Yours Excellencies, Ladies and Gentlemen,

1. On the background of high oil and gas prices, concern for energy security, together with growing evidence of climate change, energy has moved to the top of the international political agenda.

Countries around the world are reassessing their energy policies and a number of new energy measures are being discussed and implemented. For consuming countries in particular, decreased dependence on oil seems to be the principal objective. In fact, it may look as if oil is losing as a reliable energy source for the long run.

For oil exporters this is a cause for concern.

2. It is important to note that the current high oil prices we have today is the result of supply and demand in the market, and not set by OPEC or any single country. It is a market price.

Yes, there is a risk premium added to the price, caused by geopolitical factors, such as the Iran situation. However, even without such risks, the crude price would probably have been well above 50 USD/barrel.

There is concern that high oil prices will damage economic growth or even cause a recession. Yet, despite high oil prices for a prolonged period of time, the world economy continues to grow robustly and oil demand with it. Demand is particularly strong in countries like China, India and other countries in the less developed world. In these countries oil is needed to fuel economic growth and combat poverty.

In other words, the price for crude oil is high because the global economy is strong and standards of living in the developing countries are improving. In this sense high oil prices is not a bad thing.

3. High oil and gas prices are also likely to trigger greater technological innovation and energy efficiency and conservation. Increased energy conservation means oil will last longer.

High prices for fossil fuels also improve the competitive position of renewable energy sources.

With crude prices above 50 USD, marginal oil resources, such as non-conventional oil and oil in remote regions far from markets, will increasingly be profitable to produce.

More oil from existing fields will be commercial to produce, through IOR projects. In Norway we now see a large number of IOR projects being materialized, as oil companies now trust high oil prices are here to stay.

In this sense high oil prices will make it easier and less costly for countries to achieve basic energy policy goals, such as energy security and environmental goals.

4. The real problems with oil in my opinion are related to supply security and emission of CO2 that consumption of oil causes.

When it comes to supply security, oil has some natural disadvantages compared to other energy forms. Diversification of supply is basic to energy security, but for oil, the lion’s share of resources is concentrated in a few countries in the Middle East.

In this context, there is no surprise that governments aiming to increase energy security see reduced dependence on oil as a step in the right direction.

5. The concentration of reserves highlights the importance of the investment and operating environment in producing countries. A stable, predictable and transparent investment and operating environment is significant for energy security. As such it will serve to diminish the scepticism that exists about oil exporter’s ability to expand production capacity in a timely manner to meet growing demand.

I will not be specific about which characteristics a transparent and efficient upstream system needs. Different system can work well and it is my firm conviction that every oil producer has to find its own way.

6. Oil exporters also need to address the concern about reserves and reserves data. Often it is alleged that countries reserve estimates are overstated.

Uncertainty about the size of reserves is relevant to the market and impacts investment decisions and energy policy. It is essential to provide relevant and reliable information on reserves and resources. Particularly countries with a large resource basis – such as many OPEC countries - need to address this issue.

Continued questions over reserve data require a response to ease concerns. The oil industry is global and it needs global standards.

7. Carbon is really the only remaining environmental problem associated with oil and gas. We cannot longer deny that CO2 emissions have impacts on the climate. The climate is getting warmer and oil producers need to take responsibility.

Fossil energy producers risk in the future being held responsible for the damage being done to the climate. Just as tobacco producers today are being held responsible for the damage nicotine has caused to human health.

I believe carbon capture and storage is one option we must pursue, among others. This technology has the potential to purify fossil fuels and at same time increase oil production, if used for increased oil recovery.

Carbon capture and storage is a technology that needs the support from oil exporters. We must be leaders, not laggards in this field.

8. In summing up, access to secure and clean energy at competitive prices is a basic objective for any country. The changes to energy policies countries are undertaking to achieve these objectives represent a major uncertainty surrounding the future demand for oil and gas.

Oil and gas exporters need to adapt or risk reduced demand and lower market shares for our products. We need to create confidence in oil as a long term energy source. Our strategy must be to make our products greener and our supplies secure.