishment of Intsok markedthe  Norwegian petroleum industry’s intention to take its share of international markets. The industry had matured to the point where it had confidence that it could compete internationally. Norwegian authorities have over the years seen the internationalisation of the Norwegian oil and gas cluster as an important policy objective, and were actively engaged in the founding of Intsok.

In 1995, our current Prime Minister Mr. Jens Stoltenberg, was the Minister of Industry and Energy. In a letter to the oil industry in March 1995, he addressed the issue of internationalisation of the Norwegian petroleum cluster. The political vision then was a future where the Norwegian oil and gas industry would become less dependent on the activities on the Norwegian Continental Shelf. The ambition was to strengthen the petroleum cluster’s international competitiveness. To achieve this closer cooperation between the government and the industry was called for. This was the basis for the establishment of INTSOK.

INTSOK is an example, I believe, of a Norwegian way working together and of the Norwegian petroleum experience. Some characteristics of this experience are:

1. A market based approach: the purpose of Intsok is to improve the competitiveness of Norwegian industry.

2. A balanced role for government: the government contributes 50% of the funding for Intsok and is represented on the board of Intsok.

3. Inclusiveness: There is no division between large and small companies; they can all become members of Intsok.

4. Professionalism: Intsok is manned by staff with long experience within the oil and gas industry.

5. Cost-effectiveness: International turn-over from the Norwegian based supply and services companies reached 50 billion kroner or 9 billion US dollars, in 2005, triple what it was ten years previously. Even with these large numbers, Intsok serves the needs of industry with only a handful of staff in Oslo and very competent local advisers.

Ten years ago, the Norwegian oil companies and most of the supply and service industry concentrated their efforts the Norwegian Continental Shelf (NCS). Today, Norwegian based oil and gas related industries are engaged all over the world.

Going international is no longer an additional activity; it is an integral part of the commercial strategy for most of our oil and gas industry. Due to the effects of globalisation, where the combined effects of the IT-revolution, global supply chain management, and easy access to the world’s capital markets mean that size is less important than before. We are increasingly seeing Norwegian small and medium sized companies actively seeking to compete for market share internationally, and succeeding.

There is feedback between the activities abroad and on the NCS. The Norwegian companies’ competitive advantage is to a large degree based on the experience gathered from the NCS and the technology developed for use on the NCS. We have recently also seen that experience gathered abroad is useful for technology development in Norway, thereby benefiting the Norwegian upstream.

The situation on the Norwegian continental shelf today is far better than anyone could predict some years back. The investment and activity levels are high and will remain so for the coming years.

International challenges ahead 
Every era has its set of challenges and responses. The challenges that internationalisation poses have evolved over the years.

Today, we foresee that consumption of fossil energy will continue to grow strongly in the next decades, especially in countries like China, India and the developing countries. New investment in capacity is needed. Investment needs to be channelled to the areas where it can have the greatest benefit. Access to the resources is becoming increasingly challenging due to technical barriers such as lack of infrastructure in remote areas, as well as strict commercial and fiscal conditions imposed by host countries. The political ramifications of climate change will need to be addressed by industry, in co-operation with government.

I believe that the Norwegian oil and gas industry is well placed to compete in this world. Norwegian companies’ focus on competitiveness and technology is will continue to be valued when competing for new projects.

Part of the experience of many Norwegian companies, is, I believe, an appreciation of the needs and requirements of host governments and the local communities.

Norwegian companies are also expected to behave in a responsible fashion by the Norwegian public. The issue of Corporate Social Responsibility is a complicated issue that Norwegian companies are expected to consider and address in their international activities.

The government’s goal is that the Norwegian petroleum sector will continue to succeed in the future, at home and abroad. This means an industry based in Norway that is competitive on an international level. Therefore the government will continue to support the internationalisation of the oil and gas industry. We can only succeed if we interact with players in other countries and markets.