Thank you Excellency, Ladies and gentlemen.
It is a great pleasure for me to be here in Osaka and to talk about investments to such a distinguished audience. I would like to express my thanks to our host - the government of Japan - for organising this conference and for your hospitality.

I have noticed that energy security has again risen on the political agendas of many countries. Security of supply is the main focus of energy plans presented. For a producing country, security of demand is equally important.

So, I would like to use my 10 minutes to ask a few hopefully provoking questions, that are high on the agenda of a major oil exporting country.

The simplistic view on investments is often that there will be a need for more oil – this oil will have to come from countries with the largest oil resources – and since these countries are short of cash they will have to open up their up-stream sector for foreign capital investments – demand will keep track – and then everything will be OK.

Yet, if we look back on recent history it is not certain that developments will be that simple.

Due to high oil prices, the first part of the 80-ties were characterised by shrinking demand. It took a decade to get back to the global oil demand level we had at the end of the 70-ties.

Throughout the 90-ties, most analysts were forecasting demand to show an annual growth of some 1.5 million barrels per day or even more. The historic figures now tells us that the average annual increase in demand was only 800 000 barrels per day.

Now, at the beginning of the new century, demand growth seems to have come to a new halt.

In our outlook session yesterday, it was suggested that as soon as the economy recovers, oil demand will be back on a trend growth well above 1 million barrels per day.

To be quite frank, I do not recognise such a trend. Especially in a high price scenario I am afraid that demand growth can be much lower.

On the other hand, production is expected to keep growing, in particular Non-OPEC production.

More worrying is the fact that Non-OPEC production has systematically been underestimated in the past.

A telling example of this tendency is the production developments in my own country.

In the 70-ties, when the first oil production started in Norway, we thought that the production would peak in the early 80-ties with just 1 million barrels per day. Since then major technology advances have been made, and this has allowed us to produce much more oil at significant lower cost. Today, we have reached peak production well above 3 million barrels per day.

The question is whether what we have experienced in Norway, also will take place in many other Non-OPEC countries in the near future.

I think it will, and that it will take place in regions were the companies find the right balance between the geology and above ground metrics. You can not change the geology of a region, but you can change the terms and conditions to make the region attractive. Countries need to be competitive to attract and keep oil companies engaged.

I very much agree with the Petroleum Finance Company when they stress this issue in their background paper. Striking this balance has been the key to Norway's success in attracting the international oil companies to the Norwegian Continental Shelf.

If my analysis is right with stagnant demand and continued growth in Non-OPEC production, then I foresee little room for OPEC production increases in the short term. I think most forecasters will agree with this for the next year and even the following year.

My concern is that I do not exclude that this situation will prevail well into the future.

In the past there has been a clear tendency to overestimate the future call-on-OPEC oil. For the last 20 years we have been told, that after just a few years nearly all the incremental oil will have to come from OPEC producers.

Yet, this has not happened. Today, OPEC is producing less crude than in the 70-ties. And it is telling that in the latest Outlook from the IEA, the call-on-OPEC in 2020 is nearly 12 million barrels per day lower than what was forecasted in their previous Outlook.

What conclusions can we draw from this?

It seems to me that for the next few years, OPEC producers could be in a more difficult situation than we have seen in years.

They have the resources, but the outlet for their oil is limited by sluggish market growth and the Non-OPEC production.

Many OPEC-countries have invested in capacity that today rests idle. They get little credit for this spare capacity, although it plays a crucial role in controlling price volatility. When you think about it; storage and spare production capacity fulfil the same function and both represent the residual to the supply demand balance.

Long term, the non-conventional oil could become a serious contender, as well as, technologies for producing liquid fuels from gases or solids. New energy technologies based on hydrogen or new renewables will also reduce the demand for fossil fuels. Climate changes could accelerate these developments.

To me, this is not only challenges, but also opportunities. As producers and consumers of fossil fuels we should all strive to make the best out of these non-renewable resources. Better extraction technologies, improved energy efficiency and sequestration of CO2, are options that should be pursued with vigour.

With these challenges in mind, I think the producer consumer dialogue plays an important role in improving our understanding of the parameters governing the international oil market. We must continue our discussions of issues which can contribute to reduce market uncertainties. We should also address market consequences of environmental constraints and how the market will be affected by policy responses to climate changes.

A market that is better informed will reduce the risk for the market participants and will serve to limit over- and under-investments. Nobody wants the excess volatility that badly timed investments can lead to.

I think the dialogue on these issues goes to the core of our mutual interest in energy security.

Also in this context, I think that the new secretariat for the Forum could play a useful role in focusing on these challenges and hence in improving the transparency of the oil market. My country strongly supports the establishment of the Secretariat and hope to contribute to its success.

Mr. Chairman, I would like to end by recalling that the previous Forum meeting in Riyadh resulted in the Joint Oil Data Transparency Initiative. A great job has been made in taking this project forward. It is an important contribution to reduce some of the uncertainties in the market. The demand side of the analysis should be given more attention. I hope that the IEA and OPEC secretariats will not let go of this project which has been such a success story up until now.

Thank you for your attention.