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In StatoilHydro, we're reefing our sails to adjust our speed, but we're not altering course. As an energy company with long-term commitments to our customers, we have to maintain headway even in heavy weather. That means facing up to the energy challenges of tomorrow, today. And it means planning today, to provide the energy of tomorrow.
We cannot afford to be wrong-footed by changing market conditions or fluctuating oil and gas prices. Our customers — consumers, businesses, even countries — depend on us for reliable energy supplies, often decades ahead, and the demanding nature of our industry means that we also need many years to identify, explore and engineer the projects of the future.
That's why we're not losing track of our long-term goals even though oil prices have dropped radically in recent months. Rather, we're focusing on what we do best: concentrating on safe, efficient and sustainable operations, maximising recovery of resources from existing fields, and positioning ourselves strategically for growth in renewable energy and internationally.
We're focusing strongly on cost discipline, on realising synergies from the merger, and delivering on our production targets. That's not to say we don't see challenges — but the challenges we see are further ahead than the current focus of world attention. And inherent in them is a major dilemma.
One side of the dilemma is probably the greatest challenge of our time: the now widely-accepted need to make radical reductions in emissions of CO2 from fossil fuels so as to combat climate change.
But pulling in the opposite direction is the long-term trend for growth in the demand for oil and gas being driven by economic development and population growth. In the International Energy Association's World Energy Outlook 2008 Reference Scenario, which assumes no new government policies, world primary energy demand is estimated to grow by as much as 1.6% per year on average between 2006 and 2030 — a cumulative increase of 45%.
A third consideration, along with the growth in demand, is the challenge of resource scarcity. It's easily overlooked in the current crisis, but when economic recovery comes, and it will, oil and gas prices are likely to increase, reflecting restrained capacity. Maturing fields are producing less, and new reserves of oil and gas are becoming harder to find. The age of 'easy' oil and gas is over. Remaining reserves are increasingly found in deep waters, harsh environments and geologically challenging formations that require ever more complex and costly engineering solutions to develop.
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