The future development of the Norwegian continental shelf

Good morning,

It’s nice to start the day at a theatre! It reminds me of the quote “All the world’s a stage, and all the men and women merely players” (by Shakespeare). So – my reflections today will be to say that we are players and we need to have a script for what lies ahead.

The World Energy Outlook

And let me start by saluting the International Energy Agency (IEA) and the World Energy Outlook (WEO) for being such a script. It is published every year – and now established as a very credible knowledge-based script for what lies ahead. So, with that point of departure, I think it sets the agenda. – Read the report.

It touches on energy security – which is today so obvious with geopolitical risks, especially in the Middle East, war in Europe, and the threats to global oil and gas supply. We saw what it did to Europe in the spring of 2022.

The report is emphasizing the transition and pointing out how renewable energy is accelerating, and how clean energy is set to meet nearly all growth in energy demand by 2035. It is promising – and it is happening.

And on climate, the emissions are expected to peak soon, but they must not only peak, they have to decline, and they have to decline rapidly.

Norway at the G20 Summit

I could see some of the same agenda also around the table of the G20 in Rio, exactly one week ago, where Norway has been a guest country of G20 for one year, and I could participate with the other leaders. G20 managed to get together on a declaration, which in itself was not obvious. We could have wished to see more ambition in some parts of that declaration, but yet it was a declaration.

And the same with COP29. I think it is – at least – a sign of hope that COP29 was able to conclude and not completely disrupt. Nearly 200 countries meeting on this agenda – in these times – is a sign we have to build on. And I believe this change is on an unstoppable path.

However, the question we have to ask: Is the transition towards low emissions and renewables fast enough? Is it high on the agenda of the oil and gas companies? And on the agenda of all governments? And how should governments plan to guide and steer this process?

And when I talk about governments – and you can see this around the table at G20, where there are democratic governments who have to face elections in the midst of a costs of living crisis for the electorates – where climate is fighting a hard struggle. Some around that table live in that reality. And then there is the other reality – there are authoritarian leaders around that table who don't have to struggle with elections – but I still believe that those who deal with that kind of political systems are more vulnerable when it comes to the fundamentals.

Norway’s energy policy

I am also here to share my outlook for Norway's energy policy, and I will put it in the following way:

We, Norway, shall continue to secure stable energy supplies to Europe. No positive things come from supply-side shocks. I think this is part of what the report also tells.

We experienced briefly, in February, March, April, in the spring of 2022 and onwards, what a supply-side shock could lead to in terms of disruption of industrial production and also social imbalance. We have to move on and be steady and reliable. We were able to increase our gas exports by almost 10 % during those months in 2022, and today we deliver more than one third of UK's gas and one third of Europe's gas.

We shall continue to contribute to the green transition. We cannot be complacent. Through low-carbon energy production and new technologies. – At the same time, we will be a steady provider and contribute to this change.

Overall, we are committed to reach our climate goal. There is no alternative. It's not a question about if, but how we do it.

And I am convinced that as democratic leaders, we have to do that with a positive notion of what the transition will mean. It will mean opportunities. We can cut emissions and create jobs, even new and better ones, and introduce new technologies that other countries also can use.

However, for Norway, reaching our climate goals is not going to change much in the world. But the way we reach them can make a difference. We can be leaders on technological solutions which will have great impacts far beyond Norway.

So, what are my priorities as Prime Minister in all this? I will share with you five reflections on the future development of the Norwegian continental shelf.

Europe’s energy security

The first one is short. The situation in the energy markets today, and in Europe especially, reminds us of the importance of stable access to energy and resources. And again, Norway is the largest producer and the only net exporter of oil and gas in Western Europe.

Thus, we matter to Europe's energy security, which means we matter to Europe's security. This is also part of our dialogue with the European Union and with leading European countries.

We will continue to develop the Norwegian continent shelf as a stable and long-term supplier. – With an active policy of exploration.

Lower emissions

That being said, dear friends, we will strive towards yet lower emissions, and continue to lower emissions from our production. It is already at a low level. We will bring it further down. This must have high priority, as all companies operational on our shelf should know.

Due to high price on carbon emissions, the energy companies are now having strong incentives to reduce their emissions, and we see that happening. It has led to lower emissions, and it will have to continue. CO2 carbon tax is stable, going up to the level we have predicted.

And it has led to stronger industrial capacity to innovate and design low-carbon and zero-carbon solutions for tomorrow's energy systems. So, the price mechanism works, and it will continue to work.

We have built up knowledge and experience over the last some 50 years of operations at the Norwegian continental shelf to develop these new low- and zero-carbon energy solutions.

Reading Equinor’ reports, I think, if I'm correct, that 4 % of your investments went to renewable energy just some 4-5 years ago, and now you are at 20 %, and I think that is the right trend. That's my second point.

Renewable energy, offshore wind

My third point, on renewable energy specifically:

Now, IEA tells us that we are moving towards a more electrified future, globally. Everything that can be electrified will be electrified. As we’ve heard before the conference started, we will still need oil and gas for industrial production, but on energy we will move towards electrification broadly.

So, our strategy of developing a diversified set of energy sources has to respond to that. Our large-scale offshore wind ambition is part of this.

Norway is – at the outset – a renewable energy country, and we will now take another step to reach the target of 30 gigawatts by 2040 developed by offshore wind.

We have the world's largest floating wind farm at Hywind Tampen which we opened some months ago. The successful auction in March this year was a milestone in the development of offshore wind in Norway. We have awarded the project area for our first large-scale project, Sørlige Nordsjø 2, that will now be planned and set in motion.

So, in the future, I believe that companies will look to Norway if we allocate new areas along our coast. We plan to make the next announcement in 2025, that is next year, and then follow up regularly with announcements towards 2040.

And the big thing here will be floating offshore wind, because it is not shallow along our coast. – Not only will that be important along the Norwegian coast, but if you look at the world at large, that is the reality in most places. It will have to be floating.

So, this technology has to be developed. It's still immature, and the costs are high, but I believe that the oil and gas industry are the ones with the technological solutions and the expertise to make this real. – Developing technology and reducing costs must now be a top priority, and in any event, the government will do what it takes from our side to support and encourage this process.

And I am also encouraged to see that engineers of my generation – well, I am not an engineer, but when meeting people of my age – they used to work on oil and gas platforms – they are now designing floating offshore wind, and that is how it has to be.

CO2 capture and storage

My fourth point – on new technologies – is focusing on CO2 capture and storage.

Many of us witnessed the Northern Lights CO2 project now been completed, and in a few months, the Longship project will be ready and able to work. So, the next step is now the inclusion of more CO2 volumes into this project. Longship is Norway's largest climate project and Europe's first complete value chain for CCS.

And just over the last year; having seen the experiences, the views on CCS have changed in politics. Scientists have told us, since many, many years, that we will need CCS to reach our climate goals, and now we also see this coming in politics, and I think that's good, especially in Europe. Previously skeptical people have now learned what we know, and they are actively in favor.

Through this project, we aim to capture significant volumes of CO2, and the Norwegian continental shelf has enough storage capacity for much of Europe's CO2 in decades to come. So, this is a real industrial project that we will work on with our partners.

It's written into our Green Alliance with the EU, and it's also in our industrial partnerships with France, Britain, Germany, Belgium, and other states.

So, the question we need to ask is this; has the Norwegian petroleum industry rigged up sufficiently to be able to take advantage of the momentum that the completion of Longship will provide? – I mean, in order to acquire European customers for CO2 storage on the Norwegian continental shelf?

I know there is a discussion about building a dedicated pipeline from Europe to the Norwegian continental shelf – a really bold idea. And these are also ideas that I encounter when I meet with the European industry and they tell about how these changes are now unfolding.

Hydrogen

This will also touch on hydrogen, which is emerging as a major new energy source.

And looking at Norway itself, Enova has now granted support for more than 30 vessels to be fueled by hydrogen and ammonia. And only a few weeks ago, they announced grants for five new hydrogen infrastructure hubs along the coast. I think that is also the pattern for Europe.

Hydrogen has to be produced close to where it is going to be used. And that is why the infrastructure in Europe has to be adapted to that. That’s why I believe more in the approach that Norway will continue to export gas to Europe. CO2 has to be handled, and then hydrogen will be produced close to the source and use. This is the discussion we are having with our European partners.

Access to electricity

My fifth point, I return to the global energy outlook, dear friends.

As we now discuss energy transitions, we discover that artificial intelligence, which is on the verge, is going to consume enormous amounts of energy. Just another example of what electrification will mean.

At the same time, there are 700 million people today who do not have access to electricity at all. This is a poverty dilemma, a moral dilemma, and a development agenda of great proportions. And we have to address this.

Two examples of how we do that in Norway:

Together with Fatih Birol and the IEA, and together with the president of Tanzania, I have been leading an initiative to provide clean cooking opportunities to countries with very bad energy systems. There are about 3 million people who die every year from indoor air pollution because they cook their meals over wet grass and bad sources of energy, which is affecting the mother and the child, often sitting on her back. 340,000 children die from these diseases every year. And by providing new cooking materials to these families, we can improve health, we can improve the environment. It is economically viable, and it is also reaching out to women and children. We had a conference, Dr. Birol, in Paris in May, collecting more than $2 billion for this. And I think it's really an initiative that we have to work on, both health, economy, and environment.

And the other one is the initiative launched by the World Bank and the African Development Bank to provide 300 million Africans with electricity by 2030, called ‘Mission 300’. Norway is fully behind that. And I think it's critically important in order to reach our climate goals that we get electricity on a renewable basis to these families.

So let me conclude:

Energy security is about a lot of dimensions.

We will invest in Norway in research and development within low-emission technologies. We will drive in that direction.

And we will work to make global solutions profitable, including CO2 storage.

So, if “the world is at stage”, let us be the players. And I wish you great success.

Thank you.

 

• Recording of the conference: Equinor - the Autumn conference 2024 - Equinor