Tale/innlegg | Dato: 19.03.2015 | Olje- og energidepartementet
Tale i anledning Nordic Energy Summit. Oslo - 19.mars 2015
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Chairman, dear friends of Norway’s biggest and most important industries, thank you for the invitation to the Nordic Energy Summit, generously hosted by Swedbank.
We are gathered at Norway`s most famous and traditional hotel. Everyone knows its location and, it is a part of our national history. It used to be a place to see – and to be seen.
The most famous regular guest was probably Henrik Ibsen, one of the most important playwrights of all time.
He visited his favourite cafe every day. With his characteristic look, he sat down by his table, and in his specially made armchair - "Reserved Dr. Ibsen".
Grand was his second home, and the Cafe knew how to appreciate their famous guest.
Now, what does Ibsen have in common with today´s subject – the Norwegian energy industries?
Link to Europe
Both are closely linked to Europe. Ibsen wrote his plays in Danish, and spent 27 of his most productive years in Italy and Germany.
And more relevant to this audience: Europe is the world’s biggest importer of energy, and Norway is a major supplier of energy.
Last month, I was in Riga where ministers and key stakeholders discussed the development of the EU Energy Union.
Shortly summarized: I do see a common energy agenda for Norway and the EU. I am glad that Norway is seen as a key strategic partner.
Norway is the largest producer of natural gas in Western Europe. Gas from the Norwegian Continental Shelf cover about a quarter of the European gas consumption.
We have been, and will remain, a stable supplier of gas, and an energy partner for the European Union for decades to come.
Further development of both infrastructure and gas fields is key to European Union energy security.
A stable and predictable framework, and a well functioning market, are both necessary in order to stimulate investments. The EU Energy Union must build on the EU open market principles.
We are also closely linked to Europe when it comes to renewable energy.
Last week, Deputy Minister Kåre Fostervold attended the official opening of Skagerrak Four - the fourth cable interconnecting Norway and Denmark.
Recently, Statnett, TenneT and KfW also made the investment decision for the new Norwegian-German interconnector. I will get back to that in more detail later.
The point I would like to make today is that Norway and Europe are closely connected both in terms of fossil and renewable energy. The discussions on the European Energy Union reflect that.
From the Norwegian point of view, what happens in Europe is important for our security of demand. With that in mind, I have a positive impression of the latest discussions.
Now, I would like to talk more specifically about the Norwegian Continental Shelf – the NCS.
The NCS – Status
Next month, we celebrate an anniversary in my ministry. On the 13th of April 1965, the first licensing round was announced on the Norwegian shelf.
The oil and gas industry is currently employing more than 200.000 all over the country. This is a large number, considering Norway´s population of only 5 million people.
The industry is currently facing a challenging oil market. During the last year, we have seen a significant drop in oil prices.
However, history has taught us that the oil market is cyclic. We have seen rapid price changes before, and we will see them again.
Experience also shows us that the oil and gas industry is able to withstand a low cycle period, and come back even stronger.
We have both the resources and the competence to continue our journey.
After more than forty years of production, less than half of the expected recoverable resources on the NCS have been produced.
The oil and gas sector will remain Norway´s most important industry for decades to come. It will continue to have a vital role for economy, jobs and value creation throughout the country.
I would like to mention a few factors that contribute to my positive view of the future.
First, the largest offshore petroleum discovery in the world in 2011 is about to be developed on the NCS. This is, of course, the Johan Sverdrup field.
This is our largest oil discovery on the Norwegian continental shelf since the 1980s.
Anticipated recoverable resources are expected to be between 1.7 and 3 billion barrels of oil.
Sverdrup is the biggest industrial project in Norway in modern times, and will represent enormous value creation and employment opportunities for decades to come.
Start of production is planned for 2019. And to illustrate the long term perspective: This is a field where your grandchildren can work!
New acreage – The Barents Sea
The second event was the launch of the 23rd licensing round.
In the end of January, I announced the 23rd licensing round. For the first time since 1994 we start exploration in new areas. Opening up of the Barents Sea South East will allow the industry to grow further north, create new jobs and strengthen the economy – particularly in Northern Norway.
At the same time, the Government also offered ownership interests in 54 new production licenses to 43 different companies as part of the Awards in Pre-defined Areas 2014 (APA 2014).
With the industry gradually moving north, we are optimistic about the opportunities this will bring. Northern Norway is a priority area for the Norwegian government.
Let me just make one point in that regard. I was born in what Brussels call the Arctic, seemingly a mystic, dark, frozen, desolate and remote part of the world.
And it wasn’t until I entered national politics that I started to reflect upon this image of Northern Norway. There is half a million people living in these areas. We have hospitals; we have roads, ice-free harbors. Even universities.
With that in mind, our aim is to secure a framework that makes Northern Norway one of the most innovative regions in the world, with growth and prosperity based on knowledge and science. The 23rd licensing round will be an important contributor to reaching this goal.
Service and supply industry
A third reason for optimism is the growth and success of our petroleum-related service and supply industry.
Each major development project on the Norwegian Continental Shelf has had its challenges, making it a “laboratory” for technological development.
On the basis of these activities, we have developed a first class service and supply industry that is in high demand in petroleum provinces across the world.
Recently, I visited Australia where I had meetings with energy officials and Norwegian industry established “down under”. There, especially our subsea-technology is in high demand.
Technology and innovation have been key drivers behind this success since the beginning, and we need to keep this commitment – also in the future.
In this respect, The Government has a technology strategy initiative called OG21 - oil and gas in the 21st century. OG21 brings together oil companies, universities, research institutes, service and supply industry and Governmental bodies, to develop and implement a national petroleum technology strategy for Norway
The purpose of the OG21 strategy is to align the various stakeholders to a common direction and understanding regarding technological challenges as well as technological opportunities.
This will ensure a coordinated national effort in research, development, demonstration and commercialization – in important areas like increased recovery, cost-effectiveness and environmentally sustainable technologies.
So far, I have been speaking mostly about oil and gas. When it comes to renewable energy, Norway is also a major player.
Almost 100 percent of our electricity production is based on renewable resources – mainly flexible hydropower. The water is stored in reservoirs, and can be put into action when the market needs it.
We also have a renewables share of around 65 percent in our total energy mix – the highest in Europe together with Iceland.
When I mention these facts to my international colleagues, I that quite a few of them would be more than happy to be in my shoes.
Our ambition is still to increase the production of renewable energy, which will contribute to more renewable energy in the European energy mix.
Our most important instrument to stimulate further growth in renewable energy production is the common Norwegian-Swedish electricity certificate market.
This is the first cross-border support scheme for renewable energy in Europe.
The certificate system is neutral in terms of technology, and market based. The politicians have decided the production target, but the market decides the level of support, and which projects to realize.
Since the start in 2012, we have seen considerable more wind power projects being developed in Sweden compared to what has been the case in Norway.
Many have pointed out a difference in tax rules as the reason for this. As a result, we have listened to the industry, and are now taking steps to align our tax rules with the Swedish ones.
The Government intends to submit the proposal to the Parliament this spring, with the new rules taking effect from the fiscal year of 2015. This is important, considering the investment decisions.
You’re also probably aware that the new Swedish government wants to increase the production target for the certificate market.
Last week, I reached an agreement with my Swedish colleague, Minister Ibrahim Baylan, to increase the target by two terrawatthours – to 28,4.
Under the agreement, Sweden will pay for the cost of the addition to the target. It will also remove a tax relief for its wind power producers to make investment conditions in the two countries even more alike.
Generally speaking, we have seen significant changes in Europe over the last few years. Power from renewable sources now plays a greater role in the European energy mix.
However, much of this increased production comes from intermittent power sources. Therefore, there is an increased need for a stable and flexible energy source to counter the unpredictable nature of wind and solar power.
Put simply: The customers need power, also when the sun is not shining, or when the wind does not blow.
Cross border trade of electricity makes it possible to draw mutual benefits from differences in electricity generation and consumption between countries.
For Norway, the power trade through interconnectors to other countries in northern Europe, especially Sweden, has been of great importance to our security of supply and for the efficiency of our power systems.
This will also be true for the new planned cables to Germany and Britain.
They will allow for more flexible and improved power supply as it will ensure more efficient use of our resources and better utilization of the energy systems.
For the broader picture, the announced white paper on energy policy will be presented in the spring of 2016. This paper will assess the Norwegian energy system in the context of developments in the European energy market.
Ladies and gentlemen, it is time to summarize. We need to continue investments both in oil and gas, as well as in renewable energy production and infrastructure. Norway and Europe need more energy, and we need more sustainable energy.
Norway is a good place to invest.
- We have stable and predictable frameworks - We have attractive acreage for petroleum exploration - We have abundant renewable energy resources - And We put great emphasis on research and development
Last, but not least, policies in Europe seem to be heading in the right direction, making Norway an important energy partner for Europe – now and for the future. I started with Henrik Ibsen and the Grand.
During his daily walks to the café he used to make a brief stop by the University square, checking his watch against the big one at the University, making sure he had the correct time.
You could set your watch after his habits.
My point is that we need our energy markets to be just as reliable and just as efficient.
Thank you for your attention!