Den norske stats oljeselskap a.s Annual Report and Accounts 1974 statoil Den norske stats oljeselskap a.s Statoil was established by a unanimous decision by the Starting on June 14. 1972. The Company's objectives, as stated in its Articles of Association, are as follows: Statoil has as its objective inde­ pendently, or in participation or in co-operation with other companies to carry out explo­ ration and production, transportation, refining and marketing of petroleum and related products and other activities in close relationship with this. The pipelaying barge Choctaw I working on the Norpipe line from Ekofisk to Emden in West-Germany. so far the worlds longest offshore pipeline. 2 Report for 1974 Preface authorities. Statoil may not in offshore oil activity and parti­ The year 1974 has been a year execute projects with significant cipation in pipeline transpor­ of extensive and increasing political or practical implications tation systems (Norpipe), in the activity for Statoil as a result of before they are approved or petrochemical complex at Bam­ the tasks the Company has been cleared by superior political ble and in the marketing of given through d0cisions taken bodies. It is this principle which the State's royalty crude oil. by the authorities. This has made is now clarified and formalized continuous rapid growth of by the new regulations and the The Board's task to a large the Company's organization Articles of Association for extent is to ensure that Statoil necessary so as to enable it Statoil, approved by the Stor­ discharges its duties with proper to handle the State's business ting in June 1974. care in accordance with the interests in the petroleum sector authorities' wishes and in a way in the best possible way. The new Articles of Association best suited to making the best provide that the Board shall put possible use of the State's busi­ Internationally 1974 has been before the General Meeting all ness interests. At the same time, dominated by the new oil price matters "which can be assumed it is quite clear that the Board's structure and the changed situa­ to have important political as­ role should not be a passive one. tion in petroleum supply. Sharp pects or aspects of principle The Articles of Association give inflation has greatly increased and/or can have important social the Board the necessary freedom the cost of a number of the pro­ and socio-economic impli­ to carry on business within the jects in which Statoil is engaged. cations". The Articles also con­ framework prescribed by the At the same time Norwegian oil tain a list of the most important authorities at any given time. and gas reserves have increased cases covered by this rule. The in value. The international energy new Articles must also be seen It is also one of Statoil's tasks supply situation still seems to in the light of the fact that to act as an advisory agency to be less stable than it used to be. the Starting decided that it shall the authorities. In this connec­ This gives Norway a certain have laid before it each year in tion Statoil will be in a position, global responsibility, a respon­ the form of a Government White thanks to its knowledge and sibility which is acknowledged Paper "the main aspects of expertise, to provide factual in­ by the Norwegian authorities. Statoil's plans and projects to­ formation, to put forward view­ The role of the large private oil gether with economic estimates points and evaluations, and to companies seems to have and other items involving impor­ make suggestions to the authori­ changed as a result of the tant questions of principle or ties as to the courses they nationalization of oil production political aspects". Statoil's plan should follow. in most of the large oil-producing for any year will normally be countries and the expansion of decided upon at a regular Gene­ 3. Concession round the state-owned oil companies ral Meeting in the spring of During 1974 the Government in these countries. But in Europe the preceding year. pronounced its decision on the and elsewhere it also seems third concession round. In ac­ likely that state-owned compa­ These decisions have formalized cordance with the rules laid nies will have increasing impor­ the established practical pattern down by the Storting, this was tance as part of the different of the way business is handled a limited allocation, with five countries' national oil policy. between state-owned companies concession areas, partly along In West Germany, the United and their General Meeting i.e. the median line with UK waters, Kingdom, Canada and Australia The Ministry of Industry. Statoil's and partly in deepwater areas steps were taken during 1974 role and importance in Norwe­ extending to 62 degrees north, to create oil companies under gian society had created a desire close to the coast. While 50% state control and ownership. for such formalized rules. state participation had earlier been the maximum, in the new Relationship with the authorities The aim of these Articles is to concessions it is a minimum. 1974 saw a clarification of ensure the overall governmental Statoil's participation can be in­ Statoil's situation, especially guidance and control which creased with the volume of with regard to its relationship the Storting had indicated that it eventual production and in cer­ with the political authorities. desired. The Company's special tain cases can reach 75%. It has always been quite clear purpose, which is to carry out Statoil has been given the task, that Statoil's objectives are to the decisions of the superior for the first time, of acting as look after the State's business political authorities, has been operator for one area. This is the interests in the petroleum sector underlined by these new Articles. area covering Blocks 15/11, in accordance with the Articles It is a special characteristic of 15/12 and 6/3. The Company of Association, rules and regu­ Statoil's activities that all the has prepared itself for its role lations laid down by the authori­ tasks of any importance have as operator by, inter alia, leasing ties at any given time. Statoil is been given to the Company a drilling rig, supply ships, etc. thus an instrument for the politi­ through decisions either by the An agreement on principles has cal authorities and carries out the Government or by the Storting. been reached with Esso, which objectives decided upon by the This applies to all participation gives Statoil the opportunity to 4 draw on technical and other assi­ When there is a find, the part­ key blocks, which had been set stance from Essa to the extent ners (including Statoil) must aside for State development, that Statoil wishes. decide within certain agreed after the Ministry of Industry had time limits whether they wish given Statoil this planning task As in the case of Statfjord to take part in the development earlier. For the blocks which in (Blocks 33/9 and 33/12), Statoil of the find and in later produc­ Statoil's jugdment should be may take over at a given time tion development. explored in the course of the as operator of the other areas next few years, Statoil submitted al located, except for the area Statoil shall not pay its share a plan whereby the State through where Norsk Hydro is operator. of the development costs ac­ Statoil on the one hand would crued after the find is declared have control with development The conditions in the standard commercial before it has been and exploitation of possible joint-venture agreements which decided that Statoil shall take finds, and which on the other the Government has negotiated part in the development. hand would ensure the Company are based on the same frame­ the necessary technical and work which the Ministry of Indu­ The State's supervision and other assistance. Through the stry first laid down in the Stat­ control is ensured partly through proposed plan, the State will fjord concession in 1973, general rules about different li­ retain full ownership of any although some parts have been cences and through regulations petroleum which might be found. enlarged. Statoil's share of the from the Government, and partly Possible partners will be ensured exploration costs is met by through Statoil, which through the right to agreed amounts of the other partners and Statoil its participation' percentage has produced petroleum from such does not bear these costs, a large say in decisions in the finds through agreements which whether anything is found or not. different joint ventures. will enable the partners to The costs of development /d recover the invested capital with production are borne .. /'· interest and at the same time in full, in proportion t " will give them a reasonable cipation percentage. profit and a risk premium. In accordance with the wishes of \ "~::~ the Government it is also provi­ \'~. ded that the Norwegian compa­ nies Norsk Hydro and Saga \\ Petroleum s~all be broght into ·.. \ the development in some of the . \ \ key block areas in joint-venture agreements with Statoil. In connection with the announce­ ments of the results of the third concession round, the Ministry of Industry in principle made a decision on Statoil's plan for key block development. The Ministry informed Statoil that the plan­ ning necessary for the Ministry to grant production licences for blocks 24/12 and 1/9 could im­ mediately be proceeded with regard to the tempo of develop­ ment of the other key blocks, the Government would bide their time for the moment.