The Ministry of Petroleum and Energy will prioritise these areas in the budget for 2005:

• Increased commitment to R&D in the energy and petroleum field, a total of NOK 421.7 million available for research and innovation
• Shift and increase in the financing of the Energy fund
• Increased commitment to environmental gas technologies
• Strengthening the support scheme for increased use of natural gas onshore
• Strengthening the program for increased safety against clay landslide.

Strong focus on petroleum research and development

-The Government will increase the allocated funds to petroleum research with over 60 per cent in 2005, to ensure that the petroleum sectors role as a substantial contributor to the funding of the country's welfare and to the industrial development, says Thorhild Widvey, Minister of Petroleum and Energy. -We work actively to contribute to increase the petroleum production on the Norwegian continental shelf, through stimulating higher exploration activity and increased oil recovery. A commitment to research and development within the petroleum sector is a vital element here, says the Minister.

In 2005 the Government proposes to increase the grant to petroleum research over the state budget with approximately 62 per cent, from NOK 137.5 to 222.3 million. The Government also proposes to earmark NOK 28 million for petroleum research from the increased return on the Fund for research and innovation. In total the public funding of petroleum research will increase with approximately NOK 113 million.

The increased means for petroleum research are important for meeting the challenge to optimize output from the petroleum resources and increase added value from the petroleum industry.

The increase will primarily strengthen the research program PETROMAKS in the Research Council of Norway. DEMO 2000 will also be strengthened.

Research and innovation for developing a clean energy system for the future (RENERGI), including hydrogen, will increase by NOK 10 million.

Renegotiated agreement with Enova
The Ministry of Petroleum and Energy and Enova SF have renegotiated the agreement and increased the goals for change in energy production and use, on the basis of increased funding for the Energy fund. After the renegotiated agreement, Enova will contribute to new environmental friendly energy production and saving equivalent to 12 TWh per year by end 2010. This is an increase of 2 TWh per year compared to the previous agreement negotiated in 2002.

The Government raises the level of ambition for the change in energy production and use. In 2005 the income for the Energy fund is estimated to approximately NOK 660 million, an increase of NOK 90 million compared to 2004. The mark-up on the electricity transmission tariff is from 1 July 2004 increased to 1.0 øre/kWh.

Intensified commitment to technologies for environmentally friendly gas fired power plants
The Government has given a high priority to the development of CO2 sequestration technology for gas fired power plants. A total of NOK 150 million will be available for R&D and innovation in this field. Gas fired power plants with CO2 sequestration is a crucial element in the commitment to environmentally friendly and reliable energy supply. The establishment of an innovation company in Grenland will be a main instrument in developing these technologies.

From 2005 the Government propose to establish a national gas technology program. The new innovation company and the Research Council of Norway will collaborate on this program. This program will prioritise research, development and testing of technologies for gas fired power plants with CO2 sequestration.

The innovation company will administer approximately NOK 46 million which is the return from the Fund for environmentally friendly gas technology. This fund was established in 1 July 2004 and the capital is NOK 2 billion.

In addition the innovation company can also tie up NOK 50 million in advance from the 2006 budget. This makes available funds for 2005 approximately the same as one whole year's return from the Fund. The Government also proposes a grant of NOK 10 million for establishing and operating the innovation company for 2005.

The Research Council of Norway has allocated NOK 50 million for the development of sequestration technology.

Increased domestic use of natural gas
The Government stated an offensive policy to increase domestic use of natural gas. Increased domestic use of natural gas can form the basis of value added, industrial and technological development and a better environment. A long term strategy for increased use of natural gas can give important contribution to a more flexible energy supply. The Government will contribute with funding to ensure availability of natural gas in other regions.

For 2005 the Government proposes NOK 44 million to develop an infrastructure for natural gas, consisting of a grant of NOK 24 million and a possibility to tie up NOK 20 million from the 2006 budget. Enova SF administers this support scheme.