Key Note Speech - INTSOK's 11th Annual Russian-Norwegian Oil & Gas Conference

Ladies and Gentlemen!

• It is a pleasure for me to speak here at the INTSOK’s 11th annual Russian – Norwegian Oil and Gas Conference, and to address issues that are important for our common opportunities and challenges

 

• The High North is one of the focal points of the present Government. Our aim is to work diligently to safeguard a sustainable development in our northernmost regions. This implies expanding economic activities to continuously develop society, employment, growth and welfare, in due consideration of environmental concerns. It also implies the importance of a good relationship to our neighboring countries based on mutual respect and appreciation.

 

• The relations between Norway and Russia have been strengthened through the treaty on maritime delimitation in the Barents Sea and the Polar Ocean.  Our common target is prudent management and responsible cooperation in the Arctic.

 

• The treaty creates new opportunities for petroleum activities and cooperation in areas of the Barents Sea that have not yet been opened to such activities, or where exploration has not yet started. This is a new chapter in our cooperation – and in our energy dialogue. 

 

Norwegian Industry Competence

• The petroleum activities in Norway the economic engine of our society and the basis for much of our industrial developments, growth and welfare.

 

• This would not have been possible without the presence of internationally developed knowledge and expertise.  

 

• Exploration and exploitation of oil and gas resources on the Norwegian Continental shelf have always been demanding. Fields have been located in deep water or in remote areas with no infrastructure in place. Technology development has been necessary to make fields economic or if at all possible to develop.

 

• When it all started back in the mid-1960s, Norway possessed no national expertise. We therefore invited the international oil companies to take a lead in the first phase of our oil and gas activities.

 

• Attracting international oil companies was both a necessary and successful strategy. We had the oil and gas resources under the seabed.  The international companies contributed with their skills and knowledge, both to discover fields and to develop and produce them.

 

• And we invited in a diversity of foreign companies.  This was essential to create the right level of competition we wanted to stimulate innovation in field development and to maximize value creation for the Norwegian society. 

 

• It provided results. Production and activity increased and state income increased.  Norwegian oil companies, as well as a supply, service and a knowledge industry were created.

 

• The engagement and interaction between oil companies, industry and research institutions have been fundamental in finding solutions to technological challenges. I am truly proud of the way these players have collaborated and are bringing world class technology and technological solutions to the market.

 

Norwegian Barents Sea

• What we do know, is that it takes time to develop a new petroleum province. In Norway the petroleum activities on the continental shelf have over time developed from the South – and stepwise all the way to the High North.

 

• Thirty-two years have passed since acreage in the Barents Sea first was opened for petroleum activities. Thirty years have gone by since the discovery of the Snøhvit gas field, which came in production in 2007.

 

• The Goliat oil field was the second Norwegian significant discovery in the Barents Sea. It was made in the year 2000 – nearly twenty years after the Snøhvit discovery. We expect production to start next year.
• Recently, the Skrugard and Havis – two major discoveries - were made and will constitute the third profitable field development in the Barents Sea.

 

• We also see a huge interest from the oil industry in exploration drilling in the Barents Sea, and receive comprehensive applications from many companies for participation in announced acreage.

 

• This illustrates the time span it could take to develop a new petroleum province. But the important thing is that we now, for the first time, have activities in the whole value chain in the Barents Sea – from the opening of new areas, many exploration wells to be drilled, field developments in progress and under way and last – but not least - ongoing production.

 

• The delimitation agreement between Norway and Russia in the Barents Sea includes specific provisions for cooperation between Norway and Russia in case an oil and gas discovery is made that could extend across the delimitation line.

 

• At the moment geological mapping is taking place here. We are also carrying out an impact assessment. These are the two elements in the process of opening the southern part on the Norwegian side of the formerly disputed area for petroleum activities. This area is called the Barents Sea South/East.

 

• The Storting – our parliament – will take the decision to open it or not. Our ambition is to submit a proposal on the issue to the Storting in the spring of 2013.

 

• We also look at other regions of the High North. The opening process for the continental shelf around Jan Mayen is going ahead as planned.

 

• Our plan is to submit the question of opening of this area for petroleum activities to the Storting in the spring of 2013.

 

• The successful offshore oil and gas activities should also render positive effects for the region. After thirty years we see the prospects of long term and significant petroleum activities in the Barents Sea. This implies large possibilities for Finnmark and Northern Norway. Ongoing activities have already generated extensive ripple effects.  

 

• Side effects are mostly stemming from deliveries of goods and services in the development phase and during the production phase. The challenge for regional businesses is to develop their competence and capacity so as to be able to compete for these contracts.

 

• Through increased interest, more exploration, more discoveries and developments, large ripple effects will hopefully be the result in the years to come. I firmly believe that we will continue to see success stories coming out from this part of the country.

 

• Another area that requires action is education and competence building. The youth must – to an even larger degree than today – educate itself both on the undergraduate and graduate level to meet the needs of the petroleum and energy industry in the northern regions. We want our young people to see the high attraction level and long term employment opportunities the petroleum sector offers.

 

• Northern Norway has become the land of opportunities in oil and gas!

 

Unlocking the High North potential – together!

• This leads me to how the specific challenges that we face in the Barents Sea and how these challenges needs to be addressed.

 

• The Arctic continental shelf is believed to be a region with a very high potential of finding oil & gas. One of the major obstacles to fully explore this region’s potential as a future energy supply base, is the industry’s lack of capability to provide technology meeting the severe climate conditions affecting field development and operations, environmen­tal demands, presence of ice and long export distances

 

• INTSOK has, with the support of the Norwegian Government and Norwegian and Russian oil & gas industry, launched last year the Ru-No project to address these challenges.

 

• The 3 year Norwegian-Russian oil & gas industry cooperation project will assess the gap between the technology currently available and the technology needed for extracting oil and gas resources in the Barents, Pechora and Kara Seas in an environ­mentally sound and safe way.

 

• The project is aimed at iden­tifying the best available industry capabilities and the need for common innovation and technology development between our two countries.

 

• No less important is the is­sue of the associated high costs of offshore field developments. Norwegian industry has world class offshore technology, but meets new challenges demanding new/im­proved technology when moving towards the High North.

 

• Russian industry equally has long and valuable experience in facing and managing severe climate conditions in the High North. The Ru-No project adds industrial weight to Norwegian – Russian energy cooperation and has become a part of our energy dialogue.

 

• It has been a pleasure to address you to-day, and to discuss the very exciting topic of new opportunities and increased cooperation in oil and gas activities in general and in particular in the Arctic. Our close relations, competence level and industrial opportunities form an excellent basis for our future co-operation.

 

• I am convinced that this conference will further add to this.

 

• Thank you for your attention!