The Norwegian government has decided not to extend the restriction on oil production into the second half of 2002.

Mr. Einar Steensnæs, Minister of Petroleum and Energy, stated that the decision not to extend the restriction on oil production was taken on the background of improved conditions in the oil market and the anticipated growth in oil demand in the second half of this year.

Although there is some uncertainty concerning the strength of the recovery in the world economy and the robustness of the growth in oil demand, it is expected that increased oil supplies will be needed in the second half of 2002 to stabilise oil prices at a reasonable level.

The decision not to extend the restriction on oil production is unilateral and is not part of any formalised agreement with OPEC or producers outside OPEC.

For the first half of 2002 the allowed crude oil production is 3,02 million barrels per day. This is 150 000 barrels per day below estimated capacity.

Since the decision to cut production was taken at the end of last year the fundamentals of the oil market have improved.

Global oil supply is now more than 1 million barrels per day lower than in the second half of 2001. Oil inventories have declined and are now close to normal levels for this time of the year.

The crude oil price has increased from USD 16 – 17 per barrel when the decision to cut production was taken, to about USD 24 – 25 per barrel.

Economic growth has strengthened since the 4th quarter 2001, particularly in the USA, but also in Europe and in Asia. However, there is some uncertainty about the strength and durability of the economic recovery.

Oil demand is expected to increase by 1.5 – 2 million barrels per day from the 2nd to the 4th quarter of 2002 because of improved economic prospects and a seasonal increase in oil demand.