Where we will discuss challenges facing the Norwegian oil industry in view of the Paris Agreement and the turbulence in the energy market. So we have a very competent panel with us today to discuss these issues and we have representatives from both the research community, the oil industry and the financial market. First I just wanted to set the stage very quickly for this topic. Norway has a paradoxical relationship with climate policy. On the one hand Norway wants to contribute to a strong international climate agreement and has a very green profile internationally, but on the other hand Norway's oil industry has grown enormously over the past couple of decades. So some key facts on Norway's economic dependence on the oil industry. Oil's contribution to GDP is now at 20%. Direct and indirect jobs related to the oil sector are 300,000 out of 5 million citizens. The petroleum sector's share of total investment is 30%. The share of state income is 27% and the share of exports is 48%. In the current oil regime, the Norwegian government takes an active role in terms of sharing the risks as well as the income with the oil industry actors on the Norwegian territory. Exploration and exploration happens mainly in the North Sea and in the Barents Sea, in the North, in the Arctic. And there are two ways that Norway's government is actively engaged in sharing risks and income with the oil industry. It's first through the licensing processes, strict rules that limit which areas are open for exploration and drilling. And there are two types of regulations here. There are annual licensing processes in the mature areas of the Norwegian sector where the geology is known. And there are much stricter rules to regulate opening up of new areas for exploration and drilling. And then the second kind of engagement by the Norwegian government is through the petroleum tax system. The oil industry is levied a 25% ordinary business tax, but on top of that there is a special tax of 53%, which is paid only if the company has a surplus. And basically this is the payment for the right to extract oil on the Norwegian territory. And in order to balance this very high tax rate of 78%, the government gives generous tax deductions to balance. And there is a capital depreciation, repayment for investment over six years. And on top of that an extra 22% tax deduction for parts of the taxable income. And perhaps most important, there is a cash refund of up to 78% of exploration investment costs to stimulate more actors to engage on the Norwegian territory and to sort of incentivize more activity for exploration. So in total the oil companies pay 22% of exploration costs themselves and earn 22% of the surplus after tax. So the Norwegian government takes a big share of the risks and income on the Norwegian territory. So in the context of supply side policies there are two ways, at least two ways that the Norwegian government could sort of engage in supply side climate policy. First, it's a limit exploration or extraction activities. This means to change the licensing processes. Or we could change the petroleum tax system to take away some of the risk sharing and investment support that is given by the Norwegian government in the current regime. So now we will discuss these sort of difficult issues and the paradoxical situation for Norway under the Paris agreement and with an expanding oil activity. Then we have first researcher, Bård Lund from CISRO, who will discuss sort of this paradox of how Norway has debated both climate change policies and increased oil activities. Please. Thank you very much, Guri, and hello everyone. Yes, so this paradox of Norway as simultaneously being among the world's largest oil and gas exporters, which is extremely reliant on oil production, as Guri has mentioned, and on the other hand aiming for this international position as a climate leader, I'm guessing that paradox is not the reason why someone would want to call Norway, as we heard from the previous panel. That has more to do with other parts of Norwegian oil and gas regulations. But what I will try to do is to give a quick historical overview of how what we discuss as supply side regulations has been discussed in the Norwegian political discourse to try to explain how Norway has tried to manage this paradox and in fact how leading political forces within Norway have been very successful in large part to decouple the discussion about climate policy and the discussion about oil and gas production. And then also towards the end look a little bit at how that is now looking to change a little bit in part because of the Paris Agreement and general developments in climate science and climate policy internationally. So oil and gas was discovered on the Norwegian continental shelf in the late 1960s and in fact at the early stages of the development of the Norwegian oil and gas industry throughout the 70s and most of the 80s. There was in fact quite a lot of discussion about how to retain political control with the pace of production, the level of investments in the sector and to keep the production and the level of investments under control. There were concerns about economic impact, what the economic impact would be of a large inflow of investments in one particular sector. There were concerns about overheating the economy as a result of large new revenue streams. There were also concerns about the power that multinational oil companies would hold coming into a relatively small country with no prior experience with oil and gas industry. So all of this led to a number of policy measures, especially in the 1970s, to make sure that the government captured most of the rent. So this is when the petroleum tax system that Gure talked about was established to ensure national participation and ownership in the industry. And interestingly also attempt to try to limit the actual production of oil to prevent the oil industry from becoming too dominant within Norway. So a goal was established to limit production to a moderate pace and a specific goal was set that annual output should not exceed 90 million tonnes of oil equivalents for oil and gas combined. But this whole discussion was not connected to climate concerns that were not very well established politically in the 70s and 80s. There were some general environmental concerns playing into this discussion but that was more about a fair of a general increase in consumerism and materialism related to increased wealth and so on and not particularly to climate. And then something I would say very remarkable happened towards the end of the 1980s and beginning of the 1990s. And two things happened pretty much simultaneously and the one thing was that climate change become firmly established on the political agenda and it was across the political spectrum it became very clear that there was a deep commitment for Norway to act as a leader on climate change. The Norwegian Prime Minister headed the Bruntland Commission on Sustainable Development and so on. But at the same time as this happened the discussion about limiting the pace of production and investment in the oil and gas sector all disappeared. And the 90 million tons of oil equivalents of annual production ceiling that had been established a few years earlier was surpassed in 1988 without any real political debate. So the target was just left and production skyrocketed, increased almost tripled by the year 2000 and investment also started to grow very rapidly without any real discussion. So at the same time we had this commitment to climate change being established in the political discussion. And on the other hand at the same time we had this completely, you know, complete well I shouldn't say deregulation but well there were no more attempts to politically control the level of activity in the oil and gas sector. And I would highlight two important policy innovations that helped achieve this decoupling of the climate discussion and the oil and gas policy and one was the sovereign wealth fund that was established into which most of the or almost all of the government revenue from oil and gas would flow. So that kind of alleviated fears of overheating the economy and so on. So the kind of economic argument for raining in production was weakened. And the other thing that happened was of course the development of the international climate change regime with an accounting system that is based on the demand side of fossil fuels that is, you know, national emissions of greenhouse gases and with the flexible mechanisms that allowed for flexibility in how you meet international climate change commitments and Norway was very active as a policy entrepreneur in establishing this regime and in particular the whole idea of joint implementation and flexible mechanisms acting together with the United States and the umbrella group in getting this international system established. And this allowed for combining then relatively high ambitions in international climate policy with almost no real discussion about the level of oil and gas production because targets could always be met by relying on flexible mechanisms. So this is not to say that there were no political controversies relating to oil and gas industry in the 90s and 2000s. There were some heated political discussions about gas-fired power plants in the 90s that actually led to a government resigning because they refused to accept building a gas-fired power plant without requiring CCS, so using the slogan proposed by Miles Allen of sequestration from, what was it, immediate sequestration or whatever. And they had to resign because they couldn't get the majority behind this. But this of course related to the domestic use of gas, not to the production and export, right? And you also had a lot of discussion about specific areas, especially in the North or Norway, whether to open the Barents Sea for exploration, whether to open the areas outside of the Lofoten Islands that are especially important for fisheries for exploration. And environmental NGOs have pushed since the early 2000s for establishing petroleum-free zones in specific areas on the Norwegian continental shelf that would be a no-go zones for oil and gas exploration. But mostly they didn't succeed in framing this as a climate issue. So it was mostly framed as, you know, in terms of potential problems for fisheries that are important, especially in the Northern Norway, and exposing fragile ecosystems to the risks of oil and gas production. So what we've seen in effect is that for the first 20 or so years of Norwegian oil and gas activity, we had quite a lot of discussion about how to limit production, but no discussion about climate policy. And then for the next 20 years we had quite a lot of discussion about climate policy, but really no discussion about limiting the production of oil and gas. Now, however, over the last few years we have seen, I think, the beginnings of a change in which policy discussions around climate change and oil and gas activity are increasingly being linked. And I think increasing discussion both about the licensing system that Guri mentioned and also about the tax system is getting harder and harder to avoid, in a sense. And this has to do, of course, with the fact that the international climate system doesn't look like what Norway helped establish with the Kyoto Protocol in the 90s. The whole role of flexible mechanisms is more uncertain. The whole, the Paris Agreement takes a more nationally oriented and bottom up approach that places more emphasis on what each country actually delivers. And the other thing is the whole discussion about the carbon budget that kind of makes these links unavoidable, in a way. With the fall in the oil price that has been recently, the industry in Norway has, of course, experienced some major problems that have been significant layoffs and reduced investment activity. And one could foresee that this leads the policy discussion in two different directions. Either it could lead to an increase in support for the oil industry with increased exploration and investment to keep employment high, kind of doubling down on the oil and gas sector. Or it could also lead to a stronger realisation that Norway needs to do more to diversify and needs to manage the transition away from oil and gas. And, of course, it's difficult to know how this will play out. But my feeling is that because of the increasing link between climate and oil in the political discourse, there are some signs that the latter version is gaining direction. So I'd say we'll live in interesting times for discussing Norwegian oil and gas industry. Thanks so much for that, Bård. And now we will proceed and hear from Arne Eik, which is a leading adviser in the Corporate Sustainability Unit in Statoil. Thank you very much. And thank you for coming. It's great to be here. I was not here yesterday because I was in Paris at the IEA workshop discussing the role of state-owned enterprises in the low carbon energy transition. So that was interesting. I'm sure it's going to be interesting here today. A few words about Statoil in the beginning. So we are 66% owned by the Norwegian government, but we are listed at the stock exchange in Oslo and in New York. So in that sense, we are operating as a normal private company, having to take care of our shareholders, like other companies have to do. So sometimes some question about whether your Norwegian oil and gas company is directed by the Norwegian government or not, that's why I'm making that point. 20,000 employees operating in around or we have employees in around 35 countries, producing around 1.9 million barons of oil equivalents per day. 60% of this is in Norway. We have a separate business area on renewables and new energy solutions. So I'll get back to that a bit later.  And I hope we can have a discussion on that afterwards as well. So first thing I'd like to say, that we as a company, we don't question the climate science. If we have some employees questioning the climate science go out doing that, we say this is not company policies. We don't question the climate science. We try to act upon it. I'm sure it will be discussion whether we do enough, but we try to act upon climate science. We fully support the Paris Agreement, so no doubt about that. We do something called the energy perspectives. That's our energy outlook coming out every June. And I think we are the only oil and gas company not talking about this is the base case. This is how the energy demand is going. This is how much gas demand, oil demand is going to be in the world in 2014. We have three different scenarios. One of those scenarios is a two degree scenario. So I will not talk so much about supply side policies. I think Bord talked a lot and very well about that. But it's one thing I'd like to mention on the supply side policies. We have, as we've heard, different types of supply side policies in Norway. The one I'd like to mention is the Norwegian CO2 tax, the offshore tax. So for every tonne CO2 you emit when you produce oil and gas, you need to pay a tax of around 50 US dollar per tonne. This is, as far as I know, the highest CO2 tax, at least for our business. This is something we have benefited from in many ways. We have been able to reduce our emissions. This has contributed to us being what we like to call ourselves a world leader in carbon efficient oil and gas production. And perhaps more importantly, this CO2 tax level in Norway is something that our CO and the rest of us, I guess, are talking about as a good example of how carbon pricing works. So I'm not going to have a kind of explicit view on what the price in the EU ETS should be. But if it could rise from the today levels of, is it four or five euros, to something much higher and perhaps something similar we have in Norway as a Norwegian CO2 tax, maybe it would actually be effective. So that's what I want to say about one of the supply side policies. I'm sure we'll have discussion on that afterwards. A few words about our strategic belief. One of those nice words, our strategic beliefs. So I remember we have the energy perspectives and the different scenarios. There is no doubt that we are in the energy transition. There is no doubt that we're moving towards a lower emissions future. There is of course uncertainties how fast this will happen. But we're not betting on the business as usual or that it's going to be exactly like it has been over the last 20 years.  So due to, and I'm not, I don't have to tell you this, but due to policies both on the supply side and the demand side and perhaps more importantly due to the very fast technological changes we see within renewables, we see within electrification and I guess the next one will be energy storage and the costs coming down for these. We will obviously see a lot of changes going forward. We, we could see upon this is a threat. Of course it might be a risk if you want to be an oil and gas forever and if you only want to do oil and gas. We like to see this as opportunities. We are in renewables and I think embracing these changes, look upon them as opportunities is the right way for an energy company for us to do this. The changes will happen anyway. So it's much better to look at the opportunities of this than to just try high. No, no, it's not happening. It's not happening. That's not how we approach these things. But for us it's not oil and gas or renewables. It's about both. Same with the GE. It's, it's, it would be probably not a good strategy to only go for one thing in these changing energy markets. So we're talking about both. We see that there will be many new oil and gas productions, fields put in production. We've seen the data from the IA today that in a two degree scenario, current, current fields will only produce some 20 to 30%. What the demand for oil and gas will be if we should believe IA's two degree scenario. So there will be more oil and gas coming on stream. So that was our strategic beliefs. So then what is, yeah, last thing I wanted to say on the oil and gas. So our strategic belief is that, as mentioned, it will be more oil and gas, perhaps not very valuable for an oil and gas company to say. But what we do think is that to be among the winners within oil and gas, within this low emission future, we have to be low on cost. Probably the most important thing, be low on cost. That's where your competitive advantage is. Secondly, you need to be low on CO2 emissions in your production phase. Partly because with a higher CO2 taxes, higher CO2 prices, it's going to add to your break even. But you also need to be low in methane emission. Methane is an issue coming up more and more within the oil and gas business. And that's essential for the oil and gas business to reduce and eliminate methane emissions both in the production, but also throughout the value change. So low on cost, low on carbon, that would be needed. So what is our strategy to be among the winners in this changing energy future? First, we want to grow significantly within renewables and new energy solutions. I'll kind of bother with you with some facts on that. As you may know, we are quite big in offshore wind. We are about to serve around one million households in the UK and Germany by electricity from offshore wind. Over the last year, we have invested around one billion US dollar in offshore wind. We are next year in Scotland starting the first offshore floating windmill park. And we are putting energy storage next to that one. So we're trying out energy storage technology for that one. And you may also know that we have launched a new energy fund, a venture fund, 200 million US dollar, where we are looking into innovative businesses, companies that are into renewables or into what we call high impact technologies or companies that are doing new business models. So that fund is obviously not going to do business as usual of things we've done before. And the CCS, I'm sure there will be a discussion around that. Always good to have CCS. I think, and correct me if I'm wrong here Miles, that we have stored more CO2 than any other company, 20 million tonnes since we started. Perhaps more interestingly, we're now looking into, together with the Norwegian industry, together with the Norwegian government, on the possibility of establishing a CCS value chain in Norway. It's very early days, so I can't promise anything, but this is at least something we're looking into. The government is coming with a budget in a couple of weeks, so hopefully there will be some money on this. I'm sure you've done lobbying to ensure that. So that will be money for initiating one to three capture plants in Norway from the Norwegian industry and also for storage of CO2. The role starter will take on this will be the storage part, helping the Norwegian industry to reduce their CO2 emissions by storing it at the Norwegian continental shelf. And hopefully, on the long term, we may be a storage hub for European industry and power sector as well. As I said it's early days, but this is at least something we are looking into. So the next thing, I think I've already said it at least once, and we will still be in the oil and gas business, but if we are to be among the winners, if we are to succeed in what is possibly a shrinking market, we have to be low on cost and we have to be low on carbon. And thirdly, and I think that is, and I think G did a very good presentation on that with the work you're doing with the energy transition commission. They're very good examples on how different companies, different NGOs and different institutions working together, discussing openly how we can make the world better. We're not in the energy transition commission, but we are involved in many other initiatives with institutions, with NGOs, with governments. And I think for us to be more efficient, for us to be doing the right things, it's very important for us to have these partnerships. And also I think the last thing I want to say is the importance of dialogue. We don't have all the answers. We don't have all the answers. We have to talk with you, we have to talk to all other people, we have to learn. For example, let me give you one example on who we're talking a lot to is the is the carbon tracker initiative. They're doing some great analysis on this topic. Really be challenged, talk to others, get input, do partnerships. That's how we think we will be ready for the low emission future. Thank you. Thank you very much, Arne, for your perspectives from the oil industry. And now we will hear from Tina Magrete Saltve, which is chief analyst of the petroleum market in Nordea Bank, which is the largest Nordic bank. So please, Tina. Thank you. I'm probably one of the only green oil analysts in Norway, at least. So let's start from that starting point. I'm going to talk about three different topics. And from a financial side, I'm going to talk about the changing business model for oil companies. Then I thought I'm going to touch up, touch upon the carbon risk transparency. And then at the very end, a bit about the Norwegian oil fund. Not much because I'm not a specialist, but I think it's important to mention because it's very big. And they seem some wishes from the Norwegian public as well, that how could we use this oil fund in a positive way to lead to the green shift? We're not there yet, but it's starting to get more focused on what we should invest in for the future. So let's start with the changing business model. Because there is a risk of stranded assets, of course, if the oil companies are not taking into account the changes in the fundamental which is going on in the oil market at the moment. Because there are big changes based on the supply and demand side, which will completely change the competitive arena there on. And of course, climate is one and very important topic which the oil companies have to consider when they think about the future investments, and not at least also the investments and production possibilities. This also accounts for the Norwegian state, because as an oil producing country you have to focus on how many new areas you want to open for future production. And of course, that will hinge on how you see the market going on in the future. So what are the big changes in the oil market? Well, first of all, on the demand side, I think you're going to see rapid changes much faster than maybe we have discussed so far. Because I think, for example, disruptive technology might actually change or moving us in the right direction of a greener energy circle than actually the politicians are able to do. Hopefully, base will help us to move to more greener energy. So that will have an influence on the demand side. Well, we didn't touch upon earlier today, and we talked about this rationality of oil companies and companies investing in the future. I'm not sure I totally agree about a rational company, because what we have seen so far, when oil prices move up till around $114 in 2014, is so a lot of oil companies investing in a lot of fields around the world. Why do they actually invest? Because the old business idea was that oil is a scarce resource. So being able to buy up and sit, hold a reserve means that even if it's not profitable today, it will be profitable going forward because it's scarce and the oil demand will continue to increase into the long term future. This business model, of course, I think is challenged now. First of all, because the rapid changes on the demand side, which I think is very important, but also changes we have seen on the supply side. And one thing is the shale oil production, because it's so flexible. So we have a bit more flexible production, meaning that the supply curve is starting, it's very steep, but it's starting to get a bit less steep. But what we haven't discussed is that the supply side in the oil market is a very long term, except from the shale oil. Because when you start to invest, it takes approximately seven years until the oil is out in the market and then you produce between 30 and 50 years. Shale is different, but it's not that much shale compared to the total. What we see on the other side of the balance, you have the supply, but the demand side is much shorter. So it's a mismatch between the changes on the supply and the demand side. Because demand changes faster. 55% of the oil we're using goes to transport. And since we haven't had much competition within the transportation sector up until now, of course, oil prices could move up for a very long time without seeing much of a reaction to the demand of oil. This, I think, is changing now. First of all, because of the changes in technology. Disrupted technology coming into the market, but also because of climate policy. And this will mean that the very steep demand curve in the oil market, as well, is not going to be that steep any longer because you get much more competition into the market. And what does that mean for the business model of an energy company? Well, it means that the old idea of actually buying up reserves, because you think at some point in the future it will be profitable, is not there any longer. It has to change to management, cost cuts, as you talked about, a completely different way of steering the companies. And I think that not all the oil companies has taken this into account. And the risk is, of course, if you still believe that you should invest in more areas to produce, because the idea that oil demand will continue to rise, the need for oil will continue to rise, then, of course, the risk is that it will actually settle with stranded assets in the future. And it's not only all the oil companies have not taken this into account, also the Norwegian government. Because how long will they continue to open up, for example, new fields or continue with a tax policy they're doing if they don't see that there is a massive change in the oil sector, or the oil energy sector, as such. So I think that's an important question we're actually discussing in the Norwegian market at the moment. The second thing I wanted to focus on is that how should we actually make money move faster? And that's what we're discussing a lot in the financial industry now. How should we make money move faster from more highly carbon products to less carbon products of green energy? And one thing on that would be a supply side suggestion as well, is to be more transparent about the carbon footprint we see from different companies. So I think we need to be, we need to require more opening or more clarify what the footprint would be from different companies, not only in the oil sector, but all companies. And because that will make it easier for investors to know what kind of industry, what kind of company they can invest in, to avoid the climate risk. Especially if it's changing, the market is changing as fast as I think it will do, because of the changes in technology and the changes in the climate for, in the climate policies. How could we also do this? We could also start to implement carbon risk in our pricing models. Because what we do, what we do, we price the company or we take the risk of the company, and we wait the risk. Today we have market risk, we have financial risk, which is in these, when we credit the company, or we have a credit company, but then if we start to implement also the credit or the carbon risk into this waiting system, then it would be much more, or then we would take account of the carbon risk also, then evaluate a company, and then when actually you see the total risk of a company. So we need to get that into the evaluation models, which we're not doing today. And it's not only for the oil companies and the fossil fuels companies, we have to do this. Because we as a bank of course, we lend a lot of money to all gas, not any longer coal industry, but we used to do that as well. Of course, you, when you go to invest in either a bank or a company, a stock, you need to know what you're actually investing in. So I think better exposure or better the transparency of the exposure for all companies is very important, because I think that will help to move money from high carbon to less carbon investment alternatives. And why am I saying that? Because we already say that. Many of the clients want to have a green portfolio. Or two reasons. One because they want to have, or they're actually told to have a part of green investments in the portfolio. But the second and most important one is that that's where the profitability is increasing. So in that kind of sense, I think it's very important that you do know your carbon risk for the investments you're doing in the future. So at the very end, I think I'm going to say a couple of words about the oil fund. It's the world's largest sovereign wealth funds. And I made a bit of calculation this morning. But it started out in around 1990. Then they decided to build this oil fund. And the purpose of this oil fund is to make a more flexibility in the economy. If oil prices decline, for example, or you have a contraction in the economy, you should be able to use this backup or oil fund to try to stabilize the economy. And so we have done that as well. It's it's actually very well during the financial crisis of, for example, they started to use a bit more not of the fund, but the yield of the fund to be able to support economy in in the periods with with higher risk. So that's a bit of the idea. So how big is the oil fund? And how how did they start? Well, it started around 1990. They decided to build this oil fund. The first, actually, the first transfer or money to the oil fund was in 1996. And then they transferred 4.5 billion pounds. Now today, the oil fund, that's 20 years later, how big is the oil fund today? It's around 155 billion pounds. So of course, this is a massive oil fund. And one of the discussions we have today is, is it possible to use any of this fund to start to invest in more green energy to help the green shift going on? Today, the purpose of this fund is not really be used politically. So today, they have a sustainability investment profile. So sustainability is very important because it's a long term fund. And they think that sustainability is very important to get profitability out of the fund in the longer term. The discussion now is about, here we use this for greener energy. It has been discussed. Actually, the oil fund itself want to do that they apply to actually do that because they think not because they have a political issue doing it, but because they see that in the future, this investing in green energy, but also in infrastructure would be a good investment. And also help the balance in the fund. And I think it's very important when you see this big, the world's biggest oil fund is moving in this direction. I think it's a signal to many other investors as well. And of that reason, I think it's, it will be a very interesting discussion. The Ministry of Finance said, no, this year, they wanted to have a bit more, a bit more insight to how this market works. But they will, this discussion will, I promise, you come up again next year. Thank you very much. Thank you very much, Tina. And from the, going from the financial market perspectives, we're now going to listen to Ragnil Fregdala, who is going to talk from the local perspective of the citizens of Northern Norway. So please, Ragnil, you're a PhD scholar at the Scott Polar Research Institute at Cambridge University. Thank you. So I will be speaking mainly from a perspective of what is happening in the Northern communities of Finmark in Northern Norway, which is where the, it's the shore of the Barents Sea, where the government currently has given Norway a new licensing round for developing new petroleum fields. So this is the emerging petroleum province of Norway and the future perspectives. And to emphasise the importance of this province to Northern Norway in the Arctic strategy of, of Norway, our foreign minister, Berger Brända, has explicitly said that the government will target its efforts towards industries which has growth potentials. The oil and gas sector is the mainstay of economic activity in the North and offers unique opportunities for value creation, employment and growth, and for generating other positive spin-off effects in Northern Norway. He's also linked this to, in the same publication, to melting ice, becoming, making the more accessible Arctic being an opportunity to provide the rest of the world with its need for energy. And large estimates of oil and gas can create values and that gas can be a transition. So a lot of this rhetoric runs around the reasoning behind an explicit move towards the Barents Sea. But from a community perspective, or from the municipalities of the North, it's not immediately clear that what is in the interest of the oil and gas company or of the Norwegian government is actually in the interest of the local communities. And that comes a lot down to infrastructure, development and jobs. The current oil fields in operation in the Barents Sea are located outside of Hammerfest, which is a city with about 10,000 citizens. And an oil and gas sector that now employs over 1,000 people. But which only 10, 15 years ago had a totally different economy. It's also the only part of the northern oil that's seen that kind of growth around the patrolling resources. But to put things a little bit into perspective, Finmark, which is northern most in the region, has 75,000 people living in it in an area of about 48,000 square kilometers. When we are talking about the oil industry moving into this area, we're not talking about just extending a cable from Stavanger up to the next oil field. We're talking about 1,500 kilometers in air distance between Stavanger and Hammerfest. And we are talking about the place where there is currently very little infrastructure in the electricity net and elsewhere to actually support the kind of growth that is there. Hammerfest has built this up throughout, through an explicit political and local economy will to build up the know-how and the expertise to make that happen. That includes also a when Hammerfest had a very reliant economy on the fishing industry that was moved out of the partly through regulations in the quotas and the moving towards trawlers and partly that's a big fillet factory that processed fish and employed by 1,200, 1,300 people at the most was closed. The economy was in crisis until they then got the oil as their development possibility. However, there is no guarantee for other communities that they will have the same thing. One of the main reasons why Hammerfest managed to secure their part of the cake on the development of Snow White, which is a gas field with an onshore processing energy run by Statoil, was that the oil comes on shore or the gas comes on shore to the processing plant and so they have both a stable amount of local jobs and income through the property tax. They've invested a lot of money in infrastructure building schools and making the city see that they also benefit from the oil industry. When there was a there is also an oil field in operation called Gugliate, which is run by the Italian oil company, when that was decided upon there were several options for where the oil should be brought on shore and many of the neighbouring municipalities were trying to secure their part of this because they looked at Hammerfest and said and thought that if they secure themselves with the onshore processing that means that they will have local jobs, they'll have a boost to the economy. The political process ended with the oil field being an offshore field exclusively, with ships going to the oil field. Any place their offices in Hammerfest as well as a way of ensuring there would be some regional growth and there has been a lot of deliveries also from the local supply chain but for the neighbouring municipalities there is very little effect. There is an emergency oil spill response depot and someone who maintains that. There is a couple of response exercises every year. There are some boats that have gone into the fishing fleet in the cooperation with government authorities and company and local actors but overall the effect remains fairly small. In another municipality not far away Stato have just made an investment decision to not do an onshore processing terminal but also do an offshore development of the Kastberg field which is significantly larger but still not large enough for them to see the economy in taking it onshore and so for the municipality there is now less guarantee of the local development than there would be. Another issue with so these are just these are just the projects are currently on stream and are happening and are made investment decisions about them then for further down the line if there is an argument for this operating in a low-cost low carbon environment is very unlikely for the communities that they will actually manage to secure that oil onshore unless there is a massive political will to make that happen but in a world where we see that there are risks to to the old companies and to the future of the Barents Sea it's also not really sure that this will keep developing and a final note on the infrastructure is also that as I said in the beginning there is a insecurity towards whether this will what this means for local communities but if you build oil fields particularly with the demands that Norwegian governments tend to have about electrification from onshore rather than using gas and self-powering the stations there is also a need to build new electricity grids and that is paid for probably by the government but also by the primary primary resource uses in the area particularly the reindeer herders who will have the power lines going through their gracing areas so a lot of issues that are thrown up not just specifically relating to climate change but also in terms of the just transition in who is actually benefiting and not from this development thank you thank you very much to all of the panelists and I think we have about 20 minutes for a discussion now so I will open up for questions from the audience so we have one there one and you're two and you're three thank you for all those presentations I'm glad to see that start oil was an early leader in recognizing climate change and climate science so thank you for that leadership on and others my question for you on is you say you fully support the Paris agreement and I'm wondering what kind of assessments you're doing in order to assure that that is happening and when you expect peak oil and gas production to happen it has been modeled and if there is a conflict between the investments and additional oil and gas development in Norway as well as internationally in terms of increasing production in Norway and elsewhere versus reducing total oil and gas production and one quick question to board also about the petroleum free zones is the idea to also exclude horizontal drilling under the petroleum free zones or is it only surface activities we're talking about oh and my name is Richard heavey with climate accountability is to you yeah thanks great if you can introduce yourselves hi I'm Megan Derby from climate home and I also have a question for our we heard yesterday Paul Eakins presenting his unburnable carbon analysis and one of the things he said was if any country doesn't need to produce its fossil fuels it's Norway and so I'd like to get your response to that and also NGOs making this point rather more forcefully I understand the planning legal action against the government saying that you know the government should not be putting these Arctic blocks up for license and I'm kind of interested in anybody's comment on that there was one here front thanks I think I was accused of bringing down the government which is a first for an academic but in self-defense this I can't resist advertising as well this paper which I put some copies outside it's the case for military sequestration but it was actually published after that incident so you can't blame me but I do hope we get third time lucky with CCS in Norway because we can't really afford to mess this one up again and the UK has stayed twice now maybe more than twice and has probably given up so this may be CCS's last chance and the crucial point of this paper was we need a business case for CCS which doesn't depend on mandating it at the point of mission because if you do that you the government falls because you end up with a sort of clean power plan arguments that are happening in the US when people present CCS as a war on coal or as it was presented in that argument in Norway as a sort of war on natural gas exploitation entirely so what we propose there's copies of the paper outside you need a mandated in gradually so fossil fuel extractors eventually will have to put away the same amount of CO2 that they extract we all know that that's what net zero means we just need to get on a path where we increase the sequestered fraction progressively rather than in a panic in the 2040s and this is something Norway has the opportunity to do Norway could demonstrate to the world that it's possible to have a progressive fossil fuel extraction policy that is consistent with the net zero 1.5 degree world and if Norway could demonstrate back to the world you would then turn around to the rest of the world and indeed to pull weekends and say look Norway is showing the world it's possible to extract fossil fuels responsibly and that would be a fantastic service much better than just turning around and saying to the world look Norway is so nice they're leaving their fossil fuels in ground which is something you can't expect the rest of the world to do so I'm hoping for reactions from all of the panel on that so thanks for that I think we have we'll have now a round of answers and then we'll take some more questions afterwards yes thank you great questions so how do we as mentioned we fully support the Paris Agreement and how do we make sure that we're actually following that in practice in our investment positions so we have we tend to see the Paris Agreement and the ambitions and the Paris Agreement in terms of a carbon budget like many of you are doing I think that's a very useful way of looking upon this when you're discussing the carbon budget it can be seen from a kind of how much you as a company can morally produce of the total budget and or sorry and or it could be seen from a perspective where only the most efficient, profitable projects will go on which is that it's more than the carbon tracker perspective I find most or both of them are very interesting if you look at our reserves we will have we have enough reserves to produce for around 8 more years proven reserves whereas for example Saudi Arabia Venezuela and Canada which you know today, they would have reserves for many many decades so it's not so that startle as a company will kind of overshoot the carbon budget by ourselves so that's kind of a call it a moral calculations but I think this is kind of a theoretical way of looking at it I think in the low carbon future when the Paris Agreement is implemented that might hit on the demand for oil and gas which again might hit the prices so it will be those being able to produce most carbon and cost efficient that would be within that budget and what to do with that we are doing a portfolio resilience of our portfolio so in our last to say ability report we assessed how much a 2 degree scenario would impact on the net present value of our portfolio and we found that it will be some 5% lower than it would be in a new policy scenario and I think this is exactly the kind of information the investment banks would need to have and this is something we welcome as well more climate and carbon transparency I think this discussion on who is whether Norway or others should produce the oil and gas it's probably better to ask the norwegian government about their view of that but I think it's if we are to have that kind of division how would we do that in practice how could we agree on the UN level now it's your turn to produce not your turn because you have so much money and you have produced for so many years so you better stop now it's another country it's challenging and that's why I think we will still see most policies on the demand side it will be really emission performance standards for cars for the development technological development we really will decide the demand for oil and gas who will be able to produce and if you have only high cost barrels you would probably lose that competition and that's I guess how it is it remains to be seen how we will be in Norway on that going forward so that would be my answer to that point I completely agree on the CCS third time lucky we will do our best what I want to say there is that we look upon this as an opportunity but we also need to make some money on it it's a public partnership thing we're not saying that we need to extreme a higher rate of return but we won't do this unless we see a good also economical reason for doing it we have a new round of questions afterwards so short answer first so the idea that has been put forward is that all types of oil and gas activity whether exploration or production should be banned including the horizontal drilling so the horizontal drilling is well I guess mostly something that has been discussed with regards to the potential opening of the areas outside of the Lofoten islands where the continental shelf is very narrow so the distance to land is not very long and you can potentially do this horizontal drilling and then have the production facilities on shore what that would mean though is that while it would decrease the risk of oil spills in relation to the production facility it would also mean that all the transport would have to go into the shoreline and so the risk related to transport would increase and for the fisheries communities who also oppose opening these areas to oil and gas exploration phase and especially the seismic exploration is also an extremely important part of why they oppose it so it's not really something that has been within the policy discussion has contributed to a lot of progress on that issue on the lawsuit very quickly yes there are environmental NGOs considering not specifically in relation to Arctic activity but in order to challenge the new licensing round that has been announced by the government to award new licenses on the Norwegian continent generally it remains to be seen whether that will go forward there has been some talk about this for a few years the lawsuit is based on a constitutional clause that the government's responsibility to protect the environment for future generations and it's very unusual in the legal context to bring a case to the court on the basis of a constitutional claim so that's really part of the legal tradition in a way but it remains to be seen how that will move forward and then finally just a quick comment on the mandatory sequestration we can agree that you're off the hook with respect to the government resigning in 2000 but I do think that the Norwegian case is interesting even though it's not directly related to the use of gas rather than the production but because the Norwegian environmental NGO community has different from NGOs elsewhere in that they've taken a fairly pragmatic view on CCS for quite some time and they have consistently ever since the late 90s been arguing for mandatory sequestration if you will either there's been some kind of constructive energy there because for parts of the environmental movement that has been about preventing the building of power plants altogether because it would decrease the chances of them being built for other parts it has been about wanting to develop CCS but either way the consistent process of building it while that had some traction as long as there were let's say more regular energy companies wanting to build isolated power plants as soon as the oil industry had interest in doing that then the gains that were achieved on political regulation were very quickly lost so I think it's really a lesson in the whole political economy and of course you never tell that it might not really be necessary necessarily be a very effective strategy for the environmental movement that's maybe a bigger discussion so I think we're going to have some around of questions now and then I'll give me and Ena the microphone so there was one in white t-shirt over there and in the black t-shirt there and in the green up there and we knew in the stripes or patterned well thank you fans I'm trying to understand the regulatory environment so I can understand comparisons and I'm a little bit confused there was a lot of numbers there on the taxes so you mentioned already that there's a $50 carbon tax and a ton so is that 100% coverage and are there competitiveness measures there that reduce that overall cost to production and is there any limit on emissions or on production now and finally when new fields or projects are assessed for national interest determination are they assessed with a business as usual market scenario is there any work by the government done to assess for a 2 degree or a 1.5 global market economic scenario and then just to aren't I asked on your you said you're focusing on low cost low CO2 development and yet you're investing in the oil sands and the Arctic so I'm wondering how you can square that circle for me thanks Farms you didn't want to go would you pass so yes Steve Kretsman from Oil Change International quick question on you said Armand that you use a 2 degree forecast just wondering is that a 50% chance of 2 degrees it looks so from what I'm seeing and if so given the upper limit of what the Paris agreement is is 2 degrees should be gaining for a likely scenario of 2 degrees and what would that mean and it was down here with the hi Steve with the obviously development institute I was really excited to hear that the IAA is looking at this question of state-owned enterprise the role of state-owned enterprise in the low carbon transition particularly because from estimates that I've seen 70% of oil gas oil production including fossil fuel power is state-owned and it's really a topic that's significantly overlooked obviously the divestment movement touches on some of that where these state-owned enterprises are publicly listed but it's a real whole and we look at state-owned enterprise investment in terms of the G20 it's 244 billion a year in fossil fuel production so what I'm wondering is if we're thinking more optimistically what could be the role of state-owned enterprise in the transition and do you see as an advantage in the transition and navigating the transition because of the ability to work with governments on kind of longer lateral signals and I think it's always a really interesting example because you have both a production company but also a power company in statcraft so interesting to see what discussions are having around that as well so then Tina would you start can you come I have this I would just like to say that the government or the Ministry of Oil and Energy they're making this kind of scenario analysis of course because it's always part of the parity agreement as well they do make this analysis with a two degree scenario but I still think the difficulty is that when you're actually going to put this out in operation it's more difficult because the politicians are just sitting there for four years and I'm not sure it actually works from paper till real life because as I talked about you have to look at the business model in a completely new way and I'm not sure if actually the politicians really want to take this into a hand yet because it's an election next year the oil industry is quite powerful it has accounted for a lot of investments for the economy and also for a lot of workers so in that kind of sense I think it's not really necessarily companies but it's also the politicians who are afraid to do that decision because it's a hash position but otherwise it might end up with strata deficits because it's no doubt that no way it doesn't have the cheapest oil to produce in a bit but the government produces the analysis not on a field-by-field basis but I mean on a field-by-field basis the decision is made based on whether it's in commercial in commercial vital but it's so basically for each for decisions for developing each field that's the decision the risk there is assessed by the companies basically and what the government says is that well we have a taxation system that will ensure that if it's in commercial vital then it will be also socio-economically beneficial so they don't do any even though they do long-term analysis as Tim has said they don't do it on a field-by-field basis I think that one report is why they did it for a field-by-field basis as well but this is also where there's a lack of impact assessments of how what will happen when we open up the new I mean in the new what do you say the reasoning behind the new licensing route there isn't a lot of discussion of climate change at all if there is any discussion of climate change it is about more about the ice and trying to move further north and therefore more areas are accessible from which to extract all this actual acknowledgement of climate change impacting the regional production so I think we're going to give if I can also add there was also by the local business actors and municipal people in 2013 in Fenmuk they had four wildcasts that might influence they had kind of development scenarios where all four of them included some that were trolling development and the varying degrees of local involvement in none of them they had four wildcasts including an Ahton bomb in Fenmuk and international regulation that was making petroleum extraction in northern Oat in Mosul and that was a wildcast and not something we actually considered in the scenarios three years ago so we're going to give a time and a chance to answer very shortly one minute we are involved in a very tiny oil sands project we have no plans to do more on oil sands on Arctic we will not invest in projects if they are too costly so it has to be low on cost and also we have requirements when it comes to carbon intensity for those two degree forecast so what we're doing is basically we take the IA forecast and to my understanding that's 50% of achieving if IA or maybe we should say when IA going to 1.5 degree forecast we would need to look into that but I can't tell you now we will change a lot advantage of the state command process clearly what I learned yesterday it's a big difference between companies obviously governments trying a little bit different from Norway and it's also of course whether you're 100% state on or 66% state on but I think that you have the ability to kind of perhaps think a little bit more long term as a state on company and I'm happy to discuss that more in person so yes thank you very much


This paper presents a novel human-machine interaction, HMI, recognition wearable system for continuous multiple degree of freedom, DOF, ankle-foot movements. The system uses sole kinematic signals from inertial measurement units and multi-class support vector machines, SVMs, to achieve high-level control of multiple DOF wearable lower limb robotics. The system was validated through experiments with multiple participants achieving overall accuracies of 98.45% and 85.3% respectively within a prediction time of 10.9 ms and 14.1 ms. These results demonstrate that the proposed system is more effective at recognizing multiple continuous DOF foot movements than existing strategies and can fill the HMI high-level control demand for multiple DOF wearable lower limb robotics. This article was authored by Chen Xiaoshu, Lan Luo, Jingying Mai, and others.


Live from San Francisco, extracting the signal from the noise. It's theCUBE, covering ConsulConnect Live 2015. Sponsored by Consul, there's your host, John Furrier. Okay, welcome back everyone. You are watching Silicon Angles theCUBE, our flagship program. We go out to the events and extract the signal noise. I'm John Furrier with my co-host, Jeff Frick, Silicon Angle Media, and our next guest is Sonny Kumar, Chief Commercial Officer Summit IG. Welcome to theCUBE. Thank you for having me. So congratulations. You were here at the ConsulConnect Live in San Francisco. You guys had a press release out as join their partner program. Yeah, absolutely. And that means you are now in their ecosystem for provisioning direct connections to customers who want to provision it. So talk about your business. What do you guys do and why ConsulConnect Live and what's the connection on the partnership? Sure, absolutely. Thank you for having me first off. So Summit IG is a three-year-old startup. We're focused on dark fiber infrastructure in a very disruptive way. So we've actually created the densest and largest footprint of dark fiber in Northern Virginia. And as you probably know, Northern Virginia is the magnet of the internet on the East Coast. So we connect all those data centers, all those key aggregation points with dark fiber. So that's available not to just the big companies or big service providers or big content companies, but that's available to anyone, a large enterprise or a small enterprise. So we're excited to join the partnership with Consul and IIX because we're helping them kind of get distribution and getting those customers on board to their platform. So you guys are just regional now in Northern Virginia, Mid-Atlantic State? Yeah, so we are in the Northern Virginia and the greater Virginia marketplace of the DC area. We're hoping that, you know, we monetize and show that there's value and prove that this is a model that customers are gravitating towards. And then we'd hopefully take this on the road and take it to other markets. How big is the geography? How far in the Mid-Atlantic area do you go? Do you have to Baltimore? Is it just within North Virginia? So we are, so the Northern Virginia corridor, if you're familiar with that area, think of Ashburn as kind of a hub or the magnet of the internet. There's about in the neighborhood of 30 to 40 data centers just in that area, six million square feet. It's actually going to be the largest data center coverage in the next couple of years. So the concentration, the density of dark fiber, or sorry, data center environments is like no other. So six million square feet going to nine million here in the next few years. So we do the Ashburn corridor. We do Reston, Tyson's, that entire corridor within Northern Virginia. And then we also created a network, a dark fiber network custom built, purpose built from the Northern Virginia marketplace down to Richmond. So Point South, bypassing Washington DC. It's almost like, I remember the old days in the corporations, Coax Cable, Hubs, local area networks, you connect everything. You guys are essentially connecting the market as like a local network. Absolutely, that's a great way to put it is. So we are looking to be the fabric or the mesh. And if you think of dark fiber is not, is something that's readily available, how would you architect your networks? So we're challenging the enterprises and the content companies of, if you had fiber at your disposal, would you look at, you know, lighting those services maybe in a different way? So we connect those data centers, as I mentioned, where we have an 864 count cable populated today that we can replicate six, seven, eight times over. So that you're done that over 5,000 strands of glass just within that ecosystem. Our nearest competitor has a 432, right? So you're talking about a very different density of fiber. Like a Ferrari of fibers. Yeah, so that's where it's like, you know, so I gave the example a little bit earlier, you know, Google or Microsoft, those big boys always go after dark fiber and they have the buying power to do that. But why can a small little startup that's trying to build their business, think about Facebook back in 0405, if they had availability of dark fiber, I'm sure that would help drive it their business model. And it's dark in that you're putting it in before you have demand for the services and then lighting it up, or did you take over some stuff that was already in the ground or explain the business model a little bit? So we've built, so all the stuff that we've done is owned and operated 100% underground, so top quality networks, and we built it over the last few years. Okay. So, and with that. In anticipation of the demand that you're going to light up, right?  We see that as kind of the, we want to be that on-ramp or that onboarding ramp for enterprises and data center, data center companies. Okay, so. It's so funny on Facebook, I mean, because we're old, we're on Facebook. Younger kids are all on Instagram and Snapchat. Someone had a throwback Thursday post that said, it was a chart from Netscape's road show. Right. With the going public. Yeah, yeah. Internet adoption. Yeah. Like in 95. And the bars, they look decent, but they're like, now you look at it. No, the explosion's there. It's just beginning, but now businesses are looking at it differently because they have different issues that go into a whole nother level architecture because of the consumerization. And now the transit's getting lower priced, but the quality's not that strong. Exactly. So the transport now is a huge deal. Yeah. What's going on for the people that aren't following inside the ropes? Yeah. Why is this disruption happening? What is the big deal about this? You see cloud adoption happening. You had your earlier adopters that were coming into the cloud environments and the platforms, but now you're starting to see more mission critical go out there. But if the CIA was going to push its mission critical applications and systems out there in the cloud, they need to have better control and agility of those networks. So that's where the network infrastructure is very different than what it was seeing five, 10 years ago. It's actually part of their core business and core competency. I remember when I was working at other startups back in the early 2000s, Google and Microsoft were buying wavelengths from us. They were buying lit services or managed services from us. They quickly made that shift in the late 2000s and now every customer is following that because network infrastructural is what's going to drive their business strategy. So that's very important. So what happened to Fibermar? I remember back in the 90s, Quests had a bunch of fiber, never made it, made it out. All this dark fiber was being laid out in train tracks and underground. Level three in the whole thing. And then the huge bankruptcy and market crashed. People buying up the assets. What is the state of fiber in the U.S., for instance? I think inner city. So the example I'll give you is, I'll stay in our corridor or our marketplace for a little bit. But the inner city or the long haul connections, they're still there and people are using them. And some of them are using it in a dark fiber fashion. Most are using it in a lit capacity fashion. So unless you are a big boy, you're actually buying lit services from a level three request or someone else. But so there's abundance of fiber there, but what happens is you need to get all the way out to the end user. And that's where the dark fiber in the metro space is not available. Or you need unique routes or diversity from what's currently available. And who are the suppliers in the old model? The telcos? I mean, just based on the telcos, right? I mean, through T1s and internet access. Absolutely. So you think about the big boys, the quests, the level threes, the horizons, the 18 T's of the world.  But we're looking at dark fiber in a very disruptive model, as opposed to what other people are doing. But again, we're looking at it from a metro and a regional space as opposed to a long haul. So when you talk to customers, what's the top conversations you're having with them? Is it the pressure to have more bandwidth, security, devos, more development? What's the big driver right now? I think so. From my standpoint, for our optics, we see security as the first and foremost is that they're looking at, they even got to make sure that their networks are secure. And then from our standpoint, it's dedicated fiber, right? So you're not on a shared network. You're not in a shared environment. You're not buying lit services from a telco. You're actually buying dark fiber services from an infrastructure provider like Summit. So I would say security is number one. A close second would be performance, right? So they're looking for the best performing networks possible. No one's ever complained by getting more bandwidth, but they'll complain if they get less bandwidth. Absolutely, because you think about whether it's reliability or to your point, there's choke points in the network or capacity choke points, the user's going to suffer. Whether that's an employee, a partner, and a customer, whoever that is, that user community is going to suffer. So the CIOs are looking at infrastructure, going back to my other comment, as, hey, if we bring that in-house, will you sell us the dark fiber to go do that? And absolutely the answer is yes. So can you give me an example in your territory where you've seen examples of people using the internet for backhaul or connection from, you know, two different requests and destinations where it got shipped off to China or shipped overseas to Europe, some of the hijacking spoofing. Could you elaborate on that concept and share an example for the folks watching? Yeah, so I think, you know, from, you know, security is always going to be some, there's going to be breaches and vulnerabilities in the network, and that's the stuff that we all need to improve on. But the Direct Connect philosophy that we have here at console is allowing the end user, the enterprise, to control that infrastructure to the point of interconnection. And that's what we're doing for these guys in the metro space. But you see, whether you're coming into Ashburn and that's kind of your onboarding node, and then you're shipping stuff over to Asia, over to Europe, over to the West Coast, those are things that are happening. But if you can create that private peering environment and that fabric or interconnection fabric using us along with console, that's where the marriage really is. What's next for you guys outside of the territory? You get, you know, in the Virginia, there's very lucrative concentration there, it's pretty solid. Right, right. Any plans? Yeah, no, I think, you know, from our standpoint, we're laser focused on the marketplace that we're solving. We want to be, we want to solve that problem in a rich way within Northern Virginia. But we always look to figure out ways how do we can enrich that experience for our customers. So are there other areas within that marketplace that we can grow into? So whether that's in going further south or diversity into Richmond or Norfolk, or stuff that's within DC or something like that. But we look at our model in the sense of we want to make sure we do what we can here in Northern Virginia. And then we'd love to take into another market. Explain to the folks watching the value proposition for a console and what that really means. There's a lot of nuances behind what they're doing, but it's correct. It scales not only the bandwidth, but also the human capital component. Absolutely. But also the business has benefited. It's a trifecta. It's really a triple threat. Yeah, it is. I think, you know, from a user interface perspective and all the things that they're doing to make it an easy user experience, even if, whether you have the competency or you don't, they've made it very easy to do. And it's kind of a seamless network and automated. So that's some of the stuff that we like because we're behind the curtain and they can use our infrastructure to onboard those customers easy and efficiently. So from our standpoint, we're excited to be part of the program and part of the partnership. And I think there's more to be done here in the coming months. Explain to the folks watching live who didn't make this event. I guess it's the second event, first console event. IAX had their inaugural event last year, which we geeked out on the prospects of interconnections scaling. Now they're shipping, they're announcing console. What's the vibe of the show here? What's going on? What's the content like? What are they missing? I tell you what, they need to make it out here next year. This is going to become an annual event for them. From our standpoint, it's a great set of customers in the community, kind of the, there's a lot of buzz about kind of the unveiling of console and the interface that's out there, but just the people that are part of the entire ecosystem. You know, we're excited to be a partner with them, but I know everyone else that's here as part of this show is really see the value in kind of being part of this interconnection. Awesome, and just comments on the industry right now. What do you see this SDN interconnection connecting, I mean, is it converging or? Yeah, that's a good question. My crystal ball, it's been wrong in the past, so I can't tell you that I know where it's going to go, but what I'll tell you is that customers are more and more chewing up bandwidth. They're pushing more and more mission critical applications outside their firewall, and then with that, they need control and accessibility, and that's where we are.  What does this do for entrepreneurs? It seems like there's a lot of opportunities to innovate around this whole console concept. Absolutely. What are some of those things that you'd see?  So I think from an early startup or an entrepreneur standpoint, if you can get in with a lower cost of ownership and create the right experiences for your end users, you're going to succeed in a model like this. Okay, really appreciate you coming on theCUBE, sharing your insight. We are live in San Francisco for Console Connect. Hearing the perspective, what's going on at the fiber? Dark fiber is going to be lit up soon. If we have our way, there'll be no dark fiber left. We're going to have plenty of bandwidth flowing out of the sky and wireless. Thanks so much, I appreciate you spending the time. Thank you for taking your time. We'll be right back with more live coverage for Console Connect 2015 after this short break.


You're all very welcome. My name is Pardig Marfi. You will no doubt wish to be reminded, if you need to be reminded, to turn your phones to silent or switch them off. We're very fortunate today to have Professor Mark Kellyati to speak to us on Russia and the West moving beyond the hybrid war illusion. Myself, I've often wondered what hybrid war exactly was. And I talk the tactic in the Trojan War of introducing the horse was perhaps the first recorded instance of hybrid war. And perhaps there has not been a war since that has not been hybrid in that regard. Anyway, Professor Kellyati is going to challenge the prevailing view on this question of hybrid war. He has a lot of experience in Russia, having lived and worked in Russia. He is now a senior non-resident research fellow at the Institute of International Relations in Prague. And I understand we'll certainly be returning to London where he will take up an important position there. He is the author of a number of works, including We Need to Talk About Putin, as indeed we constantly do. And a more recent one also is the Vori, Russia's super mafia, which I think had quite a reverberation. So Mark, you're very welcome. We look forward to hearing what you have to say. Well, super. Thank you very much indeed. Thank you. Thank you for talking with me. I'll carry on sitting, if that's fine with you. Delighted to be here. So thank you very much indeed to the Institute. Not least, because this is my very first time in Dublin. So very pleased to be here. So let's talk about hybrid war, which apparently is this fearsome new way of war that we all face, that the Russians have invented some new way of blending military force, threat, subterfuge, disinformation, you name it. Maybe even it's part of the gerassim of doctrine named after the current Russian chief of the general staff. There's one small problem with all this. In my opinion, hybrid war does not exist, first of all, exactly as we've heard. As far as I'm concerned, no war in history has ever not been hybrid, has ever not been marked by a combination of military means and non-military means. There is no such thing as a magic Russian new way of war. Doesn't mean to say that we don't face the challenge from Russia. Of course we do. But I think it's important to actually try and unpick what the nature of that challenge is, because that's the only way in which we can work out quite what to do about it in an effective way. And to that end, I think we need to understand two things. One is, what actually is Putin after? Because no conflict can ever be unpicked from the goals of the participants. And then secondly, we talk about hybrid war. Well, in so far as that term, and unfortunately, because NATO uses it and so forth, we are stuck with it as a term of art. But in so far as there is this hybrid war, I would suggest there is not a hybrid war. There are, in a way, three that we need to understand. Three separate different perspectives. So let's start with this, what does Putin want? He does not, in my opinion, have any territorial ambitions beyond Crimea, which pretty much every Russian anyway thinks is absolutely rightfully part of Russia anyway. He has political ambitions. What are his political ambitions? To coin a phrase, it's to make Russia great again. I think that the Putin we are seeing at the moment is one who is absolutely consumed by thoughts of his own political legacy. Like all leaders, especially autocratic leaders, he changes over time. I was going to say it evolves, but that has a certain positive implication. The Putin who came to power in 2000 talked tough about nationalism, but was actually strikingly pragmatic. This is also the Putin, after all, who talked about the potential in the future of Russia being part of NATO. However surreal that may seem now. And frankly, a non-starter would have been even then. But it said something. It wasn't just purely a spoiler or a bit of rhetoric. This is a Putin who did not in any way want Russia to become a Western-style democracy, but who believed that Russia's future lay in some kind of positive relationship with the West, a modus vivendi. And he thought that that was possible. Now, without apportioning blame, because it lies on both sides, it very much became clear that Putin's notion of a relationship with the West is not one with which we were comfortable. Not least at the time he was fighting his brutal, almost genocidal war in Chechnya. And he almost felt, well, let's quit pro quo. We're supporting the Americans following 9-11. We're providing sort of roots and logistical support for their activities in Afghanistan. So surely you can't really have a problem with our own anti-terrorist war, even if it means that Chechen cities are being consumed by fireballs of thermobaric munitions, and Chechen civilians are being treated as basically combatants. And he became angry. And over time, actually there's been this quite quick disillusion that Putin felt with the West. A sense on his part that the West was not being fair to Russia. Now, look, I'm not saying this to say that we should feel sorry for that poor Mr. Putin. Or, indeed, necessarily for Russia. Or that we actually have to accept his view of the world. But what we have to do is accept that he has a view of the world. To understand quite how the world looks through the Kremlin windows. So over time he became more and more disillusioned. His notorious 2007 speech at the Munich Security Conference very much marked a kind of a key right of passage, as he's very much turned to, he regarded that above all the United States was this dangerous force that the real challenge to the world was the so-called unipolarity, in other words American domination of it, and that America was basically using its hyper-power, its military and economic strength to basically bully anyone who didn't fall into line. That was in many ways a political evolution of his view of the outside world. The bottom line was he did not realise that, however imperfectly, in the West we do strive to have value-based foreign policies. As said, I mean, if we're honest it is very, very imperfect. But nonetheless, there is that intent, and that we could not, therefore, just simply sit back and watch all kinds of human rights abuses take place in Russia, in Russian territories, without saying something, without pushing back against it, which he regarded as interference. But then there was a period in which he took a backseat, sort of, kind of. Because of constitutional requirements he stepped down as president because he could not stand for a third presidential term in succession. He became the notional Prime Minister to his former Prime Minister, Dmitry Medvedev. Now look, in practice, of course, he was still running the show. Dmitry Medvedev was his, basically, his soft puppet president. But nonetheless, it meant he had a period in which he was no longer at least kind of formally behind the big table in the Kremlin. And in that period, and this is kind of the crassest form of pop psychology, but nonetheless there does seem to have been an evolution in his thinking about what he stood for. And when he came back, after his time, not exactly in the wilderness, but in the office next door, to his next presidential term, not only did he come back to mass public protests, which he felt had been assisted and encouraged by the West, if not actually orchestrated by the West, but also, too, I think, a new sense of what he was about. It's interesting, talking to some friends who are historians at Moscow State University, saying that it's all kinds of sort of presidential awards and such, like, and usually Putin staffs out those events. But if it's given them historians, we know the history is one of the few things Putin reads, then Putin actually tends to do it himself. And he invariably asks the same question of people he's awarding. In a hundred years' time, how will they be writing about the need? Well, first of all, what an uncomfortable question to be asked by the virtual despot of your country. But secondly, again, it does give us some sense of where his head is at. I think he is now looking much more at this issue of legacy, and his legacy is clearly that he is the man who will actually bring Russia back to where it was. His first two presidential terms were about restoring central power to a country that was coming dangerously close to him, if not being a failed state, now it is about restoring Russia's position in the world outside. And that means, basically, demonstrating that Russia is a great power. Of course, Russia is not a great power in any of the objective standards. This is a country with, depending on how you count it, an economy somewhere between the size of Italy and Spain. Speaking as a half Italian, I think it's fair to say that perhaps with the exception of the French at the moment, no one really cares too much about Rome's position on all the major global issues. But that doesn't matter. Militarily, Russia has modernized its forces quite effectively. But we should remember that European NATO has more ground troops than the Russians do, even without factoring in the Americans and the Canadians. Now, again, they're not all sitting on the border, they're not all necessarily configured for the right kind of operations, but nor are the Russian forces. You know, I'm not trying to say that the Russians are inconsequential, but I'm saying they are not a great power. Soft power, likewise. There are many would-be strongmen around the world who want to be more like Putin. But there's not many countries where people are sitting there thinking, our country will be so much better if it was more like the Russian Federation. On all of these indices, Russia is not a great power. But as far as Putin is concerned, I think this reflects the fact that Putin is not just, in some ways, the last proper generation of Homo sovieticus, someone who really had sort of formative times in Soviet era, but he's also that kind of immediate post-imperial. Which, again, I say this is someone with a British passport. It seems to take quite a while for a country to get over the fact that it's no longer a great world spanning empire. We shouldn't be surprised if actually Russia's still having trouble coming to terms with it. So Putin wants the world to accept that Russia is a great power. Because remember, politics is all about perception.  But his notion of great power is a very 19th century one, I would say. It's not about dynamic technology and interconnection and soft power and so forth. A great power has a sphere of influence, which I think he regards as basically the other post-Soviet revolution of the Baltic states. A great power has a voice and that means a veto in all of the major issues facing the world. And ultimately a great power has a kind of get out of jail free card. He doesn't want to see international structures and norms necessarily destroyed. But he feels that when Russia wants to, it can ignore those rules and norms. Why? Because he feels that's what America does. And he feels, well, that is his model of how great power is. Now, obviously the only way he can get these things is if he manages to persuade us to allow him that. And therefore I think this is the nature of the struggle. This is not him, this is a very post-ideological struggle. This is not someone who is thinking, oh, I need to spread my message. He does not want to see, I don't know, Russian orthodoxy extended to the French. He does not care about what social models of organisation are applied in Scandinavia, in and of themselves. Instead, he is trying to find ways of persuading forcing us to treat Russia in that light. Or at the very least to ensure that we cannot prevent him from asserting Russia's great power status. So, the three hybrid wars that I want to talk about. First of all, when we talk about hybrid war in the West, we tend to think of this terrible thing that the Russians have created, and Crimea was the first expression of that. Well, it's quite interesting that what is the Russian phrase for hybrid war? It is, They just simply translated it across. Why? Because as far as they're concerned, hybrid war was a Western invention that they face. They look at the Arab spring risings. They look at the coloured revolutions that took place in post-soviet space. They look at what happened in Ukraine with the Maidan. And instead of seeing these as the upwellings of public resistance and often repulsion about corrupt, inefficient and unresponsive or autocratic regimes, they see the dread hand of Langley. They see these as essentially run operations. Now, obviously, they're wrong. I mean, I'm not saying that the Americans didn't often give some of these helping hands and very much encourage them. But the idea that actually the Americans can generate these mass popular uprisings is nonsense. But let's be honest, it's a very human thing. We always have a tendency to assume the other side is that much bigger, tougher, smarter and better sort of able to manage things than we are. We know our own flaws. The tendency to think of Putin is this master geopolitical strategist continually looking at the global chessboard and running things. So too, the Russians actually have a sense of the West and above all, the Americans are like that. So their notion is actually that hybrid war is something that they face the risk of. And that's one of the reasons why they are so paranoid about any expression of political opposition. Why they were so concerned about the public protests that took place when Putin came back to the presidency. Not just simply because they saw this as signs of the Russian people or elements of the Russian population being fed up, but because they regarded this as some kind of evidence of regime change plots from the West. So, I could go on about that, but I'll leave it there. So first of all, the Russians believe that they face this threat. What are the consequences? If we look at what the military look at. The military, like militaries all over the world, are basically looking at how in the modern era you can support the activities of your warfighters with all kinds of non-military means. Propaganda and information operations, cyber attacks and such like, again, this is not anything special to the Russians. They might have their own particular twist on how they would do it, but if you look at, for example, take a look at Desert Storm, the invasion of Iraq, that had a massive information operations component to try and get Iraqi soldiers to defect or surrender or just simply keep their heads down and so forth. Of course, it's how you find wars these days, just as you always have. Now, we know a lot about what the Russian military is doing because they have a tradition of relatively open discussion within their own press. When you have a military structure which is over a million men and a few women strong, when you have about 40 different academies and other education institutions you can't keep all your discussions behind closed doors, tank top secret and so forth because this is going to drive your doctrine, your procurement, your training, everything. So we look at that and we see what the military are planning and we think, okay, that's it. But also, the military is looking at these kind of operations because they think they're going to face them. There was a particular sort of notorious now article in a Russian military publication called the Military Industrial Courier which, trust me, is as exciting a page turner as it sounds in which the chief of the general staff, Gadassimov or more likely the people in his team who actually write these things had this article based on a speech he'd given about non-military means and just how powerful we are in the modern world. And we, of course, jumped on that as a ha Gadassimov is saying this is what the West does, but probably this means this is what the Russians will do. Well, no, actually this is a military man who's trying to reassure the Kremlin. Remember, if you're the chief of the general staff, you're not the foremost soldier. You are also the military's main political advocate. You are constantly struggling for budgets and purpose and so forth. And this is the time when the Kremlin was getting worried about the thought that it would face Gibridnaya Voina from the West. And so, Gadassimov was writing and talking about this because he was trying to say, don't worry guys, we've got a plan. I mean, it's a very Russian plan.  But the point is it means that that's why he was talking about it. He was talking about it because his political masters were worried and he didn't want then thinking that the military could not handle this particular potential threat. So in other words, this was his way of saying, we've got a plan, so keep spending the money on us so we can buy all our shiny new toys. Which is after all what all generals, all good generals want. But the trouble is we focused on that in the West. And we focused on the model of Crimea, particularly. So whenever we see all these non-military disinformation and information operations and espionage and subterfusion and such like, it's always with the, okay, when do the troops come though? This is surely just about preparing the battlefield to the inevitable day when the little green men, remember those commandos without the insignia come over the border. Well, I don't think the little green men are ever going to come. And the reason for that is the third hybrid war. This is what I want to end with. The military is subordinated to the civil authorities. True in almost every country. But actually Russia has a particularly strong tradition of that. You know, the Communist Party was very, very keenly aware of the need to control the military. And we see that still today. It's much, much harder to tease out the views, but if you look at the national security establishment, particularly within the apparatus of the Security Council, the Presidential Administration, which are the most powerful institutions in Putin's Russia, because basically they are Putin's personal chancellery. There's a very different debate. There they say, look, in the modern world war has become incredibly expensive. And not just in terms of cash, though obviously modern weapons are ridiculously expensive, but also politically. Doesn't matter if you're in Russia or in the West, we have become very casualty averse. And that's a good thing, I think. The days when you think, well, we'll have a war and we'll say, okay, we'll lose a few thousand soldiers, but it's all right, they're all working class boys and there's always more of them breeding in the cities. We've gone beyond that. A single casualty, a single reversal can actually turn the whole nature of the political debate about a military operation. But also we live in an interconnected world, increasingly so. Global supply chains, ownership chains, as well as the effect of the internet and so forth. And so what the national security establishment in Russia is thinking is, look, we can use these non-military means not to prepare the battlefield for when we send in the soldiers, but as an alternative. But actually we can get at political gains through using these means. And what do they want? They want to divide us. They want to ensure that within countries and between countries that we are so divided that we cannot muster the kind of unity and the cohesion that is needed to challenge what Russia is doing. They want to distract us. There is a sense, looking not without reason, the western democracies are essentially attention deficit disorder societies. But today we're really concerned about this issue and we think it's really important that, oh, shame! Something else crops up and distracts us and the whole sort of political debate has moved. It's one of the things that they've won, and they're very, very keen to push the whole issue of migrants to say, no, no, no, the real threat to Europe comes from the south, it comes from the Middle East. Russia and then nothing going on there, really. And the third thing they want to do is to demoralise us to make us feel that either Russia is too dangerous, too worrisome, too unpredictable and that therefore rather than making a stand against Moscow we need to be making a deal with the Russians. Because this is how the Russians are going to get what they want, by convincing us that we need to basically give them something in order to reduce the challenge. So, in conclusion, this for me is actually the threat we face. Not that the Russians are ever going to roll their tanks into the Swalki Gap and, you know, this is not going to be a re-run of kind of NATO nightmares. Nor that the Russians are going to try and reshape our political systems or whatever. They don't really care about how they are going to go except when it comes to Russia. What we will see is a multi-vector campaign without any real clear central guidance, without any sort of message except just simply to find any opportunities in order to distract, divide and demoralise us. In the hope that either exactly we will basically become so confused that we are not able to do anything about what Putin is doing for us close at home, such as in Ukraine, or that we will actually feel that we need to have some kind of Yalta 2.0, some kind of deal that basically tells him, you can have what you want, just stop bothering us, in which case I think he will be delighted. Anyway, I will stop there and then throw it open.


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