ANNUAL REPORT /2012 Annual Report on Form 20-F ANNUAL REPORT /2012 Annual Report on Form 20-F The Annual Report on Form 20-F is our SEC filing for the fiscal year ended December 31, 2012, as submitted to the US Securities and Exchange Commission. The complete edition of our Annual Report is available online at www.statoil.com/2012 © Statoil 2013 STATOIL ASA BOX 8500 NO-4035 STAVANGER NORWAY TELEPHONE: +47 51 99 00 00 www.statoil.com Cover photo: Ole Jørgen Bratland Annual report on Form 20-F Cover Page 1 1 Introduction 3 1.1 About the report 3 1.2 Key figures and highlights 4 2 Strategy and market overview 5 2.1 Our business environment 5 2.1.1 Market overview 5 2.1.2 Oil prices and refining margins 6 2.1.3 Natural gas prices 6 2.2 Our corporate strategy 7 2.3 Our technology 9 2.4 Group outlook 10 3 Business overview 11 3.1 Our history 11 3.2 Our business 12 3.3 Our competitive position 12 3.4 Corporate structure 13 3.5 Development and Production Norway (DPN) 14 3.5.1 DPN overview 14 3.5.2 Fields in production on the NCS 15 3.5.2.1 Operations North 17 3.5.2.2 Operations North Sea West 18 3.5.2.3 Operations North Sea East 19 3.5.2.4 Operations South 19 3.5.2.5 Partner-operated fields 20 3.5.3 Exploration on the NCS 20 3.5.4 Fields under development on the NCS 22 3.5.5 Decommissioning on the NCS 23 3.6 Development and Production International (DPI) 24 3.6.1 DPI overview 24 3.6.2 International production 25 3.6.2.1 North America 27 3.6.2.2 South America and sub-Saharan Africa 28 3.6.2.3 Middle East and North Africa 29 3.6.2.4 Europe and Asia 29 3.6.3 International exploration 30 3.6.4 Fields under development internationally 32 3.6.4.1 North America 32 3.6.4.2 South America and sub-Saharan Africa 33 3.6.4.3 Middle East and North Africa 33 3.6.4.4 Europe and Asia 33 3.7 Marketing, Processing and Renewable Energy (MPR) 35 3.7.1 MPR overview 35 3.7.2 Natural Gas 35 3.7.2.1 Gas sales and marketing 36 3.7.2.2 The Norwegian gas transportation system 38 3.7.2.3 Processing 38 3.7.3 Crude oil, liquids and products 39 3.7.3.1 Marketing and trading 39 3.7.3.2 Processing and transportation 39 3.7.4 Processing and manufacturing 40 3.7.5 Renewable energy 42 3.8 Statoil Fuel & Retail 43 3.9 Other Group 44 3.9.1 Global Strategy and Business Development (GSB) 44 3.9.2 Technology, Projects and Drilling (TPD) 44 3.9.3 Corporate Staffs and Services 46 3.10 Significant subsidiaries 47 3.11 Production volumes and prices 48 3.11.1 Entitlement production 49 3.11.2 Production costs and sales prices 50 3.12 Proved oil and gas reserves 51 3.12.1 Development of reserves 54 3.12.2 Preparations of reserves estimates 55 3.12.3 Operational statistics 56 3.12.4 Delivery commitments 58 3.13 Applicable laws and regulations 59 3.13.1 The Norwegian licensing system 59 3.13.2 Gas sales and transportation 61 3.13.3 HSE regulation 61 3.13.4 Taxation of Statoil 62 3.13.5 The Norwegian State's participation 63 3.13.6 SDFI oil and gas marketing and sale 63 3.14 Property, plants and equipment 65 3.15 Related party transactions 65 3.16 Insurance 65 3.17 People and the group 66 3.17.1 Employees in Statoil 66 3.17.2 Equal opportunities 67 3.17.3 Unions and representatives 67 4 Financial review 68 4.1 Operating and financial review 2012 68 4.1.1 Sales volumes 68 4.1.2 Group profit and loss analysis 70 4.1.3 Segment performance and analysis 74 4.1.4 DPN profit and loss analysis 77 4.1.5 DPI profit and loss analysis 79 4.1.6 MPR profit and loss analysis 81 4.1.7 Other operations 83 4.1.8 Definitions of reported volumes 84 4.2 Liquidity and capital resources 85 4.2.1 Review of cash flows 85 4.2.2 Financial assets and liabilities 86 4.2.3 Investments 88 4.2.4 Impact of inflation 90 4.2.5 Principal contractual obligations 90 4.2.6 Off balance sheet arrangements 91 4.3 Accounting Standards (IFRS) 91 4.4 Non-GAAP measures 92 4.4.1 Return on average capital employed (ROACE) 92 4.4.2 Unit of production cost 93 4.4.3 Net debt to capital employed ratio 94 5 Risk review 95 5.1 Risk factors 95 5.1.1 Risks related to our business 95 5.1.2 Iran-related activity 100 5.1.3 Legal and regulatory risks 100 5.1.4 Risks related to state ownership 102 5.2 Risk management 103 5.2.1 Managing financial risk 103 5.2.2 Disclosures about market risk 105 5.3 Legal proceedings 105 6 Shareholder information 106 6.1 Dividend policy 108 6.1.1 Dividends 108 6.2 Shares purchased by issuer 110 6.2.1 Statoil's share savings plan 110 6.3 Information and communications 111 6.3.1 Investor contact 111 6.4 Market and market prices 112 6.4.1 Share prices 112 6.4.2 Statoil ADR programme fees 113 6.5 Taxation 115 6.6 Exchange controls and limitations 119 6.7 Exchange rates 119 6.8 Major shareholders 120 7 Corporate governance 122 7.1 Articles of association 122 7.2 Ethics Code of Conduct 124 7.3 General meeting of shareholders 125 7.4 Nomination committee 127 7.5 Corporate assembly 127 7.6 Board of directors 130 7.6.1 Audit committee 134 7.6.2 Compensation committee 135 7.6.3 HSE and ethics committee 135 7.7 Compliance with NYSE listing rules 136 7.8 Management 137 7.9 Compensation paid to governing bodies 141 7.10 Share ownership 147 7.11 Independent auditor 148 7.12 Controls and procedures 150 8 Consolidated financial statements Statoil 151 8.1 Notes to the Consolidated financial statements 156 8.1.1 Organisation 156 8.1.2 Significant accounting policies 156 8.1.3 Change in accounting policy 165 8.1.4 Segments 166 8.1.5 Acquisitions and dispositions 170 8.1.6 Financial risk management 172 8.1.7 Remuneration 175 8.1.8 Other expenses 176 8.1.9 Financial items 176 8.1.10 Income taxes 177 8.1.11 Earnings per share 179 8.1.12 Property, plant and equipment 180 8.1.13 Intangible assets 182 8.1.14 Non-current financial assets and prepayments 183 8.1.15 Inventories 184 8.1.16 Trade and other receivables 184 8.1.17 Current financial investments 184 8.1.18 Cash and cash equivalents 185 8.1.19 Shareholders' equity 185 8.1.20 Bonds, bank loans and finance lease liabilities 185 8.1.21 Pensions 187 8.1.22 Provisions 192 8.1.23 Trade and other payables 193 8.1.24 Bonds, bank loans, commercial papers and collateral liabilities 193 8.1.25 Leases 193 8.1.26 Other commitments and contingencies 194 8.1.27 Related parties 195 8.1.28 Financial instruments: fair value measurement and sensitivity analysis of market risk 196 8.1.29 Condensed consolidating financial information related to guaranteed debt securities 202 8.1.30 Supplementary oil and gas information (unaudited) 208 8.2 Report of Independent Registered Public Accounting firm 218 8.2.1 Report of Independent Registered Public Accounting Firm 218 8.2.2 Report of Independent Registered Public Accounting Firm 219 8.2.3 Report of KPMG on Statoil's internal control over financial reporting 220 9 Terms and definitions 221 10 Forward looking statements 224 11 Signature page 225 12 Exhibits 226 13 Cross reference to Form 20-F 227 Cover Page UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 20-F (Mark One) REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2012 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ OR SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report _________ Commission file number 1-15200 Statoil ASA (Exact Name of Registrant as Specified in Its Charter) N/A (Translation of Registrant’s Name Into English) Norway (Jurisdiction of Incorporation or Organization) Forusbeen 50, N-4035, Stavanger, Norway (Address of Principal Executive Offices) Torgrim Reitan Chief Financial Officer Statoil ASA Forusbeen 50, N-4035 Stavanger, Norway Telephone No.: 011-47-5199-0000 Fax No.: 011-47-5199-0050 (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange On Which Registered American Depositary Shares New York Stock Exchange Ordinary shares, nominal value of NOK 2.50 each New York Stock Exchange* *Listed, not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission Securities registered or to be registered pursuant to Section 12(g) of the Act: None Statoil, Annual report on Form 20-F 2012 1 Document last updated 21-03-2013 18:38 CET Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.