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    S TAT O I L A N N UA L R E P O R T A N D AC C O U N T S 2 0 0 1


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    Statoil 2001 At the end of 2001, Statoil had 16 686 employees allocated to the following busi- ness areas and organisational entities. Business areas: Exploration & Production Norway Contents Leading operator and producer on the NCS, responsible for about 50 per cent of total Norwegian output. Operates 10 fields and has four fields under develop- Inside front cover: Financial ment. Entitlement crude output: 697 000 barrels per day. Gas production: 39.1 million scm per day. Reserves: 3 664 million barrels of oil equivalent. Revenues: highlights and definitions NOK 65.7 billion. Employees: 560. 1 We l c o m e t o S t a t o i l International Exploration & Production 2 Review of 2001 Important positions in the Caspian region, western Africa, western Europe and 4 The chief executive Venezuela. Substantial production growth expected over the coming years. Entitlement crude output: 58 000 barrels per day. Gas production: 1.2 million scm 6 Directors’ report per day. Reserves: 612 million barrels of oil equivalent. Revenues in 2001: NOK 7.7 billion. Employees: 521. 13 Shareholder matters 14 Statoil through the year Natural Gas A leading player in the European market. Operates transport systems for natural 16 Business operations gas and treatment plants on land. Sells gas to 12 countries. Volumes equity gas 24 The group, safety and society sold: 14.7 billion scm per day. Responsible for selling the Norwegian state’s gas. Revenues in 2001: NOK 23.5 billion. Employees: 974. 28 The environment 31 HSE accounting 34 Environmental data 38 Operating and financial review and prospects 64 Accounts for 2001 64 The Statoil group – USGAAP 101 The Statoil group – NGAAP 129 Statoil ASA – NGAAP 148 The corporate executive Manufacturing & Marketing committee Responsible for Statoil’s and the Norwegian state’s crude oil sales. One of the Inside back cover: Statoil worldwide world’s largest sellers of crude with an average volume of 2.2 million barrels per day. Sells rich gas, refined oil products and natural gas in the Nordic countries. and general information Operates two refineries and nearly 2 000 service stations in nine countries – in Scandinavia, 50/50 with ICA Ahold. The business area also covers the Navion ship- ping company, methanol production and Statoil’s 50 per cent share in the Borealis petrochemicals group. Revenues in 2001: NOK 203.4 billion. Employees: 7 006. Entities: Report on sustainable development Technology Statoil encounters higher expectations from today's world for Technology is responsible for developing and maintaining Statoil’s expertise in key reporting on the financial, environmental and social aspects of its technology areas. Assists in providing cost-effective technical solutions and is respon- operations. To meet these expectations, the group will publish its first separate report on Statoil's contribution to sustainable sible for commercialisation of technology and industrial rights. Covers research and development in July 2002. development, exploration and reservoir technology, drilling and well services, environ- mental technology, concept development and project management. Employees: 897. The picture on the front cover is from Corporate services and corporate centre the Statoil collection of art and shows Corporate services provides the entire group with services covering finance, accoun- installations on Sleipner. Frans Widerberg (1934). ting, human resources and office support as well as education, communication, The Pavilion in the Sea, 1999. information technology, health and the working environment. Employees: 1 450. Oil on canvas, 80x100 cm. The corporate centre provides advisory staff functions for the corporate executive © Frans Widerberg/BONO, 2002. Photo: Thomas Widerberg committee. Employees: 235.


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    USGAAP - Financial highlights KEY FIGURES IN NOK MILLION 2001 2000 1999 1998 1997 Financial information Total revenues 236,336 230,425 150,132 114,648 136,036 Income before financial items, income taxes and minority interests 56,154 59,991 17,578 10,287 24,655 Net income 17,245 16,153 6,409 1,640 6,489 Cash flow used in investing activities 12,838 16,014 24,988 27,676 25,016 Cash flow provided by operating activities 39,173 56,752 29,610 18,050 27,697 Interest-bearing debt 41,795 36,982 50,497 44,261 29,534 Net interest-bearing debt 34,077 23,379 42,856 42,856 27,439 Net debt to capital employed 39.0% 25.0% 42.6 % 44.1 % 33.6 % Return on average capital employed after tax 19.9% 18.7% 6.4 % 3.2 % 9.6 % Operational information Combined oil and gas production (1000 boe/day) 1,007 1,005 967 918 943 Proved oil and gas reserves (mboe) 4,277 4,317 4,511 4,621 4,469 Production cost (USD/barrel) 2.92 3.08 3.38 3.14 - Finding and development cost (USD/barrel) (3-year average) 9.11 8.21 8.74 - - Reserve replacement rate (3-year average) 0.68 0.86 1.03 - - Share information Net income per ordinary share 8.31 8.18 3.24 0.83 3.28 Net income adjusted for one-off effects per share(1) 7.32 8.18 4.54 - - Share price at Oslo Stock Exchange 31 December 2001 61.50 - - - - Weighted average number of ordinary shares outstanding 2,076,180,942 1,975,885,600 1,975,885,600 1,975,885,600 1,975,885,600 (1) One-off effects covers certain gains on sale of assets, write-downs and provisions. See “Operating and financial review and prospects”. Income adjusted for one-off effects is not calculated for 1997 and 1998. INCOME CASH FLOW RETURN NOK bn NOK bn Per cent 60 60 25 50 50 20 40 40 15 30 30 10 20 20 5 10 10 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 Income before financial items, Cash flow used in Return on average capital income taxes, and minority interests investing activities employed after tax Net income Cash flow provided by operating activities


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    OIL PRODUCTION/PRICE USD/barrel 1 000 bbl per day GAS PRODUCTION/PRICE NOK scm 1 000 boe per day Definitions: 30 800 1.50 300 Net debt to capital employed = 700 The relationship between net interest- 25 1.25 250 bearing debt and capital employed 600 20 1.00 200 Net interest-bearing debt = 500 Gross interest-bearing debt less cash and cash equivalents 15 400 0.75 150 300 Average capital employed = 10 0.50 100 Average of the capital employed at the 200 beginning and end of the accounting 50 period. Capital employed is net interest- 5 0.25 100 bearing debt plus share capital and minority interests 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 Return on average capital Entitlement oil production Sales equity gas production employed after tax = Average oil price Brent Blend Average gas price Net income plus minority interests and net interest after tax as a percentage of capital employed Production costs = Operating expenses associated with produc- OIL/GAS RESERVES CARBON DIOXIDE (CO2) tion of oil and natural gas divided by total Million barrels Million tonnes production (lifting) of oil and natural gas 5 000 10 Finding and development costs = 8 Calculated from new proved reserves, 4 000 6 excluding acquisitions and disposals of reserves 3 000 4 Reserve replacement rate = 2 Additions to proved reserves, including 2 000 acquisitions and disposals, divided by 0 volumes produced -2 1 000 Carbon dioxide (CO2) = 1997 1998 1999 2000 2001 Carbon dioxide emissions from Statoil oper- Total CO2 emissions from ations embrace all sources such as turbines, Statoil operations boilers, engines, flares, drilling of explo- 1997 1998 1999 2000 2001 ration and production wells and well test- Gas CO2 reductions made through measures implemented between ing/workovers. Reductions in emissions are Oil and NGL 1997 and 2001 for Statoil operations accumulated for the period 1997-2001 Total recordable injury frequency = The number of total recordable injuries per million working hours. Employees of Statoil TOTAL RECORDABLE INJURY FREQUENCY SERIOUS INCIDENT FREQUENCY and its contractors are included 14 8 Serious incident frequency = 12 The number of undesirable events with 10 6 a high loss potential per million working 8 hours. An undesirable event is an event or 4 6 chain of events which have caused or could 4 have caused injury, illness and/or damage 2 2 to/loss of property, environmental damage or harm to a third party 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 Number of total recordable injuries Number of serious incidents per million working hours per million working hours


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    Welcome to Statoil Statoil ASA is an integrated oil and gas company with more than 16 000 employees pursuing operations in 25 countries. On the basis of reserves and production, we are an important player internation- ally and a leading retailer of petrol and oil products in Scandinavia, Ireland, Poland and the Baltic states. Every day we help to meet the energy needs of millions of people in many countries. Production of oil and natural gas on the Norwegian continental shelf (NCS) is the backbone of our business. But for more than a decade we have increased our activities in other countries and built up considerable petroleum reserves amid stiff international compe- tition. Competition is just as tough on the NCS, where we no longer receive preferential treatment by the authorities. In 2001, Statoil was partially privatised and now has more than 60 000 new owners. Our commitment to the shareholders is to gen- erate a good return on their investments through a sound, proactive business performance, with strict demands set on our operations. This applies to our ethical platform, social responsibility, safety work and our contribution to sustainable development through active environmental efforts. This annual report for 2001 tells of the results we have delivered and the ambitions we have for the future. W E L C O M E T O S TAT O I L S TAT O I L 2 0 0 1 1


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    Review of 2001 Statoil strengthened its position consider- In 2001, Statoil entered into an agreement The decision to build a new desulphurisa- ably on the NCS through the acquisition of to supply BP with 1.6 billion cubic metres tion plant at the group’s Mongstad refin- 15 per cent of the state’s direct financial of gas over 15 years. It is the first major ery means that Statoil will be able to sup- interest (SDFI). The group’s stake in the contract for gas from Norway to the UK ply petrol with virtually no sulphur from Gullfaks field increased by 41 per cent to since the Frigg field agreements of 1977. 2003. Petrol from Mongstad will meet 61 per cent. Deliveries started on 1 October. coming European Union requirements. 2 S TAT O I L 2 0 0 1 Å R E T 2 0 0 1


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    Listed in Oslo and New York At 10.00 on Monday 18 June, trading in the Statoil shareholders. “This is an important element in building a share began at the Oslo Stock Exchange. Five and a corporate culture,” says executive vice president and chief half hours later, trading started on the New York Stock financial officer, Inge K Hansen. Exchange. In November, personnel in wholly-owned subsidiaries in several other countries were given the chance to buy Chief executive Olav Fjell triggered the start of a new era shares. The response was lower than in June – 500 employ- for Statoil when he pressed the “Enter” button to reveal ees, or 15 per cent of those who received the offer bought developments in the share price on a big screen. Guests shares. and the press from Norway and abroad were gathered at the Oslo Stock Exchange for the occasion. Successful listing with tight deadlines – It took only A new epoch had begun. One day a wholly state- seven and a half weeks from the Storting’s (parliament) owned group, not for sale. The next day shares for NOK 5.2 decision on 26 April to partially privatise Statoil, until the billion were traded in Oslo, and Statoil was valued at NOK group was listed in Oslo and New York. Practical prepara- 151 billion based on a share price of NOK 69 when the tions were made before the resolution was passed – in par- exchange closed. That price was identical to the introduc- ticular the extensive information material which was to be tory price. made available to analysts and investors. During its first six months on the Oslo Stock Exchange, But a lot of work had to wait until the political resolu- the Statoil share accounted for almost 15 per cent of the tion was actually passed. So the 54 days between the res- exchange’s turnover. The Norwegian state is majority olution and the listing were quite hectic. Despite some shareholder. That means that 81.8 per cent of the shares expressed doubt that it could be done, the preparations are not for sale. The remaining 18.2 per cent still represents were carried out on time. the largest group of owners behind any company quoted Information and advertising campaigns were designed on the Oslo Stock Exchange. Since the June listing, the and launched. Statoil’ s corporate management split into number of shareholders has risen slightly to above 64 500. three teams which in the space of a few weeks were in contact with 570 different institutions in the USA and 7 800 employees bought shares – A total of 7 300 Europe. The teams met 163 individual investors and held employees in Statoil’s parent company acquired shares 24 major meetings. These efforts paid off. When the sub- during the subscription period in the first half of June. This scription period closed three days before trading started, constitutes 60 per cent of the workforce. It is positive for the demand for shares was four times the number offered Statoil that so many of its employees chose to become for sale. Statoil’s partial privatisation was one of the major listings in Europe in 2001, with proceeds from shares sold of NOK 26.4 billion. A new era began for Statoil on 18 June 2001, when chief execu- tive Olav Fjell opened trading in Statoil shares at the Oslo Stock Exchange. In late August, the production ship In September, the plan for development The Girassol field off Angola came on Petrojarl 1 started producing on the Glitne and operation of Snøhvit was submitted to stream in December. Statoil’s first oil pro- field in the North Sea’s Sleipner area. That the Norwegian authorities. Snøhvit is duction in Africa is thereby underway. was less than 11 months after the authori- northern Norway’s biggest industrial proj- Planned plateau production is 200 000 bar- ties approved the plans. Daily production ect and Europe’s first export facility for rels per day. The group has a 13.33 per is 40 000 barrels. LNG. Statoil is operator with a 22.29 per cent share in the field. cent stake. ÅRET 2001 S TAT O I L 2 0 0 1 3


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    Olav Fjell 4 S TAT O I L 2 0 0 1 T H E C H I E F E X E C U T I V E


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    The chief executive: A new era We have behind us one of the most important – and best – the case. Following the acquisition of SDFI interests, out- years in Statoil’s history. put has risen so sharply that the group’s production now Following the acquisition of shares from the state’s direct exceeds reserve replacement. We are therefore stepping up financial interest (SDFI) on the Norwegian continental shelf efforts to prove new reserves on the NCS and internation- (NCS), we have increased our oil and gas reserves by more ally. At the same time we will mature the finds we have than 50 per cent, and have become a company with a daily already made, so that they may be booked as reserves. production of about one million barrels of oil equivalent. During the past year we have brought several new and Statoil has a new ownership structure. A successful significant fields to a development decision. The most stock exchange listing resulted in 63 000 new sharehold- important are the Kristin field in the Norwegian Sea and ers, including 7 800 of the group’s own employees. the Snøhvit field in the Barents Sea. These projects will The financial results are good. We have improved effi- contribute to the group’s long-term growth and develop- ciency in all the areas where we operate. We have reached ment. We have also decided to invest in major develop- the objectives we set in 1999 and have thereby improved ment projects in Angola and Azerbaijan. our profitability as well as our competitive position. We enjoy a strong position in the European gas market, After a number of years of stagnation in our safety results, which is undergoing change and growth. We will be a flex- we now see an improvement. There is a greater interest in ible supplier, with long-term contracts as well as involve- improving safety. Through systematic efforts we are building ment in the new short-term market in continental Europe. a safety culture which will be just as good at all of our plants The UK market is particularly interesting because its and installations as it was at our Tjeldbergodden methanol import demand will grow in the years to come. Gas from plant in 2001, when it received the chief executive’s prize for the Snøhvit field will help us gain a footing in the rapidly health, safety and the environment. expanding LNG market and will extend the market for Our goal is that safety will be better this year, even bet- Norwegian gas to the USA and southern Europe. In time ter next year – and so forth every year after that. we will also gain access to gas outside the NCS which will We are committed to contributing to sustainable devel- enable us to develop our international gas involvement. opment. We will create value for the group’s owners, its Statoil was established in 1972 as an instrument to employees and society in general. Our workplaces will pro- develop Norway’s oil and gas industry. At that time vide opportunities for development for individual employ- nobody realised that the NCS was to become one of the ees. Through environmental management we will avoid world’s leading oil and gas provinces, or that Statoil, as any harmful impacts on the sea, the air and the ground. In operator, would play a key role in developing the the Snøhvit project, consideration of the environment and resources. That role as instrument was over some time ago. fishing interests has been an integral part of the planning, The changes to the ownership structure were therefore a since the development will take place in the vulnerable natural step to strengthen our ability and our chance to Barents Sea region. Of the gas we are to produce each year, exploit the many business opportunities we have in a 800 000 tonnes of carbon dioxide will be removed and con- national, and increasingly international perspective. veyed back to the field for injection in the sub-surface. Statoil’s employees deserve a lot of thanks for their efforts, We will deliver a competitive return so that we gain the drive and creativity. Through their systematic work they have confidence of our owners and thereby a basis for making created a competitive Norwegian oil and gas group with a new investments. Profits are also important if we are to high level of expertise and technological insight. contribute to the development of the communities of We are proud of our history but we are also eager to which we are an integrated part. Later this year, Statoil will develop the group further. We have: publish its first separate review of the group’s contribution • major opportunities on the NCS to sustainable development. • access to quality fields internationally Over the last three years, we have improved our prof- • a strong position in the European gas market itability but we intend to become even better. We will achieve • a large and loyal group of customers in the end-user a return on capital employed of 12 per cent with an oil price markets. of USD 16 per barrel. This will require a continued strong This annual report describes what we do. It demon- focus on efficient operations throughout the organisation. strates that we have the financial strength and expertise We will also replace our production with new reserves. that are necessary for our success. Historically speaking, Statoil has expanded its reserve We will deliver what we have promised our owners – basis even when its output has increased. This is no longer profitability and growth, based on our fundamental values. THE CHIEF EXECUTIVE S TAT O I L 2 0 0 1 5


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    Directors’ report Introduction – The Statoil group’s net income in 2001 costs averaged USD 9.1 per boe. Production costs per boe came to NOK 17.2 billion, an increase of NOK 1.1 billion declined from USD 3.1 in 2000 to USD 2.9. from 2000. Income before financial items, tax and minority Good results for health, safety and the environment are interests totalled 56.2 billion in 2001 as against NOK 60 bil- crucial to the group’s value creation and position. lion the year before. Total revenues were NOK 236.3 billion, Unfortunately, two fatal accidents were suffered by con- an increase of almost NOK 6 billion from 2000. The return on tractors working for Statoil in 2001. However the board is capital employed was 19.9 per cent, as against 18.7 per cent pleased to note that efforts to improve the safety level in in 2000. Net income per ordinary share was NOK 8.31 in the group has yielded results in the form of fewer serious 2001 as against NOK 8.18 the year before. Adjusted for spe- incidents and fewer injuries. cial items, the return on capital employed came to 17.6 per 2001 was an eventful year for the group. Decisions were cent, while net income per ordinary share was NOK 7.32. made which will strengthen the group’s opportunities for The board is satisfied with these results which show development, in both the short and the long term. that the group is on the right track in relation to the tar- • The Storting’s (parliament) resolution on the stock gets set for 2004. exchange listing of Statoil and the acquisition of around The good results can primarily be attributed to positive 15 per cent of the state’s direct financial interest (SDFI), developments in oil and gas production. Gas prices have has enhanced the group’s competitiveness and its abil- also been considerably higher than in 2000. However, lower ity to implement its strategy. oil prices and refining margins have weakened the result • Statoil will continue to market all oil and gas on behalf compared with the year before. A write-down in the LL 652 of the state. This gives the group a strong position in oil field in Venezuela amounted to NOK 2 billion (NOK 1.4 the global oil market and in the European gas market. billion after tax). Net income includes an after-tax gain of • Statoil has decided to invest in several major projects NOK 3.5 billion related to the sale of interests on the on the Norwegian continental shelf (NCS) and interna- Norwegian continental shelf, shares in the Kashagan oil tionally, which will have significance for the group’s field in Kazakhstan and operations in Vietnam. long-term development. The Snøhvit project in the Statoil’s oil and gas production increased in 2001 by Barents Sea, through which Statoil will become a play- 4 000 barrels of oil equivalent (boe) per day to 1 007 000 er in the LNG market, is particularly important. boe per day. At the end of 2001, Statoil’s proven reserves of Statoil’s listing on the Oslo and New York Stock Exchanges oil, NGL and gas totalled 4 277 million boe. This is 40 mil- was successful and took place at a time when the oil sec- lion boe lower than the year before. The reserve replace- tor markets were relatively stable. The Statoil share was ment rate was 89 per cent as against 47 per cent in 2000. well received. Worldwide, 394 417 002 shares were sold, of The average replacement rate for the last three years is 68 which 188 700 000 were traded in connection with the per cent. The board wants to prioritise efforts to improve Statoil share issue and 205 717 002 were sold by the the company’s reserve replacement rate by bringing Norwegian state. proven finds to maturity and increasing exploration activ- In connection with the listing, the group has estab- ities. The group’s target is that new reserves will exceed oil lished clear objectives for profitability and production and gas production in 2004. growth up to 2004. The board gives priority to ensuring Work on change, restructuring and cost cuts is consid- that these targets are met. ered by the board to be of key significance. Operating, sell- ing and administration expenses and exploration expenses Developments in Statoil’s principal markets – The have been reduced by NOK 1.4 billion compared with global economy was unsettled in 2001, with stagnation in 2000. The group has therefore met its cost target which all parts of the world. The terror actions of 11 September was set in 1999. aggravated a sense of pessimism, particularly in the USA. Finding and development costs for the group came to The economic downturn had considerable consequences USD 4.6 per boe in 2001, as against USD 11.8 per boe in for energy demand. 2000. Over the last three years, finding and development Growth in the global oil market was considerably weaker in 2001 than the year before. The average price for Brent Blend reference crude fell by 14 per cent, from USD Amanda Martin is a gas trader at Statoil’s office in London. Statoil sells gas to major industrial customers in the UK market. The London office takes 28.5 (NOK 251) to USD 24.4 (NOK 219) per barrel. Along part in the group’s global crude oil trading which is also carried out in with the Opec countries and several other non-Opec Stavanger, Singapore and Stamford, Connecticut. nations, the Norwegian authorities decided in December D I R E C T O R S ’ R E P O RT S TAT O I L 2 0 0 1 7


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    Ole Lund styreformann to cut production in order to prevent a major decline in oil day compared with 2000. A number of new fields came on prices. This decision will have negative consequences for stream in 2001 – Snorre North, Glitne, the Gullfaks satel- Statoil’s production trend on the NCS in 2002. lites and Huldra, while production ceased on the Yme field. Demand for gas in western Europe continues to rise. The board is particularly pleased that Glitne came on There is a growing market for short-term gas sales. stream less than a year after the authorities’ approval. Statoil’s average gas price in 2001 was NOK 1.22 per stan- The Åsgard B platform resumed production at the dard cubic metre, an increase of just over 20 per cent com- beginning of January 2002 following a shutdown since pared with the year before. The close connection between August 2001 due to repairs. oil and gas prices means that gas prices in 2002 are expect- The Storting passed a resolution to establish Petoro ed to be lower than in 2001. ASA to take over Statoil’s responsibility for the state’s Refining margins in Europe fell heavily, especially dur- direct financial interest (SDFI) on the NCS. The board ing the last six months. The average refining margin (fluid hopes that Statoil will develop good relations with Petoro. catalytic cracker margin) fell by 29 per cent during the year, which corresponds to USD 1.5 per barrel. This has International Exploration & Production – Income weakened the results for Statoil’s refinery operations at before financial items, tax and minority interests totalled Mongstad and Kalundborg. The average methanol price NOK 1.3 billion in 2001, as against NOK 800 million the was eight per cent higher in 2001 than the year before, but year before. This improvement primarily reflects gains on the price was considerably weakened in the fourth quarter. the sale of interests in the Kashagan field and the group’s The petrochemicals sector was also strongly affected by Vietnam operations, while the value of the LL 652 field in developments in the global economy. Margins declined by Venezuela was written down due to considerably weaker an average of 18 per cent as a result of reduced demand. production growth than had been expected. Statoil’s board expects the margins for refining, methanol International operations – and production – are still and petrochemicals to be weak for some time to come. limited in comparison with the NCS. In 2001, production averaged 67 000 boe per day, the same as the year before. Exploration & Production Norway – Income before Output will however rise considerably over the coming financial items, tax and minority interests totalled NOK years, as development projects are completed. 40.7 billion. Adjusted for special items associated with the The Girassol field, which is Statoil’s first field in Angola, sale of interests on the NCS, the result was NOK 39.3 bil- came on stream on 4 December 2001. lion as against NOK 46.7 billion in 2000. This decline pri- The Sincor field in Venezuela will also make an impor- marily reflects lower oil prices, higher exploration costs tant contribution to Statoil’s long-term growth and prof- and increased depreciation as a result of new fields com- itability. Early production of heavy crude has been under- ing on stream. way for some time, but Sincor’s upgrading plant is due to The board is pleased to note that operating expenses come on stream in the first quarter of 2002. This plant will have been reduced and that production regularity has convert heavy crude to a light low-sulphur crude and pro- been further strengthened. duction will increase. New technology has made it possi- Statoil’s oil and gas output from the NCS averaged ble to recover heavy crude from the Orinoco basin in an 940 000 boe per day in 2001, an increase of 4 000 boe per environmentally justifiable manner. 8 S TAT O I L 2 0 0 1 D I R E C T O R S ’ R E P O RT


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    Lill Heidi Bakkerud Marit Bakke Stein Bredal Statoil has access to a number of quality fields interna- The British market will become increasingly important tionally. It has been decided to develop Angola’s Kizomba over the coming years. A long-term contract for gas deliver- A oil field, phase 1 of the Azeri-Chirag-Gunashli field in ies to the UK was signed with BP in 2001. An agreement was the Caspian and the Corrib field off Ireland. also formed with the Polish Oil and Gas Company. Important The group is stepping up efforts on the exploration side clarifications need to be made before this agreement can be and a new business cluster has been established with the finalised. Statoil has also signed contracts for the supply of key priority of gaining access to new acreage. liquefied natural gas from the Snøhvit field from 2006. The board puts great emphasis on strengthening inter- During the past year, Statoil has also used the market national upstream activities in order to create a better bal- for short-term sales. Along with Ruhrgas and BEB, the ance in the group’s portfolio. International exploration is group is currently considering establishing a new hub for being extended. The development of new business oppor- gas sales on shorter contracts in the Emden/Bunde region tunities in existing core areas and in resource-rich coun- of Germany. tries such as Iran, Brazil, Mexico and Russia will receive The board puts great emphasis on meeting the group’s substantial attention. contractual obligations in relation to its gas customers. Although the shutdown of the Åsgard B platform led to a Natural Gas – Income before financial items, tax and stoppage in gas production from the field, the group has minority interests totalled NOK 9.6 billion in 2001, as against been able to deliver the contracted volumes by exploiting NOK 7.9 billion the year before. Statoil’s gas sales increased the integral flexibility of the Norwegian gas system. by 600 million cubic metres to 14.7 billion cubic metres. The Renegotiations are a normal part of the gas contracts. average gas price was some 20 per cent higher than the year The first renegotiations began in October 2001. before and is the main reason for the improved result. In the summer of 2001, the European Commission sub- New gas deliveries from the Halten Bank in the mitted a Statement of Objections to Statoil and the other Norwegian Sea to Kårstø north of Stavanger, also con- gas producers on the NCS. It is the view of the board that tributed to the increased income in 2001. there is no basis for the demands presented by the com- Statoil’s share in the Statpipe system was reduced from mission. The Norwegian authorities and Statoil have 58.25 per cent to 25 per cent following the SDFI transac- informed the commission that Norwegian gas sales have tion. This has reduced the group’s income from Statpipe. taken place in accordance with the political decisions Statoil is responsible for the sale of its equity gas as well taken by the Storting (parliament). The commission’s final as the SDFI’ s gas resources on the NCS. This means that conclusion is expected in the course of 2002. the group markets about two-thirds of the total Statoil, as operator, has developed an extensive trans- Norwegian gas output. The bulk of production is sold port system from the NCS to the markets in Europe. The under long-term sales contracts with buyers in continental Storting has resolved to establish a new transport compa- Europe. On the basis of Statoil’s reserves and market posi- ny, Gassco, for gas from the NCS. Gassco will not own tion, relations and expertise, the board will focus on the pipelines or land-based facilities, but will have overall group’s actively exploiting the opportunities represented responsibility for operating the system. Statoil will carry by the expanding European market. In October 2001, out technical operating duties by agreement with the new deliveries of gas to Italy started. transport company. D I R E C T O R S ’ R E P O RT S TAT O I L 2 0 0 1 9


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    Kirsti Koch Christensen Jérôme M Contamine Finn A Hvistendahl Marketing & Manufacturing – Income before financial pared with 2000. This is primarily due to reduced rates for items, tax and minority interests totalled NOK 4.5 billion in conventional shipping. The result for offshore loading is 2001, which is NOK 79 million lower than the year before. satisfactory, but capacity utilisation for the shuttle tanker The results for oil trading in particular show a substan- fleet was slightly lower towards the end of the year. tial improvement. Statoil sold an average of 2.2 million The Marketing & Manufacturing business area is barrels of oil per day in 2001. This represents the group’s responsible for assisting the development of a market for own production, oil sold on behalf of the SDFI and third- gas in Norway. The board is concerned that Statoil should party crude. work actively to find solutions which may increase gas Statoil’s refining results for 2001 are satisfactory once utilisation in Norway, while still meeting the group’s again, although they are slightly weaker than the year required rate of return. before as a result of lower margins. Refinery utilisation has been good and the improvement programmes at Restructuring the portfolio – In 1999, the board set a Mongstad and Kalundborg have helped the refineries to target to reduce the group’s total capital employed by 20- improve their competitive position. 25 per cent by the end of 2001. Restructuring in 2001 led to Retailing also had better results in 2001 compared with a reduction of NOK 4.7 billion. Total reduction in capital the previous year. This is due to a combination of improved employed amounts to NOK 17.8 billion, equivalent to 20.5 margins and cost cuts. At 31 December, Statoil had 21 new per cent. The board is satisfied that its target has been automated petrol stations in operation under the 1-2-3 reached. brand. The development of the new service station net- In 2001 the group realised a non-taxable gain of NOK work will strengthen the group’s competitiveness and help 1.4 billion related to the sale of the Jotun, Grane and Njord to maintain its market share. fields and a 12 per cent interest in the Snøhvit field. Methanol operations had the best results since the Statoil sold its 15 per cent interest in the Malaysian Tjeldbergodden plant came on stream in 1997, but margins Refining Company to the other two shareholders, Petronas fell towards the end of the year. Production has been high and Conoco Asia. The accounting effects of the sale were and stable. insignificant. The result for the Borealis petrochemicals group was The group sold its 4.76 per cent share in Kazakhstan’s slightly negative in 2001, NOK 400 million lower than in Kashagan field, earning a gain before tax of NOK 1.6 billion. 2000. The main reason for the weak result is low margins All of the group’s operations in Vietnam have been sold, for petrochemicals throughout the year, along with opera- realising a gain before tax of NOK 1.3 billion. tive difficulties at Stenungsund. Three new petrochemical As part of restructuring Statoil’s ownership of Navion, plants have been built in Abu Dhabi. They were built by Statoil acquired the Rasmussen group’s 20 per cent stake the Bourouge company, owned by Borealis (40 per cent) in the shipping company. All unresolved issues between and the Abu Dhabi National Oil Company. Products from the Rasmussen group, Navion and Statoil have been the new petrochemical plants will be marketed primarily resolved through this deal, which took effect on 1 October in Asia. 2001. The Berge Hugin and Navion Munin production The Navion shipping company also had a good finan- ships were sold to Bluewater. The board aims to conclude cial result in 2001, although it was slightly weaker com- the work of restructuring Navion in the course of 2002. 10 S TAT O I L 2 0 0 1 D I R E C T O R S ’ R E P O RT


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    Ellen Stensrud Ingvar M Sviggum Knut Åm Health, safety and the environment – Statoil stepped The board is positive to the introduction of a system for up efforts in 2001 to prevent harm to people and the envi- emission trading with greenhouse gases in Norway, but ronment. After several years of stagnation, safety results would underline the importance of rules that do not place improved substantially. The board would emphasise that Norwegian industry at a competitive disadvantage com- safety efforts in the group will continue to receive high pri- pared with industry in other countries. ority, with the aim of improving results further. The board is pleased that the working environment The two fatalities suffered by contractors working for survey for 2001 confirms that there is a good work envi- Statoil and Navion have been investigated thoroughly and ronment in the group. Results show progress compared measures have been implemented to help prevent such with 2000 for working environment conditions, motivation accidents occurring in future. and job satisfaction. The board is satisfied to note that the number of Further details about health, safety and the envi- recordable injuries has been reduced. Calculated per mil- ronment are provided in the review of Statoil’s opera- lion working hours, the total recordable injury frequency tions. declined from 10.1 in 2000 to 6.7 in 2001. The number of lost-time injuries per million working hours has risen Financial developments for the group – Total rev- slightly, to 3.1 in 2001, compared with 2.7 in 2000. Sickness enues for Statoil in 2001 came to NOK 236 billion, an absence remains low, reduced further from 3.5 per cent in increase of nearly NOK 6 billion from the year before. 2000 to 3.4 per cent in 2001. Income before financial items, tax and minority inter- The number of serious incidents with a high loss poten- ests totalled 56.2 billion in 2001 as against NOK 60 billion tial has also declined, from 4.3 to 4.1. The board will keep a in 2000. Net income in 2001 came to NOK 17.2 billion, close eye on developments. Work to strengthen the group’s compared with NOK 16.2 billion in 2000. safety culture and the role of managers is very significant. Cash flow provided by operating activities was NOK The Working Together for Safety project with other compa- 39.2 billion in 2001, compared with NOK 56.8 billion in nies on the NCS, trade unions and the Norwegian 2000. This decline is due principally to changes in taxation Petroleum Directorate is an important measure. associated with the SDFI transaction, and lower oil prices. One of the group’s key initiatives in 2001 was a com- Cash flows used in investing activities amounted to NOK prehensive review of the technical safety condition at all 12.8 billion as against NOK 16 billion in 2000. facilities offshore and on land. A certain need for improve- The group’s gross interest-bearing debt at 31 December ment measures has been identified, but safety levels in 2001 was NOK 41.8 billion, an increase of NOK 4.8 billion general were found to be satisfactory. from a year earlier. The group’s debt-equity ratio, defined Statoil has taken measures for several years to limit car- as net interest-bearing debt in relation to capital bon dioxide emissions from its operations. Large volumes employed, was 39 per cent at 31 December. The board con- of this greenhouse gas are removed and injected at siders this to be satisfactory. Sleipner. High priority is being given to environmental The group had NOK 6.5 billion in bank deposits and measures in the Snøhvit project. Carbon dioxide will be other liquid assets at 31 December. Overall interest-bear- removed from the gas produced, returned to the field in a ing debt is denominated in US dollars. The average matu- separate pipeline and injected underground. rity of the group’s long-term loans was roughly 12 years. D I R E C T O R S ’ R E P O RT S TAT O I L 2 0 0 1 11


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    Interest charges in 2001 averaged 5.2 per cent as against • 12 per cent return on capital employed with an oil price 6.2 per cent the year before. of USD 16 At 31 December, Statoil managed a portfolio of about • increase in oil and gas production to 1 120 000 boe per NOK 20 billion in bonds, certificates and shares. Fund day. management by the group relates to assets in Statoil The board has sanctioned projects which will help the Forsikring (insurance), the group’s liquidity reserves and group reach its objectives for production growth. Great Statoil’s pension funds. The pension funds are not consol- emphasis is being put on further reductions in the group’s idated in the accounts. The average return on these assets finding and development costs and production costs. in 2001 was one per cent. The group will exploit its strong commercial position As of 2001, the group’s financial reporting is in accor- on the NCS to increase value creation. Work on further dance with the US generally accepted accounting princi- development of the group’s core areas will continue. At ples (USGAAP) as well as the Norwegian generally the end of 2002, Statoil will take over three operatorships accepted accounting principles (NGAAP). USGAAP acts in the Tampen cluster from Norsk Hydro. The group will as a standard for international oil companies. Note 25 in implement new major and demanding development proj- the NGAAP accounts explains the differences between the ects such as the Norwegian Sea’s Kristin field and the two sets of accounts. Snøhvit field in the Barents Sea. This will contribute to the As required by section 3-3 of the Norwegian group’s long-term development and strengthen its posi- Accounting Act, the board confirms that the going con- tion in the international gas markets. Access to new explo- cern assumption has been fulfilled. The annual accounts ration assignments in the 17th offshore licensing round for 2001 have been prepared on that basis. will receive high priority. Operations on the NCS will con- In connection with the stock exchange listing, the tinue to be very important for the group’s earnings. name of the parent company has been changed from Den International upstream operations represent an exten- norske stats oljeselskap a.s to Statoil ASA. sion of the group’s position and expertise, and will be cru- Net income for the Statoil ASA parent company cial to its ability to grow in the longer term. Significant according to NGAAP came to NOK 13.6 billion. finds are under development in Angola and the Caspian. The board proposes that the annual general meeting The group is working to develop new commercial oppor- allocates a dividend of NOK 2.85 per share. The amount of tunities in its existing core areas and in countries such as the dividend comprises 40 per cent of the USGAAP result Iran, Russia, Mexico and Brazil. adjusted for profit on disposals and write-downs. The size Continuing to develop Statoil as a gas company is a key of the dividend complies with the group’s dividend policy. element in the group’s strategy. As a major gas supplier to The board proposes the following allocation of net Europe, Statoil has a good foundation for developing a income in the parent company, Statoil ASA (in NOK mil- larger involvement in European gas operations. The return lion): on existing contracts must be maximised at the same time Dividend 6 169 as markets are developed for new gas sales. Retained earnings 7 437 Statoil has a good foundation in the Marketing & Total allocated 13 606 Manufacturing business area for increased value creation The company’s distributable equity amounts to NOK by exploiting its brand, its customer base and opportuni- 20 410 million. ties for synergies between upstream and downstream operations. Expansion of the service station network in Further developments for the group – Over the past Poland and the Baltic states is continuing at full strength. three years, Statoil has carried out a demanding restruc- In the board’s view, the improvement measures and turing and improvement process which has enhanced the partial privatisation have strengthened Statoil as a robust, group’s cost-effectiveness. The new ownership structure profitable company. The board is anxious to secure the has also served to strengthen the group. Profitability and best possible return for the shareholders and will therefore the financial position are good and give the group free- keep a strong focus on efforts to increase efficiency and dom of action. will maintain strict capital discipline. The board will continue the strategic main direction of the flotation project in 2001 and will attach great weight to Stavanger, 18 February 2002 the group’s achieving the targets set for 2004 which were The board of directors of Statoil ASA communicated in connection with the flotation, 12 S TAT O I L 2 0 0 1 D I R E C T O R S ’ R E P O RT


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    Shares and shareholder matters Statoil’s fundamental objective is to give its shareholders a New York Stock Exchange. There is only one class of shares competitive return on their share capital over time, so that and they may be freely traded. As at March 2002, Statoil investing in Statoil becomes an attractive option. Returns has about 65 000 shareholders. Of these, 7 800 are employ- will be realised by a combination of rising share price and ees of the group. The Norwegian state is majority share- dividends. Through profitability and growth, Statoil will cre- holder, owning 81.8 per cent of the share capital. ate value for shareholders, employees and society at large. In the period from Statoil’s listing on 18 June 2001 and Statoil’s management will take active steps to develop up to the end of the year, 608 million Statoil shares, with a the group further, making major requirements as regards total value of NOK 37.4 billion, were traded on the Oslo profitability, economic strength and financial flexibility. Stock Exchange. This gave an average daily turnover of The group’s assets will be managed with the constant aim NOK 275 million. of promoting transparency. Main shareholders Information – Statoil puts great emphasis on keeping 1 81.8% THE NORWEGIAN STATE the stock market closely informed about developments in 2 1.68% STATE STREET BANK & TRUST CO* the group’s results, the future prospects in the markets 3 1.68% JPMORGAN CHASE BANK* where Statoil operates and other relevant issues. The aim 4 0.75% BOSTON SAFE DEP & TRUST* is to ensure that the stock market always has correct and 5 0.70% BANK OF NEW YORK* comprehensive information about Statoil, to provide the 6 0.65% FIDELITY FUNDS basis for a correct valuation of the group. 7 0.63% DEUTSCHE BANK AG Statoil works according to the principle that all informa- 8 0.51% FOLKETRYGDFONDET tion which is relevant to its market valuation must be pro- 9 0.47% JP MORGAN CHASE BANK* vided to all market players at the same time. Quarterly and 10 0.45% BANKERS TRUST COMPANY* annual results are presented at press conferences, sent to 11 0.34% THE NORTHERN TRUST CO* stock market analysts and published on www.statoil.com. 12 0.32% THE NORTHERN TRUST CO* Information which is of significance to the group’s val- 13 0.32% MORGAN STANLEY & CO* uation will also be distributed on Statoil’s home pages, via 14 0.31% VITAL FORSIKRING ASA the Oslo Stock Exchange or through presentations, 15 0.29% EUROCLEAR BANK S.A.* speeches and conferences published simultaneously 16 0.24% GJENSIDIGE NOR SPAREFORSIKRING through electronic channels. 17 0.23% DRESDNER BANK AG* Contact with the stock market is handled by the group’s 18 0.21% JP MORGAN CHASE BANK* investor relations function. 19 0.17% SKANDINAVISKA ENSKILDA BANKEN 20 0.17% SALOMON BROTHERS INTERNATIONAL LTD Ownership matters – Statoil is quoted by the ticker *Client accounts or similar symbol STL on the Oslo Stock Exchange and STO on the SHAREHOLDERS BY GEOGRAPHICAL AREA SHARE PRICE OSLO STOCK EXCHANGE Excluding the Norwegian state’s interest of 81.8% NOK 80 5.0% 8.0% 70 24.4% 60 11.4% 50 40 30 22.1% 29.1% 20 10 0 June July August September October November December Norway UK USA Rest of Europe Benelux Rest of world S H A R E H O L D E R M AT T E R S S TAT O I L 2 0 0 1 13


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    Statoil through the year New growth and new challenges – Statoil’s activities in 2001 were characterised by a good operating performance, with high regularity, rising production, measures to improve efficiency and new development assignments. All four business areas made a positive contribution to the group’s net income of NOK 17.2 billion. While the average oil price declined by 14 per cent from the year before to USD 24.4 per barrel, the average price obtained for gas rose by 23 per cent to NOK 1.22 per cubic metre. The oil market is under pressure and affected by uncertain- ty, while the European gas market has been growing steadily. That was confirmed in 2001 with new long-term contracts concluded by Statoil for gas deliveries to the UK and Poland. The review of operations on the following pages reveals a group with extensive and growing activities. Statoil operates 10 fields on the NCS, and is responsible for four new projects at the planning and development stages. It brought three fields on stream as operator in 2001, and is a licensee in three partner-operated fields which also began producing during the year. Production outside Norway is expanding, and will rise by about 25 per cent during 2002. Statoil’s first African output has begun flowing, and the group is involved in three field developments which were all agreed in 2001. With total daily production exceeding a million barrels of oil equivalent and rising, securing additional oil and gas reserves to replace current output will be a major chal- lenge. Oil products and natural gas will continue to be needed in the long term, but restric- tions on discharges to the sea and emissions to the air are constantly being tightened. Statoil will use its technological know-how to ensure that it ranks among the world’s most environmentally-effective producers and transporters of oil and gas. The group established a separate business unit in 2001 to develop technology and business oppor- tunities relating to the removal and utilisation of carbon dioxide, as well as future hydro- gen-based energy solutions. Statoil is also investing in projects covered by the World Bank’s carbon fund, which aims to secure reductions in greenhouse gas emissions. Mechanic Håkon J Sundfjord (left) and Eiel Sundve, former platform man- ager on Troll A, stand at the base of one of the concrete columns, 300 metres below sea level. The gigantic Troll platform is the guarantor for Statoil’s gas deliveries. In 2001, it supplied as much as 48 per cent of Statoil’s natural gas output. S TAT O I L T H R O U G H T H E Y E A R S TAT O I L 2 0 0 1 15


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    Business operations The Huldra gas and condensate field came The Åsgard B gas platform was shut down on stream in November. Huldra is a well- from mid-August until the New Year while head platform without a crew and it is repairs were made to welds on seabed remotely controlled from the Veslefrikk flowlines. The platform’s gas export system field 16 kilometres away. The picture was also upgraded during this period. shows the 4 275-tonne topsides being lift- ed into place on 25 March. Total oil and gas production for Statoil in 2001 averaged Oil and gas production – Norwegian continental shelf 1 007 000 barrels of oil equivalent per day, an increase of (1 000 barrels of oil equivalent/day) 4 000 barrels from the year before. The group’s ambition is Statoil’s to increase its oil and gas output to 1 120 000 barrels of oil Field 2001 share per day in 2004. All the requirements for reaching that pro- Statfjord 101.9 44.34% duction target are in place. Statfjord East 11.6 25.05% The group’s oil and gas reserves totalled 4 277 million Statfjord North 11.4 21.88% barrels of oil equivalent at 31 December 2001. That repre- Gullfaks 158.6 61.00% sents a reduction over the year of 40 million barrels, or 0.9 Troll Gas 84.8 20.81% per cent. Statoil invested NOK 17.4 billion in 2001, down Heidrun 25.3 12.43% by NOK 1.3 billion from the year before. Norne 54.3 25.00% Sleipner West 77.3 49.50% Income before financial items (NOK bn) 2001 2000 Sleipner East 74.4 49.0% Exploration & Production Norway 40.7 46.7 Åsgard 60.5 25.00% International Exploration & Production 1.3 0.8 Yme 2.2 65.00% Natural Gas 9.6 7.9 Veslefrikk 6.7 18.00% Manufacturing & Marketing 4.5 4.6 Sygna 10.9 24.73% Gungne 4.5 52.60% Glitne 7.6 58.90% Huldra 0.4 19.66% Operating developments 2001 2000 Total Statoil operated 692 Reserve replacement rate (1) 0.68 0.86 Partner operated 248 Finding and development costs (USD/boe) (2) 9.11 8.21 Overlifting 3 Production cost (USD/boe) (3) 2.92 3.08 Total production 943 (1) Additions to proved reserves including acquisitions and disposals, divided by volumes produced. 3-year average. (2) Total exploration activities, investments in field installations. 3-year average. (3) Production costs for fields and transport systems. of Petroleum and Energy on the acquisition of assets direct- ly owned by the state in 84 production licences on the NCS. Eighteen exploration wells involving Statoil were com- Exploration & Production Norway pleted during the year, including 10 operated by the group. Production of entitlement oil on the NCS averaged Discoveries were made in 12 of the wells, but their total 697 000 barrels per day, while average daily gas output volume was small – in the order of 125 million barrels of came to 39.1 million cubic metres. The corresponding fig- oil equivalent. ures in 2000 were 676 000 barrels and 38.6 million cubic metres. Overall Norwegian oil and gas production rose Åsgard B – Operation of Statoil’s production installations from an average of 919 000 barrels of oil equivalent per day on the NCS was stable with the exception of the Åsgard B in 2000 to 943 000 barrels. gas processing platform. This was shut down on 13 August Remaining oil and gas reserves at 31 December totalled after a leak had been detected in a weld on the gas flow- 3 664 million barrels of oil equivalent, a reduction of 3.2 line to the Åsgard A production ship. Extensive improve- per cent. ments are being made to welds on subsea flowline hubs, An agreement was concluded in May with the Ministry and this work will be completed in the summer of 2002. 16 S TAT O I L 2 0 0 1 S TAT O I L T H R O U G H T H E Y E A R


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    In December, Statoil took over the new Sissel Moldskred, operations vice president ery on Navion Saga. After five years of pro- Stena Don drilling rig, an important contri- for Yme, accompanied the final oil ship- duction, yielding some 50 million barrels of bution to renewing Statoil’s rig fleet. It ment from the field to the Mongstad refin- oil, Yme was shut in on 15 April 2001. has a dynamic positioning system and can operate without using anchors. This is of great help when working with seabed installations. Production resumed at a reduced rate on 1 January approval. Gas began flowing from Gullfaks South in 2002. Vibrations have also been detected in the gas export October, with the Huldra gas and condensate field coming system, and capacity restrictions will remain in force until on stream the following month. the necessary repairs are made. NOK 11 billion was invested by the business area in Gas customers have not been affected by the shut- 2001, a decline of NOK 2 billion from the year before. That down and reduced production on Åsgard B. Utilising the reduction primarily reflects a sharp contraction in spend- available flexibility in production and transport systems ing on the Åsgard development by comparison with 2000. has made it possible to meet contractual commitments to The level of development activity on the NCS is high. European and British buyers. Not one day was recorded up Statoil’s share of new projects where it is operator or to 31 December when deliveries fell short of customer licensee will total NOK 33.1 billion from 2002 to 2004. requirements, although these were close to the maximum Most of these projects have been agreed by their licensees level at times. and approved by the authorities. Improved recovery – Oil production from Statfjord New projects – Snøhvit is Statoil’s largest new project, passed a recovery factor of 60 per cent on 13 April. Efforts costed at NOK 46 billion. A plan for development and are now being made to push this factor to 68 per cent of operation (PDO) was approved by the Storting (parlia- stock tank oil originally in place. Practical utilisation of its ment) in March 2002. Statoil has a 22.29 per cent inter- own systematic research commitment is one reason for the est. The field is described in a separate article on pages high recovery factor being achieved by Statoil on its fields. 22-23. That applies in particular to the development of four- PDOs for Statoil’s Mikkel and Kristin gas and conden- dimensional seismic, which involves repeating three- sate fields in the Halten Bank area of the Norwegian Sea dimensional surveys over time. Effective use of seismic were approved in September and December respectively. data and new methods for sub-surface mapping provide Mikkel will cost NOK 2.4 billion and requires just over substantial financial gains in the form of reduced drilling NOK 1 billion to be spent on gas treatment facilities at costs and improved oil recovery. Kårstø. Statoil has a 56.5 per cent interest. Statoil has now developed a new exploration method Costed at NOK 17 billion, Kristin ranks as a major called seabed logging, based on electromagnetic waves development with a floating gas processing platform which supplement the acoustic waves used in convention- which will function as a field centre. Statoil’s interest is al seismic surveying. This solution makes it easier to iden- 46.6 per cent. This project also requires an expansion of the tify hydrocarbons, and has already been under testing for Kårstø complex, where the gas will be processed. some time. Statoil applied in December to develop a facility at A separate company, Electromagnetic GeoServices, has Kårstø which will start processing natural gas liquids from been established with Statoil as the majority shareholder Kvitebjørn in 2004. to sell services relating to seabed logging. The basis for the new technology was laid at the group’s research centre in Trondheim. International Exploration & Production Statoil’s exploration and production operations beyond the New production – The Glitne project came on stream in NCS had a successful year in 2001, with an improved late August after making very rapid progress. Production financial result, new production and new development began less than 11 months after the authorities gave their decisions. Entitlement oil production from the group’s S TAT O I L T H R O U G H T H E Y E A R S TAT O I L 2 0 0 1 17


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    OIL AND GAS NORWEGIAN AND PRODUCTION INTERNATIONAL PRODUCTION 1000 boe/day 1000 boe/day 1 003 1 007 1 003 1 007 1 120 67 67 253 256 936 940 750 751 The Kristin gas and condensate field on the Halten Bank will be developed with 12 subsea wells tied back to a floating pro- duction platform. Due to come on stream 2000 2001 2000 2001 2004 in 2005, the Statoil-operated project will cost NOK 17 billion. Oil Gas Norweigan Outside Target Norway international operations averaged 58 000 barrels per day, Oil and gas production – International while the daily average for gas production was 1.2 million (1 000 barrels of oil equivalent/day) cubic metres. Corresponding figures for 2000 were 57 000 Field 2001 Statoil’s barrels and 1.5 million cubic metres. Remaining proved share reserves increased by 82 million barrels of oil equivalent, Lufeng 6.2 75.00% from 530 million to 612 million. International holdings LL652 2.6 27.00% correspond to 14 per cent of total proven reserves. Sincor 5.5 15.00% Alba 13.5 17.00% Expansion in Angola and Azerbaijan – Statoil’s first Dunlin 3.8 28.76% African production began to flow in December from the Merlin 0.6 2.35% Girassol field off Angola. The group’s 13.33 per cent inter- Schiehallion 5.4 5.88% est in this development will yield a plateau production of Azeri-Chirag-Gunashli 8.8 8.56% 24 000 barrels per day. TotalFinaElf is the operator. Siri 8.6 40.00% Development of Angola’s Kizomba A oil field is under way, Stine 3.8 45.71% with Statoil again holding 13.33 per cent. That will provide Lulita 0.3 18.82% just over 30 000 barrels of oil per day when Kizomba A Girassol 0.5 13.33% comes on stream in late 2004. ExxonMobil is the operator. Total oil 59.6 A milestone was passed in August when the partners in Jupiter (gas) 7.4 30.00% the Azeri-Chirag-Gunashli oil field off Azerbaijan agreed Total 67.0 the first development phase, which will yield 400 000 bar- rels per day in addition to 120 000 daily barrels from the New fields - production start early phase. Statoil’s interest is 8.56 per cent. Phase I is Norwegian continental shelf Statoil’s Production expected to come on stream in early 2005. share start Glitne 58.90% 2001 Plus and minus in Venezuela – After roughly a year of Gullfaks Satellites II 61.00% 2001 testing, the Sincor project in Venezuela began full produc- Huldra 19.6% 2001 tion in March 2002 when the upgrading plant to convert Snorre II 14.40% 2001 heavy crude to synthetic sulphur-free crude became oper- Sigyn 50.00% 2002 ational. Production is set to reach 180 000 barrels per day Fram West 20.00% 2003 in 2002. Statoil has a 15 per cent interest. Mikkel 56.52% 2003 Forty billion barrels of oil have been proven in the area Kvitebjørn 50.00% 2004 covered by the Sincor project, and production is expected Kristin 46.60% 2005 to continue for 35 years. Investment totals NOK 37 billion, Snøhvit 22.29% 2006 with Statoil’s share standing at NOK 5.6 billion. Projects outside Norway Production from Venezuela’s LL652 oil field in Lake Sincor 15.00% 2001 Maracaibo is lower than planned. The most important rea- Girassol 13.33% 2001 son is technical problems with raising reservoir pressure. Corrib 36.50% 2003 ChevronTexaco is operator, and Statoil has a 27 per cent Alba II 17.0% 2003 interest. The group wrote down the value of the field by Kizomba A 13.33% 2004 NOK 2 billion in 2001. Azeri-Chiraq-Gunashli phase 1 8.56% 2005 18 S TAT O I L 2 0 0 1 S TAT O I L T H R O U G H T H E Y E A R


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    Drilling manager Tore Larsen is ready to Phase 1 in the development of the Azeri- Statoil has developed new technology based open the valves on one of the well clusters Chirag-Gunashli field in the Caspian has on electromagnetic waves in its search for for oil production in the Sincor project in been approved by the project’s partners. oil and gas resources below the seabed. The Venezuela. Statoil has a 15 per cent inter- Investments will be NOK 30 billion and group’s research centre in Trondheim has est in Sincor which has reserves for 35 output will be 400 000 barrels per day. played a key role in developing this years’ production. Statoil’s share is 8.56 per cent. method, known as seabed logging. and Gassco to operate gas pipelines and associated receiv- PROVED RESERVES ing terminals. The Norwegian Gas Negotiating Committee Bn boe (GFU) was also dissolved and replaced with a new system 4 317 4 277 which makes each company responsible for selling its own 530 12.3% 612 14.3% gas. In sum, these changes transfer decision-making from 3 787 87.7% 3 665 85.7% the authorities to the companies and make Statoil’s posi- tion as the leading producer and trader of gas from Norwegian fields even clearer. The group will continue to market the state’s directly-owned oil and gas volumes, with Petoro responsible for monitoring this arrangement. Natural Gas improved its financial results. Sales came 2000 2001 to 14.7 billion cubic metres of equity gas and 18.9 billion NCS Outside Norway cubic metres of SDFI gas. That amounted to 33.6 billion cubic metres in all, or 64.7 per cent of the 51.9 billion cubic metres in total Norwegian gas sales. Gas off Ireland – Development of the Corrib gas field north-west of Ireland was agreed, with production due to High regularity – Statoil and the SDFI have contracted start in late 2003/early 2004. The group has a 36.5 per cent to deliver more than 53 billion cubic metres at plateau to interest, which will entitle it to 3.25 million cubic metres customers in continental Europe and the UK. per day from the field. Norwegian gas deliveries achieved a regularity of 99.8 Investment totalled NOK 5.0 billion as against NOK 5.1 per cent, despite the production shut-down on Åsgard B. billion the year before. No major discoveries were made in Natural Gas invested NOK 700 million in 2001, prima- 2001. The Faroes continental shelf was opened during the rily in Dublin’s Ringsend gas-fired power station and in year, but Statoil’s first well there proved to be dry. Statoil pipelines. The Vesterled system began operating on 1 sold its operations in Vietnam and its holding in October to link Heimdal with Frigg, and thereby tie Kazakhstan’s Kashagan field during 2001. together the Norwegian and British pipeline systems. An agreement was concluded with BP during 2001 on Business development – Systematic efforts are being supplying 1.6 billion cubic metres of gas annually to the made in a number of countries to gain access to explo- UK for 15 years. Deliveries began on 1 October. The first ration acreage and operatorships. In that context, Statoil gas under a contract signed in 1997 with Snam of Italy was has opened offices in Mexico, Iran, Brazil and Saudi delivered on 1 October. Arabia. The group was awarded interests in two explo- A contract agreed with Polish state oil company ration licences in the Santos Basin off Brazil. POGC covers the supply of 73.5 billion cubic metres of gas annually over 16 years from 2008. Important consid- erations need to be clarified before this agreement can be Natural Gas finalised. Statoil experienced 2001 as a year of fundamental change Statoil has adopted a new gas marketing strategy in the for its gas business. Two state-owned management com- UK, with end-user sales to small customers giving way to a panies were established – Petoro to take care of the state’s concentration on large industrial buyers. This is expected to direct financial interest (SDFI) in petroleum operations, create a more robust business in a highly competitive market. S TAT O I L T H R O U G H T H E Y E A R S TAT O I L 2 0 0 1 19


  • Page 24

    On 1 October new deliveries of natural gas Shuttle tanker Navion Norvegia, 131 000 world leader in offshore loading. Navion to Italy and the UK started under the con- dwt, is one of 25 ships in Navion’s fleet also has substantial operations in gas trans- tracts with Snam and BP. Supplies to Snam which is purpose-built for offshore loading. port and conventional tanker markets. Its will continue for 25 years while BP will The Navion shipping company, which is a fleet numbers 60 vessels. receive gas for 15 years. wholly-owned subsidiary of Statoil, is a Gas market in growth – Gas consumption in Europe is barrel of Brent Blend reference crude varying between a continuing to increase. While gas accounted for 22 per high of USD 30.6 and a low of USD 16.5. A similar trend cent of primary energy consumption among European was seen for prices of refined products. Developments OECD members in 2000, the International Energy Agency have been affected by weaker growth in the world econ- estimates that this share will reach 31 per cent by 2020. omy, which was further undermined by the terrorist Western Europe has increased its gas usage by more than attacks of 11 September. One result was a reduction in 20 per cent over the past five years. European production Opec’s informal price ambitions, leaving the organisation and imports of this commodity both rose in 2001. satisfied for the time being with a price of just over USD Pipeline gas remains the main source of supply for 20 per barrel for Brent Blend. Late in the year, the Opec Europe, but liquefied natural gas accounts for a growing nations agreed to cut oil production by a further 1.5 mil- share of imports under both spot and long-term contracts. lion barrels per day from 1 January 2002 providing non- Spain has been a major buyer of such volumes, and will Opec oil producers also reduced daily output by 500 000 take LNG from Snøhvit when that project comes on barrels. Norway agreed to cut production by 150 000 bar- stream in 2006. rels per day. New trends – Liberalisation of the European Union’s gas Crude oil sales by Statoil – Statoil sold an average of and electricity sectors has altered market conditions con- 2.2 million daily barrels during 2001, with its own produc- siderably. The large companies supplying their own tion accounting for 30 per cent, sales on behalf of the SDFI national markets which dominated before the EU gas 50 per cent and third-party crude 20 per cent. The group’s directive must now amend their strategies in order to most important oil customers are its own refining opera- maintain market share and strengthen competitiveness. A tions and major oil companies in Scandinavia, Europe, the number of companies which expect to lose market share at USA and Asia. Oil trading yielded a good financial result home because of the constraints in the directive are seek- for Statoil in 2001. In connection with the partial privatisa- ing to extend into other countries. A series of mergers took tion of the group, the annual general meeting approved an place between producers, gas companies and electricity instruction which defines Statoil’s caretaker role in mar- generators in 2001. The EU regulations mean that bound- keting the SDFI’s crude oil and natural gas liquids. This aries between producers, transporters, distributors, sellers gives the group a predictable and long-term framework for and buyers are no longer as clear-cut as they once were. these sales, while the government meets its share of the Legal action was initiated by the European Commission costs associated with them. The state has acquired 35 per in 2001 against 23 licensees on the NCS, including Statoil, cent of Statoil’s crude oil terminal at Mongstad, an impor- for alleged breaches of the competition rules in the tant instrument in achieving the best possible price for EU/European Economic Area. The commission claims that Norwegian crude. Norwegian gas sales through the government-appointed GFU break competition rules. This allegation has been Refining – The high refining margins experienced in 2000 rejected by the companies and the Norwegian authorities. persisted during the first part of 2001, but developments were significantly weaker in the second half. Although overall results declined from the year before, they were rel- Marketing & Manufacturing atively satisfactory. The international crude oil market continued to be char- A comparison of various refineries carried out by con- acterised by big price fluctuations during 2001, with a sultant Solomon showed that Mongstad improved its 20 S TAT O I L 2 0 0 1 S TAT O I L T H R O U G H T H E Y E A R


  • Page 25

    Statoil Detaljhandel Scandinavia, owned A poll of airlines covering 66 suppliers has The Scandlines shipping company has 50 per cent by Statoil, has nearly 1 400 ranked Statoil as the best regional mar- signed an agreement with Statoil to buy service stations. The ICA Express conven- keter of jet fuel, reports international con- 40 000 tonnes of low-sulphur oil to fuel ience store concept has now been sultant Armbrust Aviation Group. Statoil ferries running between Denmark and launched at 100 forecourts. came fourth on a global basis. Germany. Statoil supplies about 60 per cent of the shipping market in Denmark with fuel. competitive position in several areas during 2000. The a total of 100 Scandinavian service stations. At 31 Kalundborg facility remained one of the most efficient December, SDS had just under 1 400 forecourts. European refineries in its class. This survey is conducted Automated stations under the 1-2-3 brand have now been every other year. introduced to Scandinavia, and 21 of these were in opera- A decision was taken to invest in a new desulphurisa- tion at 31 December. That figure included 13 in tion plant at Mongstad, which will allow the refinery to Scandinavia and eight in the Baltic states. meet new EU environmental standards from 2005 for the Operations in Poland and the Baltic states continued to sulphur content of petrol. Plans call for this facility to expand, with 10 new forecourts built during 2001. Statoil begin operation in early 2003. now has 220 stations in these countries, plus 280 in Ireland Statoil’s 15 per cent interest in Malaysia’s Melaka refin- and five in the Murmansk area of Russia. ery was sold to the other partners, Conoco and Petronas. Navion – The Berge Hugin and Navion Munin production Nordic energy – After several years with weak results, ships were sold to Bluewater. With effect from 1 October, the Nordic energy business cluster showed a significant Statoil acquired the 20 per cent stake in Navion held by improvement in 2001. This partly reflected rather higher the Rasmussen group, and thereby became its sole owner. margins, but was due above all to a sharp reduction in Operations in 2001 were characterised by good rates and costs. high utilisation for the shuttle tankers, while rates for con- Electricity sales in Sweden had failed to produce satis- ventional shipping declined somewhat towards the end of factory results, and this part of the business was sold with the year. However, overall income for Navion in 2001 was effect from 1 January 2002. At the same time, electricity very satisfactory. sales to the Norwegian household sector were transferred to the Meganor subsidiary. Sales to large corporate cus- Methanol – Methanol operations at Tjeldbergodden were tomers will be maintained by Statoil to supplement its oil again characterised by high regularity during 2001, with products. good prices in the early part of the year. Although prices The group is committed to renewable energy through declined towards the end of the year, results for 2001 were a solution developed in-house which offers flexible and the best ever achieved in this sector. It has operated for a environment-friendly supplies to buildings. Under this number of years with very good results for health, safety concept, Statoil takes full responsibility for a building’s and the environment, and the plant at Tjeldbergodden energy requirements. Important elements are heat won the chief executive’s HSE prize for 2001. pumps and renewable energy from wood pellets, which are carbon-dioxide neutral and emit little nitrogen and Borealis – Petrochemical operations through Statoil’s 50 sulphur oxides. The group produces and sells wood pel- per cent interest in the Borealis group experienced a year lets in Norway, Sweden and Denmark, and sold 61 000 of very low prices, reflecting reduced demand following tonnes during 2001 as against 30 000 tonnes the year the slowdown in the world economy. That produced a loss before. for this business in 2001. The Borouge company owned by Borealis and the Abu Retailing – Statoil Detaljhandel Skandinavia AS (SDS), Dhabi National Oil Company has built three petrochemi- owned 50 per cent by Statoil, continued to make progress cal plants in the United Arab Emirates, based on the as a leading market player in 2001. The new ICA Express Borstar technology developed by Borealis. These facilities service concept was extended and is now implemented at were completed on time and to budget. S TAT O I L T H R O U G H T H E Y E A R S TAT O I L 2 0 0 1 21


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    Theme: Snøhvit – Opening doors to the LNG market This sketch, from an animation of the Snøhvit project, shows a tanker at the Melkøya gas liquefaction plant outside Hammerfest. Four big purpose-built LNG carriers will be required to transport six billion cubic metres of gas exports annually. The liquefaction plant, where the gas is cooled and becomes liquid at –163 °C, is based on technology developed jointly by Statoil and Germany’s Linde group. Snøhvit will be the first project in Europe to be based Many years’ research, development and practical appli- on the export of liquefied natural gas (LNG). Through cation enable the untreated wellstream to be piped about Snøhvit, Statoil will become operator in a market 160 kilometres. Statoil started research into multiphase which has had enormous growth. As much as 26 per pipeline technology in the early 1980s. cent of the world’s natural gas is exported by special The planned liquefaction plant at Melkøya is a result of carriers, the volume having increased by 90 per cent long-term work to develop new solutions. Some of this over the last 10 years. technology has been developed in collaboration with Germany’s Linde group. Efficient energy utilisation is a key The gas will be recovered from the Snøhvit, Albatross and aspect of the cooling process which will be used. The pro- Askeladd fields which lie 140 kilometres off the north cessing plant will be built on a barge at a shipyard and Norwegian coast in the Barents Sea, at water-depths of transported, ready tested, to the Melkøya site. This method 250-340 metres. Seven subsea templates for 21 producing will provide major savings compared with conventional wells will be installed. Production will be entirely remote- building practice. ly controlled from the gas liquefaction plant at Melkøya “Snøhvit poses Statoil with special environmental chal- outside Hammerfest, in the far north of Norway. lenges,” says Egil Gjesteland, project director for Snøhvit. 22 S TAT O I L 2 0 0 1 S TAT O I L T H R O U G H T H E Y E A R


  • Page 27

    He is one of the group’s most able project managers with and industry. Jobs have disappeared and people have experience from Gullfaks A, Sleipner A and the Borealis moved away. Snøhvit might manage to reverse this trend petrochemicals plants in Abu Dhabi. Mr Gjesteland has an by creating optimism and jobs. During the construction ongoing dialogue with local politicians and fisheries’ rep- phase, 1 200 workers will be required and operating the resentatives and he is well aware that Statoil’s activities in facility will create 180 permanent jobs. this important area for fish stocks are under close scrutiny by many people. Exports to Spain and the USA – Six of the Snøhvit licensees have signed separate contracts with the same two Carbon dioxide led back – Great emphasis is being put gas buyers. The American El Paso Global LNG Company on the environmental side of the project. Production, will purchase 2.4 billion cubic metres of gas per year. The treatment and transport of petroleum will take place in Spanish Iberdrola S.A will purchase 1.6 billion cubic metres closed systems. The Melkøya plant will have a cleansing annually. These deals will last for 17-20 years. Almost half facility to remove carbon dioxide and chemicals before the of Spain’s annual gas imports of 17 billion cubic metres are gas is turned into a liquid by cooling. The carbon dioxide liquefied natural gas. In the United States, LNG accounts will be led back to the field through a separate pipe and for four to five per cent of the total market of 600 billion pumped down into a suitable structure below the gas cubic metres per year. The two French companies, Gaz de reservoir. The chemicals will either be recycled or treated France and TotalFinaElf, will lift their own gas from the in a biological cleansing system to avoid harmful emis- field, totalling 1.7 billion cubic metres per year. sions. Snøhvit will also provide some condensate, also known In full production, the liquefaction plant will release as light oil. Propane and butane will also be produced. some 860 000 tonnes of carbon dioxide and 650 tonnes of These products will account for 15 per cent of reservoir nitrogen oxides annually. The major part of this comes production and they will be sold on the open market. from the energy plant which will be built to provide ener- Statoil is operator for Snøhvit with a 22.29 per cent gy for the cooling process. These emissions are the lowest interest. The other licensees are Petoro with 30 per cent, possible with current technology without separating flue TotalFinaElf (18.4 per cent), Gaz de France (12 per cent), gases. Norsk Hydro (10 per cent), Amerada Hess (3.26 per cent), Politicians and business leaders in the region have RWE-DEA (2.81 per cent) and Svenska Petroleum (1.24 expressed their support and gratitude to the Snøhvit proj- per cent). ect. They are anxious to keep up value creation for business Snøhvit Albatross Askeladden Hammerfest The gas will be extracted from three fields remotely controlled from land. Carbon “Since Snøhvit poses Statoil with special which lie about 140 kilometres off the dioxide which travels through the pipelines challenges, great emphasis is being put on coast of northern Norway. No installations from the reservoirs to the Melkøya plant environmental issues,” says project director will be visible at sea level. The production will be removed and sent back to the field Egil Gjesteland. facilities will lie on the seabed and will be through a separate line. S TAT O I L T H R O U G H T H E Y E A R S TAT O I L 2 0 0 1 23


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    T h e g ro u p , safety and society Pioneer divers whose health has been In October, children in the small Chinese harmed after working in the North Sea town of Huangma moved into a new have been offered financial support from school, 1 400 square metres in size. The Statoil. Many of them are in a difficult school has received money from a Statoil position financially and suffer from physi- fund. Since 1992 the fund has awarded cal and mental health complications. almost NOK 10 million to various projects. Statoil’s business policies are entrenched in a respon- colleagues have improved. Health, safety and the environ- sibility to the environment, and they have an ethical ment are considered to have high priority. foundation on which both the group’s commitment to Statoil’s ambition is to have work methods which pro- society and the relationship between the group and its mote creativity and efficiency and working hours that are employees rest. flexible and contribute to good health and well-being. In recent years, Statoil has effected major changes to Prevention of occupational illnesses is done systematically. boost earnings and improve its competitiveness. Business Risk and measures are assessed from the design phase up to is increasingly pursued in the international arena, where operation of the group’s installations and facilities. In 2001, new commercial and social challenges are encountered. a new standard for health and the working environment These changes, along with preparations for the group’s was prepared for the design phase of development projects. stock exchange listing, formed the background for chief executive Olav Fjell’s initiative in the autumn of 2000 to Improved safety – Statoil’s objectives in health, safety review the group’s values document We in Statoil. That doc- and the environment are zero harm, accidents or losses. ument defines Statoil’s goals and ambitions and sets out the This means no work-related injuries or illnesses, and oper- ethical conduct on which the group’s business is founded. ations run without any hazardous events occurring. Two tragic accidents did however occur at two of Values basis – The new values statement, presented in Statoil’s supplier companies in 2001. One person was March 2001, focuses on a commercial approach, safe and killed in connection with anchor-handling on board a ship efficient operations and responsibility for the environment. on the Heidrun field, and one person died on a tanker Statoil is committed to meeting basic standards as regards chartered by Navion. The number of recordable injuries human rights, employee rights and the environment, based has decreased. The total recordable injury frequency, which on the conviction that this is both ethically correct and measures total recordable injuries per million hours commercially wise. By being a responsible player in the worked, fell from 10.1 in 2000 to 6.7 in 2001. The number community, the group builds up its reputation in a market of serious incidents has also declined. where ever more consumers and investors pose demands Sickness absence in Statoil is low and has declined on companies’ ethical, environmental and social profile. from 3.5 per cent in 2000 to 3.4 per cent in 2001. The HSE Statoil’s growing international activities have also led to accounting on pages 31-37 gives more information about a review of the group’s internal ethical guidelines. At the injuries and sickness absence. beginning of 2001 a new version of the Ethics in Statoil An important measure for improving safety is the document was published. The increasing risk of company “Open safety talk”developed by Exploration & Production information getting into the wrong hands has also made it Norway. The talk takes place between employee and super- necessary to set out rules for how employees should han- visor at the work site. The purpose is to gain an honest dle information which they can access through both in- assessment of any potential hazards in connection with the house and external computer networks. job and which preventive measures should be initiated. In preparation for Statoil’s stock exchange listing, the In the Marketing & Manufacturing business area, rob- group’s information databases and rules for handling beries at petrol stations and road tanker accidents account information were reviewed and revised. for most of the serious incidents. Robberies cause mental The results from the working environment survey for stress to those threatened, and active efforts have been 2001 show a positive trend in several areas as compared made to prevent robberies and to provide counselling and with 2000. Job satisfaction, motivation and relations with follow-up for employees who have experienced threats. 24 S TAT O I L 2 0 0 1 S TAT O I L T H R O U G H T H E Y E A R


  • Page 29

    In August, 60 Norwegian geology students Amnesty International Norway and Statoil The IT step is to be continued. In 1997, took part in a project on the Polar Star have entered into a cooperation agree- Statoil employees were offered a home PC research ship in waters near Svalbard. ment. The group will collaborate with and IT training modules to be completed Statoil funded the trip as part of a collabo- Amnesty on a programme to coach Statoil in their free time. This will be followed up ration with Norwegian educational institu- employees on the subject of business by a new offer of training and equipment tions, to which Statoil donates some NOK dilemmas associated with human rights. in the spring of 2002. 35 million annually. Defensive driving has been a focus area throughout the on Statoil’s financial results, the bonus will amount to a distribution network to prevent road tanker accidents. A maximum of five per cent of the individual’s basic salary. defensive driving style reduces driver stress and enhances Statoil has decided to carry on the IT step which was transport safety. A key initiative in 2001 was an extensive started in 1997. Through this programme, employees com- review of the technical safety of all major Statoil-operated pleted several training modules on home PCs with an installations and facilities offshore and on land. internet connection, which were supplied by the group. The 2002 upgrading, which will also include new PCs, will 16 686 employees – At the end of 2001 Statoil had 16 686 facilitate electronic learning and flexible modes of work- employees. This is an increase of 280 from a year earlier. ing. Under the voluntary scheme, those wishing to partic- Skilled workers on Statoil’s installations off Norway account ipate will sign an agreement to pursue an obligatory train- for the major share of new recruits. For the fifth consecutive ing programme in their free time. year, Statoil is near the top of the list of employers preferred by Norwegian engineering students. A survey is held every Supporting pioneer divers – In October, Statoil decided year among economics and engineering students at to grant financial support to former North Sea divers, whose Norwegian universities and colleges. In 2001 Statoil came ability to work has been diminished following their work in out in third place among economics students, compared the pioneer years. Divers made a great contribution to petro- with sixteenth place the year before. A positive interest in leum operations in Norway and a number of them have Statoil was also evident when the group’s trainee pro- developed complications to their health. Many are living gramme was launched. The group received 600 applications today in difficult circumstances, both financially and socially. for 15 positions advertised. The programme will continue in By providing up to NOK 750 000 to each of them, Statoil has 2002 with the aim of recruiting more new graduates in engi- taken responsibility for the pioneer divers’ position. neering and geology disciplines. In 2000, Statoil entered into cooperation agreements Humanitarian collaboration – In 2001, Statoil formed with several colleges and universities in Norway and this agreements to cooperate with and provide financial sup- was extended to include the University of Tromsø in 2001. port to several humanitarian organisations. Collaboration These deals mean that Statoil provides seven Norwegian covers the Norwegian Refugee Council, the Norwegian colleges and universities with a total of NOK 35 million Red Cross, the United Nations High Commissioner for annually for research and development projects which Refugees and Amnesty International Norway. Under the benefit both the educational institutions and Statoil. A agreement with Amnesty, the organisation prepares a substantial share of these funds is earmarked for mod- training programme on the human rights challenges fac- ernising teaching methods and tools. ing the oil industry. Statoil will utilise this, along with other measures, in its internal training and consciousness Performance contracts – In order to strengthen the per- raising. The agreements give the group access to the formance culture, individual performance contracts were organisations’ expertise on human rights and countries, drawn up for the group’s 150 top managers, with first pay- improving Statoil’s ability to manage risk. The agreements ments in 2001. These contracts create a clear connection will be useful in the countries and local communities between results achieved and the individual’s career devel- where the group operates. One example is Azerbaijan, opment and pay. The scheme is to be extended in 2002 to where the Norwegian Refugee Council is providing train- include 350 managers. A bonus scheme is being introduced ing in human rights for school pupils, with support from for all permanent employees of the parent company. Based Statoil and the Norwegian Ministry of Foreign Affairs. S TAT O I L T H R O U G H T H E Y E A R S TAT O I L 2 0 0 1 25


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    Theme: Lifting safety levels The crane driver sits alone but is dependent on close collaboration with colleagues down on the platform deck or on board the supply ships. Bjarne Aase is pictured here in total concentration on the Sleiner A platform. 26 S TAT O I L 2 0 0 1 S TAT O I L T H R O U G H T H E Y E A R


  • Page 31

    No lifting operation is left to chance. Kjell Arne Henden In a special crane simulator built in Trondheim, crane instructs Heidi Hellestø Sund, newly recruited to the drivers and deck crew can train in critical lifting opera- Heidrun platform. tions. Courses in simulator training attracted 200 partici- pants in 2001. Safety in crane and lifting operations in Statoil’s activ- need to enhance the proficiency of personnel involved in ities on the Norwegian continental shelf (NCS) con- lifting jobs. tinues to show a positive trend. Systematic efforts Working with cranes and lifting operations is highly since the middle of the 1990s have had an effect in the demanding. General training has been wanting earlier, form of fewer undesirable incidents and fewer and there have been no common requirements or certifi- injuries. cation of crane and deck crew. Practice has varied between the operating companies. In 1996, 1 000 undesirable events with 44 injuries were Statoil itself took the initiative to establish a training registered in connection with lifting operations on Statoil- scheme for the group’s crane and deck crew. A crane sim- operated platforms. In 2001 these figures had fallen to 300 ulator was developed by the Ship Manoeuvring Simulator and four, respectively. A positive development has also Centre in Trondheim, where participants get realistic train- been noted for drilling rigs and operations at the bases. All ing in critical lifting operations. Statoil’s goal is that all performance indicators for crane and lifting safety point in crane drivers and deck crew will receive such training. In the right direction. 2001, the simulator’s first year of operation, Statoil’s cours- Statoil’s work to enhance the safety of crane and other es attracted 200 participants. Other operating companies lifting operations was strengthened in the middle of the on the NCS have also used the simulator. 1990s. This followed a negative trend over several years, The simulator is connected to a ship simulator so that when normal safety efforts were insufficient in preventing training can be extended to include supply ship crew. a rise in injuries and incidents. Statoil initiated a project There is a noticeably improved effect when all of the which started by analysing chains of events and causal fac- groups involved in lifting operations get to train together. tors in association with incidents. The project revealed that The Ministry of Education and Research is currently an improvement in common practice and routines for lift- working to establish an official authorisation of crane edu- ing operations was required. It also found a significant cation in Norway. S TAT O I L T H R O U G H T H E Y E A R S TAT O I L 2 0 0 1 27


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    T h e e n v i ro n m e n t Nitrogen oxide emissions will be cut by 85 Statoil’s methanol plant at Tjeldbergodden per cent when Statoil, as the first operator in mid-Norway has been awarded the on the NCS, starts using supply ships chief executive’s HSE prize for 2001, along fuelled by liquefied natural gas instead of with its main contractor Reinertsen diesel. The two shipowners Møkster Orkanger. The plant has operated for two Shipping and Eidesvik will operate the ves- years without a lost-time injury. sels which will be delivered in 2003. Statoil’s objective is to operate without harm to people ticularly to compounds which are slow to degrade and or the environment, and in accordance with the princi- have a potential for bio-accumulation. ples for sustainable development. Good results in the Operations on the NCS are the biggest source of environmental area are needed to inspire confidence Statoil’s discharges to the sea. The volume of produced with the authorities, partners, customers, employees water released has expanded sharply in recent years, and the general public. reflecting the fact that certain fields are in a late phase with Statoil gives weight to pursuing an open dialogue on a rising water cut. environmental issues. That applies to the neighbours of its Statoil’s offshore and land-based activities also gener- land-based plants, consumer and environmental organisa- ate various kinds of waste. Recovery and recycling of waste tions, customers, partners and the authorities. are emphasised in every part of its business, with haz- ardous waste treated in line with prevailing regulations. Frame conditions – Emissions to the air are largely regu- An accidental spill of phenol-contaminated water lated by international agreements. The Gothenburg proto- occurred at the Kårstø complex in 1998 because process col, which commits signatories to cut emissions of nitrogen water failed to pass through the treatment plan. Statoil and sulphur oxides as well as volatile organic compounds was fined NOK 2 million for this incident in 2001. (VOC), and the Kyoto protocol on reducing greenhouse gas emissions are particularly important for Statoil’s business. Environment-friendlier production – Continuous The Oslo-Paris (Ospar) convention regulates dis- efforts are being made to reduce emissions to the air and charges of oil and chemicals in the seas off western discharges to the sea. Weight is given to developing ever Europe. Stricter standards on the quantity of oil permitted better technology, effective emergency response and good in produced water were adopted in 2001. These require a management based on extensive risk assessments. The aim 15 per cent reduction in the total amount of oil released is continuous improvement through enhanced energy effi- through this source by 2006, compared with the 2000 level. ciency and other purposeful measures on existing and future installations. Emissions and environmental impact– Oil and gas Identifying possible harmful effects of discharges to the production causes emissions and discharges to the natural sea represents an important priority for research and environment. The level of these is influenced in turn by the development. Statoil has led the development of the envi- volume produced and by a field’s reservoir conditions and age. ronmental impact factor (EIF) tool for risk assessment, Emissions relating to oil and gas processing depend on the which provides a better basis for choosing the most effi- type of feedstock involved and the products being produced. cient measures to reduce environmental impacts. Emissions to the air include carbon dioxide, methane, The group has also headed work on regional impact VOC, and sulphur and nitrogen oxides. These contribute to assessments, which provide an overall evaluation of oil the greenhouse effect, acid precipitation and the formation and gas operations in the various parts of the NCS. This of ground-level ozone. Offshore operations account for gives a better basis for assessing the total impact of these the bulk of Statoil’s carbon dioxide and nitrogen oxide activities for the oil companies, the authorities and other emissions, while refining is responsible for most of the sul- interested parties. phur dioxide it releases. Ninety per cent of the chemicals released from Statoil’s Discharges to the sea embrace oil, organic compounds offshore operations cause little or no environmental and chemicals, and are largely associated with produced impact, while nine per cent have temporary effects. Only water. Possible harmful environmental effects relate par- 0.5 per cent are environmentally questionable. The condi- 28 S TAT O I L 2 0 0 1 S TAT O I L T H R O U G H T H E Y E A R


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    Two shuttle tankers shipping oil for Statoil Forty installations, on land and offshore, Siri is the first field on the Danish conti- are to be equipped with systems which have gone through Statoil’s most rigorous nental shelf where gas is not flared. In will reduce their emissions of volatile safety testing ever. This led to methods for addition, almost all the produced water is organic compounds (VOC). The two ships, monitoring the condition of the facilities injected into the reservoir. Following a Juanita and Knock An, transport oil from throughout their lifetime, which will help trial period, the systems for reusing gas the Statfjord and Gullfaks fields. the operations organisations to maintain a and injecting water were put into normal high standard. operation in August. tion of the environment is monitored through regular col- market, but no decision has yet been taken on whether lection of relevant data to assess the impact of discharges Norway will join their ranks. to the sea. Environmental monitoring of both water quali- New automotive fuel qualities will cut traffic pollution and ty and seabed sediments shows a satisfactory trend. lay the basis for utilising engine technologies which provide further emission reductions. Statoil continuously assesses Stricter transport requirements – About 108 million and tests alternative fuels and new additives. The group cur- tonnes of hydrocarbons were shipped by tanker from fields, rently offers renewable fuel products such as rape-methyl- terminals and refineries to customers world-wide, with ester (RME), bio-ethanol and bio-gas in markets where they northern Europe as the main area. The bulk of Statoil’s are in demand. Five per cent bio-ethanol is blended into tanker shipments are handled by its Navion subsidiary. about a fifth of the petrol sold by Statoil in Sweden. Standards set by the group for the tankers used exceed The methanol fuel cell alliance between Statoil, national and international requirements. These norms were Methanex, DaimlerChrysler, BP, BSF and Xcellsis is continu- tightened in 2001 for the age of vessels, and by making it ing. This partnership aims to prepare for a safe introduction mandatory for ships carrying heavy fuel oil to have a dou- of methanol as an automotive fuel if this chemical becomes ble bottom or hull. Tanker operations in 2001 suffered no the preferred hydrogen-bearer for fuel-cell vehicles. significant oil or chemical spills. Statoil is also collaborating with America’s IdaTech, Road tankers belonging to Statoil or hired by the group which develops small fuel cell systems for stationary and covered about 37 million kilometres delivering products to portable use. service stations and customers in 2001. Carbon dioxide emissions relating to these consignments total some Investments and costs – Statoil devoted about NOK 28 000 tonnes, or roughly 0.3 per cent of the total carbon 600 million to research and development in 2001 with the dioxide released from Statoil operations. aim of finding, producing and processing oil and gas more The group places great emphasis on regular replace- efficiently and cheaply, with less energy and with a steadi- ment of road tankers with vehicles featuring better ly decreasing impact on the environment. engines, which use less fuel and give off lower emissions. The group established a separate business unit in 2001 Route planning is optimised, and tankers use the best to develop technology and business opportunities relating diesel oil quality on the market in terms of its environ- to the removal and use of carbon dioxide, and future mental properties. hydrogen-based energy solutions. Recycling installations and equipment on the NCS pro- Products better adapted to the environment – vides both financial and environmental gains. Revenues from Automotive fuels and heating oils represent Statoil’s prin- the sale of surplus hardware totalled NOK 80 million in 2001. cipal products in the manufacturing and marketing sector. A provision of NOK 7 521 million was made at 31 Its objective is that these should rank among the best for December under the unit of production method to meet technical user qualities and environmental properties. the future cost of shutting down and removing oil and gas More than NOK 1 billion is due to be invested over the production installations and plants. NOK 957 million was next couple of years to enhance product quality at Statoil’s charged against income in 2001 as against NOK 1 381 mil- Mongstad and Kalundborg refineries in order to meet lion the year before. future European Union requirements for petrol and diesel Annual carbon dioxide tax paid on emissions from oil. A number of countries are expected to offer tax incen- Statoil-operated installations on the NCS comes to about tives to stimulate early adoption of this standard in their NOK 1.5 billion. S TAT O I L T H R O U G H T H E Y E A R S TAT O I L 2 0 0 1 29


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    Theme: Carbon dioxide, innovation and research “Statoil is one of the world’s most environment-friendly from Sleipner can be transferred to power stations and producers and transporters of oil and gas. But we do stand other major industrial users of fossil fuels. for a substantial share of Norwegian carbon dioxide emis- In connection with the Snøhvit development (described sions, and even though uncertainty remains about the on pages 22 and 23), Statoil will launch its second impor- connection between emissions and climatic change, the tant project for carbon dioxide storage. During the field’s precantionary principle underpins our work on a broad lifetime, 23 million tonnes of carbon dioxide will be sepa- basis to reduce emissions.” This is chief executive Olav rated from the gas flow from the field to the land facility Fjell’s manifesto for Statoil’s efforts to tackle the carbon and returned to the field. This will represent storage of dioxide challenges. roughly 800 000 tonnes of carbon dioxide annually when Statoil’s most well-known project is the underground production starts in 2006. storage of one million tonnes of carbon dioxide annually In 2001, Statoil initiated a project at the group’s from gas and condensate production on the Sleipner area research centre in Trondheim, to study ways of using car- in the North Sea. It is the world’s first major industrial bon dioxide other than long-term storage underground, storage project and it has attracted considerable interna- for instance to increase oil recovery. tional attention. In 2001, thorough seismic surveys were Statoil has also made preparations to adopt new mech- carried out for the second time after storage started in anisms which will contribute to lower global emissions 1996, to chart the effect of carbon dioxide storage 1 000 and more effective use of energy. Through its participation metres below the sea bed. Four-dimensional seismic – in the World Bank Prototype Carbon Fund (PCF), Statoil three-dimensional seismic repeated over time – is used. will gain emission credits in 2002 on the basis of its emis- These surveys have given no indication that any carbon sion reductions. Established in April 2000, the PCF buys dioxide will leak out. reductions in greenhouse gas emissions which can be The project has formed the basis for an international credited under the Kyoto protocol’s rules. Investment proj- collaboration project to establish a technology platform for ects must contribute to sustainable development in the future storage. Forty per cent of the project’s funds are host countries. Companies and nations which have invest- financed by the European Union. The EU sees under- ed in the fund receive their return in the form of emission ground storage as a very promising method if experience credits. Statoil is one of 17 participating companies. 30 S TAT O I L 2 0 0 1 K S TAT O N SOEIRL NTLHERDO EUR GH THE YEAR KONSERNLEDER S TAT O I L 2 0 0 1


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    HSE accounting for 2001 Emergency response exercise on the Åsgard field. While the helicopter holds its position above the Stril Tender standby ship, nurse Stein Gloppen is hoisted up from the ship’s deck. Introduction – Our objective is to operate with zero harm Data for all of the group’s main activities are included to people or the environment, in accordance with the prin- in the HSE accounting. For 2001, data for Navion’s own ciples for sustainable development. We support the mech- ships and most of those chartered are included, with safe- anisms proposed by the Kyoto protocol and the 16 princi- ty data and oil spills (number of hours, in accordance with ples of the International Chamber of Commerce for sus- shipping industry practice). This is an improvement on tainable development. We apply the precautionary princi- previous years’ HSE accounting. ple in the conduct of our business. Oil spills are the only data on the external environment The management system for health, safety and the envi- included for the service stations. Historical data include ronment (HSE) forms an integrated part of the group’s total figures relating to acquired operations from the date of management system, and is described in its governing doc- acquisition. Correspondingly, figures relating to divested uments. A key element in the HSE management system is operations are included up to the date of divestment. registration, reporting and assessment of relevant data. HSE performance indicators have been established to assist Results – The HSE accounting presents the development this work. The intention is to document quantitative devel- of the performance indicators over the past five years. Use opments over time and strengthen the decision-making of resources, emissions and waste volumes for Statoil’s basis for systematic and purposeful improvement efforts. largest land-based plants and operations on the NCS are HSE data are gathered continuously by the business units shown in separate environmental overviews. See also the and reported quarterly to the corporate executive committee, information on HSE in the review of Statoil’s operations. which evaluates trends and decides whether improvement More than 69 million hours worked in 2001 form the measures are required. The chief executive submits HSE basis for this accounting. This is a reduction of three mil- results and associated assessments to the board together lion hours from 2000. The decline is partly due to the com- with the other quarterly reports. These results are posted to pletion of some major projects. the group’s intranet and its internet site. Contractors handle a substantial proportion of the Statoil has nine group-wide HSE performance indica- assignments for which Statoil is responsible as operator or tors. Those concerned with safety – the total recordable principal company. Unfortunately, two fatal accidents were injury frequency, the lost-time injury frequency and the seri- suffered by contractors in 2001. One fatality occurred in ous incident frequency – are reported quarterly at corporate connection with anchor-handling on the Heidrun field, level for Statoil employees and contractors both collectively while the other took place on the chartered Tromsø Fidelity and separately. tanker. Other group-wide indicators are only reported annually Overall, Statoil had an improvement in the number of at corporate level, with the exception of oil spills. These are total recordable injuries from 2000 to 2001, but there was a reported quarterly. The figure for sickness absence is con- rise in injuries involving absence from work. The number fined to Statoil’s own employees. Indicators for the external of serious incidents has declined. In addition to this cor- environment – oil spills, emissions of carbon dioxide and porate accounting, the individual business units prepare nitrogen oxides, energy consumption and the waste recov- more specific statistics and analyses for use in their ery factor – are reported for Statoil-operated activities. improvement efforts. S TAT O I L 2 0 0 1 K O N S E R N L E D E R H SKEOANCSCEO RUNN L ETD I NEG R S TAT O I L 2 0 0 1 31


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    Statoil’s performance indicators for HSE 14 TOTAL RECORDABLE INJURY FREQUENCY 12 Definition: The number of fatalities, lost-time injuries, cases of alternative work neces- 10 sitated by an injury and other recordable injuries (serious injuries which may be per- 8 manent in nature, all other serious injuries and all injuries requiring medical treatment, excluding first-aid injuries) per million working hours. 6 4 Developments: The total recordable injury frequency declined from 10.1 in 2000 to 2 6.7 in 2001. For Statoil employees alone, the frequency was 4.4 as against 5.5 in 2000. For contractors, it was 8.8 compared with 14.6. The trend for Statoil employ- 1997 1998 1999 2000 2001 ees over the past five years has been stable, with an improvement for both Statoil employees and contractors over the past two years. 5 LOST-TIME INJURY FREQUENCY Definition: The number of lost-time injuries and fatal accidents per million working 4 hours. 3 Developments: The lost-time injury frequency (including both Statoil employees and 2 contractors) was 3.1 in 2001 as against 2.7 in 2000. For Statoil employees alone, the 1 frequency was 2.5 compared with 2.3 in 2000. For contractors it was 3.7 compared with three. The frequency has increased somewhat for Statoil employees in recent years, while it has been relatively stable for contractors, but with a negative trend for 1997 1998 1999 2000 2001 the past two years. 8 SERIOUS INCIDENT FREQUENCY Definition: The number of undesirable events(1) with a high loss potential per million 6 working hours. 4 Developments: The serious incident frequency (including both Statoil employees and contractors) was 4.1 in 2001 as against 4.3 in 2000. After several years of progress 2 and a small backward step in 2000, there is now an improvement. The number of inci- dents declined from 310 in 2000 to 287 in 2001. 1997 1998 1999 2000 2001 (1)An undesirable event is an event or chain of events which have caused or could have caused injury, ill- ness and/or damage to/loss of property, environmental damage or harm to a third party. Risk matrices have been established which show the degree of seriousness and frequency of repetition for different types of undesirable events. Events with a high potential for loss are incidents with a high degree of seriousness and/or which are frequently repeated. 5 SICKNESS ABSENCE Definition: The total number of days of sickness absence as a percentage of possible 4 working days. 3 Developments: Sickness absence declined from 3.5 in 2000 to 3.4 in 2001. Sickness 2 absence has been stable over the entire five-year period and it is positive that there 1 was a small decline from 2000 to 2001. This result compares well with the Norwegian average (around nine per cent according to an official study). 1997 1998 1999 2000 2001 32 S TAT O I L 2 0 0 1 H S E A C C O U N T I N G


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    500 OIL SPILLS Definition: The number and total volume (in cubic metres) of unintentional oil spills to 400 the external environment from Statoil operations.(2) 300 Developments: The number of unintentional oil spills came to 414 in 2001 as against 200 431 in 2000. After several years of sharp increases, the number of oil spills has been 100 declining steadily since 1997. In volume terms, spills totalled 246 cubic metres in 2001 as against 120 in 2000. The figure shows the volume of oil spills in cubic metres. 1997 1998 1999 2000 2001 (2)All unintentional oil spills are included in the figures with the exception of those collected inside a facil- ity (platform/plant) and which accordingly cause no harm to the surrounding environment. However, such spills are included for downstream operations. 10 CARBON DIOXIDE EMISSIONS Definition: Total emissions of carbon dioxide in million tonnes from Statoil opera- 8 tions.(3) 6 Developments: Carbon dioxide emissions totalled 9.2 million tonnes in 2001 as 4 against 8.3 million in 2000. This increase is partly due to higher production in Natural 2 Gas, and somewhat increased production and more injection for pressure support in Exploration & Production Norway. 1997 1998 1999 2000 2001 (3)Carbon dioxide emissions embrace all sources such as turbines, boilers, engines, flares, drilling of explo- ration and production wells, well testing/workovers and residual emissions from the carbon dioxide sepa- ration plant for natural gas on Sleipner T. Support services such as helicopter traffic, supply and standby ships and shuttle tankers are excluded. 50 NITROGEN OXIDE EMISSIONS Definition: Total emissions of nitrogen oxides in tonnes from Statoil operations.(4) 40 30 Developments: Emissions of nitrogen oxides totalled 29 500 tonnes in 2001 as against 30 300 tonnes in 2000. The International Exploration & Production and Marketing & 20 Manufacturing business areas both report reduced emissions. In addition, a lower con- 10 sumption of diesel has given reduced emissions for Exploration & Production Norway. (4)Nitrogen oxide emissions embrace all sources such as turbines, boilers, engines, flares, drilling of explo- 1997 1998 1999 2000 2001 ration and production wells and well testing/workovers. Support services such as helicopter traffic, supply and standby ships and shuttle tankers are excluded. 50 ENERGY CONSUMPTION Definition: Total energy consumption in terawatt-hours for Statoil operations. This 40 includes net electricity purchases, energy from gas- and diesel-fired power generation 30 and energy losses through flaring. Energy consumption based on the use of fossil fuels is calculated as fuel energy content. 20 10 Developments: Energy consumption totalled 44.2 TWh in 2001, as against 40.0 TWh in 2000. This increase is partly due to higher production in Natural Gas, and some- what increased production and more injection for pressure support in Exploration & 1997 1998 1999 2000 2001 Production Norway. It is also due in part to the units now reporting energy losses through flaring. 1.0 WASTE RECOVERY FACTOR Definition: The quantity of waste recovered in tonnes divided by the total quantity of 0.8 waste in tonnes from Statoil operations (excluding hazardous waste).(5) 0.6 Developments: The recovery factor was 0.65 as against 0.66 in 2000. The trend over 0.4 the past six years is positive. Some of the business areas have increased their recovery rate from 2000 to 2001, while others show a small decline. 0.2 (5)The quantity of waste for recovery is the total quantity of waste from the plant’s operations excluding waste incinerated without energy recovery, waste deposition and hazardous waste. Hazardous waste is 1997 1998 1999 2000 2001 defined by national legislation in each country. HSE ACCOUNTING S TAT O I L 2 0 0 1 33


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    Environmental data for 2001 NORWEGIAN CONTINENTAL SHELF 1) ENERGY PRODUCTS Diesel2) 1 130 GWh Oil/condensate 97.2 mill scm Electricity 19 GWh Gas for sale 41.5 bn scm Fuel gas 20 200 GWh Flare gas 4 130 GWh EMISSIONS TO AIR CO2 5 630 000 tonnes RAW MATERIALS 3) nmVOC5) 169 000 tonnes Oil/condensate 97.2 mill scm Methane5) 16 900 tonnes Gas4) 63.6 bn scm NOx 25 100 tonnes Water 76.0 mill scm SO2 342 tonnes UTILITIES DISCHARGES TO WATER Chemicals process/prodn 37 500 tonnes Produced water 74.3 mill scm Chemicals drilling/well 128 000 tonnes Oil in oily water 1 880 tonnes Accidental oil spills 36.1 m3 OTHER Chemicals:6) Injection water as Process/production 21 900 tonnes pressure support 149 mill scm Chemicals drilling/well 57 800 tonnes 1) NCS includes UK sector of Statfjord, but excludes WASTE Kollsnes Waste for landfill 2 820 tonnes 2) Represents 95 300 tonnes Waste for recovery 5 950 tonnes 3) Includes 24.1 mill scm o e supplies from third party Recovery factor 0.68 (Snorre, Tordis, Vigdis and Visund) Hazardous waste: 4) Includes fuel gas (1.71 bn scm), flare gas (0.355 bn Oily cuttings/mud 21 200 tonnes scm) and injected gas for pressure support, etc (19.8 Other 8 980 tonnes bn scm) 5) Includes buoy loading 6) Includes 72 000 tonnes water and green chemicals CO2 NOx NUMBER OF ACCIDENTAL OIL SPILLS kg emissions per produced scm o e kg emissions per produced scm o e REPORTABLE GAS LEAKS m3 50 0.20 25 150 40 0.15 20 120 30 15 90 0.10 20 10 60 10 0.05 5 30 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 KOLLSNES ENERGY PRODUCTS Electricity 654 GWh Gas 21.43 bn scm Fuel gas 67 GWh Condensate 0.54 mill scm Flare gas 24 GWh EMISSIONS TO AIR 1) RAW MATERIALS CO2 16 780 tonnes Rich gas Troll A 18.2 bn scm NOx 11.6 tonnes Rich gas Troll B 1.28 bn scm CO 12.6 tonnes Rich gas Troll C 1.98 bn scm nmVOC 247 tonnes Methane 692 tonnes UTILITIES Monoethylene glycol 62 m3 DISCHARGES TO WATER 1) Acid/caustic soda 148 m3 Treated water/effluent 106 300 m3 Other chemicals 18 m3 TOC 2.0 tonnes Monoethylene glycol 2.8 tonnes Methanol 1.5 tonnes Hydrocarbons 0.1 tonnes Ammonium 0.02 tonnes Phenol 0.01 tonnes WASTE Waste for landfill 102 tonnes Waste for recovery 60 tonnes Recovery factor 0.37 CO2 NOx nmVOC Hazardous waste: kg emissions per scm o e g emissions per scm o e kg emissions per scm o e Sludge from treatment plant 50 tonnes 1.0 1.0 0.10 Other 255 tonnes 0.8 0.8 0.08 0.6 0.6 0.06 1) All regulatory emission requirements have been met in 2001 0.4 0.4 0.04 0.2 0.2 0.02 2000 2001 2000 2001 2000 2001 34 S TAT O I L 2 0 0 1 H S E A C C O U N T I N G


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    MONGSTAD ENERGY PRODUCTS 8 902 000 tonnes Electricity 680 GWh Propane Butane Fuel gas and steam 6 240 GWh Naphtha Gas oil Flare gas 710 GWh Petrol Petcoke/sulphur Jet fuel RAW MATERIALS Crude oil 7 718 000 tonnes EMISSIONS TO AIR 5) Other process raw materials 1 748 000 tonnes CO2 1 529 000 tonnes Blending components 227 000 tonnes SO2 1 101 tonnes NOx 1 587 tonnes UTILITIES VOC refinery2) 9 310 tonnes Acids 760 tonnes VOC terminal2) 10 900 tonnes Caustic 1 450 tonnes Additives 1 350 tonnes DISCHARGES TO WATER 5) Process chemicals1) 4 300 tonnes Oil 3.01 tonnes Phenol 1.53 tonnes Ammonium 46.3 tonnes Cyanide <0.05 tonnes WASTE Waste for landfill 570 tonnes Waste for recovery 730 tonnes Recovery factor 0.56 Hazardous waste3) 3 700 tonnes 1) Includes catalyst which represents 50 per cent 2) Comprises nmVOC and methane 3) 66.5 per cent goes to recovery CO2 NOx SO2 4) Processed volumes means crude oil and other kg emissions per processed volumes4) kg emissions per processed volumes4) kg emissions per processed volumes4) process raw materials 200 0.20 0.20 5) All regulatory emission requirements have been met in 2001 150 0.15 0.15 100 0.10 0.10 50 0.05 0.05 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 KALUNDBORG ENERGY PRODUCTS 5 023 000 tonnes Electricity 142 GWh Propane Butane Steam 70 GWh Naphtha Gas oil Fuel gas 2 303 GWh Petrol Fuel oil Flare gas 61 GWh Jet fuel ATS (fertiliser) RAW MATERIALS EMISSIONS TO AIR 4) Crude oil 3 510 000 tonnes CO2 487 000 tonnes Other process raw materials 1 153 000 tonnes SO2 399 tonnes Blending components 343 000 tonnes NOx 591 tonnes VOC1) 3 000 tonnes UTILITIES Acids 700 tonnes DISCHARGES TO WATER Caustic 1 200 tonnes Oil 2.15 tonnes Additives 10 000 tonnes Phenol 0.06 tonnes Process chemicals 207 tonnes Suspended matter 49.7 tonnes Ammonia, liquid 2 154 tonnes Sulphide 0.13 tonnes WASTE Waste for landfill 90 tonnes Waste for recovery 221 tonnes Recovery factor 0.71 Hazardous waste2) 637 tonnes CO2 NOx SO2 kg emissions per processed volumes3) kg emissions per processed volumes3) kg emissions per processed volumes3) 1) Includes nmVOC and methane 120 0.20 0.30 2) 30 per cent goes to recovery 0.25 3) Processed volumes means crude oil and other 90 0.15 process raw materials 0.20 4) All regulatory emission requirements have been 60 0.10 0.15 met in 2001 0.10 30 0.05 0.05 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 HSE ACCOUNTING S TAT O I L 2 0 0 1 35


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    TJELDBERGODDEN ENERGY PRODUCTS Diesel 0.4 GWh Methanol 866 600 tonnes Electricity 68 GWh Oxygen 10 470 tonnes Fuel gas 1 672 GWh Nitrogen 4 164 tonnes Flare gas 157 GWh Argon 9 550 tonnes LNG 11 340 tonnes RAW MATERIALS Rich gas 469 783 tonnes EMISSIONS TO AIR 4) Condensate 0 tonnes CO2 342 900 tonnes nmVOC 37 tonnes UTILITIES Methane 11 tonnes Caustic 295 tonnes NOx 463 tonnes Acids 79 tonnes Other chemicals 21 tonnes DISCHARGES TO WATER 4) Cooling water 169 000 000 m3 TOC 1.9 tonnes Suspended matter 0.9 tonnes Total-N 0.9 tonnes WASTE Waste for landfill2) 61 tonnes Waste for recovery3) 86 tonnes Recovery factor 0.59 Hazardous waste: Sludge from treatment plant 110 tonnes Oily water1) 6.8 tonnes CO2 NOx nmVOC Other 11.3 tonnes kg emissions per tonne product kg emissions per tonne product kg emissions per tonne product (methanol + LNG) (methanol + LNG) (methanol + LNG) 600 1.0 0.10 500 0.8 0.08 1) Oil content is maximum one per cent of weight 400 0.6 0.06 2) Sent to incineration 300 0.4 0.04 3) Including 26 tonnes for incineration 200 0.2 0.02 4) All regulatory emission requirements have been 100 met in 2001 1998 1999 2000 2001 1998 1999 2000 2001 1998 1999 2000 2001 KÅRSTØ GAS PROCESSING PLANT AND TRANSPORT SYSTEMS ENERGY 1) PRODUCTS Fuel gas 5050 GWh Lean gas 7.86 mill tonnes Electricity bought 155 GWh Propane 2.23 mill tonnes Diesel 1 GWh I-butane 0.51 mill tonnes Flare gas 150 GWh N-butane 0.89 mill tonnes Naphtha 0.37 mill tonnes RAW MATERIALS 2) Condensate 3.28 mill tonnes Rich gas 10.77 mill tonnes Ethane 0.50 mill tonnes Condensate 5.19 mill tonnes Electricity sold 656 GWh UTILITIES EMISSIONS TO AIR 3) 5) Hydrochloric acid 227 tonnes SO2 2.7 tonnes Sodium hydroxide 175 tonnes NOx 770 tonnes Other chemicals 16 tonnes nmVOC 1 979 tonnes Methane 1039 tonnes CO2 1 084 000 tonnes DISCHARGES TO WATER 5) Cooling water 277 mill m3 Treated water 0.66 mill m3 Oil in water 576 kg TOC 19.7 tonnes CO2 NOx nmVOC kg emissions per tonne product g emissions per tonne product g emissions per tonne product WASTE 4) Processing plant Processing plant Processing plant Waste for landfill 675 tonnes 100 100 200 Waste for recovery 589 tonnes 80 80 Recovery factor 0.47 150 60 60 Hazardous waste 142 tonnes 100 40 40 50 20 20 1) Includes energy consumption for transport systems: 0.32 TWh 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 fuel gas and 0.005 TWh electricity 2) Excludes gas transport by transport systems: 53.4 mill tonnes CO2 NOx nmVOC 3) Includes emissions from transport systems: 71 700 tonnes kg emissions per tonne product g emissions per tonne product g emissions per tonne product CO2, 21.2 tonnes NOx, 39 tonnes nmVOC and 143 tonnes Transport systems Transport systems Transport systems methane 2.0 2.0 4 4) Includes waste from transport systems: 61 tonnes for landfill, 1.5 1.5 3 114 tonnes for recovery 5) All regulatory emission requirements have been met in 2001 1.0 1.0 2 0.5 0.5 1 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 36 S TAT O I L 2 0 0 1 H S E A C C O U N T I N G


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    Report from Ernst & Young AS We have reviewed the annual health, safety and environment accounting for Statoil ASA in 2001, as presented in the annual report and accounts for 2001 on pages 31-36. The HSE accounting is the responsibility of the corporate executive committee. Our review has covered the following: • meetings and discussions with the corporate management for health, safety and the environment on the contents of the HSE accounting, including a review of the group’s management system for health, safety and the environment. • interviewing personnel responsible for collecting the figures in the HSE report, with a focus on consistency in measuring emissions and on the processes governing the col- lection and collation of data. In this context, we have visited 10 reporting entities. • verifying that figures from the reporting entities visited have been correctly incorpora- ted in the HSE accounts, and performing overall analyses of the figures compared with earlier reporting periods. • assessment of whether the overall information is presented in an appropriate manner in the HSE accounting. • random checks to verify that the HSE figures presented are based on consistent and recognised methods for measuring, analysing and quantifying data. On this basis, we can confirm that: • Statoil has established a well-functioning management system for health, safety and the environment. In our opinion, the HSE accounting deals with information on matters relating to health, safety and the environment which are important from a group per- spective. This information appears to be appropriately presented in the HSE accounts. • the HSE performance indicators and environmental charts on pages 31-36 are based on consistent measuring methods and are in accordance with information submitted by the various reporting entities. Our review was conducted in accordance with standard of auditing no 920 on agreed-upon procedures. As a consequence, our report is confined to the aspects specified above. Stavanger, 8 March 2002 ERNST & YOUNG AS Gustav Eriksen Jostein Johannessen State authorised public accountant State authorised public accountant HSE ACCOUNTING S TAT O I L 2 0 0 1 37


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    Production operator Hans Otto Erlandsen hauls in the hawsers of the Greek tanker Maasstant L as it berths at the Mongstad refinery’s jetty. The ship loaded a 37,500-tonne cargo of petrol bound for New York. Statoil sold almost 30 per cent of its petrol production to the North American market in 2001. That is the equivalent of 60 fully loaded tankers of the same size as Maasstant L.


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    Operating and financial review and prospects You should read the following discussion of our financial condition and results of operations in connection with our audited financial statements and relevant notes and the other information contained elsewhere in this Annual Report. Overview of Our Results of Operations In the year ended December 31, 2001, we had total revenues of NOK 236.3 billion and net income of NOK 17.2 billion. In the year ended December 31, 2001, we produced 276 million barrels of crude oil and sold approximately 14.7 bcm (519 bcf) of natural gas, resulting in total production of 368 million boe. Our proved reserves as of December 31, 2001 consisted of approximately 2.0 billion barrels of crude oil and NGLs and 368 bcm (13 tcf) of natural gas, resulting in a total of approximately 4.3 billion boe. We divide our operations into the four following business segments: • Exploration and Production Norway, which includes our exploration, development and production operations relating to crude oil and natural gas on the NCS which have been significantly increased during 2001 by our acquisition of part of the Norwegian State’s oil and gas assets on the NCS, as described below under —Company Restructuring—Acquisition of SDFI assets and transfer of certain pipeline and other assets; • International Exploration and Production, which includes all of our exploration, development and production operations relating to crude oil and natural gas outside of Norway; • Natural Gas, which is responsible for the processing, transport and sale of gas from our upstream operations on the NCS and elsewhere; and • Manufacturing and Marketing, which comprises downstream activities including trading and sales of crude oil, NGL and refined products, refining, retail and industrial marketing, methanol production and sales, petrochemical operations through our 50% interest in Borealis and shipping operations through our now wholly-owned subsidiary, Navion ASA. See —Company Restructuring. Company Restructuring Improvement Program. In 1999, we initiated a group-wide improvement program in response to low crude oil prices and our high level of development projects. This program had as its objectives a restructuring of our asset portfolio, a reduction in our level of capital expenditure by focusing on our core areas, an improvement in the cost-efficiency of our operations and a reduction in the level of our capital employed. Accordingly, since 1999, we have been pursuing a restructuring of our asset portfolio in order to improve our focus on core areas and improve our returns on capital employed. This restructuring has been achieved through asset swaps, sales and acquisitions of assets on the NCS and internationally, and by the disposition of interests in some of our downstream businesses. Acquisition of SDFI assets and transfer of certain pipeline and other assets. As part of the Norwegian State’s restructuring of its oil and gas assets on the NCS, the Norwegian State determined that it would sell approximately 15% of its SDFI assets to us and approximately 6.5% to other oil and gas companies. In a single transaction with the Norwegian State, we purchased 84 license interests and ownership interests in five pipeline joint ventures from the Norwegian State, including an additional interest in the Troll oil and gas field. As part of the transfer of the Troll interest, we agreed not to sell or transfer any of our interest in the Troll field without the prior written consent of the Norwegian State. As a result of this transaction, our NCS proved reserves increased from 2,453 mmboe (pre-acquisition) to 3,787 mmboe (post-acquisition) based on proved reserves as at December 31, 2000 and our own production on the NCS increased from approximately 582,200 boe per day (pre-acquisition) to approximately 919,200 boe per day (post-acquisition) based on average daily production for the year ended December 31, 2000. In addition, our license areas have increased from 106 to 132, of which 26 are licenses in the production phase and 106 are in the exploration phase. The numbers of licenses include all of our transactions as of December 2001. Our commitments for capital expenditures increased from NOK 3.6 billion (pre-acquisition) to NOK 6.7 billion (post-acquisition). This transaction has strengthened our interests in fields in our core areas on the NCS. We believe that this allows us better opportunities for increasing recovery of oil and gas and reducing costs while enabling us to make more effective use of existing infrastructure through coordination and ownership alignment. As part of the single transaction with the Norwegian State, we transfered to the Norwegian State a 33.25% interest in Statpipe, including the processing plant at Kårstø (reducing our interest to 25%), a 25% interest in Norsea Gas AS (Norpipe) (reducing our interest to 25%) and a 35% interest in the crude oil terminal at Mongstad (reducing our interest to 65%). O P E R AT I N G A N D F I N A N C I A L R E V I E W A N D P R O S P E C T S S TAT O I L 2 0 0 1 39


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    This single transaction between Statoil and the Norwegian State was completed on June 1, 2001 with an effective date of January 1, 2001 (with the exception of the sale of the interest in the Mongstad terminal which had an effective date of June 1, 2001). To ensure that the sales and the exchange of the SDFI assets and our pipeline and terminal interests were made at fair market value, we and the Norwegian State obtained separate valuation reports on such assets from independent, internationally recognized experts. These valuations resulted in a net balancing cash payment paid by us to the Norwegian State of NOK 38.6 billion plus payment of interest and currency fluctuation from the effective date of NOK 2.2 billion (NOK 0.7 billion after tax). The total amount paid to the Norwegian State was financed through an initial public offering of shares for NOK 12.9 billion, issuance of new debt of NOK 9 billion and the remainder from existing cash and short term-borrowings. Because the acquisition of the SDFI assets was a transaction between entities under common control, the transaction has been accounted for in a manner similar to a pooling of interests. As a result, our financial statements include the SDFI assets as if the SDFI assets had been part of Statoil in all financial periods presented. The sale of assets to the Norwegian State and the payment of the net purchase price to the Norwegian State are not included in our historic financial statements but were recorded upon closing when they occurred June 1, 2001. Equity Issue. In June 2001, we completed an initial public offering and listing of our American Depositary shares on the New York Stock Exchange and our ordinary shares on the Oslo Stock Exchange. Of the 394,417,002 ordinary shares sold in the global offering, we offered 188,700,000 and 205,717,002 were offered by the Norwegian State. Cost Savings. In 1999, we initiated a group cost reduction program to be implemented during the period 1999 through 2001. The amounts are calculated based on our asset portfolio in 1999 without giving effect to our acquisition of SDFI assets from the Norwegian State. The cost savings were initially driven by a focused reduction in our exploration expenditure in 1999, while the implementation of common group-wide administrative processes and other measures to reduce costs did not have a full effect until 2000. This program resulted in cost savings in our annual operating costs, selling, general and administrative expenses and exploration expenditures of NOK 4.4 billion, of which NOK 1.7 billion was achieved in 1999, NOK 1.3 billion in 2000 and NOK 1.4 billion in 2001. In 1999 NOK 1.1 billion of the NOK 1.7 billion annual savings were attributable to savings in exploration expenditures, in 2000 NOK 0.2 billion of the NOK 1.3 billion annual savings were savings in exploration expenditures, whereas in 2001 NOK 0.9 billion of the NOK 1.4 billion annual savings were savings in exploration expenditures. Portfolio Restructuring. From 1998 to 1999, we carried out an overall review of our strategy and asset portfolio. This resulted in the restructuring of our asset portfolio both on the NCS and internationally and included significant provisions and writedowns against some of our upstream and downstream assets. See —Combined Results of Operations—Years ended December 31, 2001, 2000 and 1999—Income before financial items, income taxes and minority interest. We reduced our capital employed by NOK 4.7 billion in 2001. Total reduction in capital employed from 1998 to 2001 is NOK 17.8 billion, corresponding to a 20.5% reduction. On the NCS we restructured our portfolio as follows: In June 2001, we realized a non-taxable gain of approximately NOK 1.4 billion related to the sale of our interests in our non-core assets in the Grane, Jotun and Njord fields and a 12% interest in the Snøhvit field in Norway (reducing our interest to 22.29%). In 2000, these assets accounted for revenues of NOK 1.5 billion and contributed NOK 364 million to our depreciation charge. At December 31, 2000 these interests represented 54 mmboe of proved reserves. In 1999, in connection with the acquisition by Norsk Hydro ASA of all the outstanding ordinary shares in Saga Petroleum, an independent oil and gas exploration and production company, we acquired some of Saga Petroleum’s interests in certain oil and gas producing licenses in exchange for a total purchase price of NOK 8.1 billion which we paid partly with cash (NOK 4.2 billion) and partly with our existing shareholding in Saga Petroleum which we transferred to Norsk Hydro. The production from the acquired Saga Petroleum assets represented approximately an additional 63,000 boe per day in 2000. Under our agreement with Norsk Hydro, we acquired interests in several exploration licenses and 320 mmboe of proved reserves and are scheduled to take over the Snorre, Vigdis, Tordis and Visund operatorships in the Tampen area of the northern North Sea in 2003. By increasing our oil production, the acquisition of the Saga Petroleum assets also contributed to a 2.1% increase in our revenue from 1999 to 2000, as discussed below under —Combined Results of Operations. We restructured our E&P International portfolio as follows: In May 2001, we sold our 4.76% interest in the large Kashagan oil field discovery off Kazakhstan in the Caspian Sea and realized a pre-tax profit of NOK 1.6 billion (NOK 1.2 billion after tax). In December 2001, we sold our operations in Vietnam. This included the development of the Lan Tay and Lan Do gas and condensate fields (Statoil share 13.33%), a gas pipeline and a gas receiving station (Statoil share 16.33%) and interests in two exploration licenses, Block 05.2 (Statoil share 33.33%) and Block 05.3 (Statoil share 50%). We realized a pre-tax profit of NOK 1.3 billion (NOK 0.9 billion after tax). In 2000, we divested our exploration interests in the Gulf of Mexico. We recorded a provision of NOK 500 million against this sale in 1999, the year in which we decided to divest these interests, which was partially reversed in 2000. 40 S TAT O I L 2 0 0 1 O P E R AT I N G A N D F I N A N C I A L R E V I E W A N D P R O S P E C T S


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    In 1999, we sold the exploration and production activities of our US subsidiary, Statoil Energy Inc., and in 2000 we sold Statoil Energy’s marketing arm. In connection with this disposal we recorded a loss of NOK 1.1 billion, of which NOK 900 million was recorded in 1999 and NOK 200 million was recorded in 2000. In 1999, Statoil Energy accounted for revenues of NOK 18.5 billion (which accounted for approximately 85% of our International E&P business segment’s total revenues for that year) and proved reserves of 217 million boe. As a result of these sales, the revenue of International E&P decreased by 58% from 1999 to 2000. In December 2001, we decided to write down the book value of our interests in LL 652 in Venezuela due to a slower-than-expected reservoir repressurization resulting in a reduction of the projected volumes of oil recoverable during the remaining contract. Through the writedown we recognized a pre-tax loss of NOK 2.0 billion (NOK 1.4 billion after tax). In Natural Gas, we restructured our portfolio as follows: In October 2001 we implemented a new strategy for our UK business with the effect that we sold our small customer portfolio to Shell Gas Direct, and we shifted from end user sales focus towards sales to larger, industrial customers. In Manufacturing and Marketing, we restructured our portfolio as follows: In May 2001, we sold our 15% interest in the Malaysian Refining Company, which operates the refinery in Melaka, Malaysia to the two other shareholders in that refinery, Petronas and Conoco Asia. In October 2001, we acquired, as part of the restructuring of our ownership in Navion, the Rasmussengruppen’s 20% equity interest in the company, so that we now own 100% of Navion. The agreement was effective from October 1, 2001. In addition, as part of the restructuring, we sold our interests in the production ships Navion Munin and Berge Hugin to Bluewater in the second half of 2001. In 1999, we sold 50% of our shares in SDS to ICA/Ahold and recorded a NOK 1.2 billion gain on the sale. We account for the results of this business using the equity method of accounting. Accordingly, we include our 50% share of the net income of SDS in our revenues. O P E R AT I N G A N D F I N A N C I A L R E V I E W A N D P R O S P E C T S S TAT O I L 2 0 0 1 41


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    Factors Affecting Our Results of Operations Our results of operations substantially depend on: • crude oil trading prices, which increased significantly in 1999 and 2000, but decreased in 2001; • natural gas contract prices, which declined in 1999, but strengthened considerably in 2000 and 2001; • trends in the exchange rate between the US dollar, in which the trading price of crude oil is generally stated, and the Norwegian kroner, in which our accounts are held and a substantial portion of our costs are incurred; and • our oil and gas production volumes, which in turn depend on available petroleum reserves, and our own as well as our partners’ expertise in recovering oil and gas from those reserves. Our results will also be affected by trends in the international oil industry including: • recent volatility in oil prices, possible or continued actions by the Norwegian Government or possible continued actions by members of the Organization of Petroleum Exporting Countries affecting price levels; • recent consolidation in the industry, including mergers creating so-called “super majors”, which is sharpening competition for exploration opportunities and operatorships; and • the deregulation of the natural gas markets, which may cause substantial changes to the existing market structures and to the overall level and volatility of prices. The following table shows the yearly average crude oil trading prices, natural gas contract prices and Norwegian kroner/US dollar exchange rates for 1999, 2000 and 2001. 1999 2000 2001 Crude oil (US$ per barrel Brent blend) 18.0 28.5 24.4 Natural gas(1) (NOK per scm) 0.58 0.99 1.22 Norwegian kroner/US dollar average daily exchange rate 7.80 8.81 8.99 (1) From the Norwegian Continental Shelf. The following table illustrates how certain changes in the crude oil trading price, natural gas contract prices, refining margins and the Norwegian kroner/US dollar exchange rate may impact our income before financial items, income taxes and minority interest and our net income assuming activity at levels achieved in 2001. Sensitivities on 2001 results CHANGE IN CHANGE IN (IN NOK BILLION) EBIT(1) NET INCOME Oil price (+/- US$ 1/bbl) 2.5 0.6 Gas price (+/- 10%) 1.8 0.4 Refining margins (+/- US$ 0.50/bbl) 0.5 0.3 US dollar exchange rate impact on revenues and costs (+/- NOK 0.50) 3.0 0.7 US dollar exchange rate impact on financial debt (+/- NOK 0.50) - 0.7 (1) Income before financial items, income taxes and minority interest. The sensitivities on our financial results shown in the table above would differ from those that actually would appear in our consolidated financial statements. Our consolidated financial statements would also reflect the effect on trading margins in the Natural Gas and Manufacturing and Marketing business segments, our exploration expenditures development and exploration success rate, inflation, potential tax system changes, as well as the effect of any hedging program in place. Our hedging activities are designed to assist our long-term strategic development and attainment of targets by protecting financial flexibility and cash flow, allowing the corporation to be able to undertake profitable projects/acquisitions and avoiding forced divestments during periods of adverse market conditions. For the oil price we have put on a downside protection structure for some of our production, reducing price risk below US$ 17 per barrel in 2001 and below US$ 18 per barrel for 2002. Natural gas is typically sold under price formulas that establish time lags for the change of the gas price. Approximately 25% of the refining margin for 2001 was locked in late 2000. Also, the currency mix of the debt has been optimized with regard to underlying cash flow exposure. Our cash-flow exposure is primarily US dollar driven; thus, our debt is mainly in US dollars. 42 S TAT O I L 2 0 0 1 O P E R AT I N G A N D F I N A N C I A L R E V I E W A N D P R O S P E C T S


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    We market and sell the Norwegian State's oil and gas together with our own production. Historically, when we took SDFI production of oil and gas into our own inventory, for example for use in our downstream operations (e.g., in our refining business or our downstream retail operations), we included the proceeds from the sale of such production in our revenues and the price we paid to the Norwegian State in our cost of goods sold. When we sold the SDFI oil and gas on to external customers directly, however, we did not take SDFI production into our own inventory, and we included only the net result of this trading activity in our revenues. Anticipating our initial public offering, the Norwegian State, acting as sole shareholder, held an extraordinary general meeting on February 27, 2001 and approved a resolution stating that Statoil shall continue to market and sell the Norwegian State’s oil and gas. The terms that apply to our marketing and sale of the SDFI oil and gas after the Norwegian State’s restructuring of its oil and gas assets are set out in the owner’s instruction which was adopted by our general assembly on May 25, 2001 and became effective on June 17, 2001. Pursuant to the owner’s instruction, we agreed to purchase all of the SDFI oil and NGL produced and, therefore, include the proceeds from the sale of the SDFI production as revenue and the price that we pay to the Norwegian State as cost of goods sold. The treatment of our sales of SDFI natural gas remains the same. Historically, we paid to the Norwegian State the “norm price” for crude oil set by the Norwegian Petroleum Price Board, an independent panel of assessors, based on an average of spot market prices and contract prices for NCS oil during the recent month. The price we paid to the Norwegian State for NGL and natural gas was equal to the price actually obtained from the sale to third parties. After June 17, 2001, the price that we pay to the Norwegian State for natural gas, however, is either the market value, if we take the natural gas into our own inventory, or, if we sell the natural gas directly to external customers or to us, our payment to the Norwegian State is based on either achieved prices, a net back formula or market value. We now purchase all of the Norwegian State’s oil and NGL. Pricing of the crude oil is based on market reflective prices. NGL prices are based on either achieved prices, market value or market reflective prices. Total purchases of oil and gas from the Norwegian State by Statoil amounted to NOK 50,987 million, NOK 39,185 million and NOK 22,293 million in 2001, 2000 and 1999, respectively. As with all producers on the NCS, we pay a royalty to the Norwegian State for NCS oil produced from fields approved for development prior to January 1, 1986. Oil fields in our portfolio currently paying royalty are Statfjord, Gullfaks and Oseberg, which together represented 37%, 30% and 27% of our total petroleum production in 1999, 2000 and 2001 respectively. The royalty is generally paid in kind, and varies from 8% to 16% of the oil produced. We purchase from the Norwegian government at the “norm price” all royalty oil paid in kind by producers on the NCS. We include the costs of purchase and the proceeds from the sale of the royalty oil, which we resell or refine, in our cost of goods sold and sales revenue, respectively. No royalty is paid from fields approved for development on January 1, 1986 or later. Remaining royalty obligations will gradually be abolished in such a manner that royalty payments from Statfjord will be abolished over a three-year period and royalty payments from Gullfaks and Oseberg will be abolished over a six- year period, in each case beginning in 2000. Fluctuating foreign exchange rates can have a significant impact on our operating results. Our revenues are mainly denominated in US dollars, while our operating expenses and income taxes payable accrue to a large extent in Norwegian kroner. We seek to manage this currency mismatch by issuing or swapping long-term debt into US dollars and engaging in foreign currency hedging. We manage the risk arising from our interest rate exposures through the use of interest rate derivatives, primarily interest rate swaps, based on a benchmark for the duration of our total loan portfolio. See — Liquidity and Capital Resources — Risk Management. In general, an increase in the value of the US dollar against the Norwegian krone can be expected to increase our reported earnings. As a result, such an increase would favor Statoil if maintained in the longer term. However, because our currently outstanding debt is principally in US dollars, the benefit to Statoil would be offset in the near term by an increase in the value of our debt which would be recorded as a financial expense and, accordingly, would adversely affect our net income. See — Liquidity and Capital Resources — Risk Management. Historically, our revenues have largely been generated from the production of oil and natural gas from the NCS. Norway imposes a 78% marginal tax rate on income from offshore oil and gas activities. Our earnings volatility is moderated as a result of the significant amount of our Norwegian offshore income that is subject to a 78% tax rate in profitable periods and the significant tax assets generated by our Norwegian offshore operations in any loss- making periods. A significant part of the taxes we pay are paid to the Norwegian State. In June 2001, the Storting enacted certain changes in the taxation of petroleum operations. O P E R AT I N G A N D F I N A N C I A L R E V I E W A N D P R O S P E C T S S TAT O I L 2 0 0 1 43


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    Combined Results of Operations The following table shows certain income statement data, expressed in each case as a percentage of total revenues. YEAR ENDED DECEMBER 31, 1999 2000 2001 CONSOLIDATED STATEMENTS OF INCOME Revenues: Sales 99.6% 99.8% 97.8% Equity in net income (loss) of affiliates (0.5%) 0.2% 0.2% Other income 0.9% 0.0 % 2.0% Total revenues 100.0% 100.0 % 100% Expenses: Cost of goods sold 53.0% 51.9% 53.4% Operating expenses 17.1% 12.5% 12.5% Selling, general and administrative expenses 4.4% 1.7% 1.5% Depreciation, depletion and amortization 11.7% 6.8% 7.6% Exploration expenses 2.1% 1.1% 1.2% Total expenses before financial items 88.3% 74.0% 76.2% Income before financial items, income taxes and minority interest 11.7% 26.0% 23.8% Years ended December 31, 2001, 2000 and 1999 Sales. Our sales revenue includes sales of our own oil and gas production and sales of oil and gas production that we purchase from others, including oil and gas that we purchase from the SDFI to take into our own inventory and royalty oil, as well as, prior to June 17, 2001, the net result of our marketing and selling of SDFI oil and gas production that we sold directly on to external customers. Sales revenues also include our share of tariffs paid by third parties for transport through pipelines in which we have interests and revenues from our majority-owned downstream businesses. Beginning on June 17, 2001, our sales revenue and cost of goods sold include sales of SDFI oil and NGL production that we purchase pursuant to the owner’s instruction, regardless of whether it is for resale to external customers directly or for our own inventory (and not just the net result). See — Factors Affecting Our Results of Operations above for more information. Our sales revenue totaled NOK 231.1 billion in 2001, compared to NOK 229.8 billion in 2000 and NOK 149.6 billion in 1999. The 0.5% increase in sales revenues from 2000 to 2001 was mainly due to a 29% increase in crude oil volumes bought from third parties and SDFI, primarily resulting from the new owner’s instruction, and a 23% increase in our realized price of natural gas. This was to a large extent offset by a 15% reduction in realized oil prices, a 29% reduction in the refining margin (FCC-margin), our sale in 2000 of the marketing arm of our subsidiary Statoil Energy Inc. and the reduction in the contribution from Statpipe, as a consequence of our interest being reduced from 58.25% to 25% as of June 1, 2001, as part of the SDFI transaction. The decrease in oil price and refining margins were partly offset by a 2% strengthening of the US dollar against the Norwegian kroner. Comprising the NOK 1.3 billion increase in sales revenues in 2001 was approximately NOK 35 billion due to increased SDFI and third party volumes and approximately NOK 4 billion due to an increase in the price and volumes sold of natural gas. Offsetting these increases, sales revenues decreased by approximately NOK 20 billion due to reduced oil prices, by approximately NOK 7 billion due to a reduction in sales revenues from refining, and approximately NOK 4 billion due to the absence of revenues from the marketing arm of Statoil Energy Inc. following the sale in 2000, as well as a reduced contribution from Statpipe. Our average daily oil production increased from 733,300 barrels in 2000 to 754,900 barrels in 2001. This was primarily a result of the start of production from the Sincor field in Venezuela, increased production from the early oil phase on the Azeri-Chirag-Gunashli field in Azerbaijan, the effect of the Gullfaks Satellites Phase II, Glitne, Snorre Nord and Troll C fields coming on stream in Norway and increases in production from the Åsgard, Norne, Sygna, Oseberg Satellites and Snorre Sør fields. There was, however, a lower than expected production increase at Åsgard due a shutdown of production on the Åsgard B platform due to leakages in the welded joints on the subsea flowlines from the production wells to the platform. In addition, as a result of an underlifting position on the NCS in 2000, as compared to an overlifting position for 2001, we lifted a higher volume of oil on the NCS than that represented by our total equity interest in 2001 while in 2000 we lifted a lower volume of oil than represented by our total equity interest. See below 44 S TAT O I L 2 0 0 1 O P E R AT I N G A N D F I N A N C I A L R E V I E W A N D P R O S P E C T S


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    for a description of the difference between produced volumes and lifted volumes. The increase in average daily oil production was partially offset by a decline in the output from the Lufeng field in China and the Siri field in Denmark and a decline in the output from the mature fields Statfjord and Gullfaks on the NCS and reduced production from the Heidrun and Sleipner fields and the decommissioning of the Yme field. Our gas volumes sold of own produced gas were 14.7 bcm (518.8 bcf) in 2001, approximately the same as the volumes sold in 2000. The 54% increase in sales revenue from 1999 to 2000 was principally due to an approximately 58% increase in our realized crude oil prices, an approximately 71% increase in our realized natural gas prices and an increase in our own oil production following the acquisition of the Saga Petroleum assets in July 1999, offset in part by a 58% decrease in sales revenue in our International E&P segment due to the sale of Statoil Energy Inc. In addition, the increase in our sales revenue from 1999 to 2000 reflected a strengthening of the US dollar against the Norwegian kroner, which contributed to the increase in crude oil prices measured in Norwegian kroner. Of the NOK 80.2 billion increase in sales revenue in 2000, approximately NOK 60 billion was due to the increase in oil prices expressed in NOK, approximately NOK 6 billion was due to an increase in the price and volumes sold of natural gas and approximately NOK 4 billion was due to the increase in oil production. Our average daily oil production increased from 709,900 barrels in 1999 to 733,300 barrels in 2000, primarily as a result of the acquisition of the Saga Petroleum assets in July 1999, which was reflected in our financial statements for a full year beginning in 2000 and which increased our average daily oil production in 2000 as compared to 1999 by approximately 30,000 barrels per day. Although our gas volumes sold decreased from 14.8 bcm (522.7 bcf) in 1999 to 14.7 bcm (519.2 bcf) in 2000 due primarily to our sale of Statoil Energy Inc., we generated higher revenues from gas sales as a result of an increase in our realized price of natural gas on the NCS of approximately 71% over the same period. We record revenues from sales of production based on lifted volumes. The term “production” as used in this section means lifted volumes. Overlifting and underlifting positions are a result of Statoil lifting either a higher or a lower volume of oil than that represented by our total equity interest in that field. Equity in net income (loss) of affiliates. Equity in net income (loss) of affiliates principally includes our 50% equity interest in Borealis, our 50% equity interest in SDS, our wholly-owned subsidiary Navion’s 50% equity interest in the West Navion drill ship and our former 15% interest in the Melaka refinery which was sold in 2001. Our share of equity in net income of affiliates was NOK 439 million in 2001, NOK 523 million in 2000 and a loss of NOK 745 million in 1999. The decrease from 2000 to 2001 was primarily due to reduced income of Borealis as a result of reduced petrochemical margins. The increase from 1999 to 2000 was primarily due to an increase in the income of SDS, whereas the 1999 result was affected by the NOK 1.2 billion writedown in the value of our interest in the West Navion drill ship and the NOK 500 million writedown in the value of our 15% interest in the Melaka refinery. Other income. Other income was NOK 4.8 billion in 2001, NOK 70 million in 2000 and NOK 1.3 billion in 1999. The NOK 4.8 billion income in 2001 primarily comprises the gain realized on the sale of non-core assets in the Grane, Njord and Jotun fields and a 12% interest in the Snøhvit field, the sale of our 4.76% interest in the Kashagan oil field discovery in the Caspian Sea and the sale of our operations in Vietnam. The NOK 1.3 billion income in 1999 primarily comprises the gain realized on the sale of 50% of SDS to ICA/Ahold. Cost of goods sold. Historically, our cost of goods sold included the cost of oil and gas production that we purchased for resale or refining, including SDFI oil and gas purchased for our own inventory, including royalty oil. Beginning on June 17, 2001, our cost of goods sold includes the cost of the SDFI oil and NGL production that we purchase pursuant to the owner’s instruction, regardless of whether it is for resale to external customers directly or for our own inventory. See —Factors Affecting Our Results of Operations above for more information. Cost of goods sold increased to NOK 126.2 billion in 2001 from NOK 119.5 billion in 2000 and NOK 79.5 billion in 1999. The 5.6% increase in 2001 is mainly due to increased purchase of SDFI volumes pursuant to the owner’s instruction and third party volumes. This was partly offset by a reduction in crude oil prices and the sale in 2000 of the marketing arm of our subsidiary, Statoil Energy Inc. The increase of 50% from 1999 to 2000 was primarily due to an increase in crude oil prices and also, to a lesser extent, increased purchases of royalty oil, increased purchases of SDFI oil and a net increase in oil purchased from others for trading or for use in our operations. The increase occurred despite the 2000 divestment of the marketing arm of Statoil Energy Inc., which accounted for approximately 20% of our total cost of goods sold in 1999. O P E R AT I N G A N D F I N A N C I A L R E V I E W A N D P R O S P E C T S S TAT O I L 2 0 0 1 45


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    Operating expenses. Our operating expenses include production costs in fields and transport systems related to our share of oil and gas production. Operating expenses increased to NOK 29.5 billion in 2001 compared to 28.9 billion in 2000 and NOK 25.7 billion in 1999. The 2% increase from 2000 to 2001 reflects a NOK 0.5 billion and NOK 0.2 billion increase in the operating expenses of our Manufacturing and Marketing and Natural Gas business segments, respectively. The increases are primarily due to increased volumes of oil and gas transported. We also recognized an increase in operating expenses due to new fields coming on stream, and an increase in preparation for operational activities for new fields. These increases were partly offset by reduced provisions as a result of updated cost estimates for future removal of field installations on the NCS, and reduced operating costs within our International E&P segment mainly due to lower production of oil and gas. The 13% increase from 1999 to 2000 was principally due to new fields coming on stream in 2000, and the effect of including the acquired Saga assets in our financial statements for a full fiscal year, partially offset by a reduction in operating expenses following the implementation of our cost reduction program. Selling, general and administrative expenses. Our selling, general and administrative expenses include costs relating to the selling and marketing of our products, including business development costs, payroll and employee benefits. Our selling, general and administrative expenses decreased to NOK 3.5 billion in 2001 compared to NOK 3.9 billion in 2000 and NOK 6.7 billion in 1999. The decrease from 2000 to 2001 was mainly a result of our sale of the marketing arm of our subsidiary, Statoil Energy Inc. in 2000. The 42% decrease from 1999 to 2000 primarily reflected the sale of 50% of SDS to ICA/Ahold in 1999, following the transfer of our retail network of service stations in Scandinavia to SDS, and the accompanying deconsolidation of the expenses associated with these service stations. This resulted in expense reduction of approximately NOK 1.4 billion in 2000. This decrease was also due in part to the cost savings program initiated in 1999, which reduced our selling, general and administrative costs from 2000. Depreciation, depletion and amortization expenses. Our depreciation, depletion and amortization expenses include depreciation of production installations and transport systems, depletion of fields in production, amortization of goodwill and other intangible assets and depreciation of capitalized exploration costs as well as writedowns of impaired long-lived assets. Depreciation, depletion and amortization expenses were NOK 18.1 billion in 2001, NOK 15.7 billion in 2000 and NOK 17.6 billion in 1999. The increase of 15% from 2000 to 2001 was due principally to the writedown of NOK 2.0 billion (NOK 1.4 billion after tax) on the LL 652 oil field in Venezuela and increased depreciation due to higher production. Depreciation, depletion and amortization expenses decrease by 10% from 1999 to 2000, due principally to several major writedowns and provisions taken in 1999 regarding the value of some of our refineries and other assets. This decrease was partially offset by an increase in depreciation as a result of the acquisition of the Saga assets being reflected in our financial statements for a full year. In addition, the increase in depreciation was also due to a full year effect of production at Åsgard and other new fields with higher depreciation rates compared to more mature fields. Exploration expenses. Our exploration expenditure is capitalized to the extent our exploration efforts are successful and is otherwise charged to expense as incurred. Our exploration expenses consist of the expensed portion of our current-period exploration expenditures and write-offs of exploration expenditures capitalized in prior periods. Exploration expenses were NOK 2.9 billion in 2001, NOK 2.5 billion in 2000 and NOK 3.1 billion in 1999. The increase of 17% from 2000 to 2001 was mainly due to a NOK 0.5 billion increase in exploration expenditure capitalized in previous years but written off in 2001 and a lower success rate in 2001 which resulted in a higher level of costs being expensed. This was partly offset by a NOK 0.7 billion decrease in exploration expenditures, primarily as a result of a lower level of exploration activity within our International E&P business segment partly offset by an increase in the exploration activity on the NCS. A total of 27 exploration and appraisal wells were completed in 2001, of which 15 resulted in discoveries. Exploration expenses decreased to NOK 2.5 billion in 2000 from NOK 3.1 billion in 1999, a reduction of 21%, due to a higher success rate in 2000, which resulted in a lower level of costs being expensed, partly offset by the effect of the strengthening of the US dollar against the Norwegian krone. In addition, exploration expenses in 1999 include NOK 0.8 billion relating to write-offs of expenditures capitalized in prior periods following a review of our NCS exploration portfolio, while exploration expense in 2000 included NOK 0.4 billion of exploration expenditure capitalized in previous years but written off in 2000. Income before financial items, income taxes and minority interest. Income before financial items, income taxes and minority interest totaled NOK 56.2 billion in 2001, NOK 60.0 billion in 2000, and NOK 17.6 billion in 1999. The 6% decline from 2000 to 2001 is mainly due to a 13% decrease in oil prices in NOK, a 29% reduction in refining margins and a NOK 2 billion writedown of the LL 652 oil field in Venezuela. These effects have partly been offset by a 23% increase in gas prices, a 3% increase in produced volumes of oil and NOK 4.3 billion in pre-tax gains related to the sale of interests on the NCS, the sale of our interest in the Kashagan oil field in Kazakhstan and the sale of Statoil’s operations in Vietnam. 46 S TAT O I L 2 0 0 1 O P E R AT I N G A N D F I N A N C I A L R E V I E W A N D P R O S P E C T S

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