Excellencies, honourable guests, ladies and gentlemen,
I take great pleaure in welcoming you to the second National Oil Companies' Forum, this year in Stavanger.

Last year's Forum in Algeria, I am told, was a success. I am very pleased that Statoil is the host of this year's Forum meetings.

I hope these days shall fulfil your expectations and prove rewarding for all of you!

An enormous amount of expertise and experience is vested in the prominent group of companies gathered here today. You represent petroleum provinces and countries that in many ways are different. Notwithstanding that, you have important experiences to compare and share in many areas.

I would like to take the opportunity of today to talk to you about the main principles and elements of Norwegian petroleum policy. The roles of the Government with respect to the Norwegian petroleum operations are threefold:

First, the State acts as the regulator of the offshore activities, developing the framework conditions.

Secondly, the State is the resource owner, which also includes direct participation and entails the Government take system

Third, the State has ownership interests in the national oil companies Statoil and Norsk Hydro, which are both fully commercial entities.

Let me first focus on the State's ownership in Statoil, and the development in this relationship up until today.

Statoil; history and development
Statoil was established as a state owned company in 1972 with the objective of carrying out exploration, production, transport, refining and marketing of petroleum. Statoil has never been part of the Government administration, and the company was established with a separate, independent board and administration. However, in the initial years the company was to some extent regarded as a political instrument for the Government.

International companies dominated exploration in the initial phase of our petroleum era, and were responsible for developing Norway's first oil fields. Statoil soon developed, however, into a highly qualified dominant operator and player at the Norwegian continental shelf. Up until 1985 Statoil was awarded a 50% participating share in all new production licences. Giving Statoil this preferential treatment provided the company with a competitive asset base which still today is an important part of the company's portfolio. Statoil was awarded its first operatorship for a field in 1981, on Gullfaks in the North Sea.

Through the special concessions and operatorships on large fields such as Gullfaks and Statfjord, Statoil developed into a major player on the NCS in the late 1970s and 1980's. The Norwegian petroleum era had at that time moved from an exploration to a development phase which required very large investments. The political goal in this first period was to develop Statoil as a powerful tool for the authorities in their petroleum policy. Together with the Ministry of Petroleum and the Directorate, Statoil had the task to safeguard national interests.

By the early 1980's Statoil had developed into an important power in the Norwegian economy. The cash flows going through Statoil's accounts were expected to be considerable in the years to follow. We must remember that we forecasted oil prices of 100$ a barrel into the 90s. In general, there were concerns that Statoil would become too strong within the Norwegian economy and also politically. There was thus a wish to reduce Statoil's power and size.

In 1985 the Government therefore reorganised its participation in petroleum operations. Most licence interests previously held by Statoil were split into two parts; one owned directly by the Government, referred to as the State's direct financial interest, or the SDFI. The other part remained owned by Statoil.

The SDFI arrangement implies that the state pays a share of all investments and operating costs in specific production licences, and receives a share of production and revenues corresponding to its direct financial interest in those licences. This is done on a cash-flow basis. The SDFI is not a company, but an asset portfolio. The Parliament sanctions the SDFI’s budget and framework as part of the regular state budget process.

From the mid-1980's Statoil was no longer given special concessions and came to operate under the same terms as other players on the NCS. This was a deliberate policy by the Government. Special privileges regarding gas sales and the development of Norwegian supply industry was taken away from Statoil. The dominant role Statoil had in the joint venture decision making was deliberately reduced with the aim of forcing the other companies to be more active.

Furthermore, international expansion became an important part of the company's strategy. In 1990, Statoil and BP formed an alliance for international operations.

Statoil was partially privatised in June 2001. It was time to further lay the foundation for Statoil's commercial development both at home and abroad. Privatisation also contributed in terms of clarifying the state's various roles in the petroleum sector and Statoil's role as a commercial player. Statoil is now subject to continuous assessment in the capital market and the valuation of the company is an important signal for stakeholders.

Statoil is now listed on the New York and Oslo stock exchanges. The State holds about 82% of the shares in Statoil, the remaining 18 % is owned by private interests in Norway and abroad. The Parliament has resolved that state ownership in Statoil can be reduced to 2/3 of the shares.

Statoils contribution to the Norwegian society over the past 30 years has been considerable. The company has developed world-class competence within the petroleum sector, which is of great value to Statoil in its international activities. Statoil has defined ambitious financial and operational targets for 2004 and 2007, and as a major owner I am confident that the company is well on its way in achieving them.

In talking about the history and development of Statoil I have emphasized the ownership role of the State versus the company, a role which has, as I mentioned earlier, become clarified with the privatisation process. Let me now talk about the State's role as an owner of the petroleum resources at the NCS as such, and the role as a regulator of the petroleum activities.

The State as a resource owner and regulator
The Norwegian oil and gas resources are part of our national wealth. Hence, there has always been a political consensus that the Norwegian society as a whole should benefit from the depletion of these resources. The right to the petroleum resources is vested in the State and the State alone can award licenses for exploration and production. This implies Government control over the resources.

The Government secures revenues through the Government take system, which consists of three elements. The most important is the tax system. This accounts for almost 60% of the total Government take. The second largest element is the net revenue from the State's Direct Financial Interest. The third element is the Statoil dividend. The total revenue to the State from the petroleum sector amounted to some 19% of the Gross Domestic Product last year.

The goal of our petroleum policy is maximum value creation. The licensing system and the production licence is the basis for obtaining that goal. The granting of a licence confers a right to the companies, national or international, to explore for, develop, produce and sell petroleum or petroleum products. The licensees are, upon certain conditions, entitled to have licence periods of up to 30 years, in some cases up to 50 years. This means that the companies will have a long term perspective in managing their interests at the Norwegian Continental Shelf. An important element in the licensing system has been to attract the best of international expertise and competence, and to promote co-operation between domestic and international players.

We have enjoyed the rewarding aspects of having participation from the largest international companies together with our national companies. This has ensured the Norwegian Continental Shelf being part in international trends in technology and processes, as well as being a laboratory for the development of peak technology and efficient operations. The sharing of competence applied in commercial cooperation is a success model and factor. This creates pluralism, checks and balances and improved efficiency and value creation.

How do we exercise day-to-day control towards the companies?

The Norwegian Petroleum Directorate, located here in Stavanger, is the "extended arm" so to say, of the Ministry of Petroleum. Established in 1972 it undertakes administrative, technical and financial control towards the companies to ensure that petroleum operations are carried out in accordance with legislation, licensing terms and so forth. The Petroleum Directorate also gives advice to the Ministry of Petroleum on issues relating to resource management.

To sum up, Government control combined with a system which allows for good business incentives and the total Government take system are the fundamentals of the Norwegian petroleum policy.

Corporate Social Responsibility
The notion of Corporate Social Responsibility and the introduction of the thriple bottom-line account has become industry practice during the latest years. Public awareness of the responsibility of multinationals and their impact in local communities is increasing.

Fight against corruption and calls for corporate social responsibility are issues that to an increasing extent have become part of our political agenda. Important questions are being raised, which were previously often taboos. Corruption is detrimental to all communities and impedes sound decion making.

Norway has signed the OECD convention of 1997 about corruption and is also a driving force in the negotiations about a UN convention on the same matter. Norway has recently made amendments in national law concerning corruption, resulting from developments in international law.

The Norwegian Government will, and there must be no doubt about that, continue its zero tolerance towards illegitimate business behaviour and will continue to contribute to the international debate and legislation related to this matter.

The Norwegian petroleum industry
With the discovery of oil at the Norwegian Continental Shelf, the goal of developing a Norwegian supply and service industry was defined at an early stage. Building national competence has been an important element of our petroleum policy. A key factor has been a close cooperation between the authorities, the companies, research institutions and universities.

Developing our offshore capabilities has entailed the development of a large contracting and supply industry. The Norwegian Continental Shelf has offered tremendous challenges due to a harsh offshore environment, deep water and remoteness from coastal infrastructure. In spite of large discoveries and very prolific reservoirs, the cost of development has been a challenge. Development and application of new technology by the industry has been a key factor in enabling economic development and competitive production.

This has made it possible to build up the petroleum production from the Norwegian Continental Shelf to the current 3 million barrels per day, making us the seventh largest producer and the third largest exporter of oil in the world. Through the world's most extensive offshore gas transportation system Norway is the third largest exporter of gas in pipelines. Statoil has a key role in producing and marketing this gas.

Final remarks
I have today tried to draw out the main lines in the Norwegian petroleum policy, and I hope that will give you some background for the talks and discussions you will have the coming days.

Our industry is an international and dynamic industry affected by global changes in the political and economic environment. As resource owners it is important that we understand these changes to keep our oil and gas policy updated. In this context I find the contact with my international colleagues and with the industry itself tremendously important.

This forum gives an excellent opportunity for you to exchange views and discuss matters of relevance. I wish you a rewarding gathering.

Thank you for your attention!