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    Annual report and accounts 2002

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    Good net income of NOK 16.8 billion, on a par with Statoil’s best-ever result of NOK 17.2 billion in 2001. Improved profitability with return on capital employed of 14.9 per cent. Matches the best industry players. 2002 Production record with 1 074 000 barrels of oil equivalent per day. The goal for 2004 is 1 120 000 barrels. Growth in 2002 was 6.7 per cent. Reserve replacement ratio improved from 0.68 in 2001 to 0.78. The target for 2004 is for new reserves to exceed production. Lower emissions of carbon dioxide, despite record-high output. New operatorships on the NCS by taking over responsibility for the Snorre, Visund, Tordis and Vigdis fields from Norsk Hydro. Strong international growth with production of 86 000 barrels of oil equivalent per day. Growth in 2002 was 28 per cent. Gained new operatorships – in the South Pars field off Iran and in Plataforma Deltana off Venezuela. New gas sales to the UK. Contract signed with British Gas Trading for supplies of five billion cubic metres annually for ten years. Strengthened market position in Poland, Estonia, Latvia and Lithuania through the acquisition of 140 petrol stations.

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    2002 statistics 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 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 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 OIL PRODUCTION/PRICE GAS PRODUCTION/PRICE OIL/GAS RESERVES 1 000 bbls 1 000 boe USD/barrel per day NOK/scm per day Million boe 30 800 1.75 350 5 000 700 1.50 300 25 4 000 600 1.25 250 20 500 3 000 1.00 200 15 400 0.75 150 300 2 000 10 0.50 100 200 1 000 5 100 0.25 50 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 Entitlement oil production Sales equity gas production Gas Average oil price Brent Blend Average gas price Oil and NGL TOTAL RECORDABLE INJURY FREQUENCY SERIOUS INCIDENT FREQUENCY CARBON DIOXIDE (CO2) Million tonnes 14 8 10 12 8 10 6 6 8 4 4 6 2 4 2 2 0 -2 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 Number of total recordable injuries CO2 reductions made through Number of serious incidents measures implemented between per million working hours per million working hours 1998 and 2002 for Statoil operations Total CO2 emissions from Statoil operations

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    USGAAP - Financial highlights KEY FIGURES IN NOK MILLION 2002 2001 2000 1999 1998 Financial information Total revenues 243,814 236,961 230,425 150,132 114,648 Income before financial items, income taxes and minority interests 43,102 56,154 59,991 17,578 10,287 Net income 16,846 17,245 16,153 6,409 1,640 Cash flow provided by operating activities 24,023 39,173 56,752 29,610 18,050 Cash flow used in investing activities 16,756 12,838 16,014 24,988 27,676 Interest-bearing debt 37,128 41,795 36,982 50,497 44,261 Net interest-bearing debt 23,592 34,077 23,379 42,856 37,538 Net debt to capital employed 28.7% 39.0% 25.0% 42.6% 44.1% Return on average capital employed after tax 14.9% 19.9% 18.7% 6.4% 3.2% Operational information Combined oil and gas production (thousand boe/day) 1,074 1,007 1,005 967 918 Proven oil and gas reserves (million boe) 4,267 4,277 4,317 4,511 4,621 Production cost (USD/barrel) 3.05 2.92 3.08 3.38 3.14 Finding and development cost (USD/barrel) (3-year average) 6.17 9.11 8.21 8.74 - Reserve replacement ratio (3-year average) 0.78 0.68 0.86 1.03 - Share information Net income per share 7.78 8.31 8.18 3.24 0.83 Net income per share adjusted for special items(1) 7.72 7.32 8.18 4.54 - Share price at Oslo Stock Exchange 31 December 58.50 61.50 - - - Weighted average number of ordinary shares outstanding 2,165,422,239 2,076,180,942 1,975,885,600 1,975,885,600 1,975,885,600 (1) Special items covers certain gains on sale of assets, write-downs and provisions. See “Operating and financial review and prospects”. Income adjusted for special items is not calculated for 1998. NET INTEREST- RETURN ON AVERAGE FINDING AND DEVELOP- CARBON SERIOUS INCIDENT Definitions BEARING DEBT = CAPITAL EMPLOYED MENT COSTS = DIOXIDE (CO2) = FREQUENCY = Gross interest-bearing AFTER TAX = Calculated from new Carbon dioxide emis- The number of inci- debt less cash and Net income plus proven reserves, sions from Statoil dents of a very seri- cash equivalents minority interests excluding acquisi- operations embrace ous nature per mil- and net financial tions and disposals of all sources such as lion working hours. NET DEBT TO expenses after tax reserves turbines, boilers, An incident is an CAPITAL EMPLOYED = as a percentage of engines, flares, event or chain of The relationship capital employed RESERVE REPLACEMENT drilling of explo- events which has between net interest- RATIO = ration and produc- caused or could have bearing debt and PRODUCTION COSTS = Additions to proven tion wells and well caused injury, illness capital employed Operating expenses reserves, including testing/workovers. and/or damage associated with pro- acquisitions and dis- Reductions in emis- to/loss of property, AVERAGE CAPITAL duction of oil and posals, divided by sions are accumulat- environmental dam- EMPLOYED = natural gas divided volumes produced ed for the period age or harm to a Average of the capital by total production 1998-2002 third party employed at the (lifting) of oil and BARREL OF OIL beginning and end of natural gas EQUIVALENT (BOE) = TOTAL RECORDABLE the accounting period. Oil and gas volumes INJURY FREQUENCY = Capital employed is expressed as a com- The number of total net interest-bearing mon unit of measure- recordable injuries debt plus share capital ment. One boe is per million working and minority interests equal to one barrel of hours. Employees of crude, or 159 standard Statoil and its con- cubic metres of gas tractors are included

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    KVITEBJØRN ON Bilde: COURSE. The topsides for the Sincor eller Girassol Kvitebjørn platform rolled out of the fabri- cation shop at ABB Offshore in Haugesund in December 2002. Weighing 10 800 tonnes, it was moved on 48 transporters with a total of 1 664 wheels. Kvitebjørn is due to start producing gas and condensate in 2004. PAGE 25 HIGHER DIVIDEND. Statoil’s board pro- poses a dividend of NOK 2.90 per share TECHNOLOGY PRIZE for 2002, as against FROM THE WORLD NOK 2.85 for 2001. PETROLEUM CONGRESS. PAGE 19 Statoil won this award for its underground storage of carbon dioxide in the Sleipner area. PAGE 44 STATOIL IS NOW Contents OPERATOR FOR 20 FIELDS ON THE NCS. Key figures, Embraces 18 staffed platforms and produc- definitions Inside front cover tion ships, four unstaffed units and The chief executive 2 STATOIL VETTED 845 17 remotely-operated TANKERS AND subsea installations. Directors’ report 4 REJECTED 12. PAGE 23 Ship’s inspector Tore Group profile, targets Tollefsen is one of the team which checks that vessels used by and strategies 12 the group meet its high standards. Organisation, management 14 PAGE 46 Corporate governance 16 INVESTING HEAVILY ON THE NCS. Shareholder information 19 Statoil is involved in POPULAR 14 new Norwegian TRAINEESHIPS. offshore projects with Diana Startchenko Statoil through the year 20 a total investment from Murmansk is one framework of of 24 trainees selected Business operations 23 NOK 100 billion. from 2 000 applicants. PAGE 25 PAGE 38 Statoil, safety and society 36 The environment 42 HSE accounting 48 Side C Operating and financial review 56 Accounts for 2002 – USGAAP 68 General information 120 The front-cover picture was taken by photographer Guri Dahl. She met Statoil personnel in their working environment on the Sleipner field. STATOIL 2002 1

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    Contents Directors’ report Profile, targets Corporate governance Shareholder The chief executive and strategies information 2 STATOIL 2002

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    Business Statoil, safety The environment HSE accounting Operating and Accounts Statoil operations and society financial review group – USGAAP Building for the future 2002 was a good year for Statoil lifetime by systematically develop- through internationally. Output with progress made in most areas. ing technology, forms of organisa- rose considerably. New projects Oil and gas production held a tion and modes of working. were sanctioned in Azerbaijan and record-high level, with an increase We are in the midst of a hectic Angola and we gained our first of seven per cent from 2001. The development phase. Statoil is operatorship in Iran. Although the demand for natural gas was operator for 12 development and project in Iran is not a large one, it greater than ever before. Ongoing modification projects on the NCS. improvement efforts in all of the Snøhvit is the biggest project. Its „ 2002 was a year group’s business areas made a investment budget has been positive contribution to the strong increased but the project remains of breakthrough results. profitable. Snøhvit breaches tech- internationally „ Efficiency is better and produc- nological boundaries and it is a tion regularity is higher than ever pioneering project on the environ- before. This is a result of Statoil’s mental side. represents an important step in ability to exploit its competence We are investing in the future the development of our interna- and knowledge to enhance value on the NCS. tional business. creation through a process of con- Gas is becoming an ever more Earnings from the NCS allow tinuous improvement. important source of energy. us the time we need to build up Demand is rising. Statoil sells profitable international upstream „ nearly 70 per cent of all gas from operations. In 10 years our inter- The annual results the NCS. That gives us market national activities could account for 2002 show that we strength and opportunities to for 40 per cent of our total produc- enhance value creation. We gained tion. are delivering „ a foothold in the British market We have invested in our last year. Our proximity to the UK refineries at Mongstad and Ambitious goals were set for gives us a clear competitive edge. Kalundborg, upgrading them to be 2004 when the company was float- Our ambition is to build a market able to supply tomorrow’s prod- ed in June 2001. These targets were position there which is similar to ucts –more environmentally- considered by many to be too those of our main markets in con- friendly petrol and diesel. We have ambitious, but I feel certain that strengthened our market position we will deliver the production growth and profitability that we „ Gas is becoming an ever more important in the new and interesting markets of the Baltic states and Poland. promised. The annual results for We have a strong brand name. 2002 show that we are delivering source of energy „ We are building a future based along the way. on our competence, our ethics, and The Norwegian continental our environmental and social shelf (NCS) is the backbone of our tinental Europe. That will require responsibility. business and it will continue to be greater transport capacity from the so for many years to come. We NCS. have succeeded in getting more We will exploit our advantages, out of our big fields – Statfjord and competence and experience in the Gullfaks – than anyone thought continuing development of our gas possible just a few years ago. Our position. Olav Fjell goal now is to extend the fields’ 2002 was a year of break- President and CEO STATOIL 2002 3

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    Contents The chief executive Profile, targets Corporate governance Shareholder Directors’ report and strategies information Diana Startchenko from Murmansk was one of 24 trainees to join Statoil in 2002. Although employed by International Exploration & Production, she is currently working on economic analysis for Natural Gas with the help of mentor Lars Bjerkelund (above). Statoil’s two-year trainee pro- gramme, designed for university or college graduates, attracted 2 000 applicants in 2002. 4 STATOIL 2002

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    Business Statoil, safety The environment HSE accounting Operating and Accounts Statoil operations and society financial review group – USGAAP Directors’ report 2002 Introduction 2001, and refining and petrochem- of recordable injuries and lost-time The Statoil group’s net income in ical margins were considerably injuries has declined. The board 2002 came to NOK 16.8 billion, weaker than the year before. will continue to monitor closely which is NOK 0.4 billion lower Statoil’s 2002 result includes a the group’s efforts to improve HSE than in 2001. Income before finan- one-off gain of NOK 1.0 billion results. cial items, tax and minority inter- before tax, and NOK 0.7 billion In connection with the flotation ests totalled NOK 43.1 billion in after tax, on the sale of the in 2001, the group has established 2001 as against NOK 56.2 billion upstream business in Denmark. clear objectives for profitability and the year before. The return on cap- The value of the LL 652 oil field in production growth up to 2004. In ital employed was 14.9 per cent, as Venezuela was written down by order to achieve the defined target against 19.9 per cent in 2001. NOK 0.8 billion before tax, or for return on capital employed, an The good results can primarily NOK 0.6 billion after tax. The 2001 extensive improvement pro- be attributed to high levels of oil result included one-off gains gramme has been initiated. The and gas production and unrealised totalling NOK 2.3 billion before objective is to realise cost reduc- currency gains on the group’s debt. tax and NOK 2.1 billion after tax. tions and improved earnings Output rose by 6.7 per cent com- Remaining proven oil and gas amounting to NOK 3.5 billion per pared with 2001, despite extensive reserves amounted to almost 4.3 year in 2004. At the end of 2002, maintenance work and production billion boe at the end of 2002. In annual improvements of NOK 1.6 limitations on the Norwegian con- 2002, the reserve replacement rate billion have been achieved. tinental shelf (NCS). Average oil was 98 per cent, a clear improve- Progress is running according to and gas production totalled ment compared with 89 per cent schedule in all of the business 1 074 000 barrels of oil equivalent in 2001. Over the last three years areas. In the board’s view, the (boe) per day, compared with the average reserve replacement group is on track to delivering in 1 007 000 boe in 2001. rate has been 78 per cent. accordance with its objectives. The board is particularly satis- Statoil’s finding and develop- The board proposes that the fied with developments in oil and ment costs were USD 5.3 per boe annual general meeting allocates a gas production. Enhanced regular- last year compared with USD 4.6 dividend of NOK 2.90 per share ity and cost-effectiveness on the per boe in 2001. Over the last for 2002, as against NOK 2.85 for NCS have made considerable con- three years, finding and develop- 2001. tributions to the good annual ment costs averaged USD 6.2 per results. Developments over the boe. Production costs per boe rose Developments in Statoil’s past year have strengthened the from USD 2.9 in 2001 to USD 3.1 principal markets group both financially and opera- in 2002, due to a weakening of the At the start of 2003 the world tionally. USD against the NOK. Measured economy was marked by a fear of The slightly weaker financial in NOK, production costs have war in Iraq. Economic indicators result compared with 2001 is decreased from NOK 26.4 per boe show that growth in the industri- mainly due to lower prices meas- to NOK 24.2 per boe. alised nations is low and there is a ured in Norwegian kroner. Good results for health, safety certain risk of a continued weak Measured in US dollars, the aver- and the environment are very development in the global econo- age oil price was two per cent important and receive high priority my. The Norwegian economy is higher than the year before, but in the group. Unfortunately, there influenced in particular by the measured in NOK it was nine per were six fatal accidents in connec- weak global growth, high pay cent lower. The average gas price tion with the group’s operations costs, high interest rates and a was 22 per cent lower than in last year. However the frequency strong Norwegian krone. STATOIL 2002 5

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    Contents The chief executive Profile, targets Corporate governance Shareholder Directors’ report and strategies information 2002 was a year of big fluctua- Statoil’s average gas price last year Norwegian companies. For the tions in the oil market. The year was NOK 0.95 per standard cubic past 10 years, Norwegian suppliers started with production restrictions metre, compared with NOK 1.22 have provided two-thirds of made by the Opec countries to in 2001. Statoil’s total contracts. This also prevent oil price reductions. The Refining margins in Europe fell applies to 2002. However, for con- Norwegian authorities decided heavily in 2002 compared with tracts involving a large number of that oil production on the NCS 2001. The average refining margin working hours, the competitive- should also be limited. In the sec- (fluid catalytic cracker margin) was ness of Norwegian firms is weak- ond half of the year the restrictions USD 2.2 per barrel, as against USD ened and several contracts have in Norway were lifted. Unrest con- 3.6 per barrel the year before. The therefore been won by companies cerning Iraq influenced the oil average contract price for methanol outside Norway. market in the second half of 2002 was 22 per cent lower than the and the strike in Venezuela had a year before, measured in EUR. Exploration & Production big effect towards the end of the Statoil’s petrochemicals sector Norway year. A major part of Venezuela’s was also affected by developments Income before financial items, tax oil exports came to a halt and the in the global economy. Margins fell and minority interests totalled oil price rose to over USD 30 per by 19 per cent in 2002. The decline NOK 31.5 billion in 2002 as barrel. The Opec countries adjust- was particularly strong towards the against NOK 40.7 billion in 2001. ed their oil production several end of the year, with margins 39 This decline primarily reflects times during the year in order to per cent lower in the fourth quar- lower oil and gas prices measured balance the market. On an annual ter compared with the same period in NOK. basis, Statoil’s average realised of 2001. Statoil’s oil and gas output from price for Brent Blend was USD The competitive position of the NCS has shown a good trend. 24.7 per barrel, compared with Norwegian industry has weakened Production averaged 989 000 boe USD 24.1 in 2001. However, meas- by nearly 30 per cent since 1995. per day in 2002, an increase of ured in NOK, the oil price fell by Differentials in pay compared with roughly 48 000 boe per day com- nine per cent. Uncertainty con- our most important trading part- pared with 2001. Gas output has cerning the situation in the Middle ners have risen by 13 percentage risen due to increased demand, East will also affect oil prices in points in local currency, while the while oil production was slightly 2003, with a risk of big fluctua- exchange rate has been strength- lower than in 2001. Regularity and tions. ened by almost 15 percentage cost-effectiveness on the NCS has Demand for gas in western points. A strong Norwegian krone improved further. The Sigyn field Europe continues to rise. The UK entails higher costs measured in came on stream three months ear- market is particularly promising foreign currency and lower income lier than planned. for sales of Norwegian gas, since in NOK. This is a clear competitive Finds were made in 14 of 20 the demand there is rising while disadvantage for Statoil’s opera- wells drilled last year. The majority domestic production is declining. tions on the NCS and for its man- of these discoveries are relatively The market for gas in continental ufacturing and marketing business. small, but promising, since they lie Europe is expanding and new Last year Statoil awarded con- near existing infrastructure. marketplaces are developing. tracts totalling NOK 30 billion to On 1 January 2003, Statoil took Leif Terje Løddesøl Chair 6 STATOIL 2002

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    Business Statoil, safety The environment HSE accounting Operating and Accounts Statoil operations and society financial review group – USGAAP over Norsk Hydro’s operatorships Kristin and Kollsnes NGL are run- Several new finds have been in the Tampen area and about 550 ning to budget and on schedule. made off Angola and gas reserves Hydro employees transferred to have been proven off Nigeria. Statoil. The board expresses satis- International Exploration & Statoil has acquired El Paso faction at the good and efficient Production Merchant Energy’s liquefied natu- cooperation between the two com- Income before financial items, tax ral gas (LNG) contracts and rights panies in connection with the and minority interests totalled to the import terminal for LNG at operatorship changes. NOK 1.1 billion in 2002, as against Cove Point in the USA. A new The board takes a particular NOK 1.3 billion the year before. organisation is being established interest in the development of the This decline primarily reflects a with responsibility for marketing Snøhvit project in the Barents Sea, reduction in special items, an gas to the US market. The board where the investment budget has increase in costs associated with considers this to be an important been increased by NOK 5.8 billion business development and lower step for Statoil in its role as a play- to NOK 45.3 billion. The main rea- oil prices measured in NOK. This er in the international LNG mar- son for this increase is that the is partly offset by a production ket. Access to the gas markets on plant’s capacity was increased by increase of 28 per cent. the US east coast represents an 30 per cent at an early stage, while International oil and gas output attractive opportunity for the the consequences of such an totalled 86 000 boe as against group. Gas imports by the USA are expansion in a large gas liquefac- 67 000 boe in 2001. The Girassol expected to rise in coming years. tion facility were underestimated. field in Angola and the Sincor field The board puts great emphasis In addition, costs rose due to the in Venezuela have contributed sub- on the further development of discussions with the Efta stantially to production growth. Statoil’s international upstream Surveillance Authority (ESA). Output will continue to rise as activities, following the three main Statoil has a 22.29 per cent interest new fields come on stream. lines of strategy: in Snøhvit. The board will put high Statoil passed an important • creating close ties with national priority on the further follow-up of milestone in 2002 when the group oil companies that want to the project, which is the first became operator for the offshore draw on Statoil’s experience for development of a gas liquefaction part of phases six, seven and eight their own development plant in Europe. The board would on the large South Pars gas field in • exploiting the group’s gas point out that the Snøhvit project Iran. In Venezuela, Statoil has expertise along the entire value remains profitable. Statoil has con- become operator for block 4 in chain ducted a detailed review of the Plataforma Deltana, off the coun- • increasing international explo- development project. This has try’s eastern coast. ration. improved certainty about costs and The group has access to several This strategy builds upon the com- project execution, and the compa- quality fields internationally. New petence, technology and market ny now has a good basis for field developments in Angola and know-how which the group has implementing the development in Azerbaijan were sanctioned last acquired through 30 years of oper- accordance with updated plans. year. A decision has also been taken ation, with its basis in Norwegian The development of large proj- to build an export line for oil from oil and gas resources. ects such as Kvitebjørn, Mikkel, Azerbaijan to the Mediterranean. Intensifying international activ- Stein Bredal Marit Bakke Bjørn Erik Egeland STATOIL 2002 7

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    Contents The chief executive Profile, targets Corporate governance Shareholder Directors’ report and strategies information ities involves new challenges, par- accounts for nearly 70 per cent of petrochemicals group improved by ticularly with regard to the political total gas production on the NCS. NOK 0.2 billion, despite lower risk in the countries where the Statoil has long-term agreements prices, largely due to the ongoing group does business. with more than 20 buyers of improvement programme. Norwegian gas. For 2002 as a whole, the result Natural Gas The board is satisfied with the for the Navion shipping company Income before financial items, tax amicable settlement reached is NOK 1.2 billion lower than in and minority interests totalled between Statoil and the European 2001. This is mainly due to lower NOK 8.9 billion in 2002, as against Commission concerning gas sales rates for conventional shipping, NOK 9.6 billion the year before. from the NCS. As of 1 January lower utilisation of the shuttle Statoil’s gas sales increased by 34 2003, ownership of the Norwegian tanker fleet and exchange rate per cent, from 14.7 billion cubic gas transport systems has been trends. On 15 December 2002, metres to 19.6 billion cubic metres. coordinated in the Gassled part- Statoil signed an agreement to sell The effects of higher gas sales are nership. This will enhance overall Navion to Teekay Shipping largely offset by a 22 per cent efficiency. Corporation for about USD 800 reduction in the gas price meas- million, with effect from 1 January ured in NOK. Statoil’s reduced Manufacturing & Marketing 2003. The transaction is due to be share in Statpipe has weakened Income before financial items, tax finalised in the first half of 2003. the result by NOK 0.9 billion. and minority interests totalled In the board’s view, it is highly NOK 1.6 billion in 2002, as against Health, safety and significant that Statoil has NOK 4.5 billion the year before. the environment strengthened its position in the Sales of crude oil, refined prod- Statoil has stepped up efforts in UK gas market through agree- ucts and NGL in the international recent years to prevent harm to ments with BP in 2001 and market provided a very good people and the environment. The Centrica in 2002. The contract with financial result, on a par with the results for recordable injuries, lost- the latter is the largest single deal, year before. The refining business time injuries and serious incidents measured in annual volumes, since had a result which is NOK 1.8 bil- show a positive trend. But the six the Troll agreements in 1986. The lion lower than the year before, fatal accidents in 2002 represent a acquisition of the development due to developments in refining step backwards. These accidents, rights for an underground gas margins and exchange rates. The which occurred in Statoil itself and storage facility on the east coast of result for retailing was NOK 0.1 with contractors working for England will also serve to billion higher than the year before. Statoil, have been investigated and strengthen Statoil’s competitive- Retailing was strengthened measures have been adopted to ness in a market with an increas- through its acquisitions in Poland help avoid similar accidents in the ing demand for imported gas. and the Baltic states. Methanol future. An agreement has also A new model for company- had a slightly weaker result than been signed with DuPont Safety based gas sales was introduced on in the record year of 2001. As a Resources for assistance in 1 October. Statoil now markets result of weaker prices the result strengthening safety efforts fur- and sells its own gas as well as the declined by NOK 0.2 billion. ther. The objective is to improve Norwegian state’s gas. This The result for the Borealis management and control, behav- Kaci Kullmann Five Finn A Hvistendahl Grace Skaugen 8 STATOIL 2002

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    Business Statoil, safety The environment HSE accounting Operating and Accounts Statoil operations and society financial review group – USGAAP iour and attitudes throughout the pared with 2001. This is principally in 2001 with regard to the age of organisation. The board will closely due to good production regularity ships and the requirement that all follow developments in safety on the NCS. For its work on ships transporting heavy crude work, both at Statoil and at the removal and storage of carbon must have a double bottom or group’s contractors. A safe work- dioxide in the North Sea’s Sleipner hull. There were no substantial place, free of injuries, is the goal. area, Statoil was awarded the tech- spills of oil or chemicals in con- Calculated per million working nology development prize at the nection with tankers in 2002. hours, the total recordable injury World Petroleum Congress in Rio frequency improved from 6.7 in de Janeiro. Sustainable development 2001 to 6.0 in 2002. The number of Emission trading will play an For Statoil, sustainable develop- lost-time injuries per million important part in climate policy in ment is associated with the conse- working hours fell from 3.1 in 2001 the years to come. The European quences of the group’s activities to 2.8. Union is to launch a new emission for people, the environment and There is also an improvement trading system. The board believes society. Statoil will pursue its busi- in the number of serious incidents that the Norwegian oil and gas ness in a profitable, safe and ethi- per million working hours. The business should have the same cal manner. It will also show con- serious incident frequency has opportunities to take part as the sideration to the environment and declined from 4.1 in 2001 to 3.8. petroleum industry within the EU accept social responsibility. Sickness absence is unchanged member states. The group’s first sustainability compared with 2001, and still low, Over the past few years, Statoil report was published in 2002 and at 3.4 per cent. Statoil has signed has invested more than NOK 1 Statoil was included in the Dow an agreement with the Norwegian billion in delivering cleaner fuel Jones sustainability index. During National Insurance to pursue a and heating oil. Its refineries will the climate summit in more inclusive workplace. meet EU quality requirements for Johannesburg in August, Statoil Companies taking part in this petrol and diesel from 2003, received an award for its work scheme commit themselves to fol- although the EU requirements will with sustainable development. lowing up employees on sick leave not apply until 2005. Actively adapting the business and adapting the workplace for In 2002 the spotlight was once to social conditions and surround- older employees and personnel again on international oil transport ings reduces risk, strengthens the with a reduced capacity for work. by ship following the accident off group’s reputation and thus Statoil has already worked actively north-west Spain. This has been a improves profitability. By con- for several years to promote pres- key focus area in Statoil’s safety tributing to sustainable develop- ence instead of absence, which is efforts for many years. All ships ment Statoil can strengthen its in line with the intentions of this which carry oil for Statoil have to position in the labour market, the agreement. go through a thorough vetting capital market and the markets for Statoil works continuously to procedure. The tankers have to sat- its products. reduce emissions of greenhouse isfy safety standards which are A good working environment is gases. Total carbon dioxide emis- stricter than both national and an important part of the group’s sions from Statoil-operated facili- international requirements. work on sustainable development. ties have declined in 2002 com- Statoil’s standards were tightened Statoil carries out annual surveys Eli Sætersmoen Knut Åm STATOIL 2002 9

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    Contents The chief executive Profile, targets Corporate governance Shareholder Directors’ report and strategies information of the working environment. The ing activities was NOK 24.2 billion The board proposes that the board is pleased to note improve- in 2002, compared with NOK 39.2 annual general meeting allocates a ments in employees’ job satisfac- billion in 2001. This is due princi- dividend of NOK 2.90 per share. tion and motivation, cooperation pally to a strengthened NOK, The amount of the dividend com- and efficiency and confidence in reduced downstream margins and prises 37 per cent of the USGAAP the management. The employees an increase in taxes paid. Cash result adjusted for profit on dis- also report that work with health, flows used in investing activities posals and write-downs. The size safety and the environment gets amounted to NOK 16.9 billion as of the dividend complies with the high priority. against NOK 12.8 billion in 2001. group’s dividend policy. There is a strong focus on The group’s gross interest-bear- The board proposes the follow- diversity and equal opportunities. ing debt at 31 December 2002 was ing allocation of net income in the As of 2003 all business areas will NOK 37.1 billion, a decline of parent company, Statoil ASA (in report quarterly on progress in NOK 4.7 billion from a year earli- NOK million): their work to create a better gen- er. The group’s debt-equity ratio, Dividend 6 282 der balance among their man- defined as net interest-bearing Retained earnings 11 050 agers. All business areas share the debt in relation to capital Reserve for valuation goal of having at least 20 per cent employed, was 29 per cent at 31 variances (955) women managers by 2005. December. The reduction is mainly Total allocated 16 377 due to lower interest-bearing debt The company’s distributable equity Financial developments for the as a result of the weaker amounts to NOK 33 200 million. group USD/NOK exchange rate. Total revenues for Statoil in 2002 The group had NOK 12 billion Statoil’s governing bodies came to NOK 243.8 billion, an in bank deposits and other liquid At Statoil’s annual general meeting increase of just over NOK 6.9 bil- assets at 31 December 2002. in May 2002, a new corporate lion from the year before. Overall interest-bearing debt is assembly was elected. After the Income before financial items, denominated in US dollars. election the corporate assembly tax and minority interests totalled At 31 December, Statoil man- comprised the following represen- NOK 43.1 billion in 2002 as aged a portfolio of about NOK 18 tatives: Anne Kathrine Slungård, against NOK 56.2 billion in 2001. billion in bonds, certificates and (chair), Wenche Meldahl, (deputy Net income came to NOK 16.8 bil- shares. Fund management by the chair), Kjell Bjørndalen, Kirsti lion, compared with NOK 17.2 bil- group relates to assets in Statoil Høegh Bjørneset, Erlend Grimstad, lion in 2001. Forsikring (insurance), the group’s Gunnar Mathisen, Anita Roarsen Return on capital employed liquidity reserves and Statoil’s pen- and Asbjørn Rolstadås. The was 14.9 per cent, compared with sion funds. The pension funds are employees elected Arvid Færaas, 19.9 per cent in 2001. Earnings per not consolidated in the accounts. Hans M Saltveit, Einar Arne share came to NOK 7.78 in 2002, The group’s financial reporting Iversen and Åse Karin Staupe as as against NOK 8.31 the year is in accordance with the US gen- members. before. Adjusted for special items, erally accepted accounting princi- In June, the corporate assembly return on capital employed was ples (USGAAP) as well as the elected a new board of directors 14.8 per cent as against 17.6 per Norwegian generally accepted for Statoil: Leif Terje Løddesøl cent in 2001. accounting principles (NGAAP). (chair), Maurey Devine, Grace Normalised return on capital Note 25 in the NGAAP accounts Skaugen, Eli Sætersmoen, Finn A employed came to 10.8 per cent, explains the differences between Hvistendal and Knut Åm. The compared with 9.4 per cent in the two sets of accounts. employees elected Marit Bakke, 2001. Normalised return on capital As required by section 3-3 of Stein Bredal and Bjørn Erik employed is based on an oil price the Norwegian Accounting Act, Egeland. Maurey Devine withdrew of USD 16 per barrel, a gas price of the board confirms that the going from the board in the summer of NOK 0.70 per cubic metre, a refin- concern assumption has been ful- 2002, and Kaci Kullmann Five was ing margin of USD 3 per barrel, filled. The accounts for 2002 have elected as a new director. petrochemical margins of EUR 150 been prepared on that basis. The members of the board all per tonne and a USD/NOK Net income for the Statoil ASA have broad experience of exchange rate of NOK 8.20. parent company according to Norwegian and international busi- Cash flow provided by operat- NGAAP was NOK 16.4 billion. ness and society, as well as knowl- 10 STATOIL 2002

  • Page 15

    Business Statoil, safety The environment HSE accounting Operating and Accounts Statoil operations and society financial review group – USGAAP edge of the industry. None of the The board’s overriding objective In the Manufacturing & directors have any business rela- is to maximise the value of the Marketing business area Statoil tions with Statoil. Statoil’s corpo- group’s oil and gas resources. On will exploit the opportunities for rate executive committee is not the NCS, Statoil is operator for integration with the upstream represented on the board. The nearly 60 per cent of overall pro- business to increase value creation. directors are elected for two years duction. The group is responsible This applies to Mongstad as well at a time. The board’s responsibili- for major, demanding develop- as Tjeldbergodden. Statoil’s strong ties are based on the requirements ment projects such as the Kristin brand will be used to strengthen laid down in legislation and the field in the Norwegian Sea, and the group’s leading position in the company’s articles of association. the Snøhvit field in the Barents Scandinavian markets and in mar- Statoil puts great emphasis on Sea. These are projects which will kets outside Scandinavia. good corporate governance. On contribute to the group’s long- Acquiring Shell’s petrol stations in the owner side this is exercised term growth. The board will keep a the three Baltic states in 2002 has through the company’s adminis- very close eye on these projects. improved Statoil’s market position. tration, board of directors, corpo- The restructuring of the Tampen A strong focus will be maintained rate assembly and annual general area in the North Sea, with a view on enhancing the efficiency of all meeting. to increased value creation, is one parts of the downstream business. As a listed company in New of Statoil’s most highly prioritised The board is committed to York, Statoil must comply with the assignments. A decision on the developing further Statoil’s organi- Sarbanes-Oxley Act which was further development of the sation and expertise, so that the passed in the USA in 2002. In the Tampen area will be taken in 2004. group will be able to meet the main, the division of responsibili- The board found last year’s challenges on the NCS and in the ties between the administration international upstream activities increasing international activities. and the board in the Sarbanes- encouraging. The operatorship The board’s fundamental objec- Oxley Act accords with the Act gained in Iran was particularly tive is to secure for the sharehold- relating to Public Limited Comp- important. Increased international- ers the best possible value creation anies in Norway. The management isation of the upstream business is and return on their investment in systems required by the new Act in crucial to the group’s ability to the group. A strong focus will the USA are in effect already expand in the longer term. therefore be put on efforts to established practice in Statoil. Substantial finds are under devel- increase efficiency and to maintain opment in Angola and the Caspian strict capital discipline. Further developments for the Sea. The group is also working to Statoil’s profitability and group develop new business opportuni- growth targets are based on At the start of 2003, Statoil’s finan- ties in its existing core areas and in assumptions for organic growth. cial and operational position is Russia, Brazil, Mexico, northern The group’s existing portfolio strong. The group’s cost structure Africa and the Middle East. makes it possible to realise the has been improved. The board will Access to new exploration goals for 2004 and form the basis give priority to achieving the goals acreage on the NCS and interna- for continued growth after 2004. for 2004 which were communicat- tionally is seen by the board to be The board will continuously assess ed in connection with the flotation crucial to the group’s long-term the group’s development through in 2001: development. Exploration efforts measures of a non-organic charac- • 12 per cent return on capital will be intensified. ter. Statoil’s financial position employed with normalised pri- Last year, Statoil further makes it possible to implement ces, margins and exchange rates strengthened its position as a lead- such measures if they are in line • increase in oil and gas output to ing player in the European gas with the group’s main strategic 1 120 000 boe per day in 2004. market. The contracts signed with direction and contribute to long- The board has sanctioned projects British buyers show Statoil to be term value creation for the share- which will help the group to reach competitive in the UK market. The holders. its objectives for production board sees big opportunities for growth in 2004. Access to new continued development in this Stavanger, 17 February 2003 projects will enable a production market and will prioritise efforts to The board of directors growth of roughly four per cent establish new transport solutions of Statoil ASA per year, also beyond 2004. to the UK. STATOIL 2002 11

  • Page 16

    Contents The chief executive Directors’ report Corporate governance Shareholder Profile, targets information and strategies Group profile • Statoil is an integrated oil and needs of the present without - production operator for the gas company with a strong compromising the opportunities world’s largest offshore focus on exploration and pro- for future generations. pipeline system duction. Represented in 25 • The leading operator on the - production operator for countries with 17 115 employ- Norwegian continental shelf Europe’s largest gas treat- ees. Head office is in Stavanger. and one of the world’s largest ment plant, other land facili- offshore oil operators. ties and gas receiving sta- • Participant in a number of inter- tions in continental Europe national oil and gas finds and in - operator for Europe’s largest rising production from fields in methanol plant Azerbaijan, Angola and - 50 per cent interest in the Venezuela. Borealis petrochemicals • The largest supplier of natural group. gas in Norway – including sales • Technology work with emphasis on behalf of the Norwegian on focused research and close state – to a growing European collaboration with supplier market. companies. Statoil is a leading • One of the world’s largest net company in: sellers of crude, including sales - using seismics to improve oil on behalf of the Norwegian recovery state. Extensive sales of oil - subsea solutions products and natural gas liq- - floating production under Statoil has three production • The group’s objective is to run uids. harsh weather conditions ships in operation on the its business with zero harm to • Has 1 883 service stations in - design, operation and main- NCS and one in the South China Sea. Pictured here is people or the environment and nine countries. tenance of large pipelines Åsgard A, one of the world’s zero accidents or losses. • Considerable industrial opera- - storage of carbon dioxide largest vessels of its kind. • Statoil supports sustainable tions: (CO2) in the sub-surface. development which meets the - operates two oil refineries Targets When Statoil was floated on the • Output of 1 260 000 barrels of • Production costs will be lower stock exchange in 2001, the com- oil equivalent in 2007, with than USD 2.80 per barrel. pany presented goals for its opera- 260 000 barrels expected from • Access to new reserves will tions and return on equity. international operations. exceed those in production. • Twelve per cent return on capi- • Improvement programme • Debt will be no higher than 40- tal employed in 2004 with a which will contribute NOK 3.5 45 per cent in relation to capital normalised oil price of USD 16 billion to income before finan- employed. per barrel. cial items in 2004. • Output of 1 120 000 barrels of • Finding and development costs oil equivalent in 2004. will be below USD 6 per barrel for the period 2002-2004. 12 STATOIL 2002

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    Business Statoil, safety The environment HSE accounting Operating and Accounts Statoil operations and society financial review group – USGAAP Norway Sweden Denmark Estonia Russia UK Latvia Ireland Lithuania Belgium Poland France Germany USA Azerbaijan Turkey Iran Saudi Arabia China Mexico Nigeria Singapore Venezuela Angola Brazil www.statoil.com/statoils_world Strategies The business Technology and the environment The organisation and • Create greater value for Statoil’s • Develop further the group’s the community shareholders. expertise in reservoir manage- • Develop further Statoil’s organi- • Develop further the group’s ment, subsea production and sation based on uniform leader- strong position as leading player floating production. ship and common values as for- on the NCS. • Develop technological solutions mulated in the We in Statoil • Build a strong position as oil along the gas chain. values document. Important and gas producer international- • Continue to develop and adopt focus areas are recruitment, ly. technology for capturing, utilis- appointing and developing • Strengthen and develop the ing and storing carbon dioxide. managers, restructuring and group’s position as producer • Develop and apply energy-effi- effective expertise development. and marketer of natural gas in cient technology which reduces • Realise ambitions for growth Europe and in new markets. greenhouse gas emissions. through proactive and whole- • Maintain the position as a lead- • Build a stronger culture within some business operations based ing global oil seller and health, safety and the environ- on sustainability, ethics and strengthen the group’s core ment (HSE). social responsibility. positions in manufacturing and marketing. STATOIL 2002 13

  • Page 18

    Contents The chief executive Directors’ report Corporate governance Shareholder Profile, targets information and strategies Organisation At the end of 2002, Exploration & Production Natural Gas Employees: 7 130, of whom Statoil had 17 115 Norway Statoil is a leading player in 5 526 work outside Norway. employees. This is an The business area is responsible Europe with customers in 11 increase of 429 com- for Statoil’s operations on the countries. In addition to Statoil’s Technology pared with a year earli- Norwegian continental shelf equity gas, the business area mar- Technology is responsible for er. A total of 5 901 of (NCS). Statoil accounted for 58 per kets the Norwegian state’s gas. It developing and maintaining Statoil’s employees cent of total Norwegian oil and is also responsible for two-thirds Statoil’s expertise in key technolo- work outside Norway. gas output in 2002. The company of Norway’s gas exports. Statoil gy areas. It assists in providing is operator for 20 oil and gas fields, has large interests in, and opera- cost-effective technical solutions comprising 18 platforms and pro- tional responsibility for, Nor- and is responsible for commerciali- duction ships with crew, four wegian gas export trunkline sys- sation of technology and industrial unstaffed installations and 17 tems and treatment plants and ter- rights. Its responsibilities cover remotely controlled subsea facili- minals on land. Employees: 937, of research and development, explo- ties. Employees: 5 774, of whom whom 132 work outside Norway. ration and reservoir technology, 3 021 work offshore. drilling and well services, environ- Manufacturing & Marketing mental and safety technology, con- International Exploration & The business area is responsible cept development and project Production for refining and selling Statoil’s management. Employees: 949. INT is responsible for Statoil’s and the Norwegian state’s crude overall exploration activities out- oil. Statoil is one of the world’s Corporate services and side the core areas of the NCS, and largest sellers of crude with an corporate centre for the development and produc- average volume of 2.2 million bar- Corporate services covers finance, tion of oil and gas internationally. rels per day. It also sells rich gas, accounting, legal services, human In 2002 the business area delivered refined oil products and natural resources and office support as well eight per cent of Statoil’s equity gas in the Nordic countries. It has as education, information technolo- production of oil and gas. Statoil 1 883 service stations in nine gy, health, safety and the environ- Statoil ranks as one of the has important positions in the countries, operates two refineries, ment and communication. world’s largest offshore oil and gas operators. At 31 Caspian region, western Africa, has interests in a third and oper- Employees: 1 465. The corporate December 2002, 3 021 of its Venezuela and western Europe. ates Europe’s largest methanol centre comprises advisory staff employees worked on fixed and floating installations off Employees: 598, of whom 243 work plant. It has a 50 per cent share in functions for the corporate execu- Norway. outside Norway. the Borealis petrochemicals group. tive committee. Employees: 262. 14 STATOIL 2002

  • Page 19

    Business Statoil, safety The environment HSE accounting Operating and Accounts Statoil operations and society financial review group – USGAAP Corporate executive committee Olav Fjell (51), President and CEO Henrik Carlsen (56), Richard John Hubbard (52), Peter Mellbye (53), Erling Øverland (50), Executive vice president, Executive vice president, Executive vice president, Executive vice president, Exploration & Production Norway International Exploration Natural Gas Manufacturing & Marketing & Production Terje Overvik (51), Inge K Hansen (56) Elisabeth Berge (48), Executive vice president, Chief financial officer Executive vice president, Technology and executive vice president, Corporate Communication Corporate Centre and Services Staff functions and corporate services Health, safety and the environment: Stig Bergseth, senior vice president Corporate control, planning and accounting: Eldar Sætre, senior vice president Group finance: Jon A Jacobsen, senior vice president Human resources: Kjølv E Egeland, senior vice president Legal affairs: Jacob S Middelthon, senior vice president Information and communication technology: Ole A Jørgensen, senior vice president Corporate services: Randi Grung Olsen, senior vice president Corporate audit: Svein Andersen, senior vice president Public affairs: Wenche Skorge, vice president Investor relations: Mari Thjømøe, vice president Promotion and media: Hans Aasmund Frisak, vice president Country analysis and social responsibility: Geir Westgaard, vice president STATOIL 2002 15

  • Page 20

    Contents The chief executive Directors’ report Profile, targets Shareholder and strategies Corporate governance information Operative David Finda is one of 160 crew on the Girassol pro- duction ship, which ranks as the world’s largest. Operated by TotalFinaElf, the Girassol field lies in 1 350 metres of water off Angola and came on stream in December 2001. It now pro- duces almost 200 000 barrels of oil per day, with Statoil’s share totalling about 25 000 daily barrels. 16 STATOIL 2002

  • Page 21

    Business Statoil, safety The environment HSE accounting Operating and Accounts Statoil operations and society financial review group – USGAAP Corporate governance Statoil’s fundamental objective is (AGM) is the company’s highest corporate assembly elects six to create value for its owners body. It is held once a year, before members of the board, which in through profitable operations the end of June. The AGM elects addition comprises three direc- and commercial development. It members of the corporate assem- tors elected among the employ- is a major requirement that the bly for a period of two years. The ees. Directors are elected for two group’s resources are used effec- corporate assembly has eight years at a time and the board’s tively to achieve greater prof- shareholder-elected and four chair receives an annual remu- itability, economic strength and employee-elected members. It neration currently stipulated to financial flexibility. monitors the board’s work, be NOK 300 000. Annual remu- approves the group’s accounts neration for the directors is NOK Statoil works to maintain a lead- and deals with cases of major sig- 165 000. ing position among oil and gas nificance. The corporate assembly companies when it comes to appoints two members to the Chief executive and corporate combining good financial results election committee and elects executive committee with a responsibility for the envi- representatives to the board. The chief executive’s corporate ronment and the community. executive committee comprises the Statoil puts great emphasis on The board chief executive and seven executive exercising good corporate gover- The board takes decisions on vice presidents, each with respon- nance and treating its sharehold- Statoil’s plans and budgets and sibility for their own business area ers equally. This requires clear handles cases of major strategic or corporate staff function. management principles and busi- or economic significance for the In 2002, the chief executive ness targets as well as good fol- business. The board is responsible received a salary and other remu- low-up and control. The group’s for the accounts and presents a neration of NOK 3 770 000. The governing bodies comprise the proposal for allocation of net board has devised an incentive board of directors, the corporate income to the AGM. The board scheme for the chief executive, assembly and the annual general appoints the chief executive and with a bonus which has a ceiling meeting. While working to safe- establishes formal powers of of 30 per cent of basic salary. The guard the owners’ interests, the attorney between the board and size of the bonus paid depends board is also accountable to the the chief executive. on the goals achieved by the employees, authorities, partners, Each quarter, the chief execu- group, in relation to the commer- suppliers, customers and lenders, tive presents to the board the cial targets determined jointly by in addition to the general public accounts, progress report in rela- the board and the chief executive. and non-governmental organisa- tion to Statoil’s plans and budg- tions (NGOs). The governing ets, including investments, cash Performance pay principles established will ensure flows, financial position, project Statoil’s 360 top managers are good management and control of progress and risk issues. Once a included in a reward system of the business. In 2002, Statoil’s year, the chief executive informs individual performance contracts governing system for overall the board about internal control which allow for a bonus of up to management and control was in the group. 20 per cent of basic salary. The certified to the international ISO The directors are independent purpose of this is to strengthen 9001 standard. of, and have no business rela- Statoil’s long-term competitive tionships with, Statoil. The corpo- position through increased focus Annual general meeting rate executive committee is not on the requirements and expecta- The annual general meeting represented on the board. The tions to results demanded of STATOIL 2002 17

  • Page 22

    Contents The chief executive Directors’ report Profile, targets and strategies Corporate governance Shareholder information Statoil’s managers. The perform- The group’s investor relations in the next report which is sched- ance contracts contain the most function reports to the corporate uled for publication in June 2003. important corporate goals, with executive committee and handles special emphasis on sub-targets the group’s dialogue with the capi- Health, safety and which the individual managers tal market. Investor relations is also the environment are responsible for delivering. responsible for distributing and A high standard within health, Importance is attached to ensur- registering information to comply safety and the environment is a ing consistency and connections with the guidelines applicable prerequisite for creating good between the targets throughout where Statoil’s securities are listed. financial results over time. the organisation. On the basis of News and relevant company infor- Statoil’s efforts denote a desire to the performance contract agreed mation is published on Statoil’s contribute to sustainable devel- between the chief executive and internet sites. A separate investor opment. That means that impact the board, the chief executive relations site provides new and his- assessments for health, safety and establishes contracts with the toric financial information, as well the environment are integrated in executive vice presidents of the as presentations made by the business strategy, risk manage- business areas. Further down the group’s top management. ment and project management. organisation, contracts are formed so that the targets for the Values and attitudes Risk management members of a management team Statoil works purposefully to and internal control evolve from and underpin the develop a strong, uniform corpo- Statoil operates mainly in the manager’s targets. rate culture with a clear value global crude oil market and mar- Statoil has established a bonus basis. Honesty, integrity and com- kets for refined products and nat- system which applies to all pliancy underpin the group’s ural gas, as well as the financial employees of the parent compa- operations. Statoil’s value basis is markets. The company is thus ny. This involves an annual bonus expressed in the group’s govern- exposed to changes in feedstock of up to five per cent, depending ing documents, with the most and product prices, exchange rates on whether the company reaches fundamental guidelines sum- and interest rate fluctuations. its financial targets. marised in We in Statoil. That doc- These variables all affect earnings, ument describes the direction and operating costs, investments and Information and level of ambition for Statoil’s financing. Statoil has an extensive equal treatment development and states the prin- system for risk management Statoil puts emphasis on keeping ciples and values which underpin which identifies, quantifies and the stock market well informed management, the development of handles different risk categories. about developments in the group’s corporate culture and work The company has established a results and future prospects. At processes. Ethics in Statoil specifies committee with responsibility for any given time the stock market requirements and provides guide- risk management throughout the must have correct and equal infor- lines for the business activities. group. This committee is headed mation about Statoil, to provide by the chief financial officer. the basis for a correct valuation of Social responsibility Statoil’s internal audit function the group. Statoil distributes all Statoil’s main objective is to cre- is the group’s independent con- information relevant to the share ate value for its owners. The result trolling body which monitors the price to the Oslo Stock Exchange, is best when good financial business to ensure that it is sub- the New York Stock Exchange and results are combined with respon- ject to adequate management and the Securities and Exchange sibility to the environment and control. It reports directly to the Commission. Such information is society. Statoil is increasingly chief executive or, when appro- distributed without delay and being asked to account for and priate, directly to the board. simultaneously to the capital mar- demonstrate how it makes a posi- The company’s external auditor ket and the media. Trading of the tive contribution to society and is appointed by the AGM and the Statoil share increased on average what it creates locally. Much auditor carries out no other assign- in 2002. The investors perceive this attention was devoted to this ments for the company which as positive and it leads to a more topic in the group’s first sustain- could lead to conflicts of integrity. effective valuation and pricing of ability report, published in 2002. It the company. will be discussed in greater detail 18 STATOIL 2002

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    Business Statoil, safety The environment HSE accounting Operating and Accounts Statoil operations and society financial review group – USGAAP Shares and shareholder matters Statoil’s fundamental objective is, These may be freely traded and December. The OSE’s all-share through profitability, growth and have equal voting rights. Statoil index fell by 31.4 per cent. Total continuing development, to create has about 62 000 shareholders and shareholder return, including divi- value for its shareholders, employ- about 60 per cent of its employees dend and measured in NOK, was www.statoil.com/ir ees and society. It aims to give own shares. The Norwegian state marginally negative at minus 0.2 shareholders a competitive return owns 81.7 per cent of the share per cent in 2002. Measured in on their share capital, so that own- capital and the other shareholders USD, in relation to the Stoxx ener- ing shares in Statoil becomes an are spread throughout the world. gy index, the Statoil share price attractive option. Returns will be The international shareholders’ shows a return of 28 per cent, realised by the sum of rising share portion has increased from roughly while the energy index showed a price and dividends. Statoil’s objec- 76 per cent at the end of 2001 to return of minus three per cent. tive is to pay out 45-50 per cent of 81 per cent in 2002. In 2002, a total Main shareholders its result to the shareholders, of 1 558 026 bonus shares were 1 81.72% THE NORWEGIAN STATE measured as an average over sev- distributed to small private share- 2 2.68% STATE STREET BANK & TRUST CO.* eral years, and taking account of holders who had retained their 3 1.65% JPMORGAN CHASE BANK* the industry’s business cycles. A shares for one year following the 4 0.77% BOSTON SAFE DEP & TRUST (USA NOM)* dividend of NOK 2.85 per share flotation of 18 June 2001. 5 0.69% FIDELITY FUNDS-EUROP. GROWTH/SICAV 6 0.68% JPMORGAN CHASE BANK was paid out for 2001. The pro- 7 0.50% BANK OF NEW YORK* posed dividend for 2002 is NOK Good liquidity 8 0.38% THE NORTHERN TRUST CO.* 2.90. This gives shareholders a div- Statoil is the largest company on 9 0.37% FOLKETRYGDFONDET idend yield of 5.3 per cent, given a the OSE measured in market 10 0.37% THE NORTHERN TRUST CO.* share price of NOK 55 per share. value. In 2002, 730 million Statoil 11 0.36% CLEARSTREAM BANKING S.A.* shares, with a total value of NOK 12 0.30% EUROCLEAR BANK S.A./N.V. (‘BA’)* 62 000 shareholders 45.4 billion, were traded on the 13 0.26% THE NORTHERN TRUST CO.* 14 0.25% VITAL FORSIKRING ASA Statoil is quoted by the ticker sym- OSE. The average daily turnover 15 0.25% DEUTSCHE BANK AG (GCS) LONDON bol STL on the Oslo Stock was 2.9 million shares, or NOK 16 0.24% DEUTSCHE BANK TRUST CO AMERICAS* Exchange (OSE). On the New York 182 million. Trading of ADRs on 17 0.18% GJENSIDIGE NOR SPAREFORSIKRING Stock Exchange (NYSE), American the NYSE in 2002 came to USD 18 0.17% BSDT - ABN AMRO GLOBAL CUSTODY N.V* depository receipts (ADRs) are 106 million. The share price fell by 19 0.17% INVESTORS BANK + TRUST (WEST) TREA* traded under the ticker symbol 4.9 per cent, from NOK 61.50 at 1 20 0.16% DEUTSCHE BANK AG* STO. There is one class of shares. January to NOK 58.50 at 31 * Client accounts or similar SHAREHOLDERS BY GEOGRAPHICAL AREA 75 Excluding the Norwegian state’s interest of 81.7% 70 3.0% 19.4% 65 60 35.3% 55 21.4% Statoil’s share price 50 Share price performance for European oil companies*) 12.5% 8.4% 45 40 Norway UK Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec USA Rest of Europe *) Stoxx Energy Index , rebased for Statoil’s share price, measured in NOK. Benelux Rest of world STATOIL 2002 19

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    Contents The chief executive Directors’ report Profile, targets Corporate governance Shareholder and strategies information Platform life offers more than gales and surging waves. The Sleipner fields can bask at times in summer sunshine and glittering sea. Process technician Cecilie Oksum Ralle has taken a break from work to devote some time to quiet reflection. Output from the Sleipner area increased sharply in 2002, making a significant contribution to a pro- duction growth of more than four per cent on the NCS. 20 STATOIL 2002

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    HSE accounting Operating and Accounts Statoil Business Statoil, safety The environment financial review group – USGAAP operations and society Contents: Statoil through the year 24 Exploration & Production Norway 25 International Exploration & Production 28 Natural Gas 31 Technology: The future starts on Snøhvit 33 Manufacturing & Marketing 34 Theme : On the offensive in new and established gas markets 36 Statoil, safety and society 39 Theme: Angola 42 The environment 45 Theme: Demanding trade – strict controls 48 STATOIL 2002 21

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    Contents The chief executive Directors’ report Profile, targets Corporate governance Shareholder and strategies information Statoil through the year The breadth of Statoil’s activi- ties in 2002 is presented in the three main chapters, Business operations, Statoil, safety and society and The environment. These chapters reflect Statoil’s wish to contribute to sustain- able development by combining sound business operations with a practical responsibility for the environment and society. Statoil’s operations in 2002 are characterised by a high rate of production, good regularity, cost savings and a substantially increased level of activity. Net income for the year is NOK 16.8 Statoil has taken over the Visund operatorship, and the Norsk Hydro logo on the billion. This is NOK 0.4 billion less platform derrick must be replaced. than the 2001 result, which was the best ever for Statoil. All of the was 22 per cent lower in 2002 than Along with increased demand, group’s business areas have made in 2001, while gas volumes sold requirements to cleaner produc- a contribution to the good result. increased by no less than 34 per tion are being tightened. Statoil is The slightly weaker financial cent. Gas activities were firmly on taking this challenge seriously. A result for 2002 is due to the fact the agenda in 2002: construction number of measures which will that the average oil price, meas- of the Snøhvit gas liquefaction contribute to improving the exter- ured in NOK, was nine per cent plant started, a new gas contract nal environment have been imple- lower than the year before, even was signed in the UK and a mented in existing operations and though it was two per cent higher foothold was gained in the US gas incorporated in the planning of measured in USD. The gas price market. new projects. ANNUAL OIL AND GAS PRODUCTION PLANNED PRODUCTION IN 2002 PRODUCTION IN 2007 1 260 1 120 8% 20% 1 074 1 007 966 1 003 1000 boe/day 92% 80% International International 1999 2000 2001 2002 2004 2007 Oil Gas Target NCS NCS 22 STATOIL 2002

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    Statoil, safety The environment HSE accounting Operating and Accounts Statoil Business and society financial review group – USGAAP operations Exploration & Production Norway in connection with Hydro’s acqui- Statoil is the leading producer on the Norwegian continental shelf sition of Saga Petroleum in 1999. (NCS). The fields operated by the group account for 58 per cent of Tampen is an important core Norway’s total oil and gas production. Statoil is operator for 20 oil area for Statoil, but it is also of and gas fields, which comprise 18 platforms and production ships major significance for national oil with crew, four unstaffed installations and 17 remotely-operated and gas production. The area pro- subsea facilities. Operations in the Exploration & Production duces about one million boe per Norway business area are organised in four core areas: day, corresponding to a quarter of Troll/Sleipner, Tampen, Halten/Nordland and the Tromsø Patch. total Norwegian output. The pro- duction picture is however com- Key figures (NOK million) 2002 2001 plex. Some fields are under devel- Total revenues 56,290 65,655 opment, while output on others is Income before financial items 31,463 40,697 declining. Statoil has initiated Gross investments 11,023 10,759 extensive efforts to find solutions which will result in the longest www.statoil.com/ Statoil’s output on the NCS set a these work on the Snorre A and B fields_ncs possible production on Tampen. A new record in 2002, averaging and Visund platforms. Vigdis and separate project, Tampen 2020, has 989 000 boe per day. This is an Tordis are subsea installations. been launched with the aim of increase of 5.2 per cent from boosting value creation and 2001. The positive development Statoil becomes sole operator in production is due to high regu- The handover means that Statoil Stena Don proved more oil larity at the facilities and high is now the sole operator in the and gas with an appraisal well in the Tyrihans South field in sales of natural gas to Statoil’s Tampen area. Tampen comprises the Norwegian Sea. A total of customers in Europe. the main Statfjord, Gullfaks, 20 exploration wells were At the beginning of 2003 Snorre and Visund fields, which completed on the NCS in 2002, including 13 operated Statoil took over operatorship for have a total of nine staffed plat- by Statoil. Five were drilled as the Snorre, Visund, Tordis and forms, and several subsea devel- extensions to producing wells. Fourteen discoveries were Vigdis fields from Norsk Hydro. opments tied back to the main made, with an overall volume The handover brought Statoil 550 fields. The transfer of operatorship found in the order of 130 mil- new employees. About 250 of from Hydro to Statoil was agreed lion barrels of oil equivalent. 940 989 Operating developments 2002 2001 319 249 Oil and gas production 2002 2001 Reserve replacement ratio (1) 0.6 0.8 691 670 Oil (thousand boe per day) 670 691 Finding and development costs (USD/boe) (2) 5.9 9.4 Natural gas (thousand boe per day) 319 249 Production cost (USD/boe) (3) 3.0 2.8 Total production (thousand boe per day) 989 940 (1) Additions to proven reserves including acquisitions and disposals, divided by 2001 2002 volumes produced. 3-year average. (2) Total exploration activities, investments in field installations. 3-year average. Oil Gas (3) Production costs for fields and transport systems. STATOIL 2002 23

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    Contents The chief executive Directors’ report Profile, targets Corporate governance Shareholder and strategies information extending the producing life of the Output is now down to hull, worth NOK 475 billion, went area. The challenges on Tampen 125 000 barrels per day. The con- to Samsung Heavy Industries Co concern unitisation and efficiency tinued operation of Statfjord is in South Korea. Aker Stord was improvements, environmental now being studied in a separate awarded the contract to build the challenges linked to high water project known as Statfjord late deck, process facilities and utili- production and, not least, prof- phase. Its aim is to extend the life- ties, at a value of NOK 5 billion. A itability for fields in a late pro- time of Statfjord by recovering the letter of intent was also concluded duction phase. Statfjord is a good huge reserves of gas still present in with Kværner Oilfield Products to illustration of these challenges. the field, as well as some oil which build subsea production equip- is difficult to access. The solution ment for the field. This agreement Statfjord late phase for Statfjord late phase is due to be is worth NOK 1 billion. At its peak the Statfjord field pro- presented later in 2003, with a duced 850 000 barrels of crude per decision expected in early 2004. Kvitebjørn on schedule day, which represents four times Located near the Tampen area, the Norwegian consumption. Big opportunities the Kvitebjørn gas and conden- The opportunities in the Tampen sate field will come on stream in Statoil’s oil and gas production – Norwegian continental shelf area are still great. Forty per cent 2004. In the course of the year (1 000 barrels of oil equivalent/day) of oil and 15 per cent of gas contracts were placed for the Statoil’s reserves has so far been produced. installation of pipelines and the Field 2002 share As operator for Statfjord and hook-up and testing of the plat- Statfjord 98.1 44.34% Gullfaks, Statoil has achieved form systems. Statfjord East 9.8 25.05% considerable results through The lower part of the platform Statfjord North 9.5 21.88% increased oil recovery. Output jacket was installed on the field in Gullfaks 159.1 61.00% represents 1.5 billion barrels of September. The water depth is Troll Gas 100.9 20.81% crude more than originally pre- some 190 metres, and the steel Heidrun 24.2 12.43% dicted, at a sales value of almost jacket has been constructed in two Norne 48.7 25.00% NOK 250 billion. Oil production parts which will be hooked up on Sleipner West 119.3 49.50% from Statfjord has passed a recov- the field in March 2003. The top- Sleipner East 34.8 49.60% ery rate of 60 per cent, and efforts sides, weighing 10 000 tonnes, Åsgard 84.8 25.00% are now being made to push this rolled out of the fabrication shop at Veslefrikk 5.5 18.00% factor to over 68 per cent. the ABB Offshore Systems yard in Sygna 7.7 24.73% Haugesund just before Christmas. Gungne 16.3 52.60% Kristin contracts Glitne 21.9 58.90% In connection with the develop- Snøhvit contracts Huldra 12.4 19.66% ment of the Kristin gas field on The development of the Snøhvit Total Statoil operated 753.2 the Halten Bank, which is now project was approved in March Partner operated 235.7 under development, several large 2002. Snøhvit will be the first Underlifting -3.2 contracts were awarded in 2002. export facility for liquefied natural Total production 985.6 The contract to build the steel gas (LNG) in Norway, and Shuttle tanker Polytraveller lifted the first cargo from Statfjord on 9 December 1979, and thereby secured a lasting place in Statoil’s his- tory. On 3 December 2002, it delivered its last shipment to the crude oil ter- minal at Mongstad. After 23 years of service, primarily with crude cargoes from Statfjord and Gullfaks, the ship had reached retirement age. 24 STATOIL 2002

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    Statoil, safety The environment HSE accounting Operating and Accounts Statoil Business and society financial review group – USGAAP operations Europe. Several large contracts mainly due to a 30 per cent Hammerfest, stopping work for were placed in 2002. Germany’s increase in the capacity of the gas two weeks. Opposition to increas- Linde industrial group was liquefaction plant. The conse- ing national carbon dioxide emis- awarded a contract worth NOK quences of such an expansion, sions, and to opening the Barents 1.6 billion for engineering, pur- which led to a considerable rise in Sea up for further exploration chasing and construction man- weight, were underestimated. In activity and development, were agement for the gas liquefaction addition, the start of construction the reasons behind this campaign. plant. Belgium’s Tractebel Industry work in the spring of 2002 was On the Snøhvit field all the car- Engineering will supply product delayed for three months because bon dioxide from the reservoirs tanks and vessel loading systems, the environmental organisation will be reinjected, but there will at a value of NOK 2.3 billion. The Bellona complained to the Efta be emissions to the air from the contract for blasting and levelling Surveillance Authority (ESA) cooling process at the gas lique- work at the site of the land plant about the project’s tax position. faction plant. This will amount to on Melkøya outside Hammerfest Bellona thought that the tax 900 000 tonnes annually. was awarded to the AFS-Pihl regime for the project contravened Group. Dragados Offshore in the EEA’s rules on state support. A good environmental project Spain will build and install the The case was clarified between the In other respects, Snøhvit is a processing facilities. The value of Norwegian authorities and ESA, good environmental project. None www.statoil.com/ this contract is NOK 1.5 billion. but the delay contributed to a rise of its installations will interfere snohvit in costs for the project. with fishing as the subsea facilities Increased costs can be overtrawled. The field will There has been a NOK 5.8 billion Environmental opposition be produced in closed systems increase in the investment budget When work at the plant started with no emissions. A biological for the Snøhvit project, from NOK up, demonstrations against the treatment plant on land will deal 39.5 to 45.3 billion. This was development were held in with harmful emissions. Statoil is involved in 14 development projects on the NCS, with a total investment budget of NOK 100 billion. The development period will last until 2006. The most important projects can be found below. Projects under development Statoil’s Statoil’s Production Plateau production Liftetime Field share investment* start Statoil’s share ** (years) Snøhvit 22.29% 10.1 2006 27 000 30 Kristin 46.60% 7.9 2005 110 000 12 Mikkel 41.62% 0.9 2003 22 000 17 Kvitebjørn 50.00% 5.0 2004 105 000 17 Sigyn 50.00% 1.0 2002 23 000 9 Fram Vest 20.00% 0.9 2003 12 000 18 *Estimated in NOK bn **Boe/day Blasting and levelling the site for the gas liquefaction plant at Melkøya in north- Sleipner satellite Sigyn came on ern Norway is well under way. The workforce had reached 250 people in early stream in December 2002, three 2003, and will rise to 1 200 when activity peaks in 2004-05. months ahead of schedule. This field contains both gas and light oils, which are processed on Sleipner A. STATOIL 2002 25

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    Contents The chief executive Directors’ report Profile, targets Corporate governance Shareholder and strategies information International Exploration & Production Girassol in Venezuela and The International Exploration & Production (INT) business area is Sincor in Venezuela are the main responsible for all of Statoil’s exploration activities outside the contributors to Statoil’s production Norwegian continental shelf, as well as development and produc- outside the NCS. tion of oil and gas internationally. INT is also responsible for the Production in Sincor is based group’s sales of natural gas outside Europe. Statoil has substantial on producing large volumes of positions in the Caspian region, western Africa, western Europe heavy crude and upgrading it to a and Venezuela. synthetic sulphur-free crude. Sincor started normal production Key figures (NOK million) 2002 2001 in March 2002, when the upgrad- Total revenues 6,769 7,693 ing facility was ready. Statoil has a Income before financial items 1,086 1,291 number of employees with key Gross investments 5,995 5,027 positions in the project. Production ran smoothly, until it was shut 2002 was a new successful year for Girassol – quickly to plateau down for 10 weeks between Statoil’s exploration and produc- Average international oil and gas December 2002 and February tion activities outside the production totalled 86 000 boe per 2003, due to political unrest and Norwegian continental shelf day. This is an increase of 28 per strikes in Venezuela’s oil industry. (NCS). The increase in production cent from 2001, and 5 000 barrels While Sincor may be charac- was greater than anticipated and more than was planned at the terised as a success, production the group made a breakthrough in beginning of 2002. from the LL 652 oil field in Lake Iran when it was awarded an The Girassol field, off the coast Maracaibo has been disappointing. operatorship in South Pars, the of Angola, contributes strongly to Output is low and expectations of world’s largest gas field. In the growth in production. The field recovering more oil from the 35- February 2003, the group was also came on stream in December 2001 year-old field, with new wells and awarded an operatorship off and reached plateau output of production equipment, have not Venezuela. The decisions to devel- 200 000 barrels of crude per day been met. Statoil wrote down the op fields in Angola and Azerbaijan five months before target, in field’s value by NOK 2 billion in will make a major contribution to February 2002. Statoil has a 13 per 2001, and is now writing it down future production growth. cent interest in the field. by a further NOK 0.8 billion. 86 Operating developments 2002 2001 6 80 67 Oil and gas production 2002 2001 Reserve replacement ratio (1) 2.8 2.5 7 60 Oil (thousand boe per day) 80 60 Finding and development costs (USD/boe) (2) 6.9 8.6 Natural gas (thousand boe per day) 6 7 Production cost (USD/boe) (3) 3.3 5.2 Total production (thousand boe per day) 86 67 (1) Additions to proven reserves including acquisitions and disposals, divided by 2001 2002 volumes produced. 3-year average. Oil Gas (2) Total exploration activities, investments in field installations. 3-year average. (3) Production costs for fields and transport systems. 26 STATOIL 2002

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    Statoil, safety The environment HSE accounting Operating and Accounts Statoil Business and society financial review group – USGAAP operations Developments in Angola (ACG) oil field have sanctioned October when the group entered In 2002, three new developments the second development phase of into an agreement with the Iranian in Angola were approved and these this large field. When phase II is company Petropars, to become will provide increased production completed, Statoil’s share of pro- operator for phases six, seven and in three-four years’ time. The duction from the field will reach eight in the development of the Kizomba B, Xikomba and Jasmim almost 60 000 barrels per day. gigantic gas and condensate field, fields will together give Statoil Plans were also approved to South Pars. Statoil will build three 45 000 barrels per day. Along with build a pipeline to carry ACG oil production platforms and three output from Girassol and Kizomba from Baku in Azerbaijan, through pipelines from the field to a treat- A, which was sanctioned in 2001, Georgia, to the port of Ceyhan on ment plant on land. The group will this will bring Statoil’s total pro- the Turkish Mediterranean coast. invest NOK 2.2 billion in South duction from Angola up to roughly This is a gigantic pipeline project Pars, and investments and return 80 000 barrels per day from 2006. in which Statoil will invest about will be covered by sales revenues With Dalia, which is planned for NOK 2 billion. Construction will from liquefied petroleum gases sanction in 2003, output will start in the spring of 2003 and the and condensate. The development exceed 100 000 barrels. line will be ready in 2005. is due to be completed in 2004. Statoil is also assessing other Pipeline from Baku Operatorship in Iran opportunities for participation in In Azerbaijan, Statoil and its part- An important goal in Statoil’s the development of Iran’s oil and ners in the Azeri-Chirag-Gunashli internationalisation was reached in gas reserves. Statoil in the South China Sea Statoil’s oil and gas production – International For more than five years, Statoil has been operator for oil production (1 000 barrels of oil equivalent/day) on the Lufeng field in the South China Sea. Production regularity has Field 2002 Statoil’s been nearly 99 per cent. At the end of 2002 the Munin production share ship had produced just over 30 million barrels of oil with a sales value Girassol 23.2 13.33% of USD 532 million. The field is now producing 7 000 barrels per day. Azeri-Chirag-Gunashli 9.5 8.56% Lufeng was brought on stream on 27 December 1997. It is a Sincor 14.1 15.00% small field and the initial plan was to LL 652 2.0 27.00% produce for three years. This time frame Siri (sold in 2002) 6.6 40.00% has been extended twice, first until 2002 Lufeng 4.6 75.00% and then until 2004. Statoil has a 75 per Alba 11.3 17.00% cent interest in Lufeng, while the China Dunlin 4.5 28.76% National Offshore Oil Company holds 25 Merlin 0.3 2.35% per cent. In addition to responsibility for Schiehallion 5.9 5.88% day-to-day operation, Statoil is responsi- Total oil 81.8 ble for training Chinese personnel. Jupiter (gas) 5.6 30.00% Total 87.4 Black Sea GEORGIA Tblisi Baku ARMENIA AZERBAIJAN Baku TURKEY Caspian Sea IRAN Ceyhan IRAQ 100km SYRIA Mediterranean Sea An 8.7 per cent stake is held by Statoil in a new oil pipeline from the Caspian to Girassol off Angola is the biggest con- Ceyhan on the Mediterranean coast of Turkey. Due to extend 1 760 kilometres, tributor to Statoil’s non-Norwegian this line will make it possible to boost production from Azerbaijan’s Azeri-Chirag- production. Gunashli field. STATOIL 2002 27

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    Contents The chief executive Directors’ report Profile, targets Corporate governance Shareholder and strategies information Exploration operator densate field in the Caspian covers the transport system. In in Venezuela reached a decision. Development 2002 Statoil signed a deal with the Statoil has been awarded opera- of the field and the gas export line US company El Paso to take over torship in an exploration block in was sanctioned by the licensees on the purchase contract for liquefied the Plataforma Deltana area off 27 February 2003. Statoil and tech- natural gas (LNG) from the Venezuela. Covering an area of nical operator BP are the main Snøhvit field. Statoil has also 1 435 square kilometres, the participants in Shah Deniz with a secured the rights to one third of acreage lies in 200-800 metres of 25.5 per cent interest each. the capacity at the LNG terminal water. The licences in Plataforma Investments in the field, a pipeline at Cove Point, Maryland, USA. This Deltana are the first offshore to land, land-based facilities and a means that Statoil will begin sell- awards made by Venezuela. 650-kilometre line – the South ing gas in the US market in 2003. Statoil has also gained interests Caucasus Pipeline – for export in two new exploration licences off through Georgia to the Turkish Corrib delayed PROVEN RESERVES Brazil and is now involved in a border, will amount to USD 3.2 Development of the Corrib gas total of four licences there. billion. A sales contract has been field north-west of Ireland has 4 277 4 267 Systematic efforts are being signed for the supply of 6.6 billion been delayed. Due to start in late 2 314 2 400 made in a number of countries to scm of gas annually to the Turkish 2003/early 2004, production has gain access to exploration acreage market. Sales to Georgia and been postponed for about a year Million boe and operatorships. In 2002, Azerbaijan come in addition, along due to extensive consultation and Statoil participated in a number with sales of condensate. approval processes. Shell is opera- 1 963 1867 of interesting finds, the majority Production is set to start in 2006. tor and Statoil’s 36.5 per cent inter- of them proven in Angola. Statoil will be commercial opera- est will give a production share of tor, with responsibility for gas 3.25 million scm of gas per day. 2001 2002 Gas to Turkey and the USA sales, contract administration and Statoil’s exploration and pro- Oil Gas During 2002 the first stage in the business development for the duction operations on the Danish development of Azerbaijan’s Shah Deniz gas and condensate continental shelf have been sold to gigantic Shah Deniz gas and con- field in the Caspian. The deal also Danish state oil company, Dong. Projects under development RESERVES Statoil’s Statoil’s Production Plateau production Lifetime Field share investment* start Statoil’s share ** (years) 15% Azeri-Chirag-Gunashli phase 1 8.56% 2.3 2005 28 000 15 Azeri-Chirag-Gunashli phase 2 8.56% 3.5 2006 30 000 15 Xikomba 13.33% 0.4 2003/4 9 000 7 Kizomba A 13.33% 3.9 2004 30 000 20 Kizomba B 13.33% 3.7 2005 30 000 20 85% Jasmim 13.33% 0.5 2003/4 6 000 6 Corrib 36.50% 2.3 2005 20 000 15 International South Pars 6, 7 and 8 Max 40% 2.3 2005 20 000 4*** NCS *Estimated in NOK bn **Boe/day ***Pay-back period IRAN Gas LPG treatment terminal plant Statoil achieved a breakthrough in Iran with the award of the offshore The Persian operatorship for phases six-eight of Gulf the South Pars gas development. The group will build three produc- tion platforms and lay three pipelines to a land plant, with pro- duction due to start in late 2004. South Pars 28 STATOIL 2002

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    Statoil, safety The environment HSE accounting Operating and Accounts Statoil Business and society financial review group – USGAAP operations Natural Gas New contract in the UK The Natural Gas business area is responsible for transporting, pro- In June 2002 Statoil signed an cessing and marketing gas from the NCS to Europe. In addition to its agreement with British Gas own gas, Statoil markets the Norwegian state’s directly-owned gas, Trading for the supply of five bil- and thereby accounts for two-thirds of total Norwegian gas exports. lion scm of natural gas per year, over a period of 10 years. British Key figures (NOK million) 2002 2001 Gas Trading is a subsidiary of Total revenues 24,536 23,468 Centrica, which is the UK’s largest Income before financial items 8,918 9,629 supplier to the household market. Gross investments 465 671 Deliveries will start in 2005. Statoil entered into an agree- Statoil has had strong growth in player in the European gas market. ment with BP in 2001 for a total sales of natural gas from the NCS, The group now covers more than supply of 24 billion cubic metres with 19.6 billion cubic metres seven per cent of Europe’s gas con- of gas to the UK market over 15 (scm) of equity gas sold in 2002. sumption through its sales of equity years. The equivalent figure in 2001 was and SDFI gas. European gas con- With a total volume of 74 bil- 14.7 billion scm, representing an sumption was 485 billion scm in lion cubic metres for these two increase of 34 per cent. 2001 and 490 billion scm in 2002. contracts, Statoil asserts its posi- In addition, the group sold The International Energy Agency tion as the largest exporter of gas 23.5 billion scm on behalf of the (IEA) expects an annual growth in to the UK. state’s direct financial interest gas consumption of three per cent (SDFI). The corresponding figure in the period 2000-2010. Acquiring gas storage for 2001 was 18.9 billion scm. The UK, which has previously In 2002 Statoil acquired the devel- been self-sufficient in natural gas, opment rights for an underground Expanding gas market now ranks as an exciting market. gas storage facility to be built at In the course of the last 10 years UK imports are set to increase and Aldbrough, near Hull, on the east gas consumption in Europe has Statoil has good opportunities to coast of England. The new facility risen by as much as 40 per cent. build a strong position. Statoil’s will act as a buffer against possi- During the same period Statoil has market position is described more ble terminal interruptions, and strengthened its position as a major closely on pages 34 and 35. will provide security of supply for A 30 per cent stake is held by Statoil Statoil has a 32 per cent average interest in three large LNG carriers which will ship in the Dublin Bay Power Plant in Snøhvit gas to markets in southern Europe and the USA. Under construction in Ireland. This facility will be able to Japan, these vessels are due for delivery between November 2005 and April 2006. meet 10 per cent of total Irish electric- ity requirements. STATOIL 2002 29

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    Contents The chief executive Directors’ report Profile, targets Corporate governance Shareholder and strategies information Statoil’s gas deliveries to the UK EU withdrew statement of tial new customers, while the market. It will also function as a objections sales contracts are becoming business tool in marketing opera- In July 2002, the European shorter and the volumes smaller. tions. Consisting of three under- Commission decided to withdraw Statoil has therefore opened an ground salt caverns, the facility a statement of objections issued office in Paris to create new busi- will be ready in 2007. against Statoil and other compa- ness opportunities and to follow nies operating on the NCS. The up the markets in France, Italy Gas hub in Germany statement concerned the market- and Spain where Statoil is In a joint venture with Ruhrgas ing of Norwegian gas through the involved. These countries could and BEB, Statoil has established Gas Negotiating Committee also become important markets the North Western European Hub (GFU). It was withdrawn after for the group’s future equity pro- Company. The company will pro- Statoil and the European Union duction of gas outside the NCS. vide hub services for gas transac- reached an amicable settlement. tions in the Emden area, a geo- Statoil has committed itself to New company for gas pipelines graphically central region for gas offering for sale a total of 13 bil- and terminals throughput from the NCS to the lion cubic metres of gas to new As of 1 January 2003, the owner- German and Dutch pipeline net- customers between 1 June 2001 ship interests in the Norwegian work. By exploiting the physical and 30 September 2005. gas transport systems and termi- www.statoil.com/ pipelines facilities in this area, the group is The definition of a new cus- nals have been merged into a new able to offer its customers trading tomer is all companies within the partnership, Gassled. Various inter- opportunities associated with EU which were not among ests in a total of 15 licences have short-term gas supplies in north- Statoil’s long-term customers been unitised. The new organisa- west Europe. prior to 2001. The agreement is tional model, with state-run retrospective to 1 June 2001. A Gassco as operator, opens oppor- Poland uncertain portion of the gross volume has tunities for more efficient opera- In September 2001 a sizeable deal already been sold. tions and development of the was agreed for the sale of natural Statoil has undertaken this Norwegian gas transport system. gas to the Polish Oil and Gas without any admission that the Statoil is technical service provider Company. Starting in 2008, the company's marketing and GFU for the majority of the lines and Polish company was to receive 73.5 gas marketing activities constitut- terminals in Gassled. The group billion cubic metres of gas over a ed an infringement of the compe- has an interest of 21 per cent in period of 16 years. However, the tition rules of the EU. Gassled, while its interests in the contract has not been ratified since receiving stations in Zeebrugge some conditions have not been Office in Paris and Dunkerque, which are part of met. There is growing uncertainty The gas market’s structure is Gassled, are about 10 per cent and as to whether these terms will be undergoing change as a result of 13 per cent respectively. resolved before the final deadline the implementation of the EU gas of 1 October 2005. directive. There is a strong increase in the number of poten- A gas tanker berthed at the Kårstø processing complex. Statoil has interests in and is technical service provider for large parts of Norway’s gas export infrastructure. This comprises the world’s largest submarine pipeline system and gas treatment plants in Norway, continental Europe and Scotland. 30 STATOIL 2002

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    Statoil, safety The environment HSE accounting Operating and Accounts Statoil Business and society financial review group – USGAAP operations The future starts on Snøhvit [Technology] Research into multiphase flow Norwegian Sea and between Troll technology has been pursued by A and the gas terminal at Kollsnes Statoil for more than 20 years, near Bergen. Applying this tech- and the group is among the nology on Troll A made it possible world leaders in this area. The to take the big gas processing plant ability to transport unprocessed originally intended for the platform With the Snøhvit develop- ment, multiphase flow has mixtures of oil, water and gas in and place it on land. The result was been extended to almost the same pipeline has made it a big reduction in platform size, twice the existing distance for possible to develop the Snøhvit offshore staffing and development such transport. gas field in the Barents Sea. This costs. is because operator Statoil can eliminate a staffed offshore Extensive research installation, with its associated Statoil’s research centre in operating costs. As a result, Trondheim has devoted consider- Snøhvit also opens wide perspec- able efforts to understanding how tives for the future. multiphase flows behave under dif- projects in the far north. I see ferent conditions, and how the nothing to prevent a subsea devel- Major savings most predictable and stable behav- opment with associated multiphase The subsea solution on Snøhvit is iour can be achieved in the flow transport on Russia’s big based on piping the unprocessed pipeline. The group has made great Shtokman gas field in the Barents wellstream, comprising gas, con- strides in technical knowledge of Sea.” densate, water and carbon dioxide, such transport, and vice president Nor would Mr Theodorsen over the 175 kilometres to land. Ingve R Theodorsen at the centre rule out the possibility that envi- This means that Statoil has taken a sees great possibilities. ronmental demands will require big step forward with multiphase the oil industry to find alternatives The challenge in piping flow technology, since the longest Northern promise to conventional development solu- unprocessed oil, gas and water through the same line distance over which unprocessed “Expertise in multiphase flow tech- tions. In that event, Statoil’s expert- is that the various compo- gas and liquids are currently piped nology is a very valuable commodi- ise with multiphase flow and sub- nents (phases) behave differ- is about 100 kilometres. Statoil ty, which we can utilise in our sea production solutions would put ently. Substantial research efforts have been devoted to already operates multiphase flow internationalisation efforts,”he it in a strong position. predicting what happens in transport on the Åsgard field in the says.“It can be applied to further the pipeline. STATOIL 2002 31

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    Contents The chief executive Directors’ report Profile, targets Corporate governance Shareholder and strategies information Manufacturing & Marketing companies in Scandinavia, The Manufacturing & Marketing business area embraced seven Europe, the USA and Asia. business clusters in 2002: oil trading and supply, responsible for the Oil trading yielded a good sale of crude oil, NGL and refined products, refining, which process- financial result for Statoil in 2002. es crude oils at Mongstad and Kalundborg, Nordic energy, selling traditional oil products and natural gas in the Nordic region, retail- Refining ing, responsible for the service station network, methanol, operat- Apart from a brief period in late ing methanol production at Tjeldbergodden, the Navion shipping autumn, refining margins were low company and Borealis, the European petrochemicals group owned in 2002 and the result for the year 50 per cent by Statoil. is unsatisfactory. A new desul- phurisation plant for gas oils began Key figures (NOK million) 2002 2001 operating at Kalundborg in July, Total revenues 211,152 203,387 and a similar facility for petrol is Income before financial items 1,637 4,480 due to come on stream at Gross investments 1,771 811 Mongstad during the first quarter of 2003. Both plants have been Oil trading and supply Oseberg. This is expected to pro- completed as planned and within The international crude oil mar- vide a more predictable and rep- budget. A new oil spill response ket was largely characterised by resentative pricing of crudes from centre at Mongstad ensures that rising prices during 2002, with the North Sea area, which is very the port is now better equipped to www.statoil.com/ Brent Blend reference crude important for Statoil. The group prevent and clean up oil spills. Jetty marketing reaching a high of USD 31.9 per sold an average of 2.4 million capacity for crude exports from barrel and a low of USD 18. daily barrels of oil during 2002, Mongstad is to be expanded. This Developments were affected by with its own production account- will make it possible to load more weak growth in the world econo- ing for 31 per cent, sales of crude tankers which can carry crude to my. Production restrictions were bought from the Norwegian state the USA and Asia. Supplies from instituted on the NCS during the 45 per cent and third-party crude Mongstad and Kalundborg are first half-year. Brent Blend was 24 per cent. Statoil’s most impor- delivered to their own distribution expanded to include two new tant oil customers are its own network and to customers in crude qualities – Forties and refining operations and major oil Scandinavia, Europe and the USA. Statoil is due to deliver its first energy Agreements have been concluded by Statoil to acquire 79 service stations in solution incorporating seawater-based Poland and 61 in Estonia, Latvia and Lithuania. This will bring its total network in heat pumps and propane to a large these countries to about 200 forecourts in Poland and 150 in the Baltic states. housing project in Stavanger. The transactions are due to be completed in the first quarter of 2003. 32 STATOIL 2002

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    Statoil, safety The environment HSE accounting Operating and Accounts Statoil Business and society financial review group – USGAAP operations Nordic energy these, 49 are in Scandinavia and 10 Methanol Nordic energy improved its results in the Baltic states. Statoil Methanol operations at once again in 2002. This partly Detaljhandel Skandinavia AS, Tjeldbergodden were again charac- reflects some increase in volumes owned 50-50 with the ICA/Ahold terised by high regularity and HSE sold, but above all a sharp reduc- retailing chain, is continuing to results remained very good. Prices tion in costs. The Meganor sub- develop its service concept. were weak at the start of the year, sidiary, which pursued electricity Providing a wider range of gro- but recovered somewhat during the sales to the household market in ceries in forecourt shops, it was in second half. From the autumn of Norway, has been sold. Electricity place at 161 stations by 31 2002, Statoil has extended the mar- sales to large corporate customers December – an increase of 61 over ket for its methanol to include cus- are being maintained by Statoil as the year. tomers in the USA and Canada. It an important supplement to its oil At 31 December, Statoil had a already has a strong market posi- product sales. total of 1 883 staffed and automat- tion in Europe. Statoil is the first company in ed stations in nine countries. INVESTMENTS Norway to offer a new heating oil A service station opened near Borealis 20.1 which contains 90 per cent less Oslo in late 2002 incorporates a The involvement in petrochemicals 18.0 sulphur than conventional prod- further development of Statoil’s through Statoil’s 50 per cent hold- ucts. The group has acquired 24 design concept. This will be ing in Borealis was characterised NOK bn diesel oil facilities from Fortum in applied when building new fore- by rising prices in the first half- Sweden, which helps to reinforce courts and in the modernisation of year and a sharp downturn during its network of service stations for the whole station network. the second. Although the business heavy vehicles. yielded a better result than the 2001 2002 Navion sold year before, it is still not satisfacto- Retailing Navion was sold in December to ry, despite positive effects of the Other Manufacturing & Marketing Statoil strengthened its position in Norsk Teekay AS, a wholly-owned current improvement programme. Natural Gas the petrol market during 2002. An subsidiary of Teekay Shipping The Borouge company owned International Exploration & agreement was concluded on Corporation, for a net price of by Borealis and the Abu Dhabi Production acquiring the Preem Petroleum about USD 800 million. The finan- National Oil Company officially Exploration & Production Norway service station network in Poland. cial date of the transaction was 1 inaugurated its new petrochemical Agreement was reached with Shell January, and the sale is expected complex at Ruwais in the United to acquire its forecourt network in to be closed during the first six Arab Emirates in October. It began the Baltic states of Estonia, Latvia months of 2003. Navion’s holdings operating on 1 February 2002, and and Lithuania. Eleven new stations in the West Navion drill ship and was completed on time and under were built in Poland and the Baltic the Navion Odin multipurpose budget. With one plant for ethylene states during 2002. shuttle tanker were transferred to and two for polyethylene, the com- The number of automated sta- Statoil before the sale. plex is based on the Borstar tech- tions operated under the 1-2-3 West Navion is owned 50-50 nology developed by Borealis. This brand was expanded from 21 at 1 with Smedvig, while Navion Odin makes it possible to produce thin- January to 59 by 31 December. Of is wholly owned by Statoil. ner and stronger plastic products. Statoil’s Kalundborg refinery in Denmark could deliver virtually sulphur-free In 2002, Statoil delivered LPG for the diesel oil from July 2002. That provides a marked reduction in emissions, which first time to Japan – one of the meets the EU requirements expected to be introduced in 2005. A corresponding world’s most important markets for investment at Mongstad will allow the group to deliver virtually sulphur-free this product. Norway ranks as the petrol in 2003. world’s third largest LPG exporter. STATOIL 2002 33

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    Contents The chief executive Directors’ report Profile, targets Corporate governance Shareholder and strategies information [Theme] On the offensive in new and established gas markets Statoil has traditionally pro- continue,” says Peter Mellbye, The UK has become an duced, transported and marketed executive vice president for important market for the group. Norwegian gas to a limited Statoil’s Natural Gas business Growth in British gas consump- group of buyers in continental area. He believes that the group tion has been even stronger than Europe. The number of continen- is well placed to increase its share in continental Europe, rising by tal customers has now vastly of an expanding market. no less than 70 per cent over the increased, and the UK is becom- past decade to 95 billion cubic ing an important market. Statoil Can deliver more metres in 2001. That corresponds sells gas to the USA, builds gas “Our gas reserves are close to the to 20 per cent of overall liquefaction plants, invests in market,” Mr Mellbye notes. European demand. LNG carriers and aims to sell gas “We’ve built up an infrastructure from Azerbaijan to Turkey. of gas treatment plants and Commitment to the UK transport systems, which means Statoil is making a big commit- European oil consumption has we can expand our capacity at ment to the UK market, which increased by seven per cent over modest cost to provide additional must increase gas imports the past decade, while gas con- volumes. That applies not only sharply in coming years as sumption has risen by no less for pipeline transport, but also for domestic supplies decline. Within than 40 per cent –from 340 bil- gas to be liquefied in the Snøhvit two years, the group will be mar- lion cubic metres in 1991 to 470 plant under construction at keting 8.6 billion cubic metres of billion in 2001. Melkøya outside Hammerfest in gas annually in Britain. Statoil has devoted these 10 northern Norway. Mr Mellbye believes it would years to building itself up into “If we find more gas to sup- be realistic to have even higher one of the biggest players in the plement the reserves in Snøhvit, ambitions: “We could reach an European gas market. It currently it will make good economic sense annual volume of 20 billion cubic meets just over seven per cent of to build a second processing metres in the UK market.” The UK has become an impor- tant gas market for Statoil, Europe’s needs with its own facility to handle the extra vol- Statoil’s historic role has been which concluded sales con- equity gas and supplies from the umes.” production on the NCS, pipeline tracts with British buyers in both 2001 and 2002. The state’s direct financial interest on He adds that this makes it a transport and sale to a handful of graph shows the market the NCS. big challenge for Statoil to find major European customers under share for Norwegian gas in “I think the sharp growth will more gas on the NCS. long-term contracts. A politically- the countries to which Statoil exports gas. PERCENTAGE MARKET SHARE 0 10 20 30 40 Belgium France Germany Czech Rep Spain Austria Netherlands Italy UK 2001 Poland 2010 USA Estimate 34 STATOIL 2002

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    Statoil, safety The environment HSE accounting Operating and Accounts Statoil Business and society financial review group – USGAAP operations directed liberalisation of the European Union’s gas market will change customer patterns. While Statoil had four European gas buyers in 1980, it now has about 30. While large customers have had to reduce their purchases, new opportunities are opening up. Companies supplied by Statoil for a long time remain its biggest customers after the liberalisation. According to Mr Mellbye, the main challenge is to protect the value of existing contracts while pursuing new market opportuni- ties. LNG to the USA Statoil will also be operational in the US gas market from June 2003, after acquiring capacity in one of the country’s four LNG import terminals. This Cove Point facility is not far from Washington DC. Access to its import capacity will allow Statoil to sell gas to the American market. During the first few years, gas supplies will be acquired through purchase or swap agreements. But Statoil will start selling its gas to the USA in 2006, when Snøhvit comes on stream. The group will ship LNG across the Atlantic. It has a 32 per cent interest in three large LNG carriers under con- struction to transport Snøhvit gas. “Becoming operational in the LNG market with our own gas has a 25.5 per cent interest in the own, and imports supplies by "Statoil is in a good posi- tion to secure new interests will be an important milestone for Shah Deniz gas field in the Azeri pipeline from Russia and as LNG in a gas market which will us,” says Mr Mellbye.“We’re a big sector of the Caspian Sea, which from Algeria and Nigeria. continue to grow," says gas player with substantial depends for its development on “I’m confident that we’ll executive vice president Peter Mellbye. expertise throughout the value finding a Turkish market. A con- achieve the breakthrough we chain, from production to end tract has been signed by Statoil need in Turkey, and I’m convinced users. So it’s also important for us with national gas company Botas that pipeline gas from Azerbaijan to develop as a player in a sharply in Turkey, covering annual sales of is the most competitive supply expanding LNG market.” six billion cubic metres from 2006. alternative,” says Mr Mellbye. The Turkish gas market has Seeking sales to Turkey expanded sharply over the past On the basis of a substantial gas decade. Annual consumption has discovery off Azerbaijan, Statoil is more than tripled, reaching 15.5 working to establish a market for billion cubic metres in 2001. The natural gas in Turkey. The group country produces no gas of its STATOIL 2002 35

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    Contents The chief executive Directors’ report Profile, targets Corporate governance Shareholder and strategies information Culture is energy. Statoil has cooperation agreements with music festivals, young musicians and the Stavanger Symphony Orchestra. Backed by the group as its princi- pal sponsor since 1990, the orchestra is represented www.statoil.com/sponsor here by brass players Øyvind Grong (left), Leif Værum Larsen, Ebbe Sivertsen and Gaute Vikdal. 36 STATOIL 2002

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    Business The environment HSE accounting Operating and Accounts Statoil operations Statoil, safety financial review group – USGAAP and society Statoil, safety and society organisational development. It Statoil published its first special report on sustainable development aims to create understanding and in 2002. In the group’s view, sustainability is about the impact of its support for Statoil’s culture and operations on people, the environment and society. As chief execu- values, and deals otherwise with tive Olav Fjell has put it: “Statoil will operate profitably, safely, in measures related to training, an ethically acceptable way, and showing concern for the environ- selection of managers and mobil- ment and social responsibility. We are committed to delivering ity of personnel across the group. good results against three bottom lines – the financial, the environ- mental and the social.” Equal opportunities Statoil’s policy is to provide equal- This chapter deals with the third Statoil on developing its employ- ity of opportunity for all, regard- bottom line – the effects of the ees and managers. Several man- less of gender, age and cultural group’s operations on the com- agement development pro- background. The group believes munity. grammes are being pursued. A that diversity in its organisation new programme for senior execu- has a value in itself, and that dif- www.statoil.com/ Culture and values tives was established in 2002. future ferent viewpoints help to ensure Statoil works purposefully to Statoil has growth ambitions and better decisions. Equal opportuni- develop a strong and unified cor- is committed to a rapid build-up ties and diversity are regarded as a porate culture rooted in clear val- of its international oil and gas competitive advantage. ues. This finds expression in the production. That means increased The group’s ambition is for group’s governing documents. recruitment of personnel outside women to occupy at least 20 per The fundamental guidelines are Norway. It also involves chal- cent of senior managerial posi- enshrined in We in Statoil, which lenges related to pursuing opera- tions at all levels. At 31 December summarises the group’s values tions in countries with varying 2002, this proportion was 15 per and business principles, and degrees of transparency, responsi- cent. The proportion of women describes how it wants to conduct bility, freedom of assembly and managers in the under-45 age its business. speech, and form of government. group is 27 per cent. To meet these challenges, an Expertise international strategy was drawn Popular trainee programme Great emphasis is placed by up in 2002 for personnel and Special measures have been Statoil reached the 30th anniversary of its for- mal incorporation on 18 September 2002. Former chief executives Arve Johnsen and Harald Norvik took part in the celebration together with Olav Fjell. Mr Johnsen holds the cigar box which housed Statoil’s first petty cash and a few stamps. His secretary, Marit Falch, took this container with her to work and used it during the initial weeks when she and Mr Johnsen were the company’s only employees. STATOIL 2002 37

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    Contents The chief executive Directors’ report Profile, targets Corporate governance Shareholder and strategies information adopted by Statoil to strengthen ambitions have strengthened. The company DuPont Safety its recruitment of young person- survey was carried out electroni- Resources has been commis- nel. A two-year group trainee cally for the first time. sioned to undertake a detailed programme has been established, Sickness absence in Statoil is review of Statoil’s safety culture. directed at young people with at a low and stable level of 3.4 This will focus on routines for higher education qualifications. per cent. The group’s objectives management and control, as well Two thousand applications were are zero work-related injuries and as behaviour and attitudes at all received for 24 trainee posts in illness, as well as modes of work- levels of the organisation. 2002. Participants in the pro- ing which promote creativity, effi- gramme gain work experience ciency, good health and well- Fewer injuries from different business areas in being. The total recordable injury fre- Statoil as a basis for their future Statoil offers training pro- quency (the number of recordable career development with the grammes for employees with injuries per million working group. chronic musculoskeletal disor- hours) declined from 6.7 in 2001 Statoil has one of the largest ders. One of the Norwegian gov- to six. Statoil records and analy- intakes of apprentices among ernment’s measures for reducing ses all incidents which cause or Norwegian companies, and wel- sickness absence involves collab- could have caused injury or loss. comed 119 of these on two-year orating with industry on an inclu- The most serious incidents are contracts in 2002. sive workplace. This commits the investigated. This is done to learn company to working actively to lessons and to transfer these both Attractive employer reduce sickness absence and to in-house and externally. Statoil has registered increased making arrangements to allow Safety conditions at Statoil’s interest in the group among stu- personnel whose capacity for facilities on land and offshore dents. In 2002, it was rated as the work has been reduced to remain were surveyed in 2001 and 2002. most attractive employer among in employment. “Open safety dialogues” are final-year engineering and eco- Statoil’s goal is zero injuries, used systematically to reduce nomics students in Norway. accidents or losses, and to con- risky behaviour in work opera- Job applications to Statoil are duct its business in a way which tions. These dialogues take place also on the rise. More than 11 000 avoids hazardous incidents. between manager and subordi- were processed in 2002. Despite a favourable trend, with a nate at the work site. Risk ele- continued decline in the number ments of the job and possible Health and the working envi- of personal injuries, the group measures to prevent injury are ronment and its suppliers suffered six fatal discussed. Almost 2 000 man- The results of Statoil’s 2002 work- accidents in 2002. That compares agers received training in this tool ing environment survey show with two the year before. Each of during 2002. progress in most areas from 2001. these accidents is discussed in Robberies and road tanker Job satisfaction, trust in the man- more detail under HSE account- accidents account for a large pro- www.statoil.com/job agement and confidence that ing. portion of serious incidents in the Statoil will succeed in fulfilling its Against this background, US Manufacturing & Marketing busi- Charles Tjessem (31), a cook at Statoil and product man- ager for its canteens, won the unofficial world champi- onship for master chefs in Lyons during January 2003. The group’s apprentice cooks have also done well in competition, winning the Nordic championship for trainees three years in a row. Statoil’s IT step training programme, first launched in 1997, was extended in 2002. Per Haaland, currently on a posting to Iran, is one of many employees who accepted the offer of upgraded computer hardware and a new training package. 38 STATOIL 2002

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    Business The environment HSE accounting Operating and Accounts Statoil operations Statoil, safety financial review group – USGAAP and society Prize for maritime safety The chief executive’s health, safety and environmental prize is awarded annually to highlight and reward work which has yielded good HSE results. Sixty-five candidates were nominated in 2002, and the winner was the maritime operations sector in Statoil and the relevant shipping companies for their efforts to make supply, emergency response and anchorhandling activities safer. Very good results have been achieved, demonstrating that a high HSE performance can also yield efficient operation. In addition to establishing very good attitudes, the work has developed standards which are now industry norms. The number of collisions between vessels and installations fell from 12 in 2000 to one per year in 2001 and 2002, while the number of injuries almost halved from 2001 to 2002. No serious injuries were incurred in connection with anchorhan- dling during 2002, while Statoil suffered fatal accidents relating to this type of work in both 2000 and 2001. ness area. Systematic efforts to procurement of goods and servic- tody. The second involves famil- prevent robberies and encourage es, transfer of technology and iarising Islamic Sharia judges – defensive driving are an important expertise, infrastructure develop- who base their judgements on the priority for the distribution chain. ment and tax revenues. Koran – with the UN declaration Through its social investment, the on human rights. A total of 120 Social commitment group also seeks to contribute to judges from six states in northern In common with other oil compa- local capacity building in educa- Nigeria are to receive training in nies which operate in challenging tion, health and human rights. It human rights. The third project countries, Statoil is increasingly does this primarily by channelling seeks to combat criminal behav- being asked to demonstrate how funds through humanitarian iour among young people. it makes a positive contribution organisations pursuing local Statoil established its own and what it creates locally. Much development work. strategy on HIV/Aids in 2002 in attention was devoted to this order to support the fight against topic in the group’s first sustain- Support for work this disease in areas in which the ability report, and it will be dis- on human rights group operates. The aim is to pre- cussed in greater detail in the Three Nigerian human rights vent suffering and loss for both next report. This is scheduled for organisations received project those infected and the group. This publication in 2003. support from Statoil in 2002. One is pursued through information Statoil’s most important con- of these ventures aims to expand and courses which equip people tribution is measured as value judicial capacity in the country to to look after themselves, their creation. That represents the help reduce the amount of time families and their workplace. impact of its investment on jobs, people spend remanded in cus- HOW WELL DO YOU ENJOY YOUR JOB? 6 5 Since 1986 Statoil has carried out annual working environment and organisation surveys. The results 4 are used in the group’s improvement work. Support for the survey has been good, and the response rate in 2002 was 84 per cent. The average 3 score for the question “All in all, how well do you enjoy your job?” was 4.6. This was measured on a 2 scale from 1 to 6, where 1 is “not very much” and 6 is “very much”. 1 1998 1999 2000 2001 2002 STATOIL 2002 39

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    Contents The chief executive Directors’ report Profile, targets Corporate governance Shareholder and strategies information [Theme] Secure school for traumatised children The acacia tree spreads its shady wooden blocks for language and branches over the 25 children sit- number games and other teaching ting on stones and tree stumps materials. at the Candjanguite refugee Almost 40 years of war mean camp in south-eastern Angola. that a whole generation of Angolans has missed out on They are not distracted either by schooling. The one-year TEP model the birds twittering in the canopy provides basic reading, writing and or by the livestock grazing in the arithmetic skills for children from hot surrounding fields. 12 to 17. They are then qualified to The children stare intently at a attend regular schools. board which teacher José Gala The class under the tree breaks has hung on the tree trunk. He is into song. Children do that often giving a maths lesson, and asks here, because they sing about the class initially to tell him the what they are involved with. date. Mr Gala speaks Portuguese, the Mr Gala is one of 43 teachers in official language of Angola which the camp who have been trained to all schoolchildren must learn. But use the teacher’s emergency pack- many in the class only know their age (TEP) developed by Unicef. native tongue, and have problems This system has also been dubbed following the lessons to begin “school-in-a-box”, since each edu- with. cator gets all their necessary aids in The teachers also find it chal- a metre-long blue metal box. lenging to deal with children trau- Splitting a class with the maxi- The Norwegian Refugee matised by war. mum of 25 pupils into smaller Council has been providing TEP “We know for certain that both groups or pairs is important, education since 1996, and has a sides in the conflict recruited chil- because it makes the youngsters staff of 14 teachers who visit the dren,”says Berit Norbakke, the feel more secure. camps and train others to apply Norwegian who heads the refugee “That makes heavy demands the method. council’s TEP project.“They were on the teachers,”explains Ms In 2002, the council devoted captured and forced to work Norbakke.“When the children funds received from Statoil to behind the lines.” learn through play, they don’t finance courses and the establish- She estimates that about 70 per experience the education as excep- ment of TEP schools in Matala cent of the children in each class tionally demanding.” local authority, which embraces are traumatised. They have seen More than 50 per cent of Candjanguite. adults shot and killed, their moth- Angolans are younger than 18, and Mr Gala’s blue box contains ers, fathers and siblings killed or the country has the world’s sec- enough materials for two teachers abused by soldiers, or people ond-highest child mortality rate to hold two classes under a tree, in injured by landmines. after Sierra Leone. a tent or in an abandoned build- “We must show them we care,” The nation is rich in resources, ing. These include a cloth poster says Alexandre Moises, head of particularly petroleum and dia- with the alphabet, another with TEP education in the camp. monds, but it nevertheless ranks numbers, a large clock, slates for “Lessons must include a lot of as one of the world’s poorest the pupils, chalk, pencils, small play, song and drama.” states. 40 STATOIL 2002

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    Business The environment HSE accounting Operating and Accounts Statoil operations Statoil, safety financial review group – USGAAP and society “Corruption and lack of trans- April 2002. The war-weary popula- Refugees driven by hunger contin- Gracianne Sekula and her friends are having a maths parency contribute to the unequal tion have a hesitant hope that ued to arrive after the fighting lesson in the fields around distribution of resources,”Ms fighting will not flare up again. stopped, right up to November the Candjanguite refugee Norbakke observes.“But education “We’ve seen an increase in the 2002. camp. can’t be corrupted.You can’t steal number of people returning to The number of displaced peo- what people have in their heads.” their homes over the past couple ple in the region has now fallen The refugee council has been of months,”reports Ms Norbakke. to 30 000 in six-seven camps. If running camps for internally dis- “That’s a sign of confidence in the peace persists and the camps placed people since 1994, and dis- peace.” continue to empty, the refugee tributes food, emergency items At peak, the region around council’s work will be over in and clothing. It educates people Candjanguite had 80 000 displaced one-two years. about preventive health care and people in 20 different camps. HIV/Aids, and fights for refugee rights. In 2002, Statoil contributed to run by the Norwegian People’s A major seed corn project was the Norwegian Refugee Council’s Relief Association on education, pursued by the council during work in Angola. The council pro- regional development and land- 2002 in Huila province, which vided training for 43 teachers to mine clearance. embraces Matala. Seed for 100 000 provide basic education for And the group is supporting a people arrived before the rainy around 1 000 children who are home for street boys, a centre season, thereby averting a famine. mostly internal refugees. for HIV/Aids and water drilling Peace was restored to Angola in Statoil also supports projects in Cabinda province. STATOIL 2002 41

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    Contents The chief executive Directors’ report Profile, targets Corporate governance Shareholder and strategies information Ariake has arrived at Saint John on the Canadian east coast with crude oil from Mongstad, and terminal workers Darrel Muise (left) and Ken Nauffts have got every- thing ready to start discharging 267 000 tonnes of crude. Statoil exported 30 million tonnes of crude to the USA and Canada in 2002, adding up to 150 tanker consign- ments. All vessels shipping oil for Statoil are inspected once a year, and 80 per cent of crude oil carriers which sail for the group have a double bottom or hull. 42 STATOIL 2002

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    Business Statoil, safety HSE accounting Operating and Accounts Statoil operations and society The environment financial review group – USGAAP The environment Emissions and environmental “Statoil’s vision is to build a world-class international oil and gas impact company. This requires that we are among the absolute front run- Oil and gas production causes ners in protecting the environment. No other avenue is open. If emissions and discharges to the these environmental responsibilities are not taken seriously, we will natural environment. The level of lose legitimacy, competitiveness and the licence to operate.” This is these is influenced by the volume how chief executive Olav Fjell has formulated Statoil’s ambitions produced and by a field's reser- and commitments on the environment. The group’s goal is therefore voir conditions and age. to conduct its business without harm to people or the environment. Emissions relating to oil and gas processing depend on the type of Frame conditions Stricter standards from 2005 feedstock involved and the prod- Emissions to the air are largely The Norwegian authorities have ucts being produced. They are regulated by international agree- specified that harmful discharges to influenced by plant design, tech- ments. The Kyoto protocol on the sea must reach zero by 2005. nology and operating regularity. reducing greenhouse gas emis- This means ceasing or significantly Emissions to the air include sions and the Gothenburg proto- reducing the release of certain envi- carbon dioxide, methane, VOC, col, which commits signatories to ronmental toxins, and a substantial and sulphur and nitrogen oxides. cut emissions of nitrogen and sul- reduction in the risk of harm from These contribute variously to the phur oxides as well as volatile using and discharging chemicals. greenhouse effect, acid precipita- organic compounds (VOC), are The European Union’s integrat- tion and the formation of particularly important for Statoil's ed pollution prevention and con- ground-level ozone. Offshore business. Discharges of oil and trol (IPPC) directive calls for the operations account for the bulk of chemicals in the north-eastern use of the best available tech- Statoil's carbon dioxide and Atlantic are regulated by the Oslo- niques to reduce emissions/dis- nitrogen oxide emissions, while Paris (Ospar) convention. This charges. From 2007, these require- refining is responsible for most of requires that the oil content in ments will also apply to existing the sulphur dioxide it releases. produced water released to the sea installations. The convention on must not exceed 30 milligrams per biological diversity signed at Rio Increased water production litre by 2006, when the total annu- de Janeiro in 1992 imposes a com- Discharges to the sea embrace oil, al volume of such discharges must mitment to take account of biodi- organic compounds and chemicals, be 15 per cent lower than in 2000. versity. and derive largely from produced 18 CO2 EMISSIONS (KG) PER BOE 16.4 (Sources in brackets) 14 10 6.4 6 2.4 2 New Norwegian The Statoil continental world fields shelf (OGP) (Statoil) (NPD) Carbon dioxide emissions from new Statoil fields New technology and more environment-friendly chemicals have been are among the lowest in the world. adopted on Heidrun in the Norwegian Sea to prevent deposition in the (NPD: Norwegian Petroleum Directorate, wells. These measures have been implemented in close cooperation OGP: International Association of Oil & Gas with the supplies industry, and emissions of possibly environmentally- Producers) harmful chemicals per well workover were halved by comparison with 2001. STATOIL 2002 43

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    Contents The chief executive Directors’ report Profile, targets Corporate governance Shareholder and strategies information water and drilling. Possible harm- management based on extensive Environmental monitoring ful environmental effects relate risk assessments. The aim is con- The condition of the environment particularly to compounds which tinuous improvement through around Statoil’s installations is are slow to degrade and are highly enhanced energy efficiency and monitored through regular pro- toxic or have a potential for bio- other purposeful measures on grammes. Environmental moni- accumulation. Operations on the existing and future installations. toring covers both water quality NCS are the biggest source of Discharges to the sea attract- and seabed sediments, and shows Statoil's discharges to the sea. The ed particular attention in 2002. a satisfactory trend. volume of produced water released Work was devoted to developing Where emissions to the air are has expanded sharply in recent new technological solutions and to concerned, continuous efforts are years because certain fields are in a phasing out environmentally-haz- being made to reach the goal of late phase. Statoil’s offshore and ardous chemicals, and Statoil is trimming 1.5 million tonnes of land-based activities generate well on the way to meeting the carbon dioxide equivalent from waste. Emphasis is given to recov- government’s requirement for zero the annual volume of greenhouse ering and recycling the latter, with harmful discharges from its oil and gases released on Statoil’s instal- hazardous waste being treated in gas fields by 2005. lations by 2010, compared with line with prevailing regulations. Chemicals released from the amount which would be Statoil's offshore operations have emitted without special measures. Reducing emissions been reduced from 2001 to 2002. Statoil supports the Kyoto pro- Continuous efforts are being made Of these, 89 per cent cause little or tocol and the adoption of emis- to reduce emissions to the air and no environmental impact while 10 sion trading to limit the release of discharges to the sea through per cent have acceptable environ- greenhouse gases in a cost-effec- research and the development of mental properties. Only 0.6 per tive manner. The group is making ever-better technology, effective cent are questionable, and these the necessary preparations to emergency response and good are being phased out. meet requirements for lower International prize for carbon dioxide storage The technology development prize from the World Petroleum Congress went to Statoil in 2002 for its work on injecting and storing carbon www.statoil.com/co2 dioxide in a sub-surface aquifer in the Sleipner area of the North Sea. This project was selected as the winner from among 78 candidates. About a million tonnes of carbon dioxide are returned under- ground and stored in the Sleipner area every year. This technology will also be applied on Statoil’s Snøhvit project in the Barents Sea, which comes on stream in 2006. Some 700 000 tonnes of the greenhouse gas will be stored there annually. Ranked as the world’s first industrial-scale carbon storage operation, the Sleipner area project has attract- ed great international attention. Statoil has helped to launch a new European network on dealing with carbon dioxide, with companies from all over Europe participating. Through a 24 per cent holding in the Statoil heads a collaboration with 23 other companies on the NCS to Hammerfest Strøm company, Statoil is involved reduce emissions of volatile organic compounds (VOC) from offshore in constructing a new tidal power station at loading. Eight VOC recovery plants will be operational on shuttle Kvalsundet in northern Norway. tankers by 31 March 2003. One of these is on Juanita. 44 STATOIL 2002

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    Business Statoil, safety HSE accounting Operating and Accounts Statoil operations and society The environment financial review group – USGAAP greenhouse gas emissions. Safety and environmental per- reduced sulphur emissions. During 2002, it doubled its formance are important in select- Launched in late 2002, this prod- investment in the World Bank’s ing road tankers. Key measures uct contains almost 90 per cent carbon fund to USD 10 million. include a high carrying capacity to less sulphur than conventional reduce the number of consign- heating oil. Statoil’s goal is to Biological diversity ments, modern engine technology develop a profitable business New oil and gas fields are often with lower fumes, optimal route which leads to sustainable energy found in environmentally-sensi- planning through good navigation production and increased use of tive areas, including both Arctic systems, and using diesel oil with clean energy bearers. A new energy and tropical regions. These areas good environmental properties. sector is working on renewable usually have poorly-developed energy, energy efficiency, carbon infrastructures, and efforts are Cleaner products dioxide removal and use, and being made to identify technolo- Automotive fuels and heating oils hydrogen as a future energy bearer. gy and operating methods which are the principal products in protect the environment and Statoil’s manufacturing and mar- Investments and costs ensure that local communities keting segment. Its objective is Statoil devoted NOK 800 million make positive progress. that these commodities should to research and development in Statoil is participating in the rank among the best for technical 2002 with the aim of finding, pro- energy biodiversity initiative (EBI) user and environmental properties. ducing and processing oil and gas together with three other oil com- Burning oil products has a neg- more efficiently and cheaply, with panies and five environmental ative impact locally, regionally and less energy and with a decreasing organisations. The EBI was award- globally. Emissions per unit of impact on the environment. ed a prize at the 2002 world sum- energy produced have been sub- A provision of NOK 8 056 mil- mit in Johannesburg for its work stantially reduced in recent years lion was made at 31 December on protecting biological diversity. through cleaner products and under the unit of production improved engine and treatment method to meet the future cost of Strict transport requirements technologies. shutting down and removing oil About 110 million tonnes of hydro- Alternative automotive fuels and gas production facilities. NOK carbons were shipped by tanker and new additives are under con- 706 million was charged against from fields, terminals and refineries stant assessment and testing. income. to customers world-wide in 2002. Renewable fuel products such as Reusing offshore installations Road tankers belonging to or hired rape methyl ester (RME), bio- and equipment offers financial and by Statoil covered about 35 million ethanol and biogas are offered environmental gains. In 2002, the kilometres delivering products to where customer demand exists. trading and service sector earned service stations and customers. Statoil adds about five per cent NOK 51 million on sales of sur- CO2 emissions relating to these bio-ethanol to roughly a fifth of all plus materials. consignments are estimated at the petrol it sells in Sweden. Annual carbon tax paid for some 27 000 tonnes, or roughly 0.3 The group is the first oil com- 2002 on emissions from Statoil- per cent of the total CO2 released pany in Norway to offer a new operated installations on the NCS from Statoil operations. heating oil with substantially totalled about NOK 1.4 billion. Compressors are to be installed on Troll A to drive its gas ashore as natural reser- Statoil produces and sells wood pellets voir pressure declines. Statoil has opted for units driven by hydropower. The gas- in Norway, Denmark and Sweden. A fuelled alternative would have emitted several hundred thousand tonnes of car- total of 55 000 tonnes of this biomass bon dioxide annually. were produced in 2002, up from 27 000 tonnes the year before. STATOIL 2002 45

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    Contents The chief executive Directors’ report Profile, targets Corporate governance Shareholder and strategies information [Theme] Demanding trade – strict controls Randgrid has just berthed at the Randgrid passes its inspection for other companies on fields and Mongstad terminal near Bergen on this occasion. The vessel ranks at Statoil’s terminals. with a full cargo from the as one of the finest crude oil carri- A small department with Heidrun field in the Norwegian ers operating in Norwegian seven-eight staff at the Stavanger Sea. A consignment totalling waters. Built in 1995, it features a head office is responsible for vet- 117 000 tonnes of crude is safely double hull and dual propulsion ting and approving vessels in in port, and ship’s inspector Tore systems, and maintains a high Statoil. This entity is headed by Tollefsen from Statoil has gone standard throughout. Leif Solem Farstad, a former mas- aboard. After shaking hands, But keeping tankers in good ter with Norway’s Bergesen d.y master Karl-Otto Jonassen technical condition and operating tanker company. His staff accompanies him on a routine them safely and acceptably is includes naval architects, former check of the shuttle tanker. essential. Should an accident hap- chief engineers or masters. Their pen, the consequences for the capacity is too limited to perform Cargoes shipped by Randgrid maritime environment can often anything like the number of belong to its owner, be catastrophic. Reminders of that inspections required, so contacts ConocoPhillips. But the vessel is are received time and again – most have been forged with inspectors nevertheless inspected once a year recently off Spain this winter. in a number of ports. This depart- by Statoil because it shuttles ment is also Statoil’s resource for between Heidrun and Mongstad, Major user setting vessel guidelines and which are both operated by the Statoil is a major user of tanker quality standards. group. In that capacity, Statoil can services. Some 3 200 single voy- refuse to accept tankers which fail ages were undertaken for the Meeting standards to meet a number of requirements group in 2002, carrying 110 mil- “We’re charged with ensuring for their technical and operational lion tonnes of crude oil, oil prod- that the ships we charter, and the condition. These are specified in ucts and gases. Each of these companies we take them from, detailed regulations which the journeys represented an environ- meet the standards we specify,” shipowner has undertaken to mental and safety risk. In addi- explains Capt Farstad. observe. tion came all the vessels lifting oil He says that Statoil has few Approval in several stages No tanker can sail for Statoil until it Age Double hull/bottom has been through a multi-phase The vessel must not be more than 20 Ships over 5 000 deadweight tonnes vetting procedure. years old. Exceptions can be made carrying heavy fuel oil or similar for gas carriers up to 30 years old products must have a double hull or Questionnaire and tankers in service for 25 years. bottom. The Prestige, which sank off As a first step, the vessel owner Such ships must undergo an extra Spain in November 2002, could not must complete an extensive ques- inspection which includes hull struc- have been chartered by Statoil tionnaire about the ship’s condition. tural strength, engine condition and because of its age and single hull. The answers determine whether the the loading/discharging equipment. tanker should be chartered. Input Inspection from the questionnaire and other No general requirement Ships chartered for Statoil are sources is stored in a database Statoil does not require a double inspected on the basis of an indus- which contains detailed information hull or bottom generally but these try standard used by a number of oil on more than 3 000 tankers. feature on 80 per cent of crude oil companies. This lets one company carriers sailing for the group. The charter a vessel which has been vet- proportion of such vessels is rising. ted by another. 46 STATOIL 2002

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