A supplier “cost tsunami”, the recent oil price “bust” and tightening wallets are threatening to worsen a forecast supply-demand gap in oil and gas and are already causing “demand destruction”, the head of energy power Norway’s biggest oil company said Tuesday.

StatoilHydro chief exec Helge Lund was on hand to support the Oslo launch of last week’s International Energy Agency premier, World Energy Outlook. IEA chief economist Fatih Birol was in the Norwegian capital promoting his message that only investments in oil, gas and carbon storage can stave off global instability.

“(Rising supplier costs) are also important in addressing the supply, demand gap which was mentioned by the IEA,” Lund said on the sidelines of the World Outlook seminar in Oslo.

StatoilHydro’s leader of five years appeared to making a general appeal to curb escalating costs, although supply chain attendance was sparse. He cited steel and rig costs which have soared 250 percent and 400 percent.

Lund made several direct and oblique references to the rising costs associated with “five years of upturn”.

“Quality has not kept pace”, he pleaded, adding, “Enhance quality, drive down costs.” StatoilHydro, meanwhile, was engaging in a key dialogue aimed at addressing quality and pricing issues.

“I believe the supply industry must take responsibility for the quality of their deliveries,” he said, adding that his company was on course to pay 65 billion kroner to suppliers in 2008.

Tags: StatoilHydro