Speech at the Seminar "The North Sea is changing. Are you changing with it?"

Aberdeen, 9 September 2015

State Secretary Morten Høglund's speech at a seminar during Offshore Europe 2015 - organised by NBCC (Norwegian–British Chamber of Commerce), Greater Stavanger and ONS (Offshore Northern Seas).

Ambassadors,
Ladies and gentlemen,

I am delighted to visit Aberdeen. This city truly has a key place in the close cooperation between our countries.

For more than a thousand years, Norwegian and British ships have been passing each other on trade routes across the North Sea. A rich exchange of language, culture and traditions has made Norway and the UK close political allies and trading partners.

More than 300 Norwegian companies have a presence in the UK. One hundred of these are located in Scotland and a large number of them operate in the energy sector.

As State Secretary at the Ministry of Foreign Affairs, my primary concern is the overall framework for doing business across borders. Even here in neighbouring Scotland, it is useful to remind ourselves of how essential it is to ensure fair and equitable rules within the framework of an open global economy.

That will continue to be the most important way in which foreign policy can make a difference to the Norwegian economy and business sector.

This seminar is proof of regional cooperation and partnerships. Meeting places like this are important arenas for exchanging knowledge and experience – especially in turbulent times like the ones we are seeing now.

Over the past year, oil and gas companies have been addressing high cost levels in order to increase profitability. We have witnessed a significant reduction in the oil price. We have seen a drop in the investment level on the Northern Continental Shelf (NCS).

Exploration activity is reduced and projects are being postponed. In Norway, many experience downsizing. Workforce reductions. Cut in wages. This means uneasiness and unsecurity – not only for the workers, but also for their families and whole communities.

Nevertheless, I am confident about the long-term future of this industry. Even if the investment level on the NCS will be lower in 2015 than in 2014, it is still on a historically high level. After more than forty years of production, the NCS is still a vibrant petroleum province.

Take Sverdrup. This is by far Norway's largest industrial project and represents decades of value creation, jobs and huge revenues to the welfare state. To illustrate the long-term perspective: Sverdrup will offer work for two generations!

We have been through tough times before in this cyclical industry. History shows that the industry has increased its competitiveness as a result of cost cutting measures.

It is particularly important to retain and develop competence within the industry, and continue our efforts in research and development. This is one of the few sectors where Norway has world leading technology. We will do our utmost to retain this position.

Norway has been blessed with abundance in natural recourses such as oil, gas and fish. It is, however, the know-how, the development of leading technology and highly innovative human capital that has made Norway's modern economy what it is.

Today's petroleum and fish industries are based on knowledge, research and development. And our trade and industry sector has many times proved their ability to adjust and adapt to changing needs.

Let me be clear. The oil and gas industry will continue to be important for Norway for years to come.

In addition, this industry will contribute to the solution for the development of other industries as well. The maritime and marine sectors are only at a starting point. The possibility for offshore aquaculture is only one example. Offshore wind is another. You all have the ability to bring about change.

The topic today is the North Sea. However, we cannot ignore the wider global picture.

Geopolitical risks have increased and are now a significant obstacle to global economic development and energy security.

Another serious global challenge we face in the years to come is that of ensuring security of energy supply for as many people as possible in a climate-friendly and sustainable way.

The sustainable management and use of marine renewable energy resources is at the top of our climate change agenda. The UK is the leading hub for offshore wind, and both Norwegian and British companies are working together to expand this industry.

Competing and joining forces

In 2012, Norway's then Prime Minister Jens Stoltenberg and his British counterpart David Cameron signed a joint declaration on sustainable energy cooperation in Oslo. The declaration was renewed in March this year, signed by Prime Ministers Erna Solberg and David Cameron.

British and Norwegian industries have a long history of competing and joining forces in extracting value from the North Sea. Let me give you a few examples:

First, an example from the early days: the Frigg field. The Frigg field was one of the largest offshore gas fields in the world, and it spanned the boundary of the Norwegian and British sectors of the North Sea. The field was jointly owned by both countries.

In 1976, the Frigg Treaty was signed between the governments of Norway and the UK. This agreement was the first international treaty of its kind for the production of offshore hydrocarbons.

The Frigg project brought 30 years of innovation and activity, and companies from both countries shared responsibility until the field ceased production in 2004.

We have extensive experience of extracting oil and gas under difficult conditions.

Our advanced technology, expertise, cost-effectiveness and environment -friendly solutions have proven successful in the development of major offshore oil fields all over the world.

My second example is the opening of the Sheringham Shoal Offshore Wind Farm in 2012, which Crown Prince Haakon was attending. This is one of the biggest offshore wind power installations in the world and provides clean energy for more than 200 000 British homes.

Sheringham Shoal is an example of how offshore wind production is providing both renewable energy and a basis for closer technological and business cooperation between the UK and Norway.

My third example is from March this year. Prime Ministers Erna Solberg and David Cameron announced a new link in our energy cooperation: the North Sea Network (NSN Link) interconnector, a subsea electricity cable between Norway and the UK.

Lastly, in the field of carbon capture and storage (CCS), Norway and the UK are leading the way in Europe.

We cannot deny that Norway has been in a privileged position. The oil we have discovered has created growth, employment and welfare.

However, I am confident that technology and human capital from the oil industry will be well suited for other sectors as well. As the oil industry is facing reduced investments in the coming years we must go from unique position to transition and also develop other industries. We are already seeing some great examples of this.

Oil and gas technology is being used in offshore wind projects [Automasjon og Data i Stavanger]. Equipment, knowledge and experience from the oil and gas industry is being transferred to the aquaculture industry [f.eks. AQS i Namsos]. We have even seen that NASA wants to use high-voltage transformers, developed for use in oil wells, for a plasma-based drilling system to be used on the moon, on asteroids and on Mars [Zaptec, Stavanger].

This sends an important message to me as a politician. We cannot decide which industries will thrive at any given time, but we have a responsibility to create an enabling environment for new businesses in general.

Before I round off, let me assure you that Norway is stepping up our economic diplomacy efforts. That means active promotion and service to Norwegian companies and taking an active part in reducing trade barriers through our trade policy.

As a small, open economy, we have proved that we are attractive to investors and human capital. We will let researchers, students and highly skilled talents know that Norway is a good career option, and a good place to live as well.

Earlier today, I met representatives of Norwegian companies located here in Aberdeen. I have also met representatives of several companies at Offshore Europe. In order for us to be able to serve you as well as possible, we need this first-hand knowledge.

In short time, I will also visit Angola and Brazil. These are, like Aberdeen, important hubs for our energy sector.

At the local level, our business promotion activities abroad are coordinated by what we call a 'Team Norway'. A Team Norway is an informal network of relevant Norwegian actors with a presence in the host country, led by the Norwegian ambassador in the country concerned. Several of the actors that participate in Team Norway UK are present here today. I encourage you to continue to use and develop these networks.

Regardless of the changes, challenges and competition we will have to face in the time ahead, I look forward to continuing our close cooperation. At government level, between businesses and between knowledge institutions.

I hope this evening's seminar will encourage to this. I am sure that it will be a stimulating and rewarding event.

Thank you.