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Seeking stronger gas position

February 22, 2005, 08:30 CET

Aggressive exploration activity off Norway and further development of the gas value chain is set to strengthen Statoil’s position as a secure gas supplier to Europe.

This was one of the key messages delivered by Rune Bjørnson, executive vice president for Natural Gas, to the European Flame conference in Amsterdam on 22 February.

“We occupy a strong place in a growing European gas market,” Mr Bjørnson noted. “We sold 52.4 billion cubic metres from the Norwegian continental shelf in 2004. This represents an increase of roughly 13 per cent compared with the year before, and our highest gas sales ever.”

These figures include Statoil’s own gas as well as the volumes it sells on behalf of the Norwegian state’s direct financial interest (SDFI).

“Natural gas will remain an engine for growth in our group,” Mr Bjørnson said. “Based on existing contracts, our gas sales are set to grow by an average of nine per cent annually from 2004 to 2007, and by four per cent from then to 2010.”

Mr Bjørnson referred to forecasts from the International Energy Agency (IEA) which indicate that global gas consumption is likely to almost double over the next three decades.

The agency expects consumption to increase from 2,622 billion cubic metres in 2002 to 4,900 billion by 2030.

It also estimates that the investment in infrastructure required to reach such a level of supply will be no less than USD 2,700 billion, or USD 100 billion per year.

“The IEA says that the world’s gas resources can easily meet the predicted growth in demand,” observed Mr Bjørnson. “We don’t necessarily agree with that.

“Where Europe is concerned, some of the present gas supply cornerstones will experience declining production when we look ahead to 2015 and 2030.

“This fall in output is currently a fact on the UK continental shelf, and will eventually also happen with major Russian and Norwegian fields.”

That would make Europe increasingly dependent on imports, he noted.

“A growing distance between production and consumption, and the risks and costs this will involve, are set to become important factors for security of supply.”

He went on to emphasise that the authorities at national and European levels can make a positive contribution to supply security.

That would require them to ensure predictable fiscal frameworks and a regulatory regime which promotes the elimination of bottlenecks and the development of new capacity.

On Statoil’s behalf, Mr Bjørnson stressed that the company aims to maintain and strengthen its position as a secure gas supplier to Europe.

Key elements in this commitment include a record level of exploration and a substantial investment in infrastructure projects.

Statoil’s strong position as a supplier of Norwegian pipeline gas to Europe will be supplemented in coming years by a growing involvement in additional areas.

These include the production of gas in other countries, such as Algeria and Azerbaijan, and supplying liquefied natural gas from the Snøhvit field to the USA.

See Mr Bjørnson's Flame presentation (PDF)