Oil pioneer's tips for success

Keynote speaker Farouk Al-Kasim is the architect of Norway's oil programme. Photo / Supplied

A keynote speaker at a major petroleum conference in Auckland - acknowledged as the architect of Norway's oil success - says there are some basic steps to help encourage more exploration.

Farouk Al-Kasim says he didn't "want to make the mistake of coming from abroad and telling other countries what to do" but countries such as New Zealand can overcome hurdles by following some simple rules.

"A lot of people may say the government did not persuade companies to invest, that's easy to say. You could put it the other way and say investors were not particularly excited," he said.

Oil majors were deterred by New Zealand's remoteness, the weather, lack of infrastructure and the lack of a viable and active petroleum scene.

Besides favourable royalty regimes, steps to entice drilling include:

A national petroleum policy endorsed by all major political parties to give continuity.

Governments which invest in the sector are a very serious stakeholder and unlikely to walk away.

Demonstrating through practice over many years that governments were genuinely interested in dialogue with investors. This avoids harming the reputation of a country as a serious and stable oil nation.

The difference between Norway and New Zealand was obvious.

"You haven't had many elephants (enormous discoveries) so therefore the agony is being prolonged - the uncertainty and the questioning."

In a speech on Monday to the New Zealand Petroleum Conference, Al-Kasim will outline lessons from the Norwegian experience, which has become a hydrocarbon superpower in the last 40 years.

The country is now the sixth biggest exporter of oil and second largest exporter of gas.

The Iraqi-born geologist was in Norway in 1968, just as the last oil company drilling in the North Sea quit. After dozens of dry wells the company hit an "elephant" and Norway's economy was on the way to being transformed.

Al-Kasim was a key figure in designing the structure of the oil sector, which has heavy state involvement resulting in a huge public savings fund now worth close to $500 billion.

Explorers were effectively refunded costs in return for the Norwegian Government and companies being allowed to take a combined majority stake. He also pushed for technological innovations to ensure oil extraction rates were almost double the world average.

Norway is seen as having successfully avoided the "oil curse" because of the political and financial structures it set up to cope with its oil resources.

In other countries sudden oil wealth has resulted in other parts of the economy being ignored and wiped out.

"It is well known that as soon as you find oil anywhere hell breaks loose," he said.

The conference

What: NZ Petroleum conference.

Where: Auckland.

When: Monday to Wednesday.

Who's there: International and NZ oil and gas experts, government ministers.

The theme: Unlocking the potential of the oil industry worth about $3 billion a year.