Tale/innlegg | Dato: 20.02.2015 | Olje- og energidepartementet
Olje- og energiminister Tord Liens tale i anledning Oslo Energy Forum. 20. februar 2015
Check against delivery
Excellencies, Friends of the energy industry,
It is a great pleasure for me to be here at the top of Oslo – an appropriate location to discuss issues on top of the energy agenda.
From a low cycle onward
The industry faces a challenging oil market. During the last six months, 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 come from a situation with several years of high oil prices and a record high activity level on the Norwegian Continental Shelf. This put pressure on capacity and contributed to escalating costs.
Already prior to the recent price slump, the industry had started to seriously address the cost issue. In the long term, I believe an increased focus on cost reduction will be an advantage.
A more cost efficient industry will improve resource management, and over time allow more oil and gas to be produced.
Furthermore, the world still needs enormous amounts of energy. In every scenario oil and gas will continue to be an important part of the energy mix for the foreseeable future.
Globally, producing fields are declining, and massive investments in new production are needed just to keep today’s production level.
To be able to meet future demand, we need oil prices that support necessary investments.
I believe that we will see many new and profitable investments on the NCS - from the North Sea to the Barents Sea.
NCS holds the resources
Some say the age of oil is over for Norway. I disagree. We have both the resources and the competence to continue our journey.
After more than forty years, The Norwegian Petroleum Directorate estimates that 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.
Joint efforts - with the industry
To maintain this position, the industry, suppliers and government need to address the challenges facing us in the years to come.
We need a common agenda to ensure a long term effective and profitable production of the oil and gas resources at the NCS.
The Prime Minister in her remarks on Wednesday listed four key points for enhancing our competitiveness. I will up that with one.
For the oil and gas industry, I would like to stress five points in such a common agenda:
First: We have to fully exploit the potential in existing fields and infrastructure. Second: We need to develop all discoveries that are commercially viable. Third: We have to increase efficiency in both the production and use of oil and gas, as well as undertaking necessary adjustments while maintaining cost control. Fourth: We have to keep promoting new technology and smart solutions built on the industry’s strong competence and innovation. And, fifth: We need to keep a high level of exploration drilling.
The government will ensure a long term framework for the energy industry in Norway. However, the first four points mentioned here are first and foremost the responsibilities of the oil companies, and the supply and service industry.
The existing platforms and infrastructure must be used efficiently, and the industry must make arrangements that reflect this priority.
In that regard, I would like to commend Wintershall and their tireless efforts to get the Maria field developed.
Last Friday I received the development plan for the giant field Johan Sverdrup. Nevertheless, we have many more discoveries to be developed. Quite a few of these are smaller, and will be developed as tie-ins and with subsea installations.
My third point concerns efficiency, in particular the issue of cost control. This work has started, and we look forward to see real results in reversing some of the cost escalation that took place over the last ten years.
My fourth point is the role of technology and innovation. We need our world class competence centers and the bright minds in the companies to continue to innovate and apply new technology and smart solutions.
Technology and innovation have been key drivers for recovering evermore energy resources from the NCS. What we have seen is successful cooperation between the oil companies, the supply and service industry as well as government funded research institutions.
The fifth point holds both tasks for my government - and for you!
While the government will continue to open attractive new areas for exploration, it is the responsibility of the industry to make the most of these opportunities by ensuring a long term value creation on the NCS.
The High North
Through the 23rd licensing round, announced last month, we are now opening up a new region yet to be explored. Namely, the southeastern part of the Barents Sea.
We are optimistic about the opportunities this will bring. The High North 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 mystical, dark, frozen 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 universities, we have roads and we have ice-free harbors.
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.
However, increased activity in the North also poses challenges. A colder climate, long distances and less developed infrastructure demand high quality technology and robust standards.
In order to secure sustainable economic growth in the North, responsible resource management is a key.
We must make sure that both new and traditional industries can live side by side. Development of the resources outside Northern Norway must always be done in accordance with the high environmental standards, as the industry has done elsewhere at the NCS.
While the public debate sometimes is heated, there is in Norway a broad political consensus for the current oil and energy policies.
This includes a pragmatic approach to solving environmental issues, while maintaining a high level of activity on the NCS.
Norway has always had focus on strict regulations and standards. This is nothing new and will continue to be an integral part of our approach – also in the future.
I believe this has been instrumental for many of the solutions applied on the shelf today. One example is the zero flare technology developed at Gullfaks which is now applied globally. Let me also mention the two large scale Carbon capture and storage (CCS) projects operated at Sleipner and Snøhvit. Together, they are injecting some 1,8 million tonnes of CO2 into the seabed.
A stable supplier of natural gas to Europe
Two weeks ago I was in Riga where ministers and key stakeholders discussed the development of the EU Energy Union. On the same day, our minister for climate and the environment, presented the Norwegian government’s white paper on cooperation with the European Union on climate change mitigation.
I do see a common agenda for Norway and the EU. With energy security at the top, I am glad that Norway is seen as a key strategic partner.
Norway is the largest producer of natural gas in Western Europe. We have been, and will remain , a stable supplier of gas, and an energy partner for the European Union for decades to come.
At the NCS we have a long term perspective, and a part of that is the licensing and development of resources in the north. About half our remaining gas resources are expected to be in the Barents Sea. The development of these resources requires large investments both in fields and in the transport infrastructure, be it pipelines or LNG-facilities.
Further development of both infrastructure and gas fields is key to the European Union energy security.
On the other hand, a stable and predictable framework, as well as a well functioning market, are both necessary in order to stimulate investments. The EU Energy Union must build on the EU open market principles.
As I made clear in Riga, a joint gas purchasing mechanism is not a good idea. It would directly conflict with a liberal market structure and by that undermine market based investments, and thus run counter to the goal of energy security.
Norway is not only a large producer of gas, we are also a large producer of renewable energy. Almost 100 percent of our electricity production is based on renewable resources – mainly flexible hydropower. We have a renewables share of around 65 percent in our total energy mix.
Our ambition is to increase the production of renewable energy. This will give a contribution to more renewable energy in the European energy mix.
Last week the TSOs Statnett and TenneT made the investment decision for the new Norwegian-German power interconnector. The cables allows for more flexible and improved power supply.
The flexible Norwegian hydropower and our delivery of gas, are both helpful to balance a European power system with more intermittent renewable energy like wind and solar energy.
Ladies and gentlemen, it is time to summarize.
Oil prices are cyclic, but the Norwegian framework is stable.
The government stands firm providing for a high level of activity on the NCS. Oil and gas will remain pivotal in Norwegian economy and policy for decades to come.
At the same time the cooperation between EU and Norway on energy and climate change mitigation will be enhanced.
Norwegian gas is requested by the EU, and stand firm as a long term energy source with the lowest emission of all fossil fuels.
I will work to have you, the industry, as partners for a long future of energy development on the NCS – to our mutual benefit.
Norway is – and will remain – an energy partner for the European Union, and for Germany.
Thank you for your attention!