Statoil's giant Snoehvit liquefied natural gas (LNG) project in the Arctic Barents Sea, due onstream in 2006, has spurred sharp environmental protest, but Fjell said Statoil was hoping for further exploration in the area.

"Development of the Barents Sea is crucial - not only for Statoil but for the future of the Norwegian shelf," he said. Environmentalists say the area is ecologically sensitive and should be spared from exploration.

Fjell said he was hoping that authorities' studies of the area would give a clearer picture of its future potential next year.

Statoil targets oil and gas production of 1.26 million barrels of oil equivalent per day in 2007, assuming annual growth of four percent. In Norway, it forecasts stable output at around 1.0 million boed.

"The Norwegian continental shelf remains our priority No. 1, but that will require new areas for exploration to compensate for falling production at older fields," Fjell said.

Statoil's big Statfjord field, for instance, has seen production drop to about 20 percent of its peak output, as the Norwegian continental shelf has matured.

"But the Norwegian shelf is not sufficient to reach our goals after 2007. That is why we need to look abroad," Fjell said.

NORSK HYDRO

Statoil aims to expand its international business so that it gradually accounts for a larger portion of overall output, anticipating it will derive 40 percent of its production from international operations by 2012, rising from 10 percent in 2004.

"We have very good positions in the Caspian Sea, Angola and Venezuela," Fjell said, adding that Iran, Brazil and Russia were among the longer-term prospects.

"But we are in developing business in more areas than would be right for the long term," he said, adding that it would take some time before the company decides which of the long-term prospects to develop further.

Fjell remained tight-lipped about speculation of a link-up with rival Norwegian peer Norsk Hydro.

"It's always interesting to consider all possible alternatives at all times," he said, calling the Norsk Hydro speculation a "media case and public debate not initiated by me."

Statoil, Norway's biggest energy producer, is 82-percent owned by the state, and the centre-right government is planning to cut its stake to about one-third while allowing alliances with foreign companies.