Åpningsinnlegg Oslo Energy Forum 2020

Sjekkes mot fremføring

Ladies and gentlemen,

dear industry leaders and friends!

It is a great pleasure to be here with all of you as I take part in the Oslo Energy Forum for the very first time.

I am aware of the history and traditions of this forum. I am sure there are some of you here today that can tell me all about the fabled gatherings you had a Sanderstølen back in the days – or perhaps not everything…

For my part, I am glad you have moved the event to Oslo. Here, we are only a short walk from my office in the ministry and I was never much of a skier anyway!

After all, I spent the better part of my childhood not in the Norwegian mountains, but in Texas and Florida.

 

I want to share my perspectives on the current state of affairs in the oil and gas industry with you here today.

My perspective is obviously that as Minister for Petroleum and Energy – with all its responsibilities and duties.

It is a perspective shaped by more than 6 years' experience as a parliamentarian engaged in energy issues.

It is the perspective of someone born in the 1980s and coming of age in a time where the concept of sustainable development, including the awareness of climate change, has shaped the thinking.

Most importantly, my perspective is formed by a strong belief in progress for people and the future of this industry.

However, that optimism comes with a caution: we need to embrace the times we live in, and we must be prepared to change, evolve and adapt.

The sheer scale of both the change needed, and the opportunities and obstacles connected to these changes, has been clearly expressed by speakers at this event.

The world is changing fast. In fact, it is amazing how much has changed in just the last few years: technologies, markets, communication, education, politics, energy use. Climate.

 

Friends. We all know that energy, and fossil fuel energy in particular, is powering the global economy. Coal, oil and gas covers more that 80 percent of the global energy demand.

Innumerable millions of people have over the last decades risen out of poverty and into a decent standard of living. Economic growth and access to clean water, electricity, food, medicine, education and transportation is fueled by affordable coal, gas and oil.

Despite tremendous advances, more than 700 million of our fellow human beings – that is 10 per cent of the world's population – still live in extreme poverty.

It is worst for the children of this world, with one out of five kids living in extreme poverty.

Many more depend on traditional energy for cooking.

Access to modern energy is necessary to change this. Getting the right energy is also going to save lives. Indoor air pollution is still causing 4.3 million deaths every year, according to UN figures.

Yet, energy for all may create new problems.

Sixty per cent of global greenhouse gas emissions come from energy use, and emissions has never been higher.

This is increasingly putting the oil and gas industry under the spotlight. Particularly in our corner of the world.

Let me just reflect a little bit about how things have evolved in Norway. 

 

Our petroleum resources is, and has been, a blessing for the people of this country. The way we have managed our resources is a true Norwegian success story.

We have built an industry that has brought enormous revenues, supporting a strong welfare society with the highest standards of living.

How is it possible, then, that particularly young people have taken to the streets demonstrating against our oil and gas activities?

I do not have all the answers to that question.

What I do know is this: I as a representative of the people, and you as industry leaders must acknowledge these sentiments.

We must engage with those who challenge us.

I believe that public support is essential to industry legitimacy.

Spreading the wealth, creating jobs across the country, protecting the environment and working in co-existence with other users of the ocean has been vital for the public support this industry has enjoyed in Norway.

Going forward, support for the oil and gas industry must rest on more than just creating jobs and wealth. We must have credible low carbon solutions and we must cut emissions.

People need to know that the industry are taking these issues seriously.

Taking on these challenges is necessary to secure a position as a long-term reliable energy provider, whether it is oil or gas.

On that note, let me be very clear:

It is the government's policy and my duty to make sure we continue to produce profitable oil and gas.

The world needs energy, and the world needs to cut emissions. How do we square this circle?  

I do not have all the answers but I would like to share some experiences of how we are taking on these issues. Let me call it the "Norwegian way".

The Norwegian way of securing energy for the future and reducing emission goes like this: commit to international agreements and keep in mind that this is a global challenge that requires global solutions.

We set ambitious targets for reducing domestic emissions within these frameworks and we invest in key technologies that can cut future global emissions.

We are committed to the Paris Agreement. Last Friday we submitted an enhanced climate target of reducing emissions with at least 50 %, and towards 55 %, by 2030. In doing this, we are actually one-step ahead of the European Union, our most important partner in climate policies. I am sure many of you know Norway is already committed through an agreement with the EU, to reduce emissions by at least 40 % by 2030.

Based on the European Green Deal we expect the EU to increase its climate target and we will continue to make efforts in that direction.

Setting targets is one thing, however. Delivering on them another.

We will still use a combination of a CO₂-tax and the ETS trading scheme to give incentives for companies on the NCS to reduce their emissions.

We know that this works. The carbon footprint of production per barrel on the NCS is at about half the global average.

Our CO₂-pricing is pushing the industry to improve. I am therefore very pleased with the ambitions presented last month by the Norwegian petroleum industry to reduce absolute emissions by 40 % by 2030, and to near zero in 2050.

These new ambitions are coming on top of an already impressive standard set on the NCS.

An article in Science found that global emissions from production of oil gas may be reduced by as much 700 megatons annually if NCS emission levels were achieved internationally. That reduction is 13 times Norway's total emissions.

These results and these new ambitions have not come free. They are the result of much hard work, technological development, bold leadership and large investments.

I recognize that.

It turns out that the polluter pays principle works in practice.

 

The Norwegian way is also about natural gas. We deliver affordable low-carbon energy to Europe and beyond. Norway has the resources and the ability and will to remain a stable supplier of natural gas for the long term.

Gas brings several benefits to European countries, for example by replacing coal in power production and in that way contributing to reducing emissions.

Gas is also a flexible and reliable support for intermittent renewable energy such as wind and solar.

In the longer term, gas can be decarbonized through carbon capture and storage.

The numbers vary, depending on whom you ask, but there can be little doubt that CCS, or CCUS, is a critical technology for reaching global emissions reductions.

The NCS is well suited for CO_2-storage and we already have more than 20 years of experience of storing CO₂ under the seabed at the NCS. We have established a test center for capture technologies at Mongstad.

This government's future CCS strategy remains clear:

We have an ambition to realize a cost-effective solution for full-scale CCS in Norway that leads to technology development internationally.

Together with Equinor, Shell and Total we are working hard to establish a hub for transport and safe storage of CO₂.

We aim for final investment decision in 2020 or 2021. On the capture side we cooperate with Heidelberg Cement and Fortum.

These industries are large emitters, and have limited or no alternatives to CCS if they are to become decarbonized.

With this, we are preparing the ground for future European projects - making it more attractive for European industries to consider capture of CO₂.

 

So, what does a low carbon future look like on the NCS? One thing is certain – the next 50 years will not look like the past 50

However, I am certain that the NCS is a petroleum province for the future. According to the Norwegian Petroleum Directorate we may have only produced half of our expected recoverable resources.

It is a nice historical coincidence that 2019 was the 50-year anniversary of the discovery of Ekofisk, and the year that Johan Sverdrup went on stream. Both these fields may be producing 50 years from now.

Ekofisk and Sverdrup are two very different stories, and belong to different eras on the NCS – but each in their own illustrate the Norway way of managing petroleum resources.

Ekofisk and the surrounding area is undergoing redevelopment and will produce for decades to come. Several other older fields are going through the same life extension projects; Statfjord, Balder and Valhall, to mention some.

Extending the production horizon for these fields means we can put existing infrastructure to use, get on stream quickly and generate new revenue for the operators and for the state.

I am encouraged by today's high investment level on the NCS. International studies like one from the Natural Resource Governance Institute, rank Norway top in the world for value realization from extractive industries.

Stable and predictable investment conditions combined with a competent administration are some of our advantages. In addition, a highly skilled work force, cooperation, an advanced and diverse supplier industry and petroleum cluster, third party access to infrastructure and low entry barriers make Norway an attractive place to invest.

It is no surprise that the interest for exploration on the NCS remains high. Last month the yearly APA-round awarded 69 licenses to 28 different companies. This is the third largest award round ever.

2019 was also a good year for exploration on the NCS with the number of discoveries increasing by 55 % year-on-year.

These are all examples of the continued strong business interest on the NCS and indicate that the industry has a long-term perspective.

 

As I approach the end of my remarks here today – let me reiterate the fundamentals of the government's petroleum policy.

The government remains committed to keeping a stable and predictable framework. Predictability is important for investors, but also highly important for Norway in order to maximize value creation, employment and fund our welfare society.

We will continue to provide attractive exploration acreage with annual concession rounds. Discoveries are the fundaments for all other activities in the industry.

We want to keep up research and development in order to increase productivity and recovery rates, and to reduce costs and emissions. This is vital for strengthening competiveness and innovation in all parts of the industry.

We are committed to maintaining a clean, efficient and profitable production. We remain committed to carbon pricing, but also support the development of emissions reducing technologies. This is in an integral part of the Norway way. I will say again that I am very happy that the industry has committed to ambitious cuts in their own emissions.

Finally, Norway is an ocean nation with long traditions for integrated management of the seas. We must continue the close collaboration among the different users of the sea and maintain the level of trust needed for close cooperation. We have shown in the past, and will show in the future that all the maritime industries can co-exist, whether it is the oil and gas industry, fishing, offshore wind, aquaculture or shipping.

On that final note, I am really looking forward to collaboration with all of you on these important challenges.

Thank you so much for your kind attention!