You will find the foils from the speech here .

Your Excellencies, Ladies and Gentlemen,

It is a great pleasure for me to participate at the International Oil and Gas Exhibition in Tehran. The Tehran Exhibition has become recognised as a key meeting place for the international oil and gas industry in Iran, the number of companies represented having doubled the last couple of years.

The now traditional Intsok Topical Luncheon gives good opportunity for networking between key representatives of the Iranian and Norwegian oil and gas industry.

My topic of today, "Norwegian oil industry and cooperation with Iran", fits well into this.

Let me start out by visiting the situation in the oil market.

The oil market
Oil prices are in nominal terms at an all time high, fuelled by strong demand, lack of spare capacity both upstream and downstream, geopolitical risks and strong activity in the futures market.

Oil demand will be driven by growth in the transportation sector, where there may not be competitive alternatives to oil for many years to come. Developments in 2004 to a large extent confirmed the demand potential in countries like China and India. What we have seen of increased oil demand in these countries is probably just the beginning.

At the same time we observe that demand appears to be more resilient against high oil prices than earlier expected. Oil now plays a less significant role in the world economy than in the 1980'ies, when high oil prices caused a recession. The surge in oil prices last year, seems to have left the global economy relatively unmarked, at least so far.

On the supply side growth in production outside OPEC, has, with Russia as one notable exception, been somewhat disappointing in recent years. Rising exploration and development costs, lack of large new discoveries and slow investment by the industry have led many to believe that future expansion of Non-OPEC production will be more difficult and more expensive than in the past.

The question asked by the consuming countries, is whether OPEC will be able to increase capacity sufficiently to meet the future demand for oil. OPEC countries have the reserves to sustain higher production levels. But the timing and extent of capacity additions would be a challenge.

The investments needed to expand oil production capacity will be huge. In addition - but often forgotten - investments are also needed to sustain current capacity, because of natural decline rates. According to the IEA, about three quarters of upstream oil investment will be needed only to counteract a natural decline in production.

There is every reason to underline the fact that the world will need more energy both in the short term and in a long term perspective. The International Energy Agency predicts an increase in world energy demand of 60 per cent towards 2030 unless current policies are changed. According to IEA, nearly 6 trillion US dollars will have to be invested in oil and gas over the next 3 decades.

Countries in the Middle East region, and Iran with her vast oil and gas resources, have a key role in meeting the world's future energy needs. As HE Dr. NejadHosseinian, Iranian Deputy Oil Minister, pointed out clearly in his speech at the international oil fair in Stavanger last year, the amount of investment in the upstream sectors of oil and gas in the Middle East region has been significantly less than the rest of the world. Explanations can be found in a mix of factors of political, geopolitical, economic and commercial nature.

It is evident that extensive and improved cooperation between producers and consumers of energy, bilaterally and multilaterally, will be ever more important in securing sustainable energy supply for future needs.

Production at the NCS
What is the current contribution and future role of Norway in this picture?

My point of departure is that the NCS will continue to play a vital role in supplying the world with oil and gas for many decades to come.

Production and Net Exports
Production of crude oil and liquids is about 3,3 million barrels per day. With limited domestic consumption, Norway is the third largest exporter of oil globally, behind Saudi Arabia and Russia. Norway is committed to remaining a stable, long term supplier of oil and gas.

High activity
After a period of some pessimism at the NCS, 2004 was a year of positive development. Production was all time high, and two new fields started producing (Skirne and Kvitebjørn). The Snøhvit LNG development and the Ormen Lange development are now well under way and are two excellent examples of front end technology being implemented at the NCS.

Snøhvit
Snøhvit is the northernmost LNG development in the world, located at 71 degrees north. It will become Europe's first export facility for liquefied natural gas, and is Norway's first development in the Barents Sea.

The Snøhvit development will be produced from subsea installations and landed by multiphase transportation to the receiving and processing plant on Melkøya Island in Northern Norway and shipped by LNG carriers to markets in Europe and the United States.

The development of Snøhvit will provide a basis for further field developments based on LNG in the area, and is therefore important for further exploration activities in the Barents Sea.

Ormen Lange
The Ormen Lange field is Norway's largest gas development project, proven by Norsk Hydro in 1997. Hydro's subsea solution for Ormen Lange is taking deep water technology a significant step further. Nothing will be visible on the surface when the enormous gas field comes on stream in 2007. When it reaches full production, the field will meet 20 percent of the demand for gas in the UK.

Long term fundamental and applied research in the fields of multiphase transportation and LNG at Norwegian research institutions, in cooperation with industry, has been decisive in facilitating the Snøhvit and Ormen Lange projects. The Norwegian government gives high priority to R&D in the petroleum sector and the public spending have been doubled during the last couple of years.

Investments on the NCS
There has been a notable increase in the activity level on the Norwegian Continental Shelf since last year's estimates of investments. An important reason is of course, that the oil companies and the global financial community operate with higher oil price expectations, generating more exploration and higher investments. However, the government has implemented targeted initiatives which I believe are important contributors as well.

In 2005 we expect the investment level to be record high, in the range of 15 billion US$. As for exploration activity, this year we expect the number of exploration wells to double compared to 2004. In 2005 the Norwegian Petroleum Directorate has estimated that as much as 30-40 exploration wells could be drilled. Availability of drilling rigs can, however, be a limiting factor.

19th Licensing Round
The next licensing round in frontier parts of the NCS, to be announced before this summer, will concentrate on the northernmost parts of the Shelf. Alltogether 19 companies have nominated blocks of interest. We see this extensive nomination as proof of a renewed interest for the Barents Sea.

Ensuring a high rate of exploration and continued high activity levels also in mature areas of the NCS are important challenges which we are very much focused on.

Furthermore, we must increase the recovery rate from existing fields. Today we expect an average recovery rate of 46 percent on the NCS. Our ambition is to reach a recovery rate of 50 percent or even more.

Gas Production
Let me say a few words about Norway as a gas producer. Norwegian gas production is currently at around 80 billion cubic metres per year. Production is expected to increase further in the short to medium term as new fields are developed. 99% of Norwegian gas sales are exported. As we can see on the graph, there is a potential for increased sales, and total sales of about 120 billion cubic metres per year is possible within this decade.

Gas Transportation
There are approximately 50 fields producing gas on the Norwegian Continental Shelf. With over 6 600 kilometres of pipelines, we have the world’s most extensive offshore transportation system. The gas is transported to three landfalls on the Continent, and there will be two landfalls in Britain when the new pipeline has been built for the Ormen Lange field. Of all the gas consumed in Europe, 14 percent is produced on the Norwegian Continental Shelf.

The largest industry
The petroleum industry is very important for our economy and for Norway as a whole. This industry contributes to a large share of our GDP, total investments, state revenues as well as total exports. As important as the resources, however, is the industry developed during the 30 year period of activity at the NCS.

Intsok industry clusters
This industry forms the basis of our bilateral cooperation with Iran within the petroleum sector.

Some five years ago the Norwegian petroleum industry was little known in Iran. This situation has changed remarkably, and their presence and cooperation with their Iranian counterparts is today extensive and wide-ranging.

In addition to the well-known presence of our two national oil companies Statoil and Hydro, companies from all parts of the supply chain are well represented in Iran in teams or joint ventures with their Iranian couterparts. About 50 companies are active in Iran.

A multitude of initiatives have taken place during this five-year period, which I think in general can be said to have been fruitful and mutually beneficial.

Cooperation betweenIranandNorway
Transfer of technology and know-how are central elements of the cooperation. The management and operation of large projects, enhanced oil recovery and the gas value chain are focus areas.

But also exchange of views and experience regarding the national organisation and management of petroleum activities are important elements of our dialogue in the petroleum sector. The Norwegian experience in cooperating with the international oil and gas industry in developing our petroleum resources and capacities is good, and I think many aspects of this policy could be shared with interested countries rich in oil and gas resources.

Cooperation within education and training is another pillar of our bilateral cooperation. Alltogether 50 Iranian students will be taking their Master or Doctoral programs in petroleum technology at the Technological University of Trondheim as part of a cooperation agreement between the Norwegian university and the National Iranian Oil Company (NIOC). This is an excellent example with concrete results of our cooperation, which I hope will continue also in the future. The training with Norwegian oil companies and service companies- in Norway or in Iran- is also a valuable part of this.

Two areas where I see a potential for extended cooperation is within the HSE and environmental issues. Based on high awareness and the strictest standards, the Norwegian industry has developed technology and solutions that are demanded world wide.

Ever since the activities started at the NCS strong environmental requirements have been followed and a principle of co-existence between the offshore activities and other users of the sea, such as the fishery industry, has been important.

This principle will be ever more important as the activities are moving towards the vulnerable environment of the arctic regions, including the Barents Sea. I would think you have the same concerns in this region, for instance in the vulnerable waters of the Caspian Sea. We are all obliged to ensure that the resources are managed in a prudent and sustainable manner.

I think the growing concern and awareness about environmental issues and sustainable energy systems for the future point to extended biltaral and multilateral cooperation between our two countries within these areas.

Ladies and Gentlemen,
I have today undelined the need for cooperation in the task of satisfying the world demand for energy in a sustainable manner. With her resource wealth Iran will be a key player.

With the aggressive plans for investment over the next five to ten year period, Iran will definitely also be a key partner!

I think the cooperation between our two nations is well under way, and has good perspectives.

Thank you for your attention!