Oil Report

EXCLUSIVE-Norway says high oil prices justified

OSLO, Sept 11 (Reuters) - Global oil markets are balanced and present high oil prices are needed to develop new resources in harder-to-reach places and offset rising production costs, Norway’s Petroleum and Energy Minister said on Tuesday.

Odd Roger Enoksen told Reuters the oil market was “quite well” balanced even as oil prices near record highs around $78 per barrel and played down the impact of high energy prices curbing global economic growth.

“(Production) costs have increased a lot in the last couple of years, and we need a high (oil) price to develop new resources,” he said in an interview as OPEC ministers met in Vienna to discuss a modest increase in oil output.

Non-OPEC Norway is the world’s fifth-largest oil exporter, pumping about 2.4 million barrels per day.

“More production, more resources are now gained in tougher conditions and are more expensive to develop, so we will need high prices and should be comfortable with the price now.”

“Of course the less developed countries can suffer from high oil prices but so far we have not seen threatening signs (of an oil-induced slowdown in global growth),” Enoksen added.

As Norway’s North Sea oilfields mature, it has been switching to more gas and growth for its companies abroad.

Enoksen said he was pleased with the international expansion of Norwegian oil group Statoil STL.OL and merger partner Norsk Hydro NHY.OL this year and expected the merged group to gain an even bigger international profile.

Since the merger was announced in December, the groups have separately bought a Canadian oil sands venture, acreage in the Gulf of Mexico and British heavy oil assets.

“One of the reasons for the merger was increased international activities and...I think we will see more of that in the future,” Enoksen said.


Enoksen said state-controlled Statoil was in a good position to help develop Russian Gazprom's GAZP.MM giant Shtokman gas field, especially after it takes over Norsk Hydro's oil and gas assets in a deal set to be concluded by end-September.

State-run Gazprom said on Tuesday it may bring more partners into Shtokman by mid-October, especially groups with experience in harsh Arctic conditions.

Statoil, which will be called StatoilHydro after the merger, has the only offshore development in the Arctic Barents Sea -- the Snoehvit gas field and liquefying plant seen by analysts as a smaller model for the Shtokman project.

“StatoilHydro’s possibilities should be quite good, they have experience in such harsh climate and they have been in (the negotiation) process with Gazprom for quite a long time,” Enoksen said. “They should have a good chance and I hope that StatoilHydro will be one of the partners.”

Statoil’s chief spokesman Ola Morten Aanestad said the group was in dialogue over Shtokman “to reach an agreement with conditions that are acceptable for both Gazprom and for us.” (Additional reporting by Aasa Christine Stoltz)