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    ANNUAL REPORT AND ACCOUNTS 1990 ‘I / ,2 ,.1 I 4 •~/ ,L~(’ I’’ 1/h ))?‘~~Il•• h’ /hiiIIh ~I /~v ~fl(IiillJ’(/ I’l((Il. i/i (I)~ U/(/. Ii(’)Ii 111(11(1. I~V ~,lO/ ~v f1/h S’/~/,~/ ~ ~/ Iiib IIt(/II,,Il(iI ­~ 1/hh un, i Club/i n 1/. (i­~/. STATOIL

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    Contents 1 Harald Norvik: Continuous Improvement 3 Highlights from operations 1990 4 Financial highlights 1990 6 Executive Committee 7 Report of the Board of Directors 10 Board of Directors and Corporate Assembly 11 Profit and Loss Account for 1990 12 Balance Sheet at 31 December 1990 14 Statement of Accounting Policies 15 Notes to the Financial Statements 26 Auditors’ Report and Recommen dation from the Corporate Assembly 27 Review of operations 1990 47 Survey of group activities 50 Reserves and production 52 Articles of Association 53 Statoil Executives 54 Addresses

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    CONTINUOUS IMPROVEMENT [4, “Otonil” (Autumn­like) is painted by 15­year old Eugenia Esteban from Argentina. (The International Museum of Children’s Art, Oslo.) At the time of writing, we are in one of the most critical periods for the international community. The Gulf crisis can inflict deep wounds on the world. How deep, only time will tell. To those who work in the oil industry, the Gulf crisis has also provided another reminder of how important energy particularly oil is to the world. Again we have ­ ­ to realise that, as an oil company, we must always be able to cope with uncertainty. Looking back, 1990 was one of the most encouraging years since the Second World War. Developments in the East and the integration process in Europe make 1990 a year that will forever command an important place in history. But changes take place very quickly, and it was easier to be an optimist at the end of 1989 than at the close of 1990. For Statoil, 1990 was a good year. Once again we met our goals for safe and effi cient operations. Our financial position was further strengthened. We improved our standing in domestic and international markets. New, important projects were ap proved and are in progress. Efforts to develop further our competence and consoli date our organisation continued. At the same time, important steps were taken to wards greater internationalisation of the Group, notably through a strategic alliance with BP. Also the 1990s will be marked by energy issues globally, regionally and nation ­ ally. But above all, the relationships between the need for energy and the global environmental challenges will be put even more clearly on the agenda. We work in an industry that must find many of the answers to these challenges. A key concept in the oil business is long­term strategy. We always have to think in decades. To realise our vision for the Statoil group, we still have to work persist ently to raise our overall expertise and improve our position with our customers. Statoil’s challenge in the 1990s is to be an organisation that is willing to undergo continuous improvement and where ability flourishes. HaraidNorvik Statoil’s Annual Report and Accounts 1990

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    HIGHLIGHTS FROM OPERATIONS -~ ...~- C- ~. C,,— ~, Best operati~: profit ever. 4 ~ ~ Statoil’s injuiy rate reduced by 35 per cent. Statoil buys a loper cent stake in a gas field offihore Thailand and opens its own office in Bangkok. Strategic alliance agreement Plan for development of Statfiord on international operations satellites approved. established between Statoil Lfflehammer’94 and BP Exploration. Statoil and Lillehammer Olympics Organising committee sign sponsorship agreement for the 1984 Winter Olympics.. kerhetipris ~ ~ !~ First Statoil petrol station in Norway opened. New polypropylene plant commissioned in Antwerp. Safety award 1990 to Statoil’s Stenungsund plant. More oil from Statfiord. Recoverable reserves increased by 50 million cubic metres. New extended-reach drilling Statoil acquires the record made on Statfiord C. Swedish company AB Nobel Plast with over 2,000 people on i Five new 100,000 dwt environmentally sound tankers chartered. its payroll.

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    INANCIAL HIGHLIGHTS Amounts in NOK million NON bOOn 70 NOK million 16.000 60 14.000 12.000 40 10.000 30 8.000 20 6.000 4.000 2.000 1988 1987 1980 1969 990 1986 1987 1988 1989 1990 Clod. Gas p.00. eodn.d T,ansnan 05,ar 04 oeanlnas p1004018 moI.. After tax Before extraord. items Operating income Profits 1986 1987 1988 1989 Operating income 42 485 51 803 47291 59 594 72356 Operating profit 6601 7 995 6 190 10 543 16027 Profit before extraordinary items 4210 6 458 4 069 8 242 14358 Profit! (loss) for the year (NGAAP) 1145 (1 534) 340 5 073 3270 Profit after tax 1 713 160 165 4 512 4339 NOK mill. NOK mill. 80.000 80.000 70.000 70.000 60.000 60.000 50.000 50.000 40.000 40.000 30.000 30.000 20.000 20.000 10.000 10.000 0 1986 1987 1988 1989 1990 0 1986 1967 1988 1989 1990 Share houlders equity Untaxed reseived Fixed assets Current assets Long-term liabilities Current liabilities Assets Liabilities and equity 1986 1987 1988 1989 1990 Fixed assets 42 142 46 300 48 890 48928 50451 Current assets 8 269 9 942 11 099 15 692 23 756 Current liabilities 9 413 11 269 9 990 14 358 21 988 Long-term liabilities 2 739 31 235 34 563 27 033 23 553 Untaxed reserves 8 227 9 708 11 145 12 680 16 170 Shareholders equity 5 217 3 954 4 280 10 527 12 470 Capital employed 42 476 48 823 51 310 51 662 54 462 Adjusted equity (NGAAP) 7 724 7 962 8 494 14 141 17 296 NOK million 14000 12000 10000 8000 6000 4000 2000 -2000 1986 1987 1988 1989 1990 Investments Cash flow 1986 1987 1988 1989 1990 Investments & acquisitions 8 427 11 685 10 173 5 946 6 991 Cash flow (26) 6547 6375 12538 12021 StatoiloAnnual Report andAccoants 1990

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    FINANCIAL RATIOS 30~ 40 25 I 30 20 15~ 20 10.1 ~1 0 1986 1987 1988 1989 1990 10 Aftertax Beforetao 0 1986 1987 1988 1989 1990 Return on capital employed Return on equity 1986 1987 1988 1989 1990 Return on capital employed 19.3% 19.1% 15.0% 21.6% 31.2% After-tax return on capital employed 6.0% 2.0% 3.0% 9.3% 9.2% Average interest on long-term liabilities 9.8% 9.0% 9.1% 8.6% 8.0% Return on equity 23.1% 2.0% 2.0% 39.8% 27.6% 90 12 80 70 10 60 8 50 40 6 30 4 20 10 2 0 1986 1987 1988 1989 1990 0 1986 1987 1988 1989 1990 Eqaity rabo Debt. eqaity ratio Financial ratios Dividend yield 1986 1987 1988 1989 1990 Equity ratio 15.7% 14.4% 14.3% 22.5% 24.1% Debt-equity ratio 78.6% 80.0% 80.8% 66.8% 59.8% Dividend yield 11.0% 0 0 5.6% 8.7% Definitions Profit after tax Profit before year-end adjustments less taxes less change in deferred tax. Capital employed Total assets less non-interest bearing short-term debt. Adjusted (shareholder’s) equity Equity at book value + equity share of untaxed reserves. Return on capital employed Profit before extraordin items + interest costs Average capital employed After-tax return on capital employed — Profit after tax + interest costs after tax Average capital employed Average interest on long-term liabilities Interest incurred Average long-term liabilities Return on equity Profit after tax Average adjusted equity + minority interests Equity ratio = Adjusted equity — Total assets less accounts payable for Government equity oil Debt/Equity ratio = Capital employed less deferred tax less adjusted epuity Capital employed less deferred tax Dividend yield = Dividend Adjusted equity Cash flow Payments from and disbursements to operations less net financial disbursements less taxes paid Statoils Annual Report and Accounts 1990

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    THE EXECUTIVE COMMITTEE President and Chairman H. Norvik Senior Executive Senior Executive Vice President Vice President J. N. Void T. Espedai The Statoil group’s organisation has been further developed and strengthened. A fourth business unit for sales and transportation of natural gas has been established. The Executive Committee consists of the president and chairman of the committee, two Senior Executive Vice Presidents, one of whom is also Vice Chairman, and four Presi dents, each heading their respective business unit. The two Senior Executive Vice Presidents support the President in the management of the group. They are also responsible for the group’s Corporate Services and Staff Functions. Statoil is wholly owned by the Norwegian State. EXPLORATION NATURAL GAS REFINING AND PETROCHEMICALS AND PRODUCTION MARKETING AND PLASTICS I President President President President S. Bergseth T. Vareberg S. Riben T. Tønne Statoil’sAnnu,al Rtpoit a~dAtco,s~ts 1990

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    REPORT OF THE BOARD OF DIRECTORS RESULTS The Statoil group consolidated its market posi • Refining and Marketing improved its opera tions and financial standing in 1990­ a year marked ting profit by NOK 1,273 million, to 1,229 million by strong price fluctuations for the group’s main in 1990. Full operation at Mongstad and high products. The price of North Sea oil was on refining margins were mainly responsible. Retail average about USD 24 per barrel in marketing, especially in Sweden, 1990, USD 6 higher than in 1989. also produced satisfactory results. Group turnover was NOK 72,356 Statoil’s cost • Petrochemicals and Plastics re million, up 21 per cent from 1989. effectiveness corded a NOK 718 million operat Profit before extraordinary programme ing profit, down NOR 78 million items was NOK 14,358 million, the boosted profit from 1989 owing to lower plastics group’s second best result to date. prices and higher feedstock costs. The profit was NOK 6,116 million by NOK 1.8 more than in 1989, an increase of billion. Statoil’s cost effectiveness pro about 74 per cent. gramme continued according to The group’s effective tax rate plan and contributed about NOR and taxes paid increased considerably in 1990 1.8 billion to the 1990 results. The current pro compared with 1989. Calculated taxes for 1990 gramme will continue into 1991. were NOK 7,741 million, against NOK 2,858 The group’s financial strength improved fur million in 1989. Group after tax profit is calcu ther in 1990 as the equity ratio rose from 22.5 lated at NOK 4,339 in 1990, compared with per cent to 24.1 per cent. This increases the NOR 4,512 million in 1989. group’s economic power. The improved profit before tax is attributable to Return on capital employed was just over 31 increased oil prices, higher oil pro per cent in 1990, up 10 percentage duction, better cost effectiveness points from 1989. Progress is satis and lower interest costs. Net Equity ratio factory in the light of market condi financing costs were reduced from rose from tions and the trend in competitors’ NOK 2,301 million in 1989 to 1,857 22.5 to 24.1 results. million in 1990. Refining results per cent. Consolidated profit for the year also had a positive effect on the im after tax and year­end adjustments proved before tax profit. in accordance with Norwegian ac counting policies was NOR 3,270 million in 1990. Business unit results in 1990: The parent company, Den norske stats olje selskap a.s, made a profit for the year of NOK • Exploration and Production improved its oper 3,070 million, which the board recommends to ating profit to NOK 10,817 million, up 4,072 mil be allocated as follows: lion from last year, benefiting from high oil prices and increased oil production. Statutory reserve fund NOK 961m • Natural Gas made an operating profit of NOK Dividend NOK1500m 2,941 million. 1990 was the first year that Nat Allocated to free reserve NOK 609m ral Gas operated as an independent business NOK3O7Om nit. Statoils Annual Report and Accounts 1990

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    REPORT OF THE BOARD OF DIRECTORS OPERATIONS AND MARKETING INVESTMENTS AND FINANCES The group’s operations in 1990 were marked Investments and acquisitions in 1990 were by a high level of safety and generally high plant NOK 6,991 million, 66 per cent of which were in availability and production. Norway and 34 per cent abroad. Total exploration offshore Nor High plant About NOK four billion was in way increased. Statoil was operator availability and vested in oil and gas production for five exploration wells spudded in production and transport facilities, nearly 1990. As operator, Statoil was re marked 1990 NOK one billion in refining and sponsible for four of ten new discov marketing and just over NOK one eries in the Norwegian sector. They operations billion in petrochemical opera contributed about 75 million barrels tions. to the group’s proven oil reserves. An upward Profits and cash flow in 1990 also provided adjustment of Statfjord reserves contributed to for further repayment of the group’s long-term increasing Statoil’s oil reserves by 130 million liabilities. This is in line with the group’s objec barrels. tive of increasing its equity ratio. The group’s Plant availability and utilisation of capacity long-term interest bearing liabilities were NOK were high for Statoil operated oil and gas fields 21.2 billion at the end of 1990, down NOK 3.9 and transport systems, although the Gullfaks billion from 1989. field produced below budget. This was mainly In addition to contractual instalments, sub due to reservoir problems causing longer drill stantial advance repayments of loans were ing time and slower production build-up. Cor made. Average interest paid on the group’s rective action taken has already had a positive long-term debt was 8.0 per cent in 1990, against effect. 8.6 per cent in 1989. Production and availability were also high at The group’s liquid funds increased by about Statoil’s petrochemical plants in Bamble and Ste NOK 2.1 billion. Such funds are mainly placed nungsund and at the Mongstad and in bonds, bank deposits and certi Kalundborg refineries. In October, ficates and to a minor extent in new polypropylene production began Continued shares in Norwegian companies at North Sea Petrochemicals, Ant repayment of listed on the stock exchange. werp, which is jointly owned by Stat- long-term oil and Himont Incorporated. liabilities. SAFETY AND ENVIRONMENT Statoil had access to 124 million barrels of equity oil in 1990, an in For the third year running the crease of five per cent on 1989. Including royalty Statoil group is able to present a safety record oil and the Government’s equity oil, Statoil sold showing a decline in lost time caused by inju 334 million barrels in 1990, making the company ries. From 1989 to 1990 the improvement was the largest seller of North Sea crude. 35 per cent. All Statoil’s business units reduced Statoil increased its share of the Scandinavi their number of lost-time injuries in 1990. Much an market for petrol and other refined products, attention is paid to improving the registration despite a contraction of the overall market and and follow-up of near-accidents to enhance safe fiercer competition. ty further. The group’s natural gas sales were 3.1 billion Work on improving the internal and external cubic metres, six per cent down from 1989. All gas environment continued in the operating units. transport systems had high availabi For example, good results were lity. Coordination of transport activi seen from efforts to reduce efflu ties and other measures led to re Strongly ents to air and water at the Mong duced costs also in 1990. improved stad refinery. As part of the group’s Options exercised under the Troll safety increased attention to environmen and Sleipner gas sales agreement in results. tal issues, the position of senior 1990 provide a basis for higher Nor vice president for environmental wegian future shares of the Europe affairs was established in 1990. an natural gas market. Statoils Annual Report and Accounts 1990

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    REPORT OF THE BOARD OF DIRECTORS ORGANIsATI0N AND PERSONNEL Danish North Sea in 1990. An office was estab lished in Thailand to look after the group’s explo The scope of the established programmes for ration and production interests in that country. improved development of employees and rota tion of managers was expanded by a comprehen OTHER NEW PROJECTS sive development programme for mid­level man agers. An important element in efforts to devel The Storting (Norwegian parliament) ap op Statoil’s organisation further is greater atten proved last year the development and operation tion to the build­up of technological expertise. of the Statfjord North and East satellite fields. Reduced use of manpower is part of the The development project has started, together group’s cost effectiveness target. At the end of with construction of a condensate pipeline from 1990 the number of man­years was reduced by Sleipner A to Karstø, north of Stavanger. over 1,300 from previous projections. However, Against the background of increased gas de as further commitments involved increased man livery commitments under the Troll agreements ning in new areas, the number of employees on and prospects for the gas market in general, Statoil’s payroll increased in 1990 from 11,023 to Statoil has recommended laying a third gas pipe 13,222. The growth is mainly due to the acquisi line to northern Germany. This transport sys tion in Sweden of AB Nobel Plast, tem is scheduled for completion in but also to other new activities. 1995. The board wants to give the em Build­up A step towards industrial exploi ployees credit for their part in the of tation of Norwegian natural gas was outstanding 1990 results and for technological taken when Conoco and Statoil pro their contribution to creating a more expertise posed using gas from the Heidrun effective and competitive Statoil field offshore Mid­Norway as feed­ group. stock for methanol production. In early 1991 the Government approved the field INCREASED INTERNATIONALISATION development, but postponed for a year the final decision on how to use the associated Heidrun The Statoil group’s international commit gas. ments grew in 1990. Statoil has decided to build a new research Internationalisation of the petrochemical bus centre near Trondheim. iness continued. Production started at the new polypropylene plant in Antwerp. Statoil in PROSPECTS creased its involvement in the production of fin ished goods through its take­over of AB Nobel To develop Statoil further into a leading inter Plast in Sweden, a manufacturer of plastics prod national oil company, the group has to match its ucts for a number of industries, particularly the capabilities with the best worldwide. Interna car industry. tional competitiveness also is a prerequisite for An important element in the group’s strategy Statoil’s ability to maintain and strengthen its for further internationalisation was the decision in position in a more open and competitive Scandi the late summer 1990 to enter into a strategic navian home market. alliance with BP Exploration Company Ltd. The With its marketing centre of gravity in Eu alliance covers international exploration and pro rope and a strong reserves base in Norway, Stat­ duction, research and development, and gas mar oil is well qualified to benefit from the current keting and transport. The explora economic integration process. tion and production agreement was Results of the 13th Norwegian signed in late 1990, and covers the Statoil in Offshore Licensing Round provide Soviet Union, offshore and onshore strategic Statoil with the potential needed to areas in West Africa and offshore alliance develop further its reserves base, acreage in Vietnam and China. with BP and represent new and interesting Statoil was involved in explora challenges to the organisation. tion drilling in the UK, Dutch and The energy market of the 1990s Sfatoiis Annual Report and Accounts 1990

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    REPORT OF THE BOARD OF DIRECTORS will be increasingly affected by environmental owner’s expressed support to the group’s objec conditions. Statoil’s access to gas and sweet tive of building up the equity ratio to an interna crudes gives the company a competitive edge in tional level over the next few years. this market. The attention paid by management and em Strong fluctuations in the mar ployees to customers and to the kets for the group’s principal prod market will determine the level of ucts in recent years emphasise the success achieved by the company. importance of combining a sound Equity ratio Current work to strengthen such financial base with the ability to ad to be attitudes will continue throughout just. In this way a long-term perspec increased the group. Statoil’s future will tive can be established for Statoil’s further. eventually depend on the quality commitments in the 1990s. and performance of the organisa The 1990 results strengthen the tion’s human resources. basis for such commitments and so does the STAVANGER, 28 FEBRUARY 1990 _~,~J~FHA~D OF DEN NORSKE STATS 0 LJESELSKAP ~‘~NHA.S JAN ERIK LANGANGEN OFSTAD CHAIRMAN DFI’UTY CHAIRMAN BJARNE GRAVDAHL ~/YNGVE HAGENSEN ANNE ØTAN ~c’1 PElTER ANDA SE SIMONSEN DO NGELVIK ..~, *—1~f~I fi Directors from left: Odd Angelvik, Ase Simonsen, PetterAnda, Anne ø ian, Bjarne Graydahl, Marit Reutz, Arnftnn Hofttad, Jan Erik Langangen, Yngue Hagensen. Deputies Bent Wenaas, Kjeii Rimberg, Svein G. Øhriing. Kjell Heigeland, Anne Bent Hjorth Viken, Tor Ragnar Pedersen, Thove Marie Johansen Corporate Assembly Oluf Arntsen, chairman, Brit Jakobsen, deputy chairman, Axel Buch, Kristin Krohn Devoid, Sigbjorn Eniksen, Vigdis Ravnøy, John Stene, Unn Aarrestad, Terje Fossmark, Svein H. Roifsen, Tore Jan Landmark, Heige Kjorhoit Deputies Oddny Bang, Knut Engdai, Ragnhiid Setsaas. Per Hasier, Roar Skau, Marie Dybvik, Tor Greger Hansen, Lillian Tangen, Geir T. Christiansen Observers: Bjørn Laastad, Svein K. Kjennerud, Siv Berntsen, Anne Siind Statoils Annual Report andAccounts 1990

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    PROFIT AND LOSS A CCOUNT For the year ended 31 December 1990 NOK million The consolidated companies Statoil 1990 1989 1990 1989 Operating income (1) Gross operating income 81 475 68445 60039 48314 Petrol tax etc.. (9 119) (8 851) Net operating income 72 356 59594 60039 48314 Operating costs ost of goods sold 30 033 24 741 24 043 18 587 alaries and social costs (2) 4 900 4 279 3 493 3 146 •ther operating costs (3) 15 360 14 250 12 255 11 819 x.loration costs 1 102 1037 871 967 I rdin depreciation (12) 5 225 5 140 4 487 4 496 Changes in stocks (291) (396) (313) (399) Total operating costs 56 329 49 051 44 836 38 616 Operating profit 16 027 10 543 15 203 9 698 Share associated companies (10) 188 Financial income and financing costs Dividend received (10) 8 166 157 133 Interest from subsidiaries 190 190 Interest income and other financial income 842 596 419 266 Interest costs and other financial costs 2 707 3 063 2 356 2 901 Net financial items 1 857 2 301 1 590 2 312 Profit before extraordinary items 14 358 8 242 13 613 7 386 Extraordinary income 1 263 1 263 Profit before ear­end ad stnients 14 358 9 505 13 613 8 649 Year­end adjustments Year­end adjustments (4) 3 343 1 563 3 251 1 261 Taxes (5) 7 741 2 858 7 292 2 520 Total year­end adjustments 11 084 4 421 10 543 3 781 Profit before minority interests 3 274 5 084 3 070 4 868 Minority interests 4 11 Consolidated profit for the year (6) 3 270 5 073 ~ profit for the financial year: Stl~ reserve 961 711 961 711 Free reserve 809 3 562 609 3 357 Dividend 1 500 800 1 500 800 3270 5073 3070 4868 Statoil’s Annual Report andAccounls 1990

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    BALANCE SHEET at 31 December 1990 NOK million The consolidated companies Statoil 1990 1989 1990 1989 ASSETS FIXED ASSETS Property, plant and equipment (12) Production plants and technical installations 38 897 39907 34 746 35 548 Construction in progress 6 019 4205 5 364 3 818 Land and buildings 3 505 3 346 1 732 1 771 Long-term receivables and investments Investments in subsidiaries (8) 4 870 3 699 Investments in other companies (9) 65 33 186 153 Investments in associated companies (10) 316 150 Long-term investments 1 288 1 033 425 274 Long-term inter-company receivables 1191 1 821 Unallocated excess value (11) 361 254 Total fixed assets 50 451 48 928 48 514 47 084 CURRENT ASSETS Stocks Raw materials 811 330 482 168 Finished products 1 987 1 594 639 555 Short-term receivables Accounts receivable 11 507 7074 7 990 4231 Inter-company receivables 1 379 920 Other short-term receivables 3 224 2 517 755 836 Cash and short-term deposits Cash, bank deposits (7) 6 227 4 177 5 075 2 843 Total current assets 23 756 15 692 16 320 9553 Total assets 74 207 64 620 64 834 56 637 Stavanger, 28 Febntary 1991 Jan Erik Langangen Arnfinn Hofstad Bjarne Gravdahl Yngve Hágensen Marit Reutz Anne Oian Petter Anda Odd Angelvik Ase Simonsen Harald Norvik President and Chairman of the Executive Committee Statoils Annual Report and Accounts 1990

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    BALANCE SHEET at 31 December 1990 NOK million The consolidated companies Statoil 1990 1989 1990 1989 LI~rnLITIEs AND SHAREHOLDER~S EQUITY Current liabilities Short­term bank loans and overdraft facilities 981 751 388 303 Withholdin: taxes and holida a 2 353 2 399 625 552 Accrued interest .a able 618 755 602 717 Dividend payable 1 500 800 1 500 800 ccounts .a able 7 835 4335 6 749 3 228 Inter­corn ian .a ables 646 85 Accrued taxes payable 5 195 2 322 4 800 2 083 Other current liabilities 3 506 2996 2 418 2352 Total current liabilities 21 988 14358 17 728 10 120 Ion ­term liabilities Long­term loans and provisions (13) (14) 22 786 26 217 20 028 24 343 Currency fluctuation reserve 334 330 334 330 Deferred taxes 15 433 486 Total long­term liabilities 23 553 27 033 20 362 24 673 Untaxed reserves Accelerated tax depreciation on fixed assets (16) 14 748 11 151 13 609 10 531 Other reserves (17) 1 422 1 529 801 549 Totaluntaxedreserves 16170 12680 14410 11080 Minori interests 26 22 Shareholders equity Restricted shareholder’s equity Share capital (49,397,140 shares at NOK 100 each) 4 940 4 940 4 940 4 940 Statutory reserve fund 4 489 3 528 4 489 3 528 Unrestricted shareholder’s equity Free reserve 2 856 1 873 2 905 2 296 E~c~n currency translation adjustment 185 186 Total shareholder’s equity (18) 12 470 10 527 12 334 10 764 Total liabilities and shareholder’s equity 74 207 64 620 64 834 56 637 Guarantees 352 324 342 279 Secured liabilities 217 199 Statoils Annual Report andAccounts 1990

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    STATEMENT OF ACCOUNTING POLICIES The consolidated financial statements are based Periodic maintenance on the same accounting policies as those applied Periodic maintenance is expensed in the periods by the parent company. They include the parent involved. company, Den norske stats oljeselskap a.s (Statoil) and the subsidiaries and associated Associated companies companies listed in notes 8 and 10 to the finan Companies where Statoil has considerable in - cial statements. fluence and a 20 to 50 per cent equity are de As additional information, the financial state fined as associated companies. ments are supplemented with statements of Shares in associated companies are included in - Profit after taxation and Adjusted shareholder’s the consolidated accounts according to the equity. equity method. The effect of the change of accounting poli Consolidated accounting policies are amand cies is immaterial. ed as follows in 1990: ACCOUNTING PouclEs Expensed items lated according to the unit of production meth -Expenditure related to licences in the explora od, based on the current price level and an anti tion phase. cipated removal concept. Such provisions are -Expenditure related to research, special studies included in the profit and loss account under and development projects. operating costs and in the balance sheet under -Interest and other financing expenditure. long-term liabilities. -Commissioning costs related to offshore and onshore installations and production plants. Translation of foreign currency -Procurement of spare parts. Items in foreign currency are translated into Norwegian kroner (NOK) as follows: Capitalised items - Income, expenditure and fixed assets are re -Expenditure incurred by the project organisa corded at a monthly rate of exchange set for tions related to plants under development. accounting purposes. -Field expenditure incurred after approval of - Current assets and current liabilities are trans Plan for Development and Operation. lated at the rate of exchange prevailing on 31 December. Depreciation - Long-term liabilities are translated at the ex Ordinary depreciation on oil and gas production change rates prevailing when the loans were installations is accounted for under each individ drawn. Any exchange loss resulting from re ual field or transportation system using the unit translating the debt at year-end rate of ex of production method. change is charged to expense. Similar ex Ordinary depreciation on other assets is cal change gains are recognised as income only culated on the basis of their economic life ex when such gains are realised, or to the extent pectancy, using the straight line method. that unrealised gains represent a reversal of The difference between ordinary deprecia previously provided unrealised losses. For tion and tax depreciation is shown under year- long-term receivables this policy is applied end adjustments as accelerated tax depreciation. analogously. - Unrealised currency losses in connection with Contingencies forward trading are expensed and included in Contingent losses which are likely and quantifia the balance sheet as short-term liabilities. ble are expensed. - For currency swap agreements, the calcula tions of average exchange rate at drawdown Site restoration and removal costs and allocation to the currency fluctuation re Under the licence terms the authorities may or serve have been based on open foreign ex der the licensees to remove the offshore facili change positions. ties after production has permanently ceased. To cover Statoil’s anticipated share of any such Stocks removal costs, annual provisions are made in the Stocks of crude oil, products and drilling equip financial statements. The likelihood of removal ment are valued at the lower of production/pro is evaluated annually and any provision is calcu curement cost and actual value. Statoils Annual Report and Accounts 1990

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    The Government’s royalty oil Partnerships and limited partnerships Statoil buys at a “norm price” all oil received by Statoil’s share of the income, expenditure, assets the Government as royalty in kind from fields in and liabilities of partnerships and limited part the Norwegian sector of the Continental Shelf. nerships is included under the appropriate head Statoil includes the costs of purchase and pro ings of the company’s profit and loss account ceeds of sale of this royalty oil in its operating and balance sheet. costs and operating income, respectively. Consolidation The Government’s equity oil ­ Companies in which Statoil, directly or indirect As manager of the Government’s direct financial ly, has a share exceeding 50 per cent are de involvement in the petroleum industry, Statoil fined as subsidiaries. markets the Government’s equity oil. The title ­ Share capital (and pre­acquisition reserves) of to such equity oil sold via the Mongstad crude subsidiaries are eliminated in StatoiPs books oil terminal is transferred to Statoil at the off using the past equity method. Any assignable shore loading facility. Statoil includes the costs excess of purchase price over book value is of purchase and proceeds of sale of this royalty assigned to the relevant assets and depreciated oil in its operating costs and operating income, accordingly. Unassignable excess value is de respectively. The net proceeds of all other equity preciated over 10 years. Calculation of excess oil trading are included in operating income. value takes deferred taxes into account. ­Foreign subsidiaries are consolidated in ac Trading cordance with the rate of exchange prevailing Crude oil and products trading is included in ope on 31 December. Currency gain/loss on share rating income and operating costs to the extent holder’s equity is entered against shareholder’s such transactions involve physical deliveries. The equity as a separate item in the balance sheet. net proceeds of transactions not involving physical deliveries are included in operating income. NOTES TO THE FINi~r~cI~ STATEMENTS FOR 1990 Net operating income is analysed as follows (amounts in NOK million): The consolidated companies Statoil — 1990 1989 1990 1989 Crude oil 33 122 26 377 33 361 27 274 Transport tariff income 3 986 3 656 3 986 3 656 Gas 3 520 2 930 3 994 3 243 Refined products 21 733 17 503 12 534 8 214 Petrochemical products 5 212 4 289 2 535 2 167 Other income 4 783 4 839 3 629 3 760 Total net operating income 72 356 59 594 60 039 48 314 Foreign sales Crude oil 29 468 23 253 29 643 24 149 Gas 3260 2809 3738 3119 Refined products 14 935 13 618 10 152 5 785 Petrochemical products 4 673 3 800 1 996 1 678 Other income 671 623 Totalforeign sales 53007 44103 45529 34731 Total crude oil availability includes purchased crude at NOK 11,752 million. Consolidated operating income includes royalties of NOK 2,972 million. Other consolidated income relates to personnel services charged, NOK 2,992 million and miscellaneous income, NOK 1,790 million. 2. Total remuneration to the members of the Corporate Assembly amounts to NOK 128,000, to the directors NOK 507,000 and the group president NOK 990,000. Auditing fees amount to NOK 2,921,000 in 1990. 3. This item includes royalties of NOK 2,972 million. StatoilsAnnual Report andAccounts 1990

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    NOTES TO THE FINANCIAL STATEMENTS 4. Year­end adjustments comprise (NOK million): The consolidated companies Statoil Change in stock reserve (265) (23) Accelerated tax depreciation 3 586 3 078 Group contribution from Norsk Olje a.s (79) Deffered taxes (105) Consolidation fund 81 11 Other provisions 46 264 Total 3343 3251 5. Taxes consist of (NOK million): Income tax etc. 4810 Special tax 2490 Excess tax paid previous year (8) Total taxes payable by Statoil 7292 Taxes payable by subsidiaries 449 Total taxes, Statoil group 7 741 6. Consolidated profit (and loss) is analysed as follows (NOK million): 1990 1989 Statoil 3 070 4 868 Statoil Sweden 441 339 Statoil Denmark 0 (24) Norsk Olje a.s 51 25 Other companies (142) 30 3420 5238 Group eliminations (146) (154) 3274 5084 Minority interests’ share (4) (11) Consolidated profit for the year 3 270 5 073 7. Cash and short­term deposits include bank deposits, certificates and bonds. Statoil’s bank deposits include restricted funds of NOK 120 million covering employee income tax withheld. The corresponding amount for the consolidated companies is NOK 135 million. Liquid assets in Statoil Forsikring a.s are included with NOK 1,201 million. There is a constraint under Norwegian law on lending these assets to other companies in the Statoil group. Statoil’sAnnual Report andAccounts 1990

  • Page 19

    NOTES TO THE FINANCIAL STATEMENTS 8. Statoil’s investments in subsidiaries: Amounts in 1000 Book value Par value Equity Total company NOK interest share capital Norsk Olje a.s 691500 NOK 290 000 100% NOK 290 000 Rafinor A/S 10000 NOK 10000 100% NOK 10000 Sørøysund Eiendomsselskap a.s 9 500 NOK 9 500 63.33% NOK 15000 Andenes Helikopterbase a.s 33 NOK 3 000 63. 16% NOK 60 Statoil Forsikring a.s 100 000 NOK 100 000 100% NOK 100 000 Norsk Undervannsteknologisk Center a.s 18 000 NOK 18000 60% NOK 30000 Statoil Netherlands B.V. 239 574 NLG 71 000 100% NLG 71 000 Statoil Danmark A/S 1 430 707 DKK 400 000 100% DXX 400 000 Statoil AB 1 549 347 SEK 800 050 100% SEK 800050 Statoil Finland OY 64 FIM 50 100% FIM 50 Statoil France S.A. 227 FRF 250 100% FRF 250 Statoil (UK) Ltd. 621 211 GBP 54 060 100% GBP 54060 Den norske stats oljeselskap Deutschland GmbH 81 687 DEM 21 900 100% DEM 21 900 Statoil North America Inc. 39807 USD 15 100% USD 15 Statoil Petrochemicals Belgium N.y. 217 BEC 1 249 99.9% BEC 1 250 Statoil Coordination Centre N.V.* BEC 1 0.1% BEC 1 926 Statoil (Thailand) Ltd. 77870 THB 300000 100% THB 300000 Total Statoil 4 869 744 * Statoil AB owns 98.3% of the shares in Statoil Coordination Centre N.y., while Statoil and Statoil Netherlands B.V. own the remaining 1.7%. Investments in other companies recorded in Statoil’s balance sheet at historical cost consist of: Amaounts in 1000 Book value Par value Equity Total company NOK interest share capital Botnaneset Industriselskap A/S 3 000 NOK 3 000 18.5% NOK 16200 Norsea Gas A/S 567 NOR 500 2% NOK 25000 Norpipe a.s 128 700 NOR 128 700 50% NOR 257400 Coast Center Base A/S 53 NOR 53 50% NOK 105 Statijord Transport a.s 420 NOR 420 42.04% NOK 1000 Vestbase a.s 400 NOR 400 40% NOK 1000 Norbase a.s 160 NOK 160 40% NOK 400 Helgelandsbase a.s 5 000 NOR 5 000 50% NOK 10000 Basetec A/S 15 000 NOR 15000 33.3% NOK 45000 Dansk Bio rotein A/S 24 512 DXX 1 200 13.52% DXX 8875 Scandinavian School, Brussels 1 856 BEF 1 856 16.06% BEF 62280 A/S Gasnor 1 933 NOR 1 933 19.33% NOK 10000 Ship Maneuvering Simulator Center A/S 1 125 NOR 1125 25% NOK 4500 Ottestad Breathing System A/S 3 060 NOR 142 50% NOK 284 Total Statoil 185 786 Statoil’s Annual Report and Accounts 1990

  • Page 20

    NOTES TO THE FINANCIAL STATEMENTS 1O~ Shares in associated companies recorded in the consolidated balance sheet according to the equity method consist of: Amounts in NOK 1000 Book Equity value interest Norpipe a.s 257 000 50% Coast Center Base A/S 128 50% Statijord Transport a.s 420 42.04% Vestbase a.s 1 319 40% Norbase a.s 853 40% Helgelandsbase a.s 7833 50% Basetec A/S 19 700 33.3% Norpipe UK 24656 50% Ottestad Breathing System A/S 3060 50% Ship Maneuvering Simulator Center A/S 1125 25% Total Statoil Group 316 094 Group dividends in 1989 included dividends also from associated companies. 11. Unallocated excess book value at 31.12.90 related to acquisition of subsidiaries: (Amounts in NOK million) Statoil Sweden 145 Statoil Denmark 216 Total 361 12. Property, plant and equipment, Statoil and the consolidated companies NOK million Cost Additions Disposed Trans- Accumul. Net book as at during of during fers depr. (2) at value 1.1.90 the year(1) the year 31.12.90 31.12.90 Statoil: Production plants and technical installations 62 491 2 052 43 1 614 31368 34746 Construction in progress 3 818 3 160 0 (1 614) 0 5 364 Land and buildings 1 993 53 24 290 1 732 Total 68302 5265 67 0 31658 41 842 The consolidated companies: Produktion plants and technical installations 71 229 2 286 153 1 782 36 247 38 897 Construction in ro ess 4 209 3 638 0 1 828 0 6 019 I.and and buildings 4 156 272 50 46 919 3 505 Total 79594 6196 203 0 37166 48421 (1) Statoil bought Norol’s share of the Mongstad refinery in 1990. This is included as an addition for Statoil, but eliminated in the consolidated accounts. (2) Including NOK 5,000 million accumulated extraordinary write-down of the Mongstad refinery. Statoil’s Annual Report and Accounts 1990

  • Page 21

    NOTES TO THE FINANCIAL STATEMENTS Additions to and proceeds from sales of fixed assets during the last five years, Statoil and the consolidated companies: Prodution Construction Land & Total plants & in progress buildings technical znstallations tatoil: l986Additions 2105 3788 118 6011 1986 Sales 118 43 161 l987Additions 1200 8882 112 10194 1987 Sales 84 226 19 329 1988 Additions 1 236 7 872 57 9 165 1988 Sales 3 455 6 464 1989 Additions 751 3 951 49 4 751 1989 Sales 348 131 31 510 1990 Additions 2 052 3 160 53 5265 1990 Sales 43 24 67 The consolidated companies: 1986 Additions 2 799 3 843 143 6785 1986 Sales 195 45 240 l987Additions 2380 8914 128 11422 1987 Sales 242 226 22 490 1988 Additions 2092 8 230 80 10402 1988 Sales 630 655 41 1 326 1989 Additions 1 775 4293 56 6 124 1989 Sales 531 135 33 699 1990 Additions 2286 3 638 272 6 196 1990 Sales 153 50 203 i3. Long­term debt of Statoil and the consolidated companies analysed by currency: Amounts in millions Long­term Currency Currency Average rate Book value debt swap agreem. position of exchange NOK Statoil: Norwegian kroner (NOR) 399 399 399 S Dollars (USD) 1 500 398 1 898 6.66 12 647 G rnian Marks (DEM) 723 120 843 367.38 3 097 Japanese Yen (JPY) 80 640 (44 640) 36000 4.44 1 598 French Francs (FRF) 750 (400) 350 104.86 367 Swiss Francs (CHF) 250 (100) 150 442.67 664 Pounds Sterling (GBP) 13 (7) 6 10.67 64 Danish kroner (DKR) 400 (200) 200 91.00 182 European Currency Units (ECU) 100 100 7.76 776 Long­term provisions 234 Total Statoil 20028 Statoils Annual Report and Accounts 1990

  • Page 22

    NOTES TO THE FINANCIAL STATEMENTS Amounts in millions Long term Currency Currency Average rate Book value debt swap agreem. position of exchange NOK Subsidiaries: Norwegian kroner (NOR) 101 101 101 Danish kroner (DKR) 52 52 101.92 53 Swedish kronor (SEIQ 475 475 105.05 499 Belgian Francs (BEC) 4 157 4 157 19.03 791 Long-term provisions 1 314 Total subsidiaries 2 758 Total Statoil group 22 786 14. Long-term loans consist of (NOK million): The consolidated companies Statoil 1990 1989 1990 1989 Eksport credits 216 537 216 537 Bank loans 6 598 7 558 5 699 7 135 Bonds and notes outstanding 13 810 16 484 13 799 16465 Insurance-related provisions 1 284 934 Other long-term liabilities 878 704 314 206 22786 26217 20028 24343 The majority of long-term loans expire over the period 1991-1998 inclusive, while a minor share runs until 2008. Average rate of interest on long-term loans in 1990 was 8.0%. About 2/3 of the loans are subject to a fixed rate of interest throughout their term. Other long-term liabilities include provision for site restoration and removal costs by NOK 160 million. Statoil has included capitalised value of unfunded pension liabilities, NOK 75 million, in other long-term liabilities. At 31.12.90 the pension scheme included 466 people. A discount rate of 4% is applied. The unused portion of long-term loan agreements converts to NOK 4,797 million. 15. Deferred taxes When consolidating Statoil Sweden and Statoil Denmark, untaxed reserves at the time of acquisition were split between shareholder’s equity and deferred taxes. Of the NOK 433 million estimated remaining deferred taxes, NOK 360 million relate to Statoil Sweden and NOK 73 million to Statoil Denmark. 16. Accelerated tax depreciation on fixed assets in Statoil and the consolidated companies (refer also to note 14): Amounts in NOK million Accumulated Changes Accumulated at 1.1.90 1990 at 31.12.90 Statoil: Offshore related 9370 2 042 11 412 Onshore related 1 161 1 036 2 197 Total Statoil 10 531 3 078 13 609 Statoil’s Annual Report and Accounts 1990

  • Page 23

    NOTES TO THE FINANCIAL STATEMENT ounts in NOK million Accumulated Changes Accumulated at 1.1.90 1990 at 31.12.90 Subsidiaries: tatoil Sweden 348 181 529 orskOljea.s 314 (24) 290 tatoil Denmark (44) 354 310 Other subsidiaries 13 (3) 10 Total subsidiaries 631 508 1139 Total Statoil group 11162 3 586 14748 17. Other reserves comprise (NOK million): The consolidated companies Statoil 1990 1989 1990 1989 estment fund 58 245 Reserves in stocks 151 400 38 61 Consolidation fund 331 250 90 79 Other funds 882 634 673 409 T tal other reserves 1 422 1 529 801 549 18. Movements in consolidated equity capital from 01.01.90 to 31.12.90 (NOK million): Shareholder’s equity at 01.01.90 10 527 Profit for the year 3 270 Dividend for the year (1 500) Policy amendment, associated companies 174 Change in currency adjustment (1) Sharholder’s equity at 31.12.90 12 470 liability and insurance In connection with the company’s offshore operations, including transport systems, Statoil has, like other licensees in the Norwegian sector, unrestricted liability for possible claims for damages. The company has taken out insurance for this liability up to about NOK 3,630 million for each incident. Liability for claims arising from pollution damage is insured for a maximum of NOK 3,430 million per incident. Statoil’s assets are insured at their estimated replacement value, in part in Statoil’s own insurance company, Statoil Forsikring a.s. Charter parties Statoil had at 31.12.90 signed charter parties for two drilling rigs. The remaining charter periods are two and five years respectively, with options for renewal. Statoil has seven supply vessels, tank ers and stand­by vessels on short­term charters, in addition to a diving vessel chartered for three years. Statoil has also chartered 17 tankers with a remaining period of hire ranging from one to 10 years. Partnerships As a party to various partnerships, Statoil is jointly liable together with the other partners for agree ments signed by the partnerships. Statoils Annual Repott and Accounts 1990 fiX,

  • Page 24

    SUPPLEMENTARY INFORMATION CASH FLOW ANALYSIS Amounts in NOK million The consolidated companies Statoil 1990 1989 1990 1989 Cash flow from operating activities: Payments from operations 67 923 57 272 55 821 46 512 Disbursements to operations (49 232) (41 344) (36 755) (31 787) Net financial disbursements (1 802) (2 465) (1 701) (2 498) Taxes paid (4 868) (925) (4 575) (473) Net cash flow from operating activities 12 021 12 538 12 790 11 754 Cash flow from/(to) investing activities: Acquisitions and additions to fixed assets (6 991) (5 946) (6 090) (5 544) Sales of property, plant and equipment 243 2 031 173 1 992 Net cash flow from! (to) investing activities (6 748) (3 915) (5 917) (3 552) Cash flow from/(to) financing activities: Short-term financing: Change in short-term debt 740 (1 040) 151 (1 121) Long-term financing: New long-term loans 2 081 167 680 Reduction in long-term debt (5 244) (7 602) (4 916) (7 563) Shareholder’s equity: New share capital 1 996 1 996 Dividend paid (800) (800) Net cash flow from! (to) financing activities (3 223) (6 479) (4 885) (6 688) Total net increase in cash and cash equivalents 2 050 2 144 1 988 1 514 CONSOLIDATED OPERATING PROFIT/ (LOSS) BY BUSINESS UNITS AND CORPORATE CENTRE Amounts in NOK million Operating Operating Operating income costs profit/(loss) 1990 1989 1990 1989 1990 1989 Exploration & Production 25 613 21243 14796 14498 10 817 6 745 Natural Gas 6591 6980 3 650 3870 2941 3110 Refinin & Marketin 55274 44387 54045 44431 1 229 (44 Petrochemicals & Plastics 5 333 4350 4615 3 554 718 796 Corporate Centre 509 316 187 380 322 (64) Inter-company transfers (20964) (17 682) (20964) (17 682) Total 72 356 59 594 56329 49051 16027 10543 Statoil s Annual Report and Accounts 1990

  • Page 25

    SUPPLEMENTARY INFORMATION CONSOLIDATED PROFIT! (Loss) BEFORE YEAR-END ADJUSTMENTS BY BUSINESS UNITS AND CORPORATE CENTRE Amounts in NOK million Operating Financing Extraordinary Profit/ (loss) before profit (loss) costs items adjustments 1990 1989 1990 1989 1990 1989 1990 1989 Exploration & Production 10 817 6 745 523 732 977 10 294 6 990 Natural Gas 2 941 3 110 145 404 286 2 796 2 992 e nm & Marketin 1 229 (44) 800 850 429 (894) Petrochemicals & Plastics 718 796 64 57 654 739 Corporate Centre 322 (64) 137 258 185 (322) Total 16027 10543 1669 2301 0 1263 14358 9505 Further reference is made to the report for each business unit. VALUE ADDED STATEMENT A~ nts in NOK million The consolidated companies 1990 1989 Operating income 81 475 68 445 - purchased goods and services used (43 202) (37 089) = gross value added from own activities 38 273 31 356 - ordinary depreciation (5 225) (5 140) = net value added from own activities 33 048 26 216 + financial income 850 762 = value added from own activities 33 898 26 978 Which was utilised as follows: Employees Gross salaries and social benefits 4 900* 14.5% 4 279* 15.9% Capital investors Interest etc. to lenders 2 331 6.9% 3 063 11.3% Dividend to State 1 500 4.4% 800 3.0% Central & local government Royalties, taxes, petrol tax, etc. 19 862 58.6% 14 252 52.8% Retained in business Retained earnings 5 305 15.6% 4 584 17.0% Total value added 33 898 100.0% 26 978 100.0% *Including income tax withheld 1 302 1159 Statoil’s Annual Report and Accounts 1990

  • Page 26

    SUPPLEMENTARY INFORMATION PROFIT AND LOSS ACCOUNTS OF THE MAJOR SUBSIDIARIES Amounts in NOK million Norsk Svenska Statoil Statoil A/S Olje a.s Statoil AB Petrokemi AB (DK) Operating income 4 675 5 423 2 415 5 158 Operating costs 4 178 4 920 1 955 4 880 Depreciation 192 90 43 124 Total operating costs 4 370 5 010 1 998 5 004 Operating profit 305 413 417 154 Net financial items etc. 1 (24) 105 (32) Profit before extraordinary items 306 389 522 122 Extraordinary items 907 (14) (20) Profit before year-end adjustments 1 213 375 522 102 PROFIT AFTER TAXATION - ADJUSTED SHAREHOLDER~S EQUITY To give a clearer picture of profits for the year and consolidated shareholder’s equity, statements of Profit after taxation and Adjusted shareholder’s equity are given below. Profit after taxation is defined as Profit before year-end adjustments less taxation according to the Profit and Loss Accounts less estimated change in deferred taxes. The latter estimate is based on tax rates effective at the end of the year. Similarly, Adjusted shareholder’s equity includes the equity share of untaxed reserves. Amounts in NOK million 1990 1989 Profit after taxation Profit before adjustments 14 358 9 505 Taxation (7 741) (2 858) Change in deferred taxes for the year (2 278) (2 135) Profit after taxation 4 339 4 512 Adjusted shareholder’s equity Shareholder’s equity 12 470 10 527 Untaxed reserves 16 170 12 680 Deferred taxes (11 344) (9 066) Adjusted shareholder’s equity 17 296 14 141 Statoil’s Annual Report and Accounts 1990

  • Page 27

    AUDITORS’ REPORT FOR 1990 To the shareholder of Den norske stats oljeselskap a.s We have examined the Financial Statements for 1990 in accordance with Norwegian generally accepted auditing standards. We have also examined the consolidated Financial Statements of the Statoil group. The Financial Statements have, in our opinion, been prepared in accordance with the Companies Act and Norwegian generally accepted accounting principles, and present fairly the financial position of the company and the group at 31 December, 1990 and the results of operations for the year then ended. The appropriation of net income of the parent company, as proposed by the Board of Directors, is in accordance with the requirements of the Companies Act. The Profit and Loss Account and Balance Sheet may be adopted as the Financial Statements of the company and the group. STAVANGER, 28 FEBRUARY, 1991 ERNST & YOUNG & CO. AS ST ALSAKER NORWEGIAN CERTIFIED PUBLIC ACCOUNTANT Staloils Annual Report and Accounts 1990

  • Page 28

    RECOMMENDATION FROM THE CORPORATE ASSEMBLY Resolution: At its meeting on 12 March 1991 Statoil’s Corporate Assembly discussed the Annual Report of the Board of Directors and the Annual Accounts of Den norske stats oljeselskap a.s and the Statoil group for 1990. The Corporate Assembly recommends that the General Meeting approve the Annual Report submitted, and fix the Annual Accounts in accordance with the proposal presented by the Board of Directors. The subject matter to be presented to the General Meeting. STAVANGER, 12 MARCH 1991 OLUF ARNTSEN CHAIRMAN, CORPORATE ASSEMBLY StatoilsAnnuajRepo,f andAccounts 1990

  • Page 29


  • Page 30

    EXPLORATION AND PRODUCTION EXPLORATION Summary of exploration wells spudded on the Norwegian shelf in 1990: Operator Expi. Appraisal Long-term testing! wells wells Early production Statoil 5 Others 21 6 4 Total production in the Norwegian sector increased again in 1990. Following low levels of activity in 1988 and 1989, 32 exploration wells were started in 1990, six more than the previous — — ~. year. Statoil was operator for five exploration wells, two fewer than in 1989. Ten discoveries were made in the Norwegian From the Gullfaks field. sector, five gas/condensate finds and five oil finds. Activity offshore Mid-Norway was considera The Exploration and Production (E&P) busi bly higher than the year before, with eight ex ness unit is responsible for exploration, planning ploration wells. Statoil proved oil in block. and operation of offshore installations and oil 6507/8 north of the Heidrun field and gas/con transport systems, in addition to implementation densate in block 6507/3-1 in the Nordland II of Statoil operated development projects. area. At 31.12.90 the business unit had a payroll of In the North Sea, 18 exploration and five ap 5,073 employees. praisal wells were drilled. Statoil made two of eight discoveries, in blocks 15/12 and 9/2. HIGHUGHTS Exploration proved a total of about 450 milli on barrels of oil. Statoil’s share is 75 million bar - Operating profit was NOK 10.8 billion, an rels. Just over 70 billion cubic metres gas was improvement of NOK 4 billion on 1989. This is proved, with Statoil’s share at 16 billion cubic due to high oil prices and increased production. metres. E&P met its target of cutting costs by about According to Statoil’s survey of offshore NOK 1.4 billion. resources the Norwegian shelf is still one of the - Statoil has established a strategic alliance world’s most attractive exploration areas. Analy with BP Exploration. ses indicate potential petroleum finds equally - In the Norwegian sector Statoil made four large as those proven to date. Expectations are discoveries from a total of five exploration wells. greatest in the North Sea and offshore Mid- - Statoil’s total access to equity oil was 124 Norway. million barrels, compared with 119 million bar The result of the awards in the 13th Norwe rels in 1989. On Stat1~ord, Tommeliten and Ves gian Offshore Licensing Round was positive. lefrikk a high and stable production level was Statoil was awarded six operatorships. maintained. Gullfaks produced below expecta Statoil entered into a strategic alliance with tions because of difficult reservoir conditions. BP, a key element of which is in international However, work to improve production is in pro E&P operations. With this alliance, Statoil has gress. bought stakes in BP licences in West Africa, - Recoverable Stat1~ord reserves were increas China and Vietnam. The alliance also covers ed by 50 million cubic metres (315 million bar exploration in the Soviet Union. rels). Statoil’s share of this is 132 Statoil drilled its first hole as opera million barrels. A plan for de tor in the UK sector in addition to velopment of the Statijord North ~ exploration wells in the Dutch and and East satellite fields was Danish sectors. Hydrocarbons approved by the Storting - were proven in Denmark and (Norwegian parliament) and ~ operations continue in 1991. the project work has started. Statoil established a subsidi The Troll field will be de ary in Thailand, with an office veloped with an offshore - in Bangkok. A 10 per cent wellhead platform and an stake was bought in the Bong onshore processing plant. ...-....-~ kot gas field from the state oil The BP-Statoii alliance is a fact. From left: President Ha raid Norvik (Statoil) and managing director John Browne (BP) Statoils Annual Report and Accounts 1990

  • Page 31

    EXPLORATION AND PRODUCTION planned, with only a few day’s interruption to loading and production on Statfjord. ­~ Estimates of recoverable oil reserves on Stat­ fiord were increased by 315 million barrels. The additional oil will result from better well maintenance, more extended­reach wells and increased water treatment capacity on the plat In 1990,295 and 110 cargoes ofcrude oil were shipped from forms. In 1990 a new long­drilling record was Staljjord and Guilfaks respectively. set on Stat~ord C with a well extending about 5,000 metres horizontally. Work on modification and upgrading of Stat­ company Petroleum Authority of Thailand, PT~. fiord A to increase the platform’s general safety The field will come on stream in 1993. standard is in progress, and so are safety studies for Statijord B and C. RESERVES Statoil has initiated a series of measures to boost profitability and improve the production Total recoverable reserves of over 13.5 billion performance of the Gullfaks field. A com barrels of oil and 2,800 billion cubic metres gas prehensive programme for gravel pack have been proven on the Norwegian shelf. For ing of wells was started to prevent sand the entire Norwegian shelf, this represents ingress from causing reduced produc about 17 years’ production at today’s production tion and extensive equipment wear. The rate. Oil reserves available to Statoil represent water injection system is being modified 12 years’ production at the present output rate. to improve pressure support. For gas, the picture is significantly different, The Veslefrikk field came on stream with Norwegian reserves sufficient for 40 years’ at the year­end 1989/90. Following start production at today’s rate. This also applies to up problems in the first half, the platform Statoil’s share. produced to its 65,000 barrels per day Veslefrikk. design capacity in the second half. Water injection OPERATIONS for increased pressure support started in Novem ber. Safety has a high priority on Statoil’s installa Production from the Tommeliten field, where tions, and the injury rate was reduced by 40 per Statoil operates a subsea production system, was cent from 1989. There were no serious accidents stable throughout 1990. on Statoil’s installations in 1990. The Gyda field started production in summer A Statoil employee sadly died in a rescue mis 1990. sion when a helicopter from Statijord crashed into a mountain side. Statoil’s access to equity oil was about 124 million barrels in 1990, against just over 119 mil M. Sm’O.E. lion barrels in 1989. Total crude oil availability 20 was considerably higher than scheduled in 1990 because of increased Statfjord and Oseberg pro 15. duction. IU Statoil’s equity crude production from Stat­ i 0 fiord reached 87 million barrels. On Gulifaks, Others 1.3 production was lower than anticipated because Gultfaks Statljord 1 17.1 of well problems. Norwegian oil production was Statljord Gulifaks Other fields subject to a five per cent production constraint Produced sales volumes oil and NGL in the first half 1990. Statoil’s financial share. Statoil’s cost cutting programme for the peri od 1989­91 is on schedule. The E&P business M.Sm’O.E. unit reduced its costs by about NOK 1.4 billion compared with the original plans for 1990. 25 Offshore operations and maintenance follow 1.5_ —i I ed scheduled plans. The three Gullfaks plat 1_ • I_____ — 0.5_ forms, Statfiord A and B and Veslefrikk were all 0 _______ shut down for scheduled maintenance and turna Others 1.2 ­ ­ 1.4 Guillaks 01 0.1 round. In spite of bad weather in winter 1990 Stattjord 16 1.7 offshore crude oil loading largely took place as Stalfjord GuIltaks Other fields Produced sales volumes natural gas. Statoll’s financial share. Statoils Annual Report and Accounts 1990

  • Page 32

    EXPLORATION AND PRODUCTION PROJECT DEVELOPMENT proved the development of the Stat1~ord North and East satellites. They will be developed with Statoil presented a commerciality statement subsea installations tied back to Stat~ord C for for the Smørbukk South field on Haltenbanken, processing. The investment will be just over offshore Mid-Norway. The field contains about NOK 6 billion. Both fields are scheduled to start 150 million barrels of oil and some 20 billion cu producing in 1994. At peak production, output bic metres of associated gas. Oil production will will be just over 140,000 barrels of oil per day. last for up to 15 years. The field could be com The project was started on schedule. missioned in 1996. The Troll owners have decided to develop Early in 1991 the Government approved the Troll phase 1 with an offshore wellhead platform development of the Heidrun oil and gas field on connected to an onshore processing plant at ø y Haltenbanken, but postponed a final decision on garden near Bergen. The authorities approved utilisation of the gas. Statoil and Conoco prop the revised development plan in December 1990. osed an onshore methanol plant, using the gas Investment is estimated at NOK 27 billion. Gas as feedstock. The Norwegian authorities deci exports through the Zeepipe line are planned to ded that reinjecting Heidrun gas must be con si start on 1 October 1996. Shell is operator for the dered as a serious alternative. Against this back Troll development phase and Statoil for the ope ground, Statoil and Conoco have initiated a rating phase. The project is running to schedule. technical and commercial evaluation of reinjec The Storting has approved the development ting the gas. of the Brage field, operated by Norsk Hydro. The owners of the Tordis field in block 34/7, The field will be developed with a fully integra operated by Saga Petroleum, presented a plan to ted platform, scheduled for start-up in January the Ministry for development and operation of 1994. the field through a subsea system. Untreated oil, gas and water will be piped to Guilfaks C for Key figures (amounts in NOK million) processing and export. Total investment is esti mated at about NOK 3 billion with start-up in 1994. Profit and Loss Account 1990 1989 Operating income 25 613 21 243 Operating costs excluding depreciation 11950 11318 Ordinary depreciation 2 846 3 180 ~ Operating profit 10817 6745 Financial items 523 732 Profit before extraordinary items 10 294 6 013 — ~ ~; FF7 Balance sheet at 31.12 1990 1989 The SleipnerA concrete gravity base structure. The shafts are 47 metres tall. Fixed assets 23471 22 996 Curr nt assets 1183 1 662 E&P has started work on the Sleipner West Total assets 24 654 24 658 development and operation plan. The field con tains about 130 billion cubic metres gas and 45 Current liabilities 2214 1 683 million cubic metres (283 million barrels) con Long-term liabilities 5 928 9 576 densate. Conditional untaxed res. 11 324 9 456 OFFSHORE DEVELOPMENTS Minority interests 26 22 Shareholder’s equity 5 162 3921 The Sleipner A project is - Total liabilities and equity 24 654 24 658 on schedule and is expected to come on stream in summer 1993. Investment is likely to be over three billion NOK below budget, at a current estimate of about NOK 14.5 Executive vice president exploration, RolfM. billion. Larsen (left), receiving Statoil’s 13th Round The Storting has ap award from head of division johan Alstad Minist,y of Petroleum and Ener~1. Statoils Annual Report and Accounts 1990

  • Page 33

    REFINING AND MARKETING Statoil is Scandinavia’s leading arketer ofoil roducts. ‘7he Premium Club bonus system contributed to increasing the market share’~ says sales manager Mats Holgerson Svenska StatoilAB. uJrde OoJngpá alit fran •Iivolja ti! .t.ro! V • ~ 0

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    REFINING AND MARKETING The Refining and Marketing business unit equipment at all major terminals and tank farms (R&M) is responsible for the Statoil group’s throughout Scandinavia. The refinery in refinery business and sale of crude oil, NGL and Kalundborg, Denmark, was fitted with a new refined products, in addition to retail marketing sulphur treatment plant. Statoil Mongstad has of oil products. decided to invest NOK 70 million in additional At 31.12.90 the business unit employed 3,714 environmental measures, 50 million of which people. will be spent on further reduction of sulphur emissions to the atmosphere. HIGHLIGHTS Long term charters were signed for five new - crude oil tankers built to high environmental -The operating profit of the business unit standards, making Statoil one of the world’s was NOK 1,229 million in 1990, up 1.2 billion leading operators of such environmentally sound from the year before. Value added was high, vessels. and all parts of the unit contributed to the good result. CRUDE OIL SALES -1990 was the first full operating year for the converted and expanded Mongstad refinery. A prominent feature of the crude oil market Refinery margins were high. in the first half 1990 was over-production and -During 1990 Statoil consolidated its position falling prices. In June, North Sea crude was as the world’s largest seller of North Sea crude. traded at prices around USD 15 a barrel. The -Statoil is a leading marketer of oil products Gulf crisis led to a steep rise in prices despite in Scandinavia, and has made progress in all ample supply of oil and products. At times, great markets despite keener competition. The “Pre uncertainty about further developments in the mium Club” retail bonus system was well recei Gulf crisis prompted dramatic price fluctuations. ved by customers and contributed to increasing The average price of the Brent Blend marker Statoil’s market share. crude was USD 23.50 in 1990, varying between -At the end of the year, Svenska Statoil AB 15 and 41 dollars a barrel. Demand for Statoil’s bought Nynas Industri AB, a producer and dis crude was very good. Crude oil sales increased tributor of lubricating oils for the manufacturing in 1990 to 334 million barrels, or 915,000 barrels industry. This makes Statoil Sweden’s leading per day, mainly due to higher output from Use- distributor of lubricating oils. berg and Veslefrikk and more crude purchased -Work on environmental conservation mea from third parties. sures was a high-priority task in all R&M divisi Just over 50 per cent of the crude oil availa ons. It was decided to install gas recycling ble to Statoil in 1990 was sold on contract. About 20 per cent was delivered to the compa ny’s own refineries, while the balance was sold on the spot market. Customers in north-west Europe purchased most of the crude, but North America is also an important market, particularly for Gullfaks and Oseberg oil. a- / Thousand b/d 900 800 700 600 500 400 300 200 100 1988 1989 1990 Crude oil availability 1988-1990. The Mongstad refineiy recorded 1583 ship calls in 1990. Statoils Annual Report and Accounts 1990

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    REFINING AND MARKETING NGL SALES Statoil’s access to NGL (J)ropane and butane) and naphtha in 1990 was about 1.5 million ton nes, compared with 1.1 million in 1989. Conside rably higher trading activity, plus Statoil’s invol STAT011 vement in gas transport, strengthened the com pany’s market position and yielded good results. NGL and naphtha are sold for petrochemi cal, industrial, space heating and transport uses •STATOIL ~ — in Scandinavia and north­west Europe and to Statoil’s own petrochemical plant in Stenung ~ sund, Sweden. An NGL storage terminal leased by Statoil in Antwerp enabled substantial winter deliveries to the Belgian and German domestic markets. One of the first Statoil stations built in Norway, near Stavanger Airport, Sola. REFINING At the end of the year Norol’s share in the DISTRIBUTION AND RETAIL MARKETING IN old Mongstad refinery was sold to the parent SCANDINAVIA company. Statoil Mongstad produced a total of 6.9 milli Changes in the taxation of oil products have on tonnes of oil products in 1990. The first quar been introduced in all three Scandinavian coun ter was marked by a running­in phase and seaso tries. nally weak refinery margins, while there was a In Sweden, the energy tax on petrol was in positive trend during the rest of the year, both in creased, and VAT was introduced on all oil pro terms of operations and financial results. In ducts. 1990 the refinery passed its fourth year without In Denmark, the petrol tax was reduced as lost time injuries among Statoil employees. part of harmonising taxes and duties within the EC. PRODUCT SALES In Norway, a special CO2 tax was imposed on all oil products from the beginning of 1991. In the first half of 1990 the international pro Competition in the Scandinavian retail mar duct market saw a slight decline in prices, ex ket was intensified further, and there were peri cept for petrol, which remained stable. In the ods of price war in Norway and Denmark. second half, also product prices were influenced Norol consolidated further its position in by the uncertain Gulf situation, with extreme 1990 as Norway’s leading oil products distribu price fluctuations and at times high refinery mar tor. The subsidiary’s share of the petrol market gins. increased from 26.7 per cent in 1989 to 27.1 per Most of the products from Mongstad were cent in 1990. For the overall products market, sold to customers in Scandinavia and north­west Norol achieved a share of 28.4 per cent, an im Europe. Statoil obtained sales contracts with provement of 1.3 percentage points on 1989. important distributors in France and the UK. Investments in 1990 mainly comprised the New business opportunities were investi building of new stations in the Statoil livery and gated, such as product sales to Eastern Europe. upgrading of the existing network of stations. North America is another important market for During 1991, Norol will become Statoil Nor product sales and trading. ge AS and change its brand name to Statoil. The Swedish oil prod ucts market remained largely unchanged com pared with the previous year. Higher petrol duties and the introduction of VAT on all oil products re duced the consumption of Full operation at Statoil Mongstad. petrol, diesel and fuel oil. Svenska Statoil AB still Statoil’s Annual Report and Accounts 1990

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    REFINING AND MARKETING 1990-US D/d 60 50 Key figures (amounts in NOK million) 40 30 Profit and Loss Account 1990 1989 20 Operating income 55 274 44 387 10 Operating costs excluding depreciation 52 807 43 555 1970 1975 1980 1985 1990 Ordinary depreciation 1 238 876 Crude price trend. Operating profit/ (loss) 1 229 (44) Financial items 800 850 managed to increase its sales volume by four per Proflt/ (loss) before extra cent due to substantially higher demand in the ordinary items 429 (894) LPG and aviation fuel markets. The subsidiary’s share of the total Swedish market rose from 14.9 Balance sheet at 31.12 1990 1989 per cent in 1989 to 16.0 per cent in 1990. Fixed assets 13 972 14 330 Competition in the Danish oil market was Current assets 14105 8497 considerably tightened in 1990, with extensive use of discounts. Yet Statoil’s Danish subsidiary Total assets 28 077 22 827 succeeded in increasing its market shares for petrol, gas oil and fuel oil. The total market Current liabilities 11199 7 477 share rose by over one percentage point to 22.5 Long-term liabilities 11856 11666 per cent. Conditional untaxed res. 2788 1430 Shareholder’s equity 2234 2254 TRANSPORT Total liabilities and equity 28 077 22 827 At the end of 1990, Statoil operated a fleet of 23 chartered crude oil, product and gas tankers. All Statoil’s product tankers and about 75 per cent of the crude oil carriers are fully or partly fitted with double sides or double bottoms. Stat- oil’s maritime transport is currently undergoing considerable expansion. In the period 1990-93 another five vessels of AFRA max. size (about 100,000 dwt) will be delivered. The Statoil operated partnerships K/S Stat(]ord Transport a.s & Co. and I/S Gullfaks Transport are responsible for transporting crude oil from Stat~ord and Gullfaks. The oil is carried by nine specially designed shuttle tankers to ports in north-west Europe. Statoil is a world leader in offshore oil loading. Statoils Annual Report and Accounts 1990

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    P TROC IC S N P S C Sea icaLs — ­ ­ Tr ~~Zz1 —u. ­ I ­ ­— — ­ ­ 3 4’ ci ­­ ~ I’ ­ ~ ii /q / F z_ — , — ~­ Er:: ‘ —~

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    PETROCHEMICALS AND PLASTICS The Petrochemicals and Plastics business unit is responsible for product development, pro duction and marketing of basic petrochemicals, plastics raw­materials, speciality products and finished plastics components. At 31.12.90 Petrochemicals and Plastics had about 3,000 people on its payroll. HIGHLIGHTS Operating profit was NOK 718 million. Ad ­ • i~, ;~ justed for the costs of starting up the new North Sea Petrochemicals plastics raw materials plant in Antwerp, this is comparable with the 1989 results. Construction and start­up of the new poly ­ propylene plant in Antwerp proceeded according to plan and doubled Statoil’s polypropylene capa city in 1990 to 180,000 tonnes a year. Statoil’s plants at Bamble in south­eastern ­ Norway were certified to the international quali ty standard ISO 9002. This is considered an im portant competitive factor. Statoil Bamble was licensed to increase an ­ nual production of the plastics raw materials po The Energy and Industry Committee of the lypropylene, low­density polyethylene and high­ Storting (Norwegian parliament) visiting North Sea Petrochemicals, Antwerp. From density polyethylene from a total of 320,000 ton left, vice president Tore Glittum, Statoil, nes to 480,000 tonnes. energy counsellor LeifK Ervik of Norway’s The operating profit of Statoil Petrokemi AB ­ EC delegation, committee chairman Ole Gabriel Ueland and member Gunnar in Stenungsund, Sweden, is the second best ev Berge. er. With the acquisition of the AB Nobel Plast, ­ Sweden, Statoil became a manufacturer of fin ished plastics products. New production records were set both at ­ Stenungsund, the Bamble plants and the nearby ethylene plant at Rafnes. THE MARKET High oil prices, especially in the second half of the year, meant high feed stock prices for the petrochemical business. This also influenced prices of the intermediate products, ethylene and propylene. Margins were tight throughout the year. Towards the end of the year demand for polyethylene and polypropylene stagnated. Polypropylene produced by the North Sea Petrochemicals joint venture in Antwerp invol ves marketing of increased volumes in the large Continental and UK markets. OPERATIONS At Lawson Mardon Plastics, UK, a delivery Efforts to improve safety were successful at all of polyp ropylene arrives from Statoil. facilities, with reduced injury rates both for Statoil staff and for contractors’ employees. Plant availabi lity was generally very high in 1990, resulting in new production records for ethylene both in Sten Statoil s Annual Report and Accounts 1990

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    PETROCHEMICALS AND PLASTICS ungsund and at Rafnes and for polypropylene, high-density polyethylene and total production vol ume at the Bamble plants. The modernised polypropylene plant at Barn ble came fully on stream in 1990 with increased production capacity (90,000 tonnes annual volu me). Work on expanding the high-density poly ethylene facility at Bamble from 90,000 to 130,000 tonnes a year is in progress, and pro duction at the increased rate is scheduled to start in the second quarter of 1991. Considerable effort went into Statoil Barn ble’s qualification to the international plastics NOK million raw materials quality standard ISO 9002, an im 1400 portant milestone in Statoil’s marketing of this 1200 commodity in Europe. 1000 Statoil Petrokemi AB’s ethylene plant in Ste 800 nungsund recorded high rates of availability in 800 1990, and operating profit improved from 1989. 400 Although one cracker furnace was shut down for 200 five months for repairs, a new production record 0 1986 1987 1986 1989 1990 of 378,000 tonnes ethylene was set for the over all facility. A new cracker furnace was construct Investments in petrochemicalfacilities. ed as planned. When this seventh furnace is commissioned in the first quarter 1991, produc Million tOnnes tion capacity at SPAB will increase to 400,000 12 11 tonnes a year. 10 Production of speciality products in Hamburg and Bamble was normal in spite of tight mar gins. An essential part of production is aimed at components for the car industry, and in 1990 0 1985 1986 1987 1988 1989 1990 Polyethylene and polypropylene consumption, Western Europe. Finland 11.6% Sweden 17.0% Norway 11.2% Others 2.5% Statoil’s president Haraid Norvik hoists the Statoil flag to mark the change ofowne,ship at AB Nobel Plast, Sweden. To his left, Nobel’s president Anders G. Carlberg. Editor Yngve Kallberg assists. EC 57.7% Sales ofplastics raw materials by markets. .4 .-Ji~~5-~1 - 6~Tho f~171 - Statoil Petrokemi AB, Stenungsund, Sweden, received the President’s Safety Award 1990. There was only one lost-time injury among Statoil employees and three among contractor employees. Senior vice president Stig Blomberg (left) and safety engineer PeterJeanson have the goal ready for 1991. Statoil’s Annual Report and Accounts 1990

  • Page 40

    PETROCHEMICALS AND PLASTICS Key figures (amounts in NOK million) Profit and Loss Account 1990 1989 Operating income 5333 4350 Operating costs excluding depreciation 4 409 3 369 Ordin de reciation 206 185 )iJiLIIL,v iL~ Operating profit 718 796 I .L]I’(fL~: j~!’I~~. Financial items Profit before extraordinary 64 57 items 654 739 Balance sheet at 31.12 1990 1989 -:~ ~==~- ~ Fixed assets 2 975 1 815 Current assets 2 999 2 010 North Sea Petrochemicals, Antwerp. Total assets 5 974 3 825 Current liabilities 1 582 829 Statoil qualified as a supplier for one of the Lon -term liabilities 2 941 1 913 Volkswagen models. Work is in progress on Conditional untaxed res. 347 349 qualification for other models. Shareholder’s e ui 1104 734 NEW PROJECTS AND AREAS OF BUSINESS Total liabilities and equity 5 974 3 825 In 1990, Statoil bought AB Nobel Plast from Nobel Industrier AB. AB Nobel Plast is Swe den’s leading manufacturer of plastics compo nents for the car industry, and consists of four factories in southern Sweden with a total payroll of about 2,000 employees. Deliveries to the transport industry account for 75 per cent of Nobel Plast’s turnover. Failing car sales in 1990 influenced the activity level and caused a consi derable fall in turnover also at Nobel Plast. Action has been taken to meet this situation. In a 50/50 joint venture with Himont Incorpo rated North Sea Petrochemicals Statoil is - - building a new petrochemicals complex near ‘~%s% ..,~ ‘~ Antwerp. It consists of a plant for production of polypropylene and another for conversion of pro Production of instrument panels atAB pane to propylene. The polypropylene plant was Nobel Plast, Tidahoim, Sweden. commissioned in autumn 1990 and is now produ cing at full capacity 180,000 tonnes a year. The - propylene plant is under construction and will become operational in 1991. The joint venture has about 160 employees. In addition to the traditional petrochemical processing activity based on natural gas liquids, the business unit is also planning activities using natural gas as feedstock. In 1990 plans were developed for a methanol plant based on gas from the Heidrun field. Statoil’s board decided in spring 1990 to build and operate such a plant in cooperation with the US company, Conoco. The business unit was in 1990 responsible for developing Statoil’s plans for production of the petrol additive MTBE. Statoils Annual Report and Accounts 1990

  • Page 41

    NATURAL GAS I:~,m llt~ ~‘t~ I, Httt,,a/ at Ita, ,t,, math II —t i~~’ ~? A ‘1 alt 31 :~ ~ L~ ‘~ ~b / . ~1.l • —­ :~ — I I!L~ ~IJLL J_Z~J_~.~­. ~ ­. __~h~t ~~~—<­­ ,~,A­ ~~ — / ~ ~­~• —S

  • Page 42

    NATURAL GAS The Natural Gas business unit was separated GAS MARKETING from Exploration and Production (E&P) on 1 January 1990. Natural Gas is responsible for Statoil, heading the Norwegian Gas Negotia Statoil’s activities associated with gas marketing ting Committee, occupies a leading and coordi and supply planning plus development and ope nating role in the marketing of Norwegian gas. ration of natural gas transport systems. At Statoil’s total natural gas sales in 1990 were 31.12.90 Natural Gas had a payroll of 640 people. 3.1 billion cubic metres, half of which came from Stat~ord. Total Norwegian natural gas exports HIGHLIGHTS were 25 billion cubic metres. The German companies Ruhrgas, Thyssen - The business unit’s operating profit was gas and BEB exercised some of their options NOK 2,941 million in 1990. This is slightly be under the Troll gas sales agreement of 1986 to low the estimated result for similar operations in increase their offtake of Norwegian natural gas. 1989, mainly because of lower gas sales. Gaz de France, under the gas sales agree Buyers in Germany and France decided to - ment with the Troll owners, increased its annua exercise options to increase sales volumes un offtake commitments by 2 billion cubic metres. der the Troll gas sales agreement. This will lead The Troll gas sales agreements have options to increased gas exports to these countries. for additional gas exports to Germany, the - All transport systems had high plant availa Netherlands and Belgium. bility. The Spanish company Enagas and the Troll - Statoil recommended construction of Euro- licensees have agreed to accelerate start-up of pipe, a third gas pipeline to the Continent. deliveries to Spain from 1995 to 1993. - It was decided to land Sleipner condensate Sales negotiations and talks with potential at Kârstø, north of Stavanger. gas buyers in Italy, Britain, the USA, Scandina A thousand kilometres ofpipe via ahd Norway continued. Talks also took plac for Zeepipe. Each of the 12- TRi~sPo~r SYSTEMS ON STREAM with gas companies in Eastern Europe. metre pipes weighs up to 25 Alternative gas supply sources to meet in ton nes. The Statpipe transport system handled the creased exports were also investigated in paral 40 following volumes in 1990: lel with sales talks. Negotiations with German Ruhrgas and Rich gas 5.1 billion cubic metres to Kárstø Dutch Gasunie, to make Norwegian gas avail Dry gas 7.6 billion cubic metres to Emden able in Austria and to the company SEP in the NGL 1.05 million tonnes from K~rstø Netherlands, respectively, were completed. Of the total dry gas volume, 41 per cent came from Stat~ord, 42 per cent from Heimdal, 14.5 per cent from Gullfaks and 2.5 per cent from NORWAY Veslefrikk. Stavanger Streamlining and coordination of transport activities resulted in high plant availability and reduced operating costs. 1611 S Exports through the Ula Transport system during the year were 5.9 million cubic metres oil and NGL. The oil pipeline from the Gyda field to the Ula Transport system was put on stream in sum mer 1990. DENMARK Exports through the Norpipe lines were 27 million cubic metres (170 million barrels) of oil and about 17 billion cubic metres gas. Norpipe a.s owns the oil and gas pipelines to Teesside and Emden, respectively. Frigg Transport carried about 7 billion cubic metres of dry gas from the Frigg, Northeast 0 a.’ i Frigg, East Frigg and Odin fields. Emden Europipe, the third pipeline to the continent, is scheduled to come on stream in autumn 1995. Statoils Annual Report and Accounts 1990

  • Page 43

    NATURAL GAS NEW TRANSPORT SYSTEMS Key figures (amounts in NOK million) The increased gas deliveries require higher transport capacity to the Continent. Statoil has Profit and Loss Account 1990 1989 recommended the construction of Europipe, a new transport system from block 16/11 in the Operating income 6 591 6 980 North Sea to northern Germany. It is scheduled Operating costs excluding to come on stream in autumn 1995. The initial depreciation 2 834 3 092 start­up capacity can be increased by boosting Ordinary depreciation 816 778 pressure shortly after signing of potential new Operating profit 2 941 3 110 gas sales agreements with Continental buyers. The development of the Zeepipe transport Financial items 145 404 system phase 1 has started. It includes a pipe­ Profit before extraordinary line from Sleipner to Zeebrugge, Belgium, a ter­ items 2 796 2706 minal in Zeebrugge and a 30­inch pipeline con necting Sleipner to Statpipe. The system will be Balance sheet at 31.12 1990 1989 ready for operation in autumn 1993. Fixed assets 7 929 8 237 Construction of the Zeepipe terminal in Zee brugge has started. It will receive and process Current assets 1 671 689 natural gas in transit to the Continental gas grid. Total assets 9 600 8 926 Statoil is operator both for the transport sys tem and the terminal. Current liabilities 721 176 In Etzel, northern Germany an underground Long­term liabilities 5 267 6 091 gas storage facility is under construction. It will Conditional untaxed res. 1 073 1 058 be connected to the Emden terminal by a 70 km pipeline, and is scheduled for commissioning in Shareholder’s equity 2 539 1 601 1993. Statoil is operator. Total liabilities and equity 9 600 8 926 The Sleipner licencees have decided to land condensate from Sleipner at Karstø. Constructi n of a pipeline from Sleipner to Karstø and ex pansion of the Kárstø terminal are in progress. The Statoil operated Sleipner condensate system is scheduled to come on stream in 1993. All approved and initiated development projects are on schedule. Dfl4on Sm’ 40 3$ Sp,in 30 AIJSIIi. 25 Fr,,,, 20 15 10 $ 8,lgkmr NelIlerSfld 19771960 1995 1990 1995 2300 2005 2010 Norwegian gas exports. Contract volumes. Statoils Annual Report and Accounts 1990

  • Page 44

    THE STATES OVERALL INVOLVEMENT Statoil manages the overall State participa tion in the Norwegian offshore petroleum indus try, consisting of the group’s own equity share and the Government’s Direct Financial Involve ment, GDFI. This is known as Statoil’s partici pating share. Value creation and further development of the State’s overall participation in the petroleum business take place on a commercial basis. M. tenses / year 70 M. b/cl 1,2 As business manager, Statoil prepares 60 1,0 separate financial statements for revenue, expen 50 diture and investments related to the Govern ment’s Direct Financial Involvement. 30 0,6 The Statoil group’s market position is in 20 0,4 creasingly based on the sale of the Govern 10 0,2 ment’s oil in addition to the group’s equity oil. 0 1984 1986 1988 1990 0 Total oil production associated with the State’s GOFI and royalty oil Statoil’s equity oil overall oil involvement in 1990 was 265 million Statoil’s crude oil availability and the barrels, up 25 million barrels from 1989. This Government’s Direct Financial Involvement (GDFI) total was made up from Statoil’s share of just over 124 million barrels and the GDFI share of some 140 million barrels. Total gas sales in 1990 were about 4,940 million standard cubic metres, of which GDFI amounted to 1,885 million. Total reserves discovered through explo ration in 1990 were about 450 million barrels of oil. The State’s overall share of this is 220 milli on barrels. Just over 70 billion standard cubic metres of natural gas were discovered, of which the State’s overall share is 31 billion standard cubic metres. Total exploration costs were NOK 1,460 million. Recoverable reserves proven offshore Norway consist of 13.5 billion barrels of oil and 2,800 billion standard cubic metres gas. The State’s overall share represents 6.4 billion bar rels of oil and 1,678 billion standard cubic me tres gas respectively. Operating profit from the State’s overall involvement was NOK 26.7 billion in 1990, against NOK 16.4 billion in 1989. Investments related to the State’s overall offshore involvement were NOK 13.5 billion, an increase of NOK 1.5 billion on 1989. Just over 70 per cent of the investments in 1990 were related to the Government’s Direct Financial Involvement. The most important investment projects were the Oseberg, Sleipner East and Draugen field developments and the Zeepipe gas pipeline system. Stato,l s Anneal Report and Accounts 1990

  • Page 45

    SAFETY AND ENVIRONMENT SAFETY ENVIRONMENT In 1990 the Statoil group reduced the num Measures to protect the environment have ber of lost-time injuries by 35 per cent. been a high-priority area in 1990 throughout the All business units recorded a fall in the num entire group. In addition to the existing Safety ber of accidents, with Exploration and Producti and Environment Department a special environ on returning the biggest percentage reduction. mental project was launched to ensure that Sta The company initiated several measures for toil preventive safety work. A high level of safety - maintains an aggressive attitude and is requires the dedication of all employees and this thoroughly informed about environmental has produced results. issues Major maintenance and conversions have - is prepared for new environmental demands been accomplished with a minimum of accidents - exploits business opportunities or injuries. One example was the tie-back of Snorre to the Statfjord field. On this project, The project will also examine the need for which has involved over a year of complicated resources, expertise and organisation of the Stat- diving operations, no lost-time injuries were re oil group’s environmental work. A senior vice corded. president for environmental affairs has been ap Active safety efforts at Statoil’s installations pointed to head the project. have reduced the number of lost-time accidents The Exploration and Production business by 40 per cent relative to 1989. unit has been active in reducing the content of Partially as the result of ongoing efforts to oil in produced water. On the Gullfaks A plat improve registration of accidents, the number of form efforts are well in hand to install hydrocy reported near-accidents and hazardous situa clones to improve water treatment. tions sharply increased in all Statoil units in the The Refinery and Marketing business unit past three years. By paying greater attention to has worked hard to minimise the risk of oil spills potential accidents, deficiencies and risk factors, from chartered tonnage. Over 80 per cent of the preventive action can be taken and injuries 23-ship fleet now have extra protection in the averted. form of double bottoms or double sides. Safety analyses are important for surveying At the Mongstad and Stenungsund facilities hazardous work operations. Preventive measu several specific projects have been carried res stemming from such analyses have led to a through to meet licence requirements since co reduction in injuries and fewer gas leaks. Statoil ming back on stream in 1989. uses the International Safety Ranking System, ISRS which strongly emphasises underlying - factors for ranking of safety. - The President’s Safety Award for 1990 was won by Statoil Petrokemi AB in Stenungsund. North Sea Petrochemicals in Antwerp had a significantly better safety record than Belgian industry in general and was awarded a national safety prize during the construction period. Number 2000 i~Th~i~ 1500 1000 500 Odd Tveit, safety manager of the Transport Division, received the 0 1988 1989 1990 Presidents Honoray Award 1990 for Lost-time injuries Recorded near accidents pioneering safety work. Through precautiona,y measures, lost-time injuries in the Statoil group were reduced by 35 per cent in 1990. Statoils Annual Repot-t and Accounts 1990

  • Page 46

    RESEARCH AND DEVELOPMENT In the 1990s and beyond technology will as sume greater importance for Statoil’s business activities. Since the reorganisation and consoli dation in 1989 therefore, R&D activities in 1990 have been going through a period of greater commitment. A new research centre in Trond heim will be ready to move into by the begin ning of 1994. Exploration and production technology is a key area for Statoil’s R&D efforts. Work on re servoir simulation, drilling and completion, and multiphase flow research, provide a base for fur ther development aimed at extended-reach or horizontal wells. Care of the environment is an important con sideration in drilling and well operations, parti cularly the development of environmentally friendly drilling mud systems. A dedicated commitment to multiphase re STEEL PIPE search over several years produced results which contributed to the decision to build the CABLE ORROSION PROTECTI Troll gas process plant on shore. This technolo THERMAL INSULATION gy underpins efforts to develop new acreage, By means of multj-djscjpljnan skills R&D has such as on Tromsøflaket, and to extend the use developed a thermalfiowline, which is both of existing infrastructure in the North Sea. environmentally sound and economical in use. Research efforts are being redoubled in the refining and petrochemicals fields. Development of environmentally sound fuels has high priority. New methods for testing and analysing refinery catalysts allow selection of more economical and technically enhanced catalysts for Statoil’s refineries. Through the project for conversion of natural gas to middle distillates, work is going on to ex ploit gas for production of more environmentally compatible fuels, particularly diesel. Similar processes are under development for generation of petrochemical feedstock and petrol additives, such as MTBE, from natural gas. In the longer term the potential for future chemical conversion of methane to fuels and petrochemical intermediates is being consid ered. Multi-disciplinary skills can produce valuable results. One example is the development of a thermal flowline which counteracts the forma tion of wax and hydrate during multiphase trans portation of oil and gas. This flowline was devel oped on the basis of multiphase flow expertise, materials engineering skills, and the need to transfer untreated wellfiow over long distances. The method, which is not only economical in operation but also environmentally friendly, is known as Induction Through Thermal Insulation (ITTI). Patents are pending in many countries. Statoils Annual Report andAccounts 1990

  • Page 47

    ORGANISATION AND PERSONNEL ORGANISATION EMPLOYEE RELATIONS AND WORKING The organisational structure established in ENVIRONMENT 1989 with four business units and a supporting apparatus comprising Corporate Services and In Statoil an industrial relations body, made Staff Functions has helped upgrade organisa up of the Executive Committee and main em tional performance and market-orientation. ployee delegates and called the Corporate Com A newly-formed unit known as Development mittee, has been established to strengthen co and Commercialisation has been formed as part operation within the group. of Corporate Services. It is responsible for pur In late 1989 and early 1990 an extensive suing and developing business opportunities for working environment survey of the company Statoil which do not naturally belong to the four was conducted. Based on this study and the standard business units. Objectives, Values and Management Policy The rationalisation and simplification of rou document, action plans have been devised to tines and systems has been high on the agenda strengthen the working environment and corpo in 1990. One aspect of the company’s cost effici rate culture at all levels of the organisation. ency improvements is less use of manpower. The plans call for a reduction in the number of S.iu~RY AND EMPLOYMENT CONTRACTS man-years by 1,500 relative to previous plans for the 1989-91 period. By the end of 1990 the re The salary and contract negotiations in 1990 duction under this programme was 1,343 man- incorporated the introduction of a new salary years, largely as the result of natural wastage and less use of contract staff and consultants. The number of employees in the Statoil 14 group increased in 1990 from 11,023 to 13,222. 12000 This growth is mainly due to the acquisition of 10000 the Swedish firm, Nobel Plast AB, though also to 8000 other, new commitments. In Norway, the group 6000 employs 8,789 people, while 4,433 are employed 4000 on the payroll of subsidiaries abroad. 2000 1970 1974 1978 1982 1986 1990 PERSONNEL AND MANAGEMENT DEVELOPMENT Statoil Subsidanes Statoil group; total payroll. To strengthen the corporate culture and en sure the systematic development of staff, several new personnel management systems have been introduced. These include management by ob 5000 jectives, feedback on performance, career de 4000 velopment planning and job rotation. 3000 The increasing emphasis on professional ca reer development is intended to help foster 2000 technical expertise in given areas. 1000 Great attention was paid in 1990 to initiatives 0 U&P Gas R&M PK KS FTJ for management development. At its executive 1989 1990 sessions, the document Statoil’s Vision, Year Statoil group 1989-1990; number of employees 2000 has been a central topic. The group-wide by business units and corporate centre. project Mid-level Manager in Statoil, embracing some 600 mid-level managers, had a good start, and the first 100 candidates have completed the system for onshore employees. programme. The collective offshore salary bargaining re One of the objectives of the company is to suited in an illegal dispute which caused a slow increase the proportion of women in managerial down in production for a short period. This con positions. In 1990, therefore, particular emphas flict was also an impediment to good relations on is was put on identifying women with manage the installations concerned. ment potential who will be offered a special de A job evaluation system has been established velopment programme. in the company which will become effective for staff rotations, reorganisations, recruitments and fixing salaries. Slatoils Annual Report and Accounts 1990

  • Page 48

    SPONSORSHIP Again in 1990, Statoil engaged in sponsorship activities as an element in marketing and profil ing of the company in Norway and abroad. CULTURE Statoil has signed two­year cultural sponsor ship agreements with four young Norwegian musicians. Cellist Truls Mørk, trumpeter Ole Edvard Antonsen, pianist Leif Ove Andsnes and violinist Marianne Thorsen have all been receiv ed enthusiastically by critics in Norway and in ternationally. A two­year contract was also signed with the Stavanger. Symphony Orchestra. Statoil sup ported several major music festivals and events in 1990. •.:~‘ “~ ~ Also in 1990, Statoil supported a major Munch exhibition in the National Gallery, Wash ft ~I ~ ~ ~ c~/ ington D.C. SP0Rr In 1990 Statoil sponsored a major exhibition of In December 1990, Statoil and Norol signed Edvard Munch’s art in Washington D.C. Norway’s Princess Astrid attended the opening an agreement with the Lillehammer Olympic ceremony. Left, Kristoffer Maro, general Organising Committee (LOOC) to become a manager of Statoil North America Inc. Right, Staffan Riben, president of Statoil Refining and principal sponsor for the Lillehammer Winter Marketing. Olympics in 1994. Statoil will be the only oil company in a speci ally established group of principal sponsors for the 1994 Olympics. Statoil is also the main sponsor for the Nor wegian national ski­jumping team, and two other leading ski­jumping groups. Offisiell samarbeidspartner til De XWI Olympiske Vinterleker STATOI L Statoil is a main sponsorfor the Olympic Winter Games 1994 at Lillehammer, Norway. Statoils Annual Report and Accounls 1990

  • Page 49

    SURVEY OF THE STATOIL GROUP’S ACTIVITIES IN 1990 At 31 December 19~) project operator Statoil’s share ~o comments Participating Financial EXPLORATION 32 exploration licences Statoil Norwegian shelf 49.6-85 9-30 Exploration appraisal 0 exploration licences Non-Statoil Norwegian shelf 1-59.4 0-28.82 Exploration appraisal 1 exploration licence * Shell Statoil Swedish shelf 33.33 and 10 33.33 and 10 Exploration appraisal 2 exploration licences Statoil Danish shelf 33.54 & 26.5 41.93 & 26.5 Exploration appraisal 1 exploration licence Statoil Danish shelf 40.42 44.92 Exploration appraisal 1 exploration licences Statoil British shelf 50 50 Exploration appraisal 9 exploration licences Non-Statoil British shelf 5-25 5-25 Exploration appraisal 1 exploration licence Statoil German shelf 75 75 Exploration appraisal 1 exploration licence Statoil Nam Dutch shelf 23.5 23.5 Exploration appraisal 5 exploration licences Statoil Dutch shelf 40-60 40-60 Exploration appraisal 2 exploration licences Conoco Dutch shelf 6.38 and 7.5 6.38 and 7.5 Exploration appraisal 1 exploration licence CNOOC Chinese shelf 9.80 9.80 Exploration appraisal 1 exploration licence Total Thailand 10 10 Exploration appraisal 1 exploration licence Total Angola 10 10 Exploration appraisal 1 exploration licence BP Congo 10 10 Exploration appraisal 4 exploration licences BP China 33.33 33.33 Exploration appraisal 1 exploration licence BP Vietnam 33.33 33.33 Exploration appraisal *) The licence area consists of 2 sub-licences operated by Statoil and Shell respectively. Statoil’s respective shares are 33.33°c and lO0o. DEVELOPMENT Draugen Shell Block 6407/9 65 19.6 Oil/gas Snorre * Saga Block 34/4, 34/7 41.4 10 Oil/gas/NGL Troll Unit Block 31/2, 31/3, 74.576 11.88 31/5, 31/6 - Phase I Shell/Statoil Gas/condensate field - TOGI Norsk Hydro Gas field Oseberg Gamma North Norsk Hydro Block 30/6 59.4 14 Oil/gas field Sleipner East Statoil Block 15/9 49.6 20 Gas/condensate field Mime Norsk Hydro Block 7/11 50 20 Oil/gas/NGL field Brage Norsk Hydro Block 31/4, 30/6 56 17.6 Oil field Statfjord North Statoil Block 33/9 50 20 Oil/gas field Statfjord East Statoil Block 33/9 52.7 12.27 Oil/gas field Embla Phillips Block 2/7 1 1 Oil/gas field Bongkot Total Thailand 10 10 Gas/condensate field Zeepipe Statoil Norwegian, Danish, 70 15 Gas transport German, Dutch and Belgian North Sea Zeepipe Terminal Statoil Zeebrugge, Belgium 34.3 7.35 Gas terminal Etzel Gas Lager Statoil Etzel, Germany 67 67 Gas storage North Sea Petrochemicals VOF Own mngmt. Antwerp, Belgium 50 50 Petrochemicals plant Sleipner Condensate Kàrstø Statoil Norw. shelf Kárstø - 49.6 20 Condensate transport * ) Only Phase 1 approved for development Statoils Annual Report and Accounts 1990

  • Page 50

    SURVEY OF THE STATOIL GROUP’S ACTIVITIES IN 1990 At 31 December 1990 Project Operator Location Statoil’s share 0 Comments Participating Financial PRODUCTION Murchison Conoco Block 33/9 * 11.1 11.1 OiI/gas/NGL Statfjord Statoil Block 33/9, 33/12 * 42.04661 42.04661 Oil/gas/NGL Gulifaks Statoil Block 34/10 85 12 Oil/gas/NGL Veslefrikk Statoil Block 30/3 55 18 Oil/gas/NGL Oseberg Norsk Hydro Block 30/6, 30/9 65.04 14 Oil/gas Frigg Elf Block 25/1 * 3.041 3.041 Gas North­east Frigg Elf Block 25/1, 30/10 2.1 2.1 Gas East Frigg Elf Block 25/1, 25/2 7.192 5.7307 Gas Heimdal Elf Block 25/4 40 20 Gas/condensate field Ula BP Block 7/12 12.5 12.5 Oil/gas/NGL Gyda BP Block 7/12, 2/1 50 20 Oil/gas/NGL Ekofisk area** Phillips Block 7/11, 2/4, 1 1 Oil/gas/NGL 1/5, 2/7 Tommeliten Statoil Block 1/9 70.64 28.26 Oil/gas/NGL Kotter Conoco Dutch shelf 6.375 6.375 Oil Logger Conoco Dutch shelf 7.5 7.5 Oil Weizhou 10­3 CNOOC Chinese shelf 9.8 9.8 Oil 48 Victor Conoco British shelf 5 5 Gas/NGL *) The field straddles the British Norwegian median line. **) PLO18 only. TRANSPORTATION Statpipe Statoil Norwegian shelf 58.25 ­ 58.25 Gas transport, Kárstø NGL fractionation Oseberg Transport Norsk Hydro Norwegian shelf 65.04 ­ 14 Oil transport, oil Sture, Norway terminal Frigg Transport Total British shelf ­ 24 24 Gas transport, gas St. Fergus, UK terminal Ula Transport Statoil Norwegian shelf 100 100 Oil transport Norpipe a.s Phillips Norwegian, Danish, 50 50 Oil and gas transport UK and German North Sea Norpipe Petroleum UK Ltd. Phillips Teesside, UK 50 50 Oil terminal Norsea Pipeline Ltd. Phillips Teesside, UK 2 2 NGL fractionation Norsea Gas A S Phillips Emden, Germany 2 2 Gas terminal Norsea Gas Gmbh Phillips Emden, Germany 2 2 Property Norland Gmbh Phillips Emden, Germany 2 2 Property Statoils Annual Report and Accounts 1990

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