Need for change in gas

May 11, 1999, 14:00 CEST

A call for changes in the way Norway organises its gas business has been sounded today, 11 May, by Statoil chief executive Harald Norvik.

Speaking at the 10th European gas conference organised by the Norwegian Petroleum Society in Oslo, he noted that the Norwegian model for organising oil and gas operations has been a success. But it is not necessarily best suited for the future.

His paper, entitled "European gas in the next century - fundamental changes or business as usual?", reviewed development trends which in his view made it necessary to take a fresh look at Norway's gas industry.

While the principal challenge in the past was the need to secure supplies of gas to consumers, he noted, it now lay on the political and commercial plane.

Liberalisation of markets and adequate supplies meant that margins were being pushed down, forcing producers to amend their strategies.

" The general feature, I believe, is that we are moving into a future with smaller margins, not only upstream but also throughout the supply chain," Mr Norvik observed." Such trends will require new behaviour among the players."

He accordingly predicted increased integration along two axes: gas and electricity companies would merge, and distributors would move upstream while producers shifted down the chain.

"In this perspective, I think there is a need for a review of and a long-term strategy for the state's future commercial positions," Mr Norvik commented.

"I do not have all the answers, but I am convinced that our current organisation can...and must be improved if we as a nation and as commercial players in Norway are to remain competitive and continue to create value for owners and society."