State Secretary Liv Monica Bargem Stubholt

Norwegian Shipowners Association annual meeting, 23 March 2006

Thank you very much. I am very pleased to have been invited to address this distinguished group of service providers in the Norwegian economy on behalf of the Ministry of Foreign Affairs.

First, some figures: 1 672 vessels, NOK 95 billion turnover in 1994, almost 50 000 seafarers, many of them Norwegians – these figures justify the attention focused on the maritime industry. When speaking to some of you earlier today, I was reminded that several of your “foreign services”, not least those of Wilhelmsen and Veritas, extend beyond what we have in the Ministry of Foreign Affairs. So, I am pleased to be able to address Norway’s “commercial foreign service”!

The title of my speech reflects the new Norwegian Government’s adoption of a sharpened High North focus. The High North is both a geographic area and a politically defined territory. It includes the Barents Sea and the Arctic, as well as parts of the United States, Canada and Russia, all three of which are circumpolar nations. The High North is an area which may prove to be one of the world’s most interesting energy territories in future.

However, there will be tensions and possible conflicts of interests in relation to the political and commercial development of the High North, and the pace at which development takes place. The issue of energy seems to be on everyone’s mind these days. It has come onto the agendas of groups, organisations and forums that previously did not discuss energy. It is a topic in discussions of international affairs with the European Union (and bilaterally with its member states). Russia has put energy at the top of the G8 agenda during its current six-month chairmanship. NATO is developing an interest in energy security issues, and the United States, Canada and Europe, as important energy markets, are interested in the political stability and long-term supply capacity of their energy suppliers.

Some say that “energy is the new security”. This does not do credit to the complexity of national and international security concerns, but energy has become a central part of security policy. Because political and commercial factors tend to merge, there is an increased need for dialogue on energy issues, and a greater need for the authorities and commercial players to understand each other’s views on them.

The Norwegian Government is presently putting the final touches to its integrated management plan for the Barents Sea. This document is being prepared by the Ministry of the Environment, in close cooperation with other relevant ministries and other competent players in Norwegian society, ensuring a broad spectrum of input on the important question of sustainable development of the Barents Sea. The integrated management plan for the Barents Sea is an important element of the strategy document which the Government will produce by the end of June, which will cover the High North strategy in full. While our High North strategy includes firm plans for the safe development of and high environmental standards in the Barents Sea, it also has numerous other elements.

Several foreign policy issues arise in relation to the High North. At present, energy is the driving force, but our High North policy also has a long-term perspective. Transport, the environment and standards for health management and security are also important. The buzzword for the integrated management plan for the Barents Sea is coexistence: coexistence between environmental, commercial, national, and international foreign policy interests; indeed also regional interests in developing the northern regions, both in Norway and in other Barents countries like Finland, Sweden and Russia.

The term ‘coexistence’ implies that the integrated management plan will not be based on or governed by a “conservation - nature park” ideology; we do not intend to place a “ la main morte” over the Barents Sea. We are preparing an activity plan. It will attempt to balance environmental issues with Norway’s interest in developing and benefiting from the High North’s rich natural resources. While some of the resources are non-exhaustible, others are not. Fisheries, for example, play an important part in the north. The Government is very focused on protecting and managing our fisheries resources in the north in a sustainable and reliable way. There are many reasons for this.

Firstly, if we manage our fisheries correctly, they will last for a long time, and should in principle continue to provide income and support for regional and national interests indefinitely.

Secondly, safe and sustainable management of fisheries in the north is one of several elements which support our sovereignty claims there. If we are going to protect our interests, as we plan to do, we must not only be in the right, but must also be seen as a “safe and reliable pair of hands”.

In discussions about difficult questions like territories, the continental shelf and the Spitsbergen area, we often find that it is useful to ask the following questions: “If you do not want Norway to be a central player in the High North, what do you want?”; “Do you want Russia to go it alone?”; “Do you want the United States to go it alone?”; and “Do you want the European Union to have joint management of the High North?” We find very few takers for any of these options.

Furthermore, we support our argument by referring to the rights and obligations of coastal states all over the world. The right of coastal states to extend their territories was not granted by international law because the world wanted to favour coastal states unilaterally. Rather, it was granted because a pragmatic view was taken that if you have rights over your territory, you tend to take better care of it than if you have no rights over it. Accordingly, the best way to protect coastlines, i.e. marine resources, was to make sure that coastal states considered them part of their back yards. I believe that this is a very sound way of thinking.

Thirdly, we find that general environmental concerns strengthen Norway’s claims in the High North. We are known as a nation with high environmental aspirations, and the technology and awareness to deliver on them. Therefore, the concerns being raised with regard to the vulnerability of the Arctic area (and climate change is of course a key phrase here), play in our favour. Norway has the will and the capacity to take care of the environment, to tackle environmental challenges and address environmental questions, and to develop technologies for these.

The markets are concerned about the environment, and we are therefore trying to apply pragmatic risk analysis in preparing the integrated management plan for the Barents Sea. We have found that risk analyses of petroleum exploration and development show that, on the basis of a no-accident scenario, these activities involve a smaller risk than oil and gas transportation. This is particularly relevant to those who provide logistical support for oil and gas ventures, many of whom are here today. It means that the world’s logistics department, the maritime services, should be aware of and embrace the environmental risks, and try to minimise them to make sure that transportation does not end up as the stumbling block for approved petroleum developments. Statistics show that, in the past, coastal pollution from shipwrecks has been more serious than coastal pollution from petroleum activities.

I am convinced that these factors can be addressed, but I also think that it would be good to see the maritime service providers participate in this discussion, and play their part not only in transporting oil and gas, where safety really depends on the developers and explorers, but also by setting themselves ambitious targets on transporting in a safe and sustainable way. This would pave the way for a commercial interest in development.

I would like to address another issue which may be of importance to you as providers of maritime transport, supply and exploration services to the petroleum industry, namely the political discussions on services which are taking place in international trade regimes. You will have noted that the opening of services markets in the WTO meets greater international resistance than the opening of goods markets. You can see in the trade regime of the European Economic Area and European Union that the services directive meets much greater resistance than parallel legislation related to the free movement of goods. As internationally acclaimed and internationally important services providers, you could play an important balancing role in this discussion. I would encourage you not to let the NGOs and political forces opposing trade liberalisation be the only voices heard.You should tell them why shipping is important, tell them how maritime and logistics services can be provided in a safe and sustainable way, and make sure that the picture is complete – not one-sided in the way that has, to some extent, damaged the services sector and undermined future prosperity. As you know, within the European Union, the service sector provides 75 per cent of GDP. The developing nations are well aware of this, as can be seen in the WTO, where they are saying, “Do not underestimate us; do not limit us to the liberalisation of goods markets. We see that the Western world has increased its prosperity greatly by developing strong service sectors. We want to do the same.”

Norwegian shipping enjoys political goodwill and has a lot of emotional capital with the Norwegian population. I believe that you can capitalise on that to a larger extent than you are doing at present and that, as the second largest export sector in Norway, you are well placed to do so.

I would like to close by addressing a particular environmental issue concerning the Barents Sea.

Russia is already in the process of developing petroleum resources in the North. The Shtokman gas field will hopefully be developed in cooperation with Norwegian oil companies and, I am tempted to say, almost certainly with the help of Norwegian maritime service providers. Norway is in a unique position to engage in dialogue with Russia about the standards for such development, with the objective of keeping the Barents Sea safe and clean. We believe that Russia is open for such cooperation, and indeed it has responded positively to exchange of views and the setting of targets for the standards which should apply when developing oil and gas resources in the Barents Sea.

Successful cooperation with Russia on these issues requires safety technology and procedures, for both the development and the transport stages. The setting of such standards will be greatly aided by your input on what, in your experience, has worked well, and on what has not worked as well, and your thoughts on how safety, workers’ health and environmental issues can be developed in future so as to allow Norway and Russia to show the rest of the world that their joint development of the Barents Sea assures all buyers that they are buying green (clean) energy.

However, it is clear that we will not be able to promise buyers that oil and gas from the Barents Sea will comply with the Kyoto Protocol reduction objectives. We are able to, and will, however, deliver on the safety, cleanness and sustainability objectives, while not risking harm to the environment, whether the coast, fish, other marine resources, or the vulnerable ecosystems of the Arctic.

I invite you and your organisations to join us in thinking about how we can reach such goals, which must be practical but ambitious. It is our job to create a productive climate between Norway and Russia, in which both countries are receptive to the ideas I have discussed today. We are confident that we will be able to create this climate. There are many issues on the agenda for Norway and Russia, and I believe that the forward-looking and positive aspects of high standards development in the Barents Sea will make for a good project, which will in turn make discussions between Norway and Russia on other issues run more smoothly.

Thank you.