Tale på Oslo Energy Forum 2016

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Vice president, Minister, dear friends of the energy industry, it is once again a great pleasure to meet you all here in Oslo for important discussions on the future of our industry.

Great changes have taken place around us also since the last year.

In Europe, Some are still recovering from the financial crisis. We have seen the highest immigration to Europe for decades. There is a lot of attention concerning the economy in China. And the oil price has dropped significantly.

I would like to continue with a few more words about the global development last year.

First, The global population grows. Extreme poverty needs to be eradicated, and that social inequalities have to be leveled.

Second, we also need to act seriously on the climate challenge - and lower emissions.

The Paris Agreement is a significant step. In Europe, we were front-runners or maybe lone-runners for decades.

Finally, we have all major emitters on board to fight climate change. Put simply: This presents us with an immense dual challenge: We need more energy and more sustainable energy systems on the global level. 

A global sustainable development must be based on a more sustainable global energy system.

Sustainability must be based on three different pillars.

o  An environmental pillar– that helps us reach our climate goals and reduce local pollution.

o A social pillar: – meaning a system that supports affordable energy for all.

o And an economic pillar – a system that also supports growth and jobs

To address this complex challenge, we need to choose policies that work fast and cost effectively.

An important measure in this respect is to establish a price on greenhouse gas emissions, which is long overdue.

Another is to substitute coal with gas.

Gas is a low carbon fuel. It is an abundant, flexible, affordable and reliable source of energy.Gas is a part of the solution now - and in the future.

Gas can reduce CO2-emissions through several routes:

o First, by replacing coal with gas. This is a fast, effective and cost efficient way of cutting emissions.

o Second, gas is the most flexible back up for intermittent, renewable energy.

In that respect, I would like to congratulate Minister Leadsom on the new UK policy to phase out coal. It is hopefully the first sign of a country employing gas as a key part of their climate change and energy security policies.

With a carbon price in the UK four times higher than the EU ETS, gas competes well with coal in the UK power sector.

Here the UK has lead by an example that other countries in the EU should learn from.

Last year, Norway's gas export was some 115 BCM - the highest ever. In November, we also hit a new record for delivery during one day.

The Norwegian gas machine is still going strong!

More or less all the gas we produce is sold to the EU. The exception is our export of liquefied natural gas (LNG) from our northernmost region.

Recently, we published Norway's new long-term gas production outlook.

The message is clear: Norway has the resources and the ability to remain a stable supplier of natural gas for the long term. We expect our gas production to remain high for decades ahead.

So far, only one third of Norway's estimated gas resources have been produced.( 2000 BCM)  Another 2000 BCM are expected to be exported over the next 20 years.

And the final 2000 BCM will be left for production from 2035 and beyond.

Of our untapped gas resources, a considerable share is estimated to be in Northern Norway, beyond the Arctic Circle.

Every time I speak to an international audience, I underline that this is not a new area for Norwegian petroleum activity.

We have more than a hundred years' experience of industrial scale activity in these areas.  We have been exploring the Barents Sea for 35 years, and produced gas there for almost a decade.

Last year, our gas pipeline system also crossed the Arctic Circle for the first time.

Our experience shows that the operational challenges in the north are similar to those in areas further south.

And our activities in Northern Norway and elsewhere are, as always, conducted in a safe and environmentally responsible manner.

I believe that gas from our Northern region will contribute to European security of supply for many years to come.

Additional gas export capacity from the Barents Sea will be decided during the next decade. The solution might be to connect this region to our existing pipeline system to Europe, or to expand the LNG capacity.

The EU Commission is just about to launch its gas package.

This is an excellent opportunity for the European Union to recognise the role of gas in decarbonising the economy. To strengthen upstream companies belief in the future European gas market. Well-functioning markets

  Some of you might ask: Why would a producing country support more competition and less market imperfections.

However, I strongly believe that a well-functioning market provides transparent pricing, and is good for predictability, stability and security of supply. In the long run, this is beneficial both for producers and for consumers.

Well-functioning markets are also important when developing an effective climate policy in Europe. Therefore, we also strongly support an efficient EU - ETS.

However - All talk about one efficient energy market in Europe mus be backed up by necessary infrastructure in place.

A lot has been done on the infrastructure in Europe, and things are very different today compared to only few years ago.

We are confident that this good work will continue.

In this year of the Energy Union we strongly support the work for strengthening the infrastructure in Europe.

Norway is doing its part. Our integrated gas pipeline system to both the UK and continental Europe delivers very high levels of reliability. Specifically: 99.38 percent in 2015.

Transmission cables to Denmark, Sweden, Finland and the Netherlands connect our power markets. New interconnectors to Germany and the UK are currently being built.

Let us continue to build a well-functioning energy market in Europe with efficient regulations and necessary infrastructure.

Challenges for the industry   So far, I have mostly talked about gas. Now, I would like to turn the attention to the petroleum industry as a whole.

This is Norway´s most important industry. Last year, It accounted for 40 percent of our exports and 15 percent of our GDP.

The petroleum industry will remain a cornerstone in Norway's economy for many decades ahead.

However, the current situation for the petroleum industry is challenging. Both in Norway and internationally.

The oil price is the single most important factor affecting the oil and gas industry.   I will not try to predict when oil prices will recover. However, we believe higher oil prices is required to replace depletion from existing fields - and to meet continued growth in oil use.

The oil industry is a cyclic and has recovered from difficult times before. Yet, this should not be an excuse for doing nothing.

To sit back and wait for a rapid recovery to 100 USD/B is not a sustainable strategy.The oil and gas companies must continue to cut cost, improve productivity and strengthen profitability. I notice that significant progress has been achieved. This work must go on.

The Supply and Service industry in Norway is used to compete with each other and global suppliers. Times are tough, but I am pleased to see that the industry has taken on the cost challenge and that the industry and the oil companies are cooperating to find new ways of working together to lower costs.   However, while cost-cutting is necessary and supported by the government - the absence of investment decision on time critical projects is not acceptable.

From the government's perspective our primary task is to provide the industry with predictable and stable long-term framework conditions.

We have also increased support for petroleum related research and development. Technologically the petroleum industry in Norway has been in the forefront. That´s a position we would like to maintain. 

And, what is perhaps the most important; we will continue to award a high volume of prospective exploration acreage to the industry.

In that regard, it is encouraging to see the industry's high interest in the upcoming 23. licencing round. We can see that the industry is positioning itself for a long-term presence on the NCS, looking beyond the current challenges in the oil market. 

I remain optimistic about the future of the NCS. Large areas are unexplored. The resource potential is good. There are many exciting projects; the giant Johan Sverdrup field is just one of them.

Let me conclude by saying that although the times are challenging, we are used to weathering the storm. I am confident that we will weather it this time as well.

Thank you for your attention!