Norwegian Prime Minister Gro Harlem Brundtland last week pushed for a new world energy order dominated by governments and politicians.
The aim would be fuller employment, worldwide environmental protection, and social justice.
The tenor of her theme made it clear she also strongly favors Norway's entry into the European Economic Community. This is a decision voters in Norway, Sweden, and Finland will face later this year.
At the same time, during an address to the 14th World Petroleum Congress in Stavanger, Brundtland recognized the practicalities of the current oil world by saying her labor government will drop plans to tighten taxes on the Norwegian oil industry.
This involves tax benefits that were obtained when paying interest on borrowed money for Norwegian projects. Her government had proposed abolishing this benefit.
She conceded that lower oil prices require a new look at the tax regime.
Brundtland wants a global energy policy interrelationship. She envisions this as "an ongoing cooperative network of contacts and deeper mutual understanding between producers and consumers of energy at political as well as expert levels on a bilateral, regional, and global basis."
She said, "Governments must develop new means of governance." That's because reliance on market forces to allocate resources alone is "clearly insufficient."
She strongly supports a producer-consumer meeting at the political level to be hosted by the government of Spain later this year.
COMPANIES' ROLE
"It is up to industry to try to achieve the ideal state required by our customers, which is to provide an unending supply of ... oil and gas with no impact on the environment and at a reasonable price," said Constantine S. Nicandros, president of Conoco Inc.
Nicandros told WPC in the world's largest petroleum market, the U.S., the average American's traditional approach to oil and gas is simple: Americans want cheap energy that is easily available.
"If supply is disrupted for whatever reason, they blame the oil companies," he said. "While they prefer their fuel to be of U.S. origin for security reasons, they are not willing to pay anything to encourage the continued existence of a strong domestic industry."
Nicandros told the conference it is important to protect the environment even as "humankind continues to improve its economic lot. After all, poverty is at least as undesirable as pollution."
The environmental challenge is magnified by a low price environment that is expected to extend at least until 2000. Technology will be industry's best ally in this low price environment, Nicandros said. And technological advance is being pursued differently than in the past.
Stand alone research efforts are being replaced by strategic alliances within the industry. For example, Conoco is involved in 170 joint research projects covering almost all aspects of the business.
RUSSIAN CHALLENGE
A.E. Putilov, president of Rosneft, Russia's state oil enterprise, painted a gloomy picture of the Russian oil industry for WPC attendees.
Rosneft was set up to manage the state owned share of about 240 joint stock companies, including 26 oil and gas producing companies, 22 refining companies, and oil industry service organizations.
He acknowledged the Russian oil trade is in deep trouble. Production of oil and condensate dropped from 462 million tons in 1991 to 351 million tons in 1993. At present, more than 60% of Russia's reserves are under development and their depletion has reached 55%.
As a result of deteriorating conditions in exploration and production, enhanced recovery methods are becoming more important. There are 333 current projects in which pilot tests or commercial operations are conducted.
Of the 48 refineries with a combined 500 million tons/year capacity in the former Soviet Union, 28 are outside Russia. They have a total refining capacity exceeding 300 million tons/year. AD except one are old and obsolete, and production of heavy fuel oil far exceeds the country's needs.
The government of the Russian federation plans to upgrade its refining system by 1998 but it will still be far short of modem western standards.
Putilov said the crisis in the Russian oil industry can be overcome not so much by additional investment but by market relations. He said the process is under way, but more guarantees for foreign investments are desired. And confidence in stability and implementation of legislation is of prime importance.
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