NORWAY:

Norwegian offshore continues positive trend

German Nilsen, Norwegian trade commissioner for oil and gas in Houston, expects the rebound in the second half of 2000 to facilitate ambitious plans and robust offshore activities in 2001, and beyond.

Q. What role does the Norwegian Trade Council (NTC) play in Norway’s upstream oil and gas industry?

German Nilsen

A. NTC’s role is particularly dedicated to assisting small and medium-sized Norwegian enterprises, depending on the individual company’s turnover and number of employees. Some of NTC’s offices are particularly strong in the oil-and-gas market, and focus on market research, partner search, project identification, hosting a virtual office and arranging forums for Norwegian companies. An example would be "The Norwegian Pavilion" at the OTC in Houston.

Q. What major oil and gas initiatives and projects is NTC leading or contributing to?

A. As a consequence of NTC’s "supporting role," we do not generate the big headlines, but we are introducing new and interesting technologies and concepts represented among the many Norwegian companies contracted. In March, for example, NTC marketed Intsok’s seminar in Houston on FPSOs in the deep water Gulf of Mexico.

Q. How did Norwegian companies cope with the poor economics of 1998 and 1999?

A. The Norwegian oil and gas industry had its share of that recession period, particularly in the yards along the west coast of Norway. However, such industrial downturns strengthen the research environment and eliminate those players that do not belong there.

Q. Was 2000 a year of "recovery" for the North Sea and related waters?

A. Absolutely! The second half of 2000 definitely came as a relief for most Norwegian oil and gas players. That positive trend has continued into this year.

Q. What is NTC’s outlook for Norwegian oil and gas activity levels in 2001?

A. With regard to the major offshore developments worldwide, NTC has ambitious plans, and the activity level is expected to be high. Servicing the home market is presently represented by existing projects at Grane, Valhall, Ringhorne and Kvitebjørn.

Q. What are some of the major exploration or development projects underway?

A. Beyond the already known major discoveries and consequent developments, subsea production and processing represent the new era. Ormen Lange represents a challenge!

Q. What is the outlook for the construction sector of the Norwegian upstream sector, including fabrication / conversion of FPSOs and other floating production units?

A. As previously described, a downscaling of the offshore yards is a reality. Recent FPSO conversions have landed at places other than in Norway, and new business is not likely to surface at local yards.

Q. What are some of the Norwegian offshore industry’s greatest operating challenges?

A. Of overall importance is ensuring that enough work is available for all the offshore yards, which have thousands of employees. Of course, there are several hurdles that need to be cleared, but environmental protection and safety issues have always had a high priority within the industry. New and stricter safety requirements, and platform releases / spill precautions, are constantly being addressed, with special attention to the welfare of people and the environment.

Q. What are the major technological challenges facing Norwegian companies?

A. North Sea technology requires the best possible designs, thus creating another cost level. Future industry development must emphasize methods to produce economic, feasible solutions that can meet other market expectations.

Q. What are some technological advances that have been applied in the Norwegian offshore and worldwide?

A. Many individual innovative companies and products can be mentioned, but subsea development reflects especially strong activity within some areas of Norway. Troll Pilot is probably the best example of this trend. Also, the Demo 2000 industry project program created many new important upstream technologies that are being implemented in many field applications worldwide.

Q. What are the Norwegian government’s current attitude and policies toward the upstream industry?

A. Norway’s oil minister, Olav Akselsen, has come forward and expressed the need for major alterations in offshore policy to establish future, balanced development. A white paper presented in June 2000 was discussed in the Norwegian parliament last December. This comprehensive report covers the complete topic of exploration, operation and removal of offshore installations.

Q. Will there be any significant action on tax policies in 2001?

A. The relatively high marginal tax (78%) will probably continue and maintain the gap between companies that are in a tax position versus those who aren’t. Some positive signals have been noted from the Norwegian petroleum tax system, indicating that smaller players can take a role in minor North Sea fields. Group applications are seen as another result. A governmental report (NOU) has also been circulating within the industry since June 2000. New propositions will be presented this spring.