"A bright future..." Talking oil with Finn Roar Aamodt

Before joining the Norwegian Oil Industry Association, Aamodt worked as a geologist for Exxon and as the exploration and licensing director at the Norwegian Petroleum Directorate. As director general of the industry association, he speaks for 23 oil companies and 57 suppliers. Index Publishing AS interviewed him at the group's offices in Stavanger.

What are two main points readers should know about them Norwegian oil and gas industry?

 

First, we are a very large oil and gas producer, the third largest exporter after Saudi Arabia and Russia. Gas production is increasing, playing a more important role in Europe than in the past.  We are rich in resources. Second, our activity is being carried out with very ambitious safety and working environment guidelines. We hold to very high safety and environmental standards. For example, new field developments in new areas will be developed without produced water to sea. And in established areas, our ambition for 2005 is that there should be no harmful discharges to sea.  

 

 

What about Norway's reputation for high prices?

 

As in any country with an advanced welfare structure, I think we have developed a demanding model when it comes to sharing values. Ninety percent of the profit from the oil and gas industry goes back to the nation through the state. This situation will have to be changed to keep the Norwegian coastal shelf attractive to new investment. Our labour is, in general, high-priced. But if you look at the engineering side, the technology costs in Norway are relatively cheap compared to our competitors. This is because, in Norway, there's not such a great difference between the pay for top managers, top technicians and the rest. So services may be high-priced in general, but high-quality technology is rather cheap.  

 

 

How do Norway's high environmental standards affect the bottom line?

 

That's a good question. This is all based on finding the right formula, the right balance. We are in full agreement that we must have high standards for safety and the environment, but they must be compensated for by lowering taxes or creating tax shelters to keep our competitive edge. I would say that high environmental standards, as we enter the 21st century, are a positive asset for the years ahead. But we have to find cost-effective measures to achieve our goals. The role of technology will be crucial in finding efficient solutions.

 

 

Some outside companies may fear red tape in working with Norwegian companies. Is it easy for international companies to work with Norwegian firms?

 

If we start with the oil companies, we have had a tendency to put most of our eggs in two baskets, Norsk Hydro and Statoil, so there wasn't very much open to international companies up until the mid-90's. We changed policy in 1994-95, and if you look at the allocation picture, we now see a majority of allocations being given to foreign companies. So there's been a change.    

 

 

What are the most promising developments to look for in 2003?

 

I really expect to see a few breakthroughs in the area of technology, such as (efforts to eliminate) produced water to sea. We've taken initiatives to increase our efforts in technology development. That's one area that will have an impact on the environment of course, but also affects efficiency and production. Whether we will actually see these breakthroughs in 2003 or not, I don't know.

 

 

Many Norwegian supply companies are expanding internationally. How does their future look to you?

 

Norwegian-based technology companies delivered about NOK 35 million (USD 4.8 billion) worth of equipment and services in 2002, and their ambition is to increase that to NOK 50 million (USD 6.8 billion) annually in the years to come. These are companies like FMC Kongsberg Subsea and Aker Kværner, as well as a lot of smaller ones, like Leirvik Sveis, to name one. Their future looks excellent.

 

 

What in particular are their strengths?

 

Well, subsea technology, obviously. FMC Kongsberg Subsea is a dominating presence internationally, but there are many Norwegian companies that are active around the world. Seismic is another good example, with Norwegian-based companies like Schlumberger's WesternGeco AS and PGS. Stolt Offshore is competitive in many areas, including unmanned diving activities, or ROVs. They have won quite a few contracts in deep offshore West Africa. Drilling is another strong point. But I can't name them all. As I said before, inexpensive engineering costs in general are an advantage. Norwegian engineering is cheap compared with the UK and the US.

 

 

How do you hope readers view Norway as a business entity?

 

I hope they will look at Norway as the country of opportunities. I'm quite convinced that we will find technological solutions that will satisfy environmentalists, NGOs and governments concerning safety and environment. The industry is equally interested in finding solutions so that we don't pollute and don't kill. We have a fifty-year horizon on oil and a hundred-year horizon on gas production. That's the bottom-line perspective.

 

 

On a personal note, what do you draw the most satisfaction from in your job?

 

The reason I chose this area in the first place was because I was interested to learn what this new industry was all about, when the first discoveries were made. I didn't know that this would become by far the biggest part of the economy of Norway. It's six times as big as fishing, which is a huge industry in Norway. So today, being able to play a key role in such an important industry, I get satisfaction from trying to impact the value creation to the benefit of the nation and the citizens of Norway. That's a long answer to a short question. The point is that this is Norway's most important industry, and there is a bright future, and there is a lot of potential to develop from everybody involved. 

 

 

Any plans after retirement?

 

Fortunately, that's still some 10 years down the road. I haven't given that much thought yet, but I will certainly continue to follow the industry. I also have plenty of hobbies and interests, and I'll have plenty to do with taking care of my five kids and all that comes with that. That will keep me busy.

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