Presentation Mexico

The Norwegian Model:
Evolution, performance and benefits

Ola Borten Moe
Minister of Petroleum and Energy
Olje- og energidepartementet | regjeringen.no/oed

Our largest industry
Norwegian Olje-
Ministry of Petroleum and Energy
og energidepartementet | regjeringen.no/oed
| regjeringen.no/oed
Norwegian Oil and Gas
• Activities since 1965
• 77 fields in production
• Liquids production in 2012: 1,9 million bpd
• Gas sales 2012: 114,8 MSm3 o.e. gas
• 8000 km of offshore gas pipelines
• Landing points in four countries in Europe
• 54 companies is currently licensees on the NCS
• High exploration level: 42 wells in 2012
• Investment level 2012: 172,5 Bn NOK (30 bn USD)
300 5
4,5
250
Mill. barrels o.e per day

4 19 %
200 3,5 Produced
Mill. scm o.e
44 %
3 13 %
150 2,5 Reserves
2 24 %
100 1,5 Discoveries and
50 1 IOR
0,5
Undiscovered
0 0
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015
Oil Condensate NGL Gas Mill. barrels/day (right axis)
Norwegian Olje-
Renewable energy in Norway
• The world’s 6th

largest hydro-
power producer
• Nearly all electricity

production from
renewable energy
sources
• 67,5 % renewable
energy share
by 2020
Norwegian Olje-
State organisation of the
Norwegian petroleum sector
Norwegian Olje-
Petroleum policy
• The petroleum resources shall be
managed for the benefit of the
Norwegian society as a whole
• The right to sub sea petroleum

deposits is vested in the Stat
• Goal:
Maximize value creation through:
– legal / licensing system
– resource management
– R&D and industrial
development
• High focus and continous attention

to the environment and HSE!
Norwegian Olje-
Key principles of the Norwegian
resource management system
- Predictability, transparency and stability
- Clarity of the state’s different roles
- Striking the right balance between attracting

international E&P companies and building domestic
industry
- International participation
- National control
Norwegian Olje-
Our main activities
Opening of new areas
Awarding licences
Plan for Development and

Operations (PDO)
Production
Removal
Norwegian Olje-
Stepwise opening of new areas
Norwegian Olje-
The Norwegian licensing system
• Discretionary system using the

companies as agents to create maximum
values
• Stepwise exploration
Nomination Announcement Applications Negotiations Award
Norwegian Olje-
Licencing policy – Compete &
Cooperate
• Award of production licences based on
– geological understanding
– technical expertise
– financial strength
– experience with the oil company
• Oil companies compete to be awarded licence
• Awards are on non-discriminatory basis
• Plurality of ideas and internal checks and balances in a

production licence
• Cooperate in the joint venture to maximize the value in

the production licence
• State participation through SDFI
Norwegian Olje-
Government cash flow from the
petroleum industry
Norwegian Olje-
Norwegian Petroleum Tax System
Effects of the system:
• A neutral tax system - performs well regarding net present value per dollar
invested and break-even prices
• Low risk (sleeping partner) and few distortions to pre-tax economics
• Company based tax system, not project/field based (ring fence)
Operating income (norm price)

- Operating expenses
- Linear depreciation for investments (6 years)
- Exploration expenses, R&D and decommisioning
- CO2-tax, Nox-tax and area fee
- Net financial costs
= Corporation tax base (tax rate 28 %)
- Uplift (5,5 % of investment for 4 years)
= Special tax base (tax rate: 50 %)
Norwegian Olje-
The State’s Direct Financial
Interest (SDFI)
• The Government holds shares directly in oil and gas

fields, pipelines and land-based plants
• Takes share in a production licence when awarded.

Receives revenues and pays cost as any other
company in the licence.
• Net cash flow from the SDFI portfolio is transferred

to the Government Pension Fund – Global
Norwegian Olje-
Petoro AS
• A 100 % government owned limited

company
• Business manager of the SDFI portfolio
• Relatively small – around 70

employees
• No dividends, no tax liability
Norwegian Olje-
Norwegian Olje-
The Government Pension Fund
Global and the fiscal rule
Norwegian Olje-
Pioneering achievements
Subsea to shore
Snøhvit/Ormen
New Lange, etc.
technology
Subsea & floating
Glitne
Åsgard
Norne 2009+++
Troll
Statfjord
satellites 2001
Platform-based
1999
Sleipner 1997
G.faks 1996
Statpipe
Ekofisk 1994 Significant
1993 step changes
1986
1985 Time
Source: Statoil
Norwegian Olje-
The Norwegian supply and
service industry today
36
62
26
Total turnover Norway International

turnover
Total turnover, Norwegian supply industry 2011
(bill. USD)
19 Norwegian Olje-
A Parallel and Active Commitment
Norwegian Olje- ogNorwegian

Ministry Ministry
of Petroleum and Energy
energidepartementet | regjeringen.no/oed
of Petroleum and Energy
Integrated Management Plans
• Integrated management plans for

all the Norwegian seas.
• Updated ever 4. years
• Based upon facts
• Provides a basis for coexistence

between industries, environment
and management of natural
resources
• Provides a stabile framework for

the petroleum industry
Norwegian Olje-
Thank you for your attention!
Olje- og energidepartementet | regjeringen.no/oed

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The Norwegian Model:

Evolution, performance and benefits

Minister of Petroleum and Energy

Olje- og energidepartementet | regjeringen.no/oed

Mill. barrels o.e per day

Oil Condensate NGL Gas Mill. barrels/day (right axis)

• The world’s 6th

• Nearly all electricity

• The right to sub sea petroleum

• High focus and continous attention

- Predictability, transparency and stability

- Clarity of the state’s different roles

- Striking the right balance between attracting

Opening of new areas

Plan for Development and

• Discretionary system using the

Nomination Announcement Applications Negotiations Award

• Oil companies compete to be awarded licence

• Awards are on non-discriminatory basis

• Plurality of ideas and internal checks and balances in a

• Cooperate in the joint venture to maximize the value in

• State participation through SDFI

Operating income (norm price)

• The Government holds shares directly in oil and gas

• Takes share in a production licence when awarded.

• Net cash flow from the SDFI portfolio is transferred

• A 100 % government owned limited

• Business manager of the SDFI portfolio

• Relatively small – around 70

• No dividends, no tax liability

Total turnover Norway International

Norwegian Olje- ogNorwegian

• Integrated management plans for

• Updated ever 4. years

• Based upon facts

• Provides a basis for coexistence

• Provides a stabile framework for

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