23.02.2006

The G8 focus on energy, 2006. Norwegian views.

Energy security

Stable supplies of energy are a prerequisite to continued global economic growth. To achieve this there is a need to further enhance and balance the producer/consumer dialogue and the interlink between security of supply and security of demand. Important elements in this respect are

• Increased transparency and predictability in energy markets.
  One way of achieving more efficient oil markets is to improve data on market fundamentals. Accurate, timely data can increase efficiency, reduce volatility, and make forecasts more precise. International initiatives have been launched in order to improve oil market transparency which deserve the full participation and support of its member countries. One is the Joint Oil Data Initiative under the auspices of the International Energy Forum where data on production, demand and inventories are collected and publiziced. Another important task is undertaken by the United Nations towards the harmonization of energy reserves and resources terminology.
• Predictable and non-discriminatory investment regimes.
  Additional investment in new oil and gas fields, oil refineries and infrastructure is needed in order to meet future energy demand. Governments and industry have a shared responsibility in reaching this goal. An important governmental task is to create a transparent and predictable regulatory framework for investments. Furthermore, it is important to recognize that long-term gas contracts may still play an important role in generating investments needed to reduce uncertainties. Together with short-term, spot and swap contracts they constitute the backbone of international gas supply security.
  
• Taxation of energy sources based on relative environmental merits.
  Attractive market conditions will contribute to the development of new resources. Taxation of gas which distorts competition and is not based on relative environmental merits may discourage investors. The same goes for subsidies on competing fossil energy sources.
  
• Facilitation of a secure and affordable access to energy transport networks.

Some concerns exist relating to the fact that the European downstream market is still not fully open (e.g. third party access/tariffs) and also to the fact that a concentration exists on the buyer side. Producers’ full access to the market is important in order to achieve the long term investments in gas projects needed to establish security of supply. Furthermore, it is important that consumer countries contribute in building confidence in gas as a preferred choice of energy.

Sustainable energy systems

As a major producer and exporter of oil and gas Norway places great emphasis on making such production sustainable.

The main challenge is how the global community can meet the continuing rise in energy demand while at the same time limiting emissions of greenhouse gases and minimizing the environmental impact.

Our efforts must include increasing research and development on technologies for cleaner production and more efficient use of fossil fuels in the recognition that such fuels will continue to dominate energy supplies for many years. Capture and storage of carbon dioxide is an area where Norway has already gained considerable experience from gas production in the North Sea. However, international cooperation will be important in developing cost-efficient solutions.

Furthermore, we look forward to the up-coming discussions under the UN Framework Convention on Climate Change on further reductions of greenhouse gas emissions, and we will press for a broader and more inclusive climate change regime after 2012. We will continue to support the use of the flexible mechanisms under the Kyoto Protocol.

Focus should also be placed on improving energy efficiency and increasing the use of renewable energy sources in the total energy mix.

We would like to see a continuation of last year’s G8 emphasis – the Gleneagles Plan of Action - on climate change, energy and sustainable development which is presently being implemented i.a. in cooperation with the International Energy Agency.

Norway considers measures aimed at reducing energy poverty to be an important task for the global community. Access to modern energy services in poor countries is a prerequisite to economic development and will be an important factor in reaching the UN Millenium Development Goals.

Norway as a petroleum producer

In 2004 Norway had a total petroleum production of 264 mill. Scm o.e.

Oil production was 186 mill. Scm o.e., representing 3,2 mill. b/d, whereas gas production stood at 78 mill. Scm o.e.

Oil and gas exports as a percentage of total production were 92% and 99% respectively, which makes Norway the world’s third largest exporter of oil and gas.

In 2004 Norway provided France with 35% of her gas consumption. Corresponding figures for Germany and the United Kingdom were 25% and 10% respectively. LNG shipments to the United States are set to start next year.

Furthermore, Norway provided the United Kingdom with 26% of its oil consumption, whereas corresponding figures for France, Germany and the United States are 12%, 9% and 1% respectively.

Norway hopes to see her role as an important energy provider further enhanced based on the promising resource potential which exists in the High North, notably in the Barents Sea.