Energy Ministers from Norway and the UK today launched plans for ‘the closest co-operation between the two countries in 40 years of the North Sea’.

Einar Steensnaes and Brian Wilson, speaking at the 15 ^th> international Offshore Northern Seas conference in Stavanger said that co-operation between Norway and the UK could provide a $2bn boost for the offshore industry.

A new report published today by the UK-Norway North Sea Co-operation Workgroup estimates that the offshore industry stands to gain as much as $2bn by 2010, through added value creation from saved capital, operating and decommissioning costs and accelerated developments.

It reveals that within a 60km-wide corridor either side of the UK-Norway border new opportunities could be created through increased efficiency in a number of areas:

Each 1% saving on total capital expenditure (a projected $27 billion to 2010) translates to a saving of around $35 million per year;

Development times for satellite fields could be reduced by 2-4 years, and the value of each accelerated field development could be increased by $50-100 million;

A reduction in operating costs could be achieved through closer cross-border co-operation. Each 1% saving from corridor operating expenditure ($41 billion to 2010) translates to a saving of around $50 million per year; and,

Total decommissioning costs to 2010 are $3.3 billion; each 5% saving would create a prize of around $150 million.

Einar Steensnaes and Brian Wilson who commissioned this work, said:

"It is in our common interest to make sure our oil and gas sectors exploit the North Sea to its full potential, and overcome real or perceived barriers to achieving this, with due consideration to environmental issues.

"The UK and Norway will look carefully at these recommendations and use them as a basis for taking closer co-operation forward to increase prosperity and create more jobs.

"Both our countries stand to gain a lot from sharing best practice in the North Sea, and we will reap even greater rewards by increasing the number of

international contracts we secure together. Partnerships will be crucial in an ever more competitive global marketplace.

"We are pleased that KON-KRAFT together with OLF and PILOT will follow up this process and ensure an effective implementation of the recommendations of the UK North Sea Co-operation Workgroup, working closely with the existing industry groups".

Brian Wilson added:
‘Britain will soon become a major gas importer and Norway is an obvious partner in this. That heightens the urgency of ensuring that the proper infrastructure is in place.’

Einar Steensnaes added:
"We have large gas resources that we want to supply to competitive markets, and the UK is a promising market for new Norwegian gas."

It is anticipated that this report will form the basis of a UK-Norwegian Treaty aimed at improving commercial negotiations.

Notes to editors:
A summary of the 14 recommendations can be found at Annex A.

This year’s Offshore Northern Seas conference is being held in Stavanger, Norway. This bi-annual conference alternates between the Offshore Europe conference in Aberdeen and Stavanger.

The Performance and Innovation Unit Energy Report, published in February 2002, estimated that the UK would begin to be a net importer of gas around 2005.

PILOT, the successor body to the Oil and Gas Industry Task Force (OGITF), was established in January 2000 to secure the long-term future of the oil and gas industry in the UK. PILOT is made up of twenty-three key Government representatives and recognised leaders from the industry. It meets on a quarterly basis. In order to make its vision a practical reality, specific deliverable targets were defined. Through 10 years of industry-government co-operation it is hoped the following will be achieved by 2010:

• Maintenance of a production level of 3 million barrels of oil equivalent (oil, gas and condensate);
• £3 billion per annum of capital investment;
• Prolonged self sufficiency in oil and gas;
• The creation of 100,000 more jobs in addition to earlier forecasts;
• 50% increase in exports (by 2005); and,
• £1 billion additional revenue from new business.

KON-KRAFT is co-operative body with the overall aim of enhancing the attractiveness of the Norwegian Continental Shelf (NCS) for investment. It also aims to strengthen the industry’s competitiveness both on the NCS and internationally. This will be achieved by setting up processes in which all participants in the value adding chain take part.

The project will encompass many aspects of the oil and gas industry, and will concentrate the efforts in three main areas: framework conditions, work processes and technology development. Internationalisation of the Norwegian offshore industry, competency development and productivity gains, without compromising the highest standards within health safety and the environment, are important areas for KON-KRAFT. The group is directed by a top management forum led by the Petroleum and Energy Minister of Norway.

Workgroup members: