Norway Peaking, To Invest NOK70B In Oil Business This Yr
SINGAPORE (Dow Jones)--Norway's private sector oil industry and unions alone must find a way to meet the cost challenges that have resulted in persistent labor disputes this year, said a top government official.
"It's very much in their ball park," Oluf Ulseth, Norway's Deputy Minister of Petroleum and Energy told Dow Jones Newswires in an exclusive interview late Wednesday.
"We have said, long before this current dispute started, that it's very much up to the industry and the labor unions to keep the (Norwegian Continental) Shelf competitive."
Norway's Federation Of Oil Workers Unions, or OFS, Wednesday officially ended a four-month-long strike over contract terms with the Norwegian Shipowners Association.
The government's role, Ulseth said, is to ensure the right regulatory framework is in place.
"We need to look at the totality of how different rules and regulations also influence the cost levels, because we see that we have a challenge there," he said.
Norway, the world's largest crude oil exporter after Saudi Arabia and Russia, has enjoyed a revenue windfall this year as prices climbed.
Crude futures on the New York Mercantile Exchange peaked at a new record high of $55.67 a barrel Monday and, despite a technical-driven correction, are staying above $50.
But all is not rosy for the domestic economy, Ulseth noted.
"We've said from the Norwegian side that it's not a goal for us to have these levels. We're not only a producing country, we have a small but very open economy in Norway - our other exports can also risk being hurt," he said.
With major oil producers around the world already pumping near capacity, he sees only a limited Norwegian role in helping bring down prices.
"We are doing what we can at the moment. For production we are working constantly to make the Norwegian Continental Shelf more competitive," he said.
"We are keen to produce as much as we can."
Reaching Out To Asia
Ulseth is in Singapore for a four-day state visit as part of a delegation headed by Norway's King Harald V, which is seeking to expand the reach of Norwegian oil companies in the region.
"This year we will invest some 7 billion kronor ($1.09 billion) in the oil business in Norway. I think if you look at the Norwegian supply industries they have exports about half of that - that's been growing quite substantially for the last years," he said.
"You have the shipping community that's also very much based in Singapore. We have lots of drilling companies coming out here and we've seen the internationalization of the offshore fleet, again from a North Sea base at the start and then going out to Asia and Africa."
The state visit will aim to develop those relationships, he said.
Ulseth is scheduled to speak Friday at a seminar on liquefied natural gas marketing and infrastructure, in which he will touch on the growth potential that Norway expects to see in LNG investment.
"With the combination of the shipping competence and the gas knowledge, we believe that combination is quite exciting," he said.
Oil Needs Upstream Push
But oil remains a key challenge for the global industry, which needs to do more in upstream exploration and production, the deputy minister said.
"From what we see now we are about to peak on oil," Ulseth said of Norway's 3.2 million barrels a day of crude output.
"Even though we talk about petroleum resources as limited - technically they are - but we find in reality they're not fixed. It's very much up to ourselves: what can we do in terms of acreage, what can we do in terms of cost, what can we do in terms of technology, and our ability to get out the resources," he said.
"I think that there is an overriding challenge for both companies and producers alike to find more fields, make new finds. We've done a lot to developing technology to produce more from what we have."
"But we need to keep looking," he said.