M. Chairman,
Ladies and Gentlemen,

First of all, I would like to convey my warm to thanks Mr Hansen, President and Chief Executive Officer of Statoil, and the organizers of this Forum for their kind invitation and for the opportunity they are giving me to present to you some highlights about the future of hydrocarbons industry and the role to be played by national oil companies.

This gathering does confirm the willingness of national oil companies to act in concert in order to play the role which naturally belongs to them in the structural changes affecting the world hydrocarbons industry. It does also assess the successful outcome of the approach which proceeded from the first forum of national oil companies of Algiers, which was helt on 26 and 27 April 2002, an approach with a broader scope and more interest today.

In my view, the interest of such a meeting is the perseverance to create spaces of exchange between producing countries, as already demonstrated in the conference of Ryadh, the gas exporting countries forums of Teheran and Algiers. All these efforts translate a growing awareness of the interdependency between energy players and the requirement to enhance their relationships so as to be up to the challenges of globalization.

National oil companies are a key player in the world energy arena. They are the ones holding the most important acknowledged reserves and, equally, are the ones on which the future supply is bound to rest. Given that, the vocation of national oil companies is to be the driver of a new partnering carrying the so much sought for stability of our industry.

This partnering will establish a vertical integration, while opening up equal opportunities to all the players, national and international oil companies, along all the segments of the chain.

Since it implies a sharing of risks and rewards, new partnership formulaes have to be set. These formulaes will help to put in place the significant investments which are required to meet the future demand.

The organization of our industry is more and more centered around the end product, « from well to wheel ». This means that players have to change and turn into energy companies, not only in their own functioning but also in their relationships among themselves. These relationships are getting clearer worldwide. The company is becoming the key element in the planetary economic game. The relationships between oil players are more and more turned into relationships between companies and respond to a rational competition logique. At the same time, the global market requires seeking competitive advantages over spaces beyond the domestic market. No national oil company will have the capacity to be everlasting if it only focusses on its domestic or regional market.

The context is changing, and obviously, energy sources sovereignty is more and more expressed by the performance of national energy players who are submitted to a more and more demanding world standard. The opening up of national mining territories, a heavy trend which is accelerating today, is fundamentally different from the one which prevailed in the first half of the last century, under the concessions regime, precisely because it is based on the national oil company as the driving element and the future wealth carrier.

In the future, the oil weight of producing countries will be assessed on the performance of their national company rather than the level of their reserves and their national production.

The national natural benefits will then be put in perspective only if they are continuously pursued and achieved according to a dynamic operating of the companies.

Given the opening up and liberalization trend in producing countries, the new borders of our industry are no longer geographical,  neither technological, if we consider the tremendous revolution we are going through, deep and very deep off-shore, heavy oils, costs reductions, GTL etc..., nor even financial. The consequence of the opening up of producing countries will be a modernization and an increase of production. It is an undeniable integration element in the international economy and will fundamentally set guidance to the logic of the oil industry operations : regulation will be set by the competition between companies to acquire world markets shares, or between states to attract companies or provide backing to their national ones.

In the context of the new integration to the world hydrocarbons industry, the producing countries can no longer rely on their sole condition of exporters. By means of their national oil companies, they are bound to seek an active insertion through a reinforcement of their upstream activities, within and outside their borders, while targeting downstream positions. Solidarity among these countries has to be improved and translated in partnerships, strategic alliances, and joint research and development projects between national oil companies.

States must encourage the development of powerful companies in their respective territories. Producing countries have to set themselves the goal of establishing powerful national energy channels around their national oil companies for the purpose of :

• being an active participant in the world energy game,

• reinforcing and renewing the national comparative advantage, by means of innovation and diversification of activities.

They will also be part of an emerging new form of partnering which will be demonstrated by the appearance of original vertical cooperation forms which would be mutually beneficial to producers and consumers alike.

Hydrocarbons will continue to represent more than 60% of the world energy balance, with gas reaching one quarter of that, and expected to be equal to oil during the first quarter of the century. The overall opinion is that gas will be the energy source with the
greater growth rate. However, oil will still remain, for quite some time, the main energy source driven by two elements : the high growth potential of demand in the developing countries and the increasing weight of the transportation sector in the end use oil demand.

As far as gas industry is concerned, it is recording a great dynamism but equally great uncertainties with respect to the future demand requirements. In Europe it will have to face two challenges :

• the safeguard of the economy of long term existing contracts which are so vital for its equilibrium;

• the development of new costly gas chains in a more and more unstable and uncertain context.

In line with this, it seems obvious that economical balanced and long term contracts have to be the basis of future gas supllies.

The opening up of markets must be aligned with a restructuring of the european gas industry, with mechanisms allowing a shift of revenues upstream, this being the sole security for the setting up today of the facilities required in the future. Crossed parnerships
upstream/downstream will enable to share the upstream risk, while providing a greater involvement of producers, by means of their national oil companies, in the most rewarding part which is the downstream. That is a broad perspective of cooperation between national oil companies.

Thus, I believe that the acceleration of the deregulation process, as it has been initially undertaken in Europe, without any consultation with the producers, is bearing instability. Indeed, the opening up of markets urges for transparency of rules and a non-discriminatory access to all players, including the producer towards which the quasi-totality of risks and mostly industrial and financial ones are unduly transferred.

Besides, the involvement of the European Commission in the provisions agreed about among european players to establish an equilibrium and share the risk is bearing uncertainties which do not favour the achievement of new gas projects. The interpretation by Brussels of some contractual provisions such as the territory restriction clauses gives rise to questions and legitimate worries among the traditional suppliers of Europe. Efforts are still to be made so as to resolve this issue under a mutually favorable framework.

On this subject hopefully the European Commission tends to more and more go for a procedure which is giving room to more concertation. It is becoming more obvious for all of us that the security of the northern countries energy supplies cannot be disconnected from the prime issue of the security of outlets for producers.

Mr Chairman,
Dear Colleagues,
Ladies and gentlemen,

Our industry is bound to grow dramatically in the future. It is capable of meeting the needs of the planet while being up to the challenge of the environmental protection and the sustainable development. To day, it is going through great structural changes
which are deeply transforming the very nature of players and their place in the global pattern. It is a must for producing countries to adapt, otherwise they would be irreparably set aside.

While favouring the economic efficiency and the increase of production, the opening up of mining territories, the lifting of monopolies, the separation of the State prerogative missions from those of the company will give national oil companies new perspectives of
expansion. Providing, however, that these companies undertake a deep process of modernization and technological development which will rise them to the level of major energy players.

These companies are sharing the same lot, and have much in common. It is up to them, through creative partnership formulaes to jointly build the future. For such a purpose they have to put in place targeted partnerships for well defined projects which could be
turned into strategic alliances, taking advantage of operational synergies, supplementing one another in fields like expertise (classic and deep off-shore, heavy oils, gas, downstream etc..), geographical locations, and therefore generating new expansion opportunities. National oil companies have to coordinate their efforts in order to participate in the shaping of the future gas arena instead of passively undergoing the structural changes which are taking place.

They have to focus on tecnological development. Should they put their resources in common, they would be capable, and shortly, to enhance research centers, corporate universities or engineering companies. Distances are no longer to be considered thanks to the new information and communication technologies which allow to establish networks between national oil companies. Therefore, multiplying spaces of exchange is already one way of commiting to the logic of turning national companies into the great energy players of the future. I am convinced that they have the means to achieve this immense ambition.

Thank you for your kind attention.