First of all I will thank you Mr. Ambassador for inviting me to discuss some issues of mutual interest.

The EU has been concerned with security of supply issues for a long time, and new data show that the import dependence of the EU with regard to fossil fuels will increase towards 2020. Norway has been a stable and reliable supplier of oil and gas to the EU since the early 70'ies, and will continue for a long time into the future.

In global terms Norway is a major producer of oil, and total exports of crude oil make Norway the third largest exporter of crude oil in the world today. Norway’s market share is estimated to be approximately 15 % of the EU oil demand.

Gradually gas exports will become increasingly important for Norway. In 2004 exports of natural gas from the NCS amounted to approximately 76 BCM. Production is expected to rise in the short to medium term and a sales level of 120 BCM a year is a possible scenario within this decade. This makes Norway an essential indigenous supplier to the European gas market.

All gas exported from the Norwegian Continental Shelf is delivered to European buyers. With the production start-up of Snøhvit LNG, gas will also be delivered to the US market.

Of all the gas consumed in Europe, 14 % is produced on the Norwegian Continental Shelf. The importance of Norwegian gas is large in some countries. In Germany and France Norwegian gas covers approximately 30 % of the gas consumption. Great Britain will increase its share of Norwegian imports significantly during the next years as the Ormen Lange field comes on stream. Only last week I signed a treaty together with my UK colleague Mike O'Brien addressing this.

We have so far only produced approximately 29 % of total resources on the Norwegian Continental Shelf. There is also a large potential for new resources to be developed. In total around one quarter of Norwegian petroleum resources are undiscovered. In addition, the resource potential from improved oil recovery and in discoveries yet to be developed is substantial.

Realizing the resource potential on the NCS means that we will have oil production for more than fifty years and gas production in an even longer perspective, and that Norway will be a long term supplier of oil and gas to meet growing energy demands.

Realizing the resource potential also means that we need increased exploration activities, and already this year we will experience a very large increase in exploration for oil and gas in Norway.

Building our offshore capabilities has entailed the development of a large petroleum industry. Research and application of new technologies have been key factors in enabling economic development and competitive production from the Norwegian Continental Shelf. This has resulted in an internationally competitive petroleum industry with world class technology.

The future extraction of resources at the Norwegian Continental Shelf will be ever more demanding with respect to deep water, smaller fields, environmental issues, the gas value chain and increased recovery, to mention some. The industry itself has pointed out the ambitious aim to increase the oil recovery factor from 43% to 55%. Reaching this aim is of course also beneficial to the market.

I will now address some special features concerning theBarents Sea.
The increasing importance of the Barents Sea and the Arctic in general as areas for future energy activities and supplies is being recognised by a wide audience. These areas are possibly the next large petroleum province. The USGS, for instance, has publicly stated that as much as 25% of the world's remaining petroleum resources are to be found in the Arctic. This figure may be too high, but in any case, large resources may be located in the Arctic.

We have over the past 20 years drilled 61 wells in the Barents Sea without any accidents, and the first major development - the Snøhvit LNG field - is now under development. In the Russian part of the Barents Sea large interest is connected to a possible development of the Stockman field.

Moving into new frontier areas is attracting attention from many stakeholders - the oil industry, the Russian government, the US government, the EU and NGO's. The angles of approach to the Arctic are however very different, often leaving mixed signals questioning the acceptability of petroleum activities in the Arctic. I for one, think it has been proven possible to have large scale petroleum activities in the Arctic in a manner that is environmentally acceptable and in line with sustainable development criteria. This is backed by recent studies, but more studies and R&D efforts are required. In this respect it is important that we establish a sustainable energy agenda for the Arctic. I have therefore invited the US Energy Secretary Samuel Bodman, the Russian Minister of Natural Resources Mr. Jury Trutnev, the Russian Minister of Industry and Energy Mr. Viktor Khristenko and the EU Energy Commissioner Mr. Andris Piebalgs to a high level conference in Kirkenes in Finnmark on 7 July this year. The purpose of the conference will be to create a meeting place where relevant issues concerning the sustainable economic management of the resources of the Arctic will be discussed.

Norway is the world's sixth largest hydropower producer.Norwayis also Europe’s leading producer of electricity based on renewable energy sources with an average annual production of about 118 Terawatt hours.

99,7 % of Norway’s power production is based on renewable energy sources. A substantial part of this, around 30 %, is utilised by heavy industries such as metal processing plants.

Of the total hydropower potential - about 35 TWh/year has been protected against development for environmental reasons. Upgrading of existing, old hydropower plants as well as small scale production may yield increased production. In the last few years there has been an increased interest in building small and medium sized power plants.

The electricity sector is also an area where the knowledge base is very high in Norway.

Norway has a large unutilized renewable energy potential from various sources. Closest to full commercial breakthrough are wind power and bio energy, while abundant tidal and wave power holds promises for the future. Norway’s wind resources are especially large along the coast and in Northern Norway. The high wind velocity and the large open areas make wind power particularly favourable for production of renewable electricity. The existing hydro power system may handle the natural fluctuations in wind power production.

One obstacle to the development of wind power is geography. Long and expensive connections to the existing grid are often necessary, and the northernmost part of the transmission grid presently has insufficient capacity to allow for extensive development of the very favourable sites for wind power in Northern Norway.

Total annual wind power production is approximately 500 GWh/ year. We have a goal of producing 3 TWh per year by 2010, as part of our strategy to achieve a total of 12 TWh of new renewable energy production and reductions in energy use by the same year.

We are considering the possibility of forming a joint market for electricity certificates with Sweden. Our aim is to establish a market from 1 January 2007. I have to underline that this is an ambitious project both from an administrative and political point of view. Our view is that the certificates will be useful in the future international cooperation in developing renewable electricity.

The Nordic power market is among Europe’s best integrated regional markets. This allows for effective use of power generation assets throughout the Nordic area. The substantial hydropower component gives flexibility to accommodate considerable Danish wind power production and cover peak loads. Nuclear and thermal power provide important base load.

The strong integration of the Nordic market also means that the Nordic countries share common challenges in the area of security of supply. One major challenge is the situation with net power deficit in the Nordic area as a whole in average years. Our reliance on imports has become very important in dry years. This points to the need for improving the balance between production and consumption on a regional scale to reduce volatility in the market and serious strains on the system in exceptional years.

You may also have noted that the Dutch and Norwegian transmission system operators have agreed on building a cable between the two countries. The cable will be in place from 2008. This will also be in line with the EU strategy to strengthen infrastructure between countries and regions.