The Norwegian Shelf – a good place to be

Speech held at Oslo Energy Forum, 14th february 2014

We still need oil and gas

 

  • Ministers, distinguished guests, dear friends of the energy industry,

 

  • Good morning and welcome to the top of Oslo. A suitable location for the top energy conference in Norway.

 

  • You have been discussing energy challenges since Tuesday night. Therefore, it should be sufficient for me to begin with the following fact: The growth in population and prosperity point in one direction – more use of energy.

 

  • While the world needs more energy, at the same time we also have to meet the climate challenge.

 

  • That is why energy must be produced and consumed smarter and more efficiently. We also need a cleaner energy mix.

 

  • Nevertheless, in every scenario, - oil and gas will remain a crucial part of the energy mix for decades to come.

 

  • In my opinion, the climate debate is far too important to be clouded by simplistic assumptions about the future.

 

 

  • Oil and gas still has a vital role securing a steady supply of energy to meet justified demands for more prosperity and economic development.

 

  • So far, politicians have not provided an efficient framework for the private sector to act. In most sectors and countries, it is still too cheap to emit CO2. Incentives to curb emissions are insufficient.

 

  • We need clear price signals to produce the opposite result. We know that the medicine works. Industry responds very well to price signals.

 

  • In Norway, the offshore CO2 tax has limited emissions.

 

  • New and better solutions, securing more efficient energy use, has been implemented, and flaring is kept at an absolute minimum.

 

  • Norway’s petroleum sector is also leading the way in carbon capture and storage, CCS.

 

  • Two good examples are the Sleipner and Snøhvit fields, where CCS technology was introduced years ago. At these fields significant volumes of CO2 have been captured from the well stream and stored beneath the seabed.

 

  • In coal consuming countries, switching from coal to gas is also an efficient and affordable way to reduce emissions. In the US, natural gas is currently replacing coal, with deep emission cuts as the result. Europe could, and should, do the same!

 

  • Faced with a large global challenge, an efficient global solution is needed. It must pay off to reduce emissions – if not, it simply won´t happen.

 

  • Clearer incentives will move the market towards a less carbon intensive energy mix. An efficient climate and energy policy will be the dominant premise introducing such a change!

 

  • With the right framework, I am confident that it is possible to provide sustainable energy to ensure economic prosperity for a growing population.

Norway is a good place to be

 

  • Norway will remain an attractive place for oil and gas companies and suppliers in the years ahead.

  

  • My Government is firmly rooted in the long term principles and frameworks that govern the petroleum policy, and the petroleum sector.

 

  • In my mind, this stability over time is one of Norway’s advantages for an industry faced with long lead-times in their commercial activities.

 

  • Stability and predictability will remain a trademark. This implies that we will continue to pursue a broad political consensus on oil and gas issues. This will benefit both the country and the industry.

 

  • The tax system must underpin our policy goal - also when it comes to increased recovery from existing fields and the development of smaller, more marginal discoveries. Last summer there was an adjustment in one element in the tax-system. We have no specific plan to ease the petroleum tax, but we will assess the effects of the system with an open mind.

 

  • My message is clear. Norway shall remain a stable and predictable place to do business.

 

The Norwegian Shelf is going strong

 

  • As this conference, the Norwegian shelf is now in her forties as a producer.

 

  • The Norwegian Continental shelf still has considerable potential. That is clearly demonstrated with recent world class discoveries like Sverdrup and Castberg.
  • Yesterday, the companies selected the concept solution for Sverdrup. I am happy to see a comprehensive solution that includes sufficient infrastructure to utilize the full potential of these large resources. Our largest field development since the 80s.

 

  • The activity level is high, and Norway ranks among the largest offshore markets in the world. We have a very competent industry, and a research environment able to provide technological breakthroughs.

 

  • To maintain the attractiveness, the Government is committed to provide high quality exploration acreage.

 

  • Therefore, I am very happy to announce that we have reached a new milestone in the 23rd concession round. Today the Ministry will submit for public consultation the proposed areas to be included in this round.

 

  • For the first time in 20 years a completely new area will be available in the Barents Sea. I am excited about this – and I know that many of you are as well!

 

  • After more than 40 years of petroleum production, Norway remains attractive. I am very pleased with that!

 

  • We have a wide range of players and are able to provide opportunities for both international majors and newly established exploration companies. This is very encouraging!

  

Cutting the cost level

 

  • However, there are some less attractive elements that need to be addressed. The most important is the cost level.

 

  • In parallel with higher oil prices, the cost level has also increased. Looking ahead, a continued high cost base will erode values for both the companies and the country.

 

  • This is a complex issue.

 

  • There are many players, and they have strong and often conflicting interests. But the issue is so important that all players must consider how they may contribute to achieve lower costs.

 

  • Lower costs are crucial for sound resource management and value creation. It is the responsibility of industry to maximize value creation and not leaving economic resources behind.

 

  • However, we are determined to do our part of the job. We will look into government rules and regulations as part of the cost picture, and we will act where possible.

 


 

  • However, most of the issues related to costs have to be addressed by the industry. Many key players are in this room. Look hard, be brave. I am confident you will find the solutions. The economic benefit for both industry and Norway will be great.

 

  • It is time to summarize.

 

  • We should face important discussions based on facts. Oil and gas will remain a crucial part of the energy mix for the foreseeable future. 

 

  • The oil and gas sector will remain important for Norway in decades to come. Your presence and efforts will secure this.

 

  • Norway is and will remain an attractive place to do business. We have a stable and predictable environment for investments. We have prospective acreage for exploration.

 

  • Thank you for your attention!