Foils from the speech in pdf format

Ladies and gentlemen!
It is a great pleasure for me to be here at "The 13 ^th> European Gas Conference". Since the start in 1981, this conference has become an important meetingplace for people in the European gas industry.

European Energy Outlook
Natural gas demand is growing – both because it is such a usable product and because of its environmental qualities. From the environmental point of view, natural gas is the fuel of choice among the conventional fossil fuels. I am therefore pleased to see that natural gas is replacing the use of more polluting fuels in several countries. Natural gas' share of total energy demand is according to the International Energy Agency expected to rise considerably in Europe.

This graph is based on projections made by the IEA. We see that demand for natural gas is expected to rise in absolute terms. Other energy experts think that the growth will be a bit slower, but generally, all agree that demand for gas will rise considerably. We also see that in this period, natural gas will represent an increasingly large part of the energy mix. The graph implies an average annual growth in demand for gas of 1,8 percent from 2000 to 2030, while that for total energy is expected to be 0,7 percent in the same period.

Coinciding with this rising demand, many countries also face decreasing domestic gas production. The UK situation is often used as an example of this.

The oil prices are very much discussed these days, but also gas prices have been soaring this winter – both on the continent and in the UK. In the UK, NBP spot prices have been moving around 30 pence per therm during extended periods this winter. Also, forward contract prices - published by Heren Energy - have been rising considerably. These high prices reflect the need for new gas deliveries, and give producers clear signals to bring more gas to the market.

In addition to Russia, Algeria and LNG shipments from a number of sources, Norway is an important supplier of gas to the European market.

Norway's contribution
The production from the Norwegian Continental Shelf has placed Norway as the second largest gas-supplier in the European market. Our oil exports will soon start to decline, but the gas exports will increase substantially in the years to come.

In 2004 exports of natural gas from the NCS amounted to 76,5 bcm. Production is expected to rise in the short to medium term as new fields come on stream. We expect sales this year amounting to over 80 bcm, and 99 percent of this will be exported. A sales level of 120 bcm a year is a possible scenario within this decade. This makes Norway an essential supplier to the European gas market.

The basis for this picture is our natural gas resources, the production facilities, and the transportation system. I will now turn to the resources.

Troll – the gigant on NCS
In the development of the Norwegian Continental Shelf, Troll has played a significant role. Gas deliveries to the Continent have been secured by Troll through swing-arrangements with other fields with less stable production.

The Troll field is the largest gas field producing on the Norwegian Continental Shelf. This year, Troll is producing almost 30 billion standard cubic meters of gas.

The Troll field still has large undeveloped gas reserves equivalent to an Ormen Lange field in size. It is clear that these gas reserves shall be developed, the question is how and when. There are still large oil volumes that shall be produced, and I am very satisfied with the operators' efforts to produce as much of the oil as economically feasible.

I know that the partners in the Troll licence are going through a strategic decision process to evaluate the best development Troll. The ministry follows this development off with great interest.

Snøhvit/Ormen Lange
The Ormen Lange field in the Norwegian Sea is under construction and will be a long-term source of gas for Europe for about 20- 30 years from 2007. Gas deliveries from the field are estimated to 20 bcm per year. The development is according to schedule. This year we expect to receive the plan for development of the gas field Tyrihans. The field will be developed with a subsea tie-back to the Kristin field, which is now under development.

In the Norwegian Sea, there is still a large potential for new discoveries and new developments. Yesterday the Norwegian Petroleum Directorate announced a new gas discovery in the Norwegian Sea. The NPD anticipates that the size of the discovery may approach 60 billion standard cubic metres of producible gas. This is good news for the development of the Norwegian Sea.

The Snøhvit development in the Barents Sea represents a new era for the Norwegian gas industry. It is the first large scale LNG development in Norway – and in Europe. It is also the first development in the Barents Sea. The Snøhvit project represents the first wholly sub sea development on the Norwegian Continental Shelf. A new record will be set for piping unprocessed wellstreams over long distances. No offshore installations are visible on the surface. Some 700 000 tones of carbon dioxide will annually be separated from the wellstream and piped back to the field for injection in a suitable sub-surface formation. The Snøhvit- LNG-project will come on-stream in 2006 and marks the first stage in an exciting and challenging move into offshore operations in arctic waters.

I am glad to observe that the Snøhvit partners now are considering a second train at Melkøya. This kind of development represents a great opportunity to make further use of the huge investments that are made in infrastructure for Snøhvit, and thus reduce unit costs.

Transport solutions from theNorwegian Sea
The next gas field development will probably be the gas field Skarv in the Norwegian Sea. The field has been under consideration for a long time, and finding a viable transport solution has been the main challenge. I am happy to hear that there has been an agreement on a transport solution. It is important that fields like Skarv and Idun are developed, and it is my job to secure that the framework conditions support such development.

It is the resource owners' responsibility to find efficient solutions for the transportation of their gas. New transportation solutions are dependent on having the necessary resource base. The discovery of resources must come first, then the transport solution. Willing investors is another requirement. I cannot instruct companies to invest in solutions they do not want to invest in. The Norwegian petroleum industry is organised so that the operational activities are performed by commercial companies. The companies’ drive for value creation and efficient solutions, combined with a good regulatory framework, will also give the best solution for the society.

It is also important that Gassco have a central role in all major infrastructure developments on the Norwegian Continental Shelf. Gassco as an independent player with an overall view of the resources will make it easier to achieve cost-efficient, area solutions for Norwegian gas. Gassco's role as architect for future infrastructure development is therefore very important. Gassco's success as an architect is dependent on clear roles towards the commercial companies (and this is an issue that is high on my agenda).

Large potentials in the artic region
As I mentioned earlier, the world will be in need for more gas in the future. The big question everybody has to ask is where the future supply will come from when there is a need to discover a substantial amount of new resources.

According to the US geological survey as much as 25 percent of the undiscovered resources can be found in the artic regions. Others claim that the resource base is smaller. Anyhow, this is a promising region.

The interest for the artic regions , included the Norwegian part of the Barents Sea, has increased due to large discoveries in the Russian part of the Barents Sea, maturing of other petroleum provinces in the world and higher oil prices.

In light of the future demand for petroleum it is clear that the artic region can play an important part in the future supply of petroleum.

The Barents Sea is now the region on the NCS with the highest probability of making new large discoveries.

Barents Sea – long term perspective
The NPD estimates that around 1/3 of our undiscovered resources are to be found in the Barents Sea, that is not including the northern part of the Barents Sea or the disputed areas on the boarder to Russia. The estimate of undiscovered resources is in excess of 6 billions barrels of oil equivalents. Due to the lack of geological knowledge, the uncertainty linked to this number is large.

In addition to the Snøhvit project some other minor discoveries in the Barents Sea have been made, like the Goliat oil-field. However, there are at the moment no development plans for other discoveries in the Norwegian part of the Barents Sea than the Snøhvit project.

Two wells are now completed in the ongoing drilling-campaign in the Barents Sea. Unfortunately both of them showed little or no signs of hydrocarbons. The campaign is however not finished, and more wells will be drilled later this year. Exploration is a big risk – big reward game, and we have to keep up our efforts in this area to be successful in the long run.

I have strong belief in the potential of the Barents Sea. Large resources may be located here.

As known, the chosen transport solution for the gas from Snøhvit is as LNG by ship to the USA. I understand that a LNG project also may be the preferred development solution for the Stockman field in the Russian part of the Barents Sea.

However; if the assumed gas resources come true, there will be a need for new transportation solutions for the gas. In a perspective of 10 to 20 years it is likely that development of the proven gas resources will trigger pipeline systems from the Barents Sea to the markets. If the resource base is there, development of integrated transportation system as the one we have on the NCS today is likely.

One possible transportation solution is shown behind me. A pipeline like this along the Norwegian coast could be integrated with the existing Norwegian pipeline system.

It will be reasonable to combine transportation of gas in pipelines from the region to the markets with transport of LNG by ship.

Upcoming activity in theBarents Sea
As a result of the reopening of the Barents Sea for all-year petroleum activity, areas around the Snøhvit field were included in the award in pre-defined areas in 2004. Awards in predefined areas are the annual licensing round in mature parts of the NCS.

The upcoming 19th Licensing round will give the industry access to frontier parts of the Barents Sea. The awards will take place in the 1st quarter of 2006. In October last year we invited companies to nominate blocks in the Barents Sea which they wanted to be included in the 19th licensing round. The interest for the Norwegian part of the Barents Sea was good.

Through the 19th licensing round we will ensure that the petroleum industry will get access to prospective acreage in the Barents Sea. The round will lay the foundation for an efficient and comprehensive exploration of this little explored region.

European Gas Market
As stated earlier, our resources, the ongoing field developments and the infrastructure developments, take us closer to a future where Norway’s role in the gas market is even more important than it is today.

The European market needs more gas, and so does other markets, like the US market which will also be served by the before mentioned Snøhvit LNG. The fact that the Norwegian Continental Shelf is so close to the European market puts us in a very fortunate position compared to other suppliers.

Of all the gas consumed in Europe, 14 percent is produced on the Norwegian Continental Shelf. The importance of Norwegian gas is however much greater in some countries. In Germany and France, Norwegian gas covers approximately 30 percent of the gas consumption.

The UK market’s need to replace domestic production has triggered a number of import projects, which are now in the planning or development phase - a number of LNG import terminals, the BBL, Interconnector expansion project, and new capacity from the Norwegian Continental Shelf.

New Capacity from the NCS to theUK
As you know, the Langeled pipeline’s southern leg will be operational in 2006. This will significantly expand capacity from the Norwegian Continental Shelf to the UK.

A month ago, the Norwegian government presented to the parliament plans for the construction of another pipeline, Tampen Link. Tampen Link will transport gas from the Statfjord field to the FLAGS pipeline on the UK Continental Shelf. FLAGS ends up in St. Fergus, where Norwegian gas is landed today through the Vesterled pipeline. In addition to the Statfjord gas, the Tampen Link pipeline will have capacity to transport gas from other fields on the Norwegian Continental Shelf. If approved by the parliament, this pipeline will become operational in October 2007, coinciding with the start-up of Statfjord Late Life.

These infrastructure developments will boost capacity from the Norwegian Continental Shelf to the UK from 10 bcm per year today to 40 bcm per year in 2007. In addition to these direct pipelines, Norwegian Continental Shelf gas can also be transported via the Continent and the Interconnector, so it is fair to say that Norwegian deliveries can add up to quite a large share of UK gas consumption in the future.

It will be interesting to see if the UK gas market will be over-supplied in the future as a consequence of the planned projects towards the UK gas market.

To conclude,
Norway is still a promising petroleum province with large resources to be discovered. Estimates show that one fourth of the total oil and gas resources on the Norwegian Continental Shelf remains to be found. The Norwegian government is taking every measure to ensure that Norway also in the future will continue to contribute as a major European energy supplier. Our focus is on ensuring access to prospective acreage for the industry through frequent and extensive licensing rounds, increase the rate of recovery, reduce the cost level and open for further development of the Barents Sea into a substantial petroleum province.

I have expanded today on the resources, the development of new fields and infrastructure. I think I have shown that the Norwegian Continental Shelf is ready to deliver gas where it is needed. I think this is the best possible way that we can contribute to European Security of Supply.

Norway has been a stable and reliable supplier of oil and gas to Europe since the early 70' ies and will continue to be so in the future!

Thank you for your attention.