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Annual Report 2017Connection in the energy transition

EBN - Annual Report 2017 page 2

1. Foreword 1

2. About EBN 2

2.1 Profile 7

2.2 Organisationalstructure 9

2.3 Businessmodel 11

2.4 Ourpositionintheenergychain 13

2.5 Thedevelopmentofageologicalresource 15

3. Strategy 21

3.1 Trends 22

3.2 SWOTanddilemmas 23

3.3 Vision, mission and strategy 25

3.4 Organisationalchange 26

3.5 Materialthemes 27

3.6 SDGs 29

3.7 Connectivitymatrix 29

4. Resultsfor2017 35

4.1 Generalobjectives 37

4.2 Results:OurDutchGas 37

4.3 Results:ReturntoNature 43

4.4 Results:NewEnergy 45

4.5 Financialresults 48

4.6 Socialresults 50

4.7 Prospects2018 57

5. GovernanceandRisk 61

5.1 Riskmanagement 61

5.2 Riskappetite 66

5.3 Mainstrategicrisks 67

5.4 CorporateGovernance 74

6. ReportfromtheSupervisoryBoard 84

7. Aboutthisreport 92

8. FinancialStatements 100

9. Annexes 154

9.1 Interactionwithourstakeholders 155

9.2 ThepeopleofEBN 158

9.3 Governancetable 160

9.4 Remunerationreport 162

9.5 GRIIndex2017 166

9.6 10-yearkeyfigures 174

9.7 Glossaryandreferencelist 175

9.8 Contactinformation 177

Interviews

MaartenCamps(EZ)and

JanWillemvanHoogstraten(EBN) 18

ChrisdeRuytervanSteveninck(ONE)and

ThijsStarink(EBN) 32

PietervanOord(IRO)enEricKreft(EBN) 58

SaskiaHagendoorn(Hydreco)and

EvelineRosendaal(EBN) 81

Index


TheParisclimateagreementsarenowmorethantwoyearsold.Alothasbeensaidandwrittenaboutglobalwarmingduringthisperiod.Theneedtoreducethe globalCO2emissionshassunkinforalmosteveryone.EBNisalsoexpectedtotakemajorsteps.Although2030,and2050inparticular,stillseemfaraway,wedonothavetowaituntiltomorroworthedayaftertomorrow totakeaction.Wearenotonlygoingtotalkandwriteabouttheclimateproblem,butalsoactuallymakeandexecuteconcreteplanstopreventit.

1. Foreword


Inthisrespect,theambitionexpressedinthecoali-

tionagreementtorealisea49percentCO2reduction

by2030greatlyappealstous.Thiswouldenablethe

NetherlandstobecomealeaderwithinEurope;the

Europeantargetsfor2030arenowstillat40per

centCO2reduction.Together,wemustprovidea

frameworkforthisimportantambitionofthis

governmentintheyearstocome.Wecanonlymove

forwardwiththisbigchallengewithgenuinecoope-

rationandrealuseofeachother’sstrength.

Itshouldbeclearthattheroleoffossilfuelsand

thereforeofnaturalgasinourenergysystemwill

changeenormouslyinthecomingyearsanddeca-

des.Itisthereforeimportantthatthegassector

alsoasksitselfwhatthetargetof49percentCO2

reductionforgasextractionandsupplyinthe

Netherlandsmeans-bothinthesenseofitsown

operationalactionsandintheentirechainfrom

detectiontouse.Canthegassectorreachacredible

reductionof49percentin2030withthissupply

chainapproach?Andwhatisneededtodoso?These

arechallengesthatthesectorwillandmustbe

workingoneveryday.Thisdoesnotmeanthatthe

sectorhasbeenquietinrecentyears.Stepshave

beentakeninareassuchasPower2Gas,GreenGas,

Geothermics,CCSand(blue)hydrogen.Eachand

everyoneofthemisasustainableexample,which,

toagreaterorlesserextent,canandmust

contributetothe49percentobjective.

Wewillalsomakeourcontributiontotheclimate

objectivesintheCoalitionAgreementvisibleinthe

comingyears.Traditionally,EBNinvestsinthe

exploration,productionandstorageofgasandoil.

Thatisourstatutorytask.Butwithourknowledgeof

theDutchsubsurface,wealsowanttohelpaccelerate

theenergytransition.Notbystandingonthesidelines,

butasanactiveandinvolvedplayer.Ourrevised

strategyreflectsourambitionsinthisarea:inaddition

toourtraditionalrole,wearealsoanimportantplayer

whenitcomestoreuseanddecommissioningofobso-

leteoilandgasinfrastructureincludingCO2 storage,

andinadditionweencouragetheuseofsustainable

formsofenergyfromthesubsurfacesuchasgeother-

malenergy.Geothermalenergyhasgreatpotentialin

theNetherlandsandcanplayamajorroleinthe

transitiontoamoresustainableheatsupply.Iexpect

thisheattransitiontobeanimportantpartofthe

newClimateAgreement.

Inordertotakegeothermalenergytothenextlevel,

EBNiscraftingaso-calledGeothermalMasterPlan.

Thisprojectplanshowshowgeothermalenergycan

beorganisedintheNetherlands,andcanbeusedin

ordertomakeitasuccess.

Attheendof2016,wemadeasimilarMasterPlan

fortheactivitiesconcerningreuseanddecommissio-

ningofobsoletegasandoilinfrastructure.Oneofthe

recommendationsinthisplanwasthecreationofa

nationalplatform.Iamverypleasedthatwenowhave

thatplatformasof1Januaryofthisyearintheform

ofNexstep.Nexstepwillusethecomingyears

toorganisethereuseanddecommissioningofgasand

oilinfrastructureinanefficientandsafemanner.

QuakesarestilloccurringinGroningen.On8January

ofthisyear,themostpowerfulquakeinfiveyears

wasmeasuredat3.4ontheRichterscaleinZeerijp.

TheinhabitantsofGroningenarerightlyexperiencing

asenseofinsecurity.EBNdevelopedactivitiesin2017

inavarietyofwaystocontributetoasaferandbetter

productionoftheGroningenfield,inlinewithits

missionandthepolicyoftheMinisterofEconomic

AffairsandClimatePolicy.

Wehavecommencedseveralstudiesthatshould

contributetobetterinsightsintothesubsurface

models.Thisworkissupportiveandaddstothe

researchcarriedoutbyNAM,butalsobyotherparties

suchasSSMandKNMI.

Thisyear,EBNcreatedaninfographicabouttheenergy

systemintheNetherlandsforthesecondtime.Under


theheading‘EnergyintheNetherlands’,weprovidea

clearoverviewofhowtheenergysystemisstructured,

howitisusedforextractionandconsumption,and

alsowhichsectorscausemostCO2emissions.Theinfo-

graphicprovidesagoodinsightintohowbothelectrons

(electricity)andmolecules(includingnaturalgas)form

ourenergysystem,andtheinfluencethattheheat

demandhasonseasonalfluctuations.Itisouraimto

giveasmanyDutchpeopleaspossibleinsightintothe

systemandthusinitiateaninformeddialogue.That

alsofitswithourroleto‘giveenergytothetransition’.

OneofEBN’scorevaluesistocreateaconnection.

Thiscorevalueisarecurrentthemeinthisreport.In

concreteterms,thisisreflectedinthefourinterviews

inthereport.Eachofourstrategicpillars(‘OurDutch

Gas’,‘ReturntoNature’and‘NewEnergy’)isreflected,

andthereisaninterviewabouttheurgencyofthe

energytransitionwithSecretaryGeneralMaarten

CampsoftheMinistryofEconomicAffairsand

ClimatePolicy.

Jan Willem van Hoogstraten

CEO

From left to right: Jan Boekelman, Jan Willem van Hoogstraten en Berend Scheffers.


Key figures 2017 2016

Number of joint ventures 197 198

Of which exploration 44 46

Sales EBN part (bln. N3) 17.5 20

Sales (EUR million) 3,015 3,094

Net profit (EUR million) 556 333

Payments to the State (EUR million) 1,497 1,277

Investments (EUR million) 156 281

Depreciation and impairment (EUR million) 469 789

Social

Number of employees 82 81

Absenteeism through illness 4.0% 4,9%

Environment1

CO2 emissions 655Kton

Methane emissions 5,0Kton

Energy consumption 18,2PJ

1Operational performance indicators are reported based on statements by operators and consolidated by the Netherlands Enterprise Agency. These figures relate to the calculated EBN share in Dutch gas production and annual drilling activities.

The 2017 figures will only be available later this year and will be published in the EBN sustainability report 2017/2018.


2.1 Profile

EnergieBeheerNederland(EBN)isapolicyparticipationinwhichthesharesareonehundredpercentownedbytheDutchStateandaremanagedbytheMinistryofEconomicAffairsandClimatePolicy.EBNimplementstheenergypolicyoftheMinistryofEconomicAffairsandClimatePolicy.

2. About EBN


EBNusesitsknowledgeandexperienceinthearea

ofthesubsurface,theoilandgassectorandlong-

term,capital-intensiveprojectsforareliableand

future-proofsupplyofenergy.Wewanttomakea

constructivecontributiontotheaccelerationofthe

energy transition. This transition must ensure that

theDutchenergysupplyin2050isCO2neutral.Our

energysupplywillchangedramaticallytoachievethe

goalsofthe2015Parisclimateagreement.Thedevelop-

mentsintheclimateandenergyfieldmeanthatEBN

nolongerexclusivelyfocusesontheexploration,

productionandstorageofgasandoil.

Wehavereviewedourstrategicprioritiesin2016.

Undertheheading‘energisingthetransition’we

arenowfocusingon:thesustainableandsafe

developmentofnaturalgasandoilreservesinthe

Netherlands,safeandsustainablereuseanddecom-

missioningofdisusedinfrastructure,andtheuseof

sustainableformsofenergyfromthesubsurfacesuch

asgeothermalenergy.Finally,wewanttocontribute

tothedevelopmentofknowledgeaboutnewapplica-

tionsoftheDutchsubsurfacesuchasthestorageof

energyandCO2.

Weareactiveasanon-operatingpartnerinalmost

twohundredjointventureswithoilandgascompanies,

wherewegenerallyinvestfortypercent.Inthisrole,

weputtheMiningActintoeffect.Thisisfurther

explainedinthebusinessmodelonpage10.EBNalso

hasinterestsininfrastructure:offshorepipeline

systemsandgasstorage.Inaddition,wehaveaforty

percentinterestinGasTerraB.V.,inwhichtheState

andwehavepartneredwithShellandExxonMobil.

Wesellourgasthroughthisgaswholesaler.


2.2 Organisational structure

EBNhasovereightyemployees,allofwhomare

workinginUtrecht.WehaveanExecutiveBoard

and a Supervisory Board. EBN has been organised

insixmultidisciplinarythematicteamssince

September2017:SmallFields,Groningen,

Exploration,Decommissioning&Reuse,Geo-

energyandAdvice&Innovation.EBNalsohasa

numberofsupportdepartments:HR&Facility,

Legal,Communications&PublicAffairs,Internal

Audit,Accounting&Reporting,TreasuryandICT.

Specialistdisciplinescometogetherindepartments

atEBN.Readmoreaboutourorganisational

changeonpage54.

CEO

CEO Director Strategy & Technology

DirectorFinance

HR, Support & Facility Legal

Communicationsand Public Affairs

Theme Decommis-sioning and Re-use

Theme Geo-Energy

Theme Advice & Innovation

Treasury

ICT

Theme Small Fields

Theme Groningen

Theme Exploration

Accounting & Reporting

Internal Audit

Investing in projectsFeedback

Knowledge Impact

Valuecreation

Developingknowledge

Applyingknowledge

Input Results

Core activityInput Output Impact

Managing our participating interests

• Reserves in the oil and gas deposits• Empty oil and gas fields • Sources of geothermal energy

Natural

• Exploration and production projects• Co-owner of offshore and onshore

infrastructure

Produced

• In-depth knowledge of the Dutch oil and gas industry

• In-depth knowledge of the subsurface of the Netherlands and its geological energy sources, as well as the corre-sponding infrastructure.

• Own studies into potential energy reserves from the subsurface and related production methods

• Valuable data and analyses

• Investing in new knowledge, analyses and instruments

• Learning from operational activities

• Insights into opportunities and new developments

• Marketing new opportunities• Innovation• Advice to Economic Affairs

and Climate Policy• Contributing to knowledge

development on the uses of the Dutch subsurface

• Bringing together technical, commercial, legal and business information

• Managing participating interests

• Advising• Knowledge exchange

Intellectual

• Seventy-five percent of our employees are knowledge workers with an academic or post-academic background

Human

• Sizeable cash flow, financing and equityFinancial

• Our network in the Dutch energy sector • Our share of GasTerra• Participation in the (Ultra Deep)

Geothermics Green Deal• Coordinating role in the National

Platform for Reuse and Decommissioning• Dialogue with stakeholders• Contacts with knowledge institutes and

universities

For more information, see alsoEBN’s stakeholders (page 50)

Social/relational

Investing and collaborating

Societaleffects

Developing and applying knowledge for our collaborations

Sharing and deploying knowledge

Exploration of new oil and gas deposits

Developing extractable oil and gas reserves

Optimising the production of oil and gas reserves

Collaboration in relation to oil and gas infrastructure that has

fallen into disuse

Developing CO2 and energy-storage projects

Accelerating (ultra deep) geothermal energy in the Netherlands

• Gas and oil deposits in the subsurface (reserves) • The growth of these reserves represents a value

which may yield financial capital at a later stage• Utilising empty gas fields for CCS and energy

storage

Natural

• Security of supply• Supply security

Energy supply

• Contributing to the accelera-tion of the energy transition

• Greenhouse gas emissions

Climate

• Yields/prosperity• Direct and indirect

employment• Competitiveness

Economy

• Environmental impactNature & Environment

• New assets, such as infrastructure for production• Possibilities for the reuse of infrastructure, such as

electrification and the generation of hydrogen • New exploration and production projects

Produced

• Increasing knowledge through study, research, and thanks to experience gained

• New insights and technologies • Putting knowledge amassed to use for new

applications in the Dutch subsurface• Encouraging the sharing of best practices

Intellectual

• Committed and motivated employees• The level of our employees’ knowledge and

(advisory) abilities increases through training and development

• Attracting and developing talent through traineeships

Human

• Encouraging activities in the energy sector • Creating collaborations to encourage initiatives

for the energy transition. • Dialogue with stakeholders, also with

stakeholders outside the sector, to boost support for our activities

Social/relational

• Proceeds from the gas and oil sales; we pay our profit to the State.

• Cost savings thanks to synergy in decommissioning activities

Financial



2.3 Business model

Ourbusinessmodelisbasedonthesix‘capitals’

fromtheframeworkoftheInternationalIntegrated

ReportingCouncil(IIRC):naturalcapital,manufactured

capital,intellectualcapital,humancapital,socialand

relationshipcapital,andfinancialcapital.These

capitalsaretheinputofourcoreactivitieswithwhich

wecreateeconomicandsocialvalue.

2.3.1 The input: Our six capitals

Thereservesofgeologicalenergysourcesinthe

Dutchsubsurface,aswellasourknowledgeof

andcollaborationswithintheenergysector,

arethemainelementsoftheinputforEBN.

Seefigureonpage10.

2.3.2 Core activities

Thecoreofourbusinessmodelconsistsofthree

activities:investingandcollaboratingbothinour

currentpartnershipsandinfuture,managingour

participationsanddevelopingandapplyingknow-

ledgeforourparticipationsandnewapplications

oftheDutchsubsurface.


Weinvestinthesafe,sustainableandoptimaluseof

(existing)gasandoilfields.Whereinfrastructure(pipe-

lines,platforms)hascometotheendofitslifecycle,

weinvestineffectivereuseand/ordecommissioning.

Wetakealeadingroleinthedecommissioningissue

throughtheNationalPlatformforReuseandDecom-

missioning,Nexstep.Weareadrivingforcebehind

improvingsustainabilityperformanceandhaveanactive

approachtoconsolidatingpublicbackingforouractivi-

ties.Weworktogetherwithvariouspartiestoaccelerate

thedevelopmentof(ultra-deep)geothermalenergyin

theNetherlands.


Knowledge Impact

Valuecreation

Developingknowledge

Applyingknowledge

Input Results




Natural


infrastructure

Produced














Intellectual


Human





universities


Social/relational


Societaleffects







fallen into disuse





storage

Natural


Energy supply



Climate



Economy




Produced




Intellectual




Human




Social/relational



Financial


Knowledge development and application

ThebackboneinthebusinessmodelofEBNis

knowledgeofresourcesinthesubsurface.Weusethis

knowledgeforourparticipationsandpartnerships.

Thankstothecontinuousandstructuralcooperation,

the(mutual)knowledgeexchangeremainsguaranteed.

Weinvestinourownstudiesandareinvolvedinstudies

ofpartnersorthirdparties.Wegenerateinsightsinto

possibilitiesandopportunitiesfornewdevelopments

intheDutchsubsurfacesuchasgeothermalenergy

andthestorageofenergyandCO2.Wecreatevalue

byusingourknowledgeintheentireDutchenergy

sector.WealsoadvisetheMinistryofEconomic

AffairsandClimatePolicy.

Managing our oil and gas participations

Withknowledgeandanalyses,EBNcandirectly

influenceoperators(theoilandgascompanies)in

theirchoicesanddecisions.Basedonourinsights,

weadviseoperatorstocontinueinvestinginthe

explorationandproductionofDutchnaturalgasand

oiloffshorewhereverpossible.Duringthisgovernment’s

termofoffice,operatorscannotapplyforexploration

licencesfornewonshoregasfields.

Wecloselymonitortheperformanceofour

participations.Thismeanswecanmakeadjustments

wherenecessaryandpossible.Weuseabi-annual

standardisedanalysisthatincludesoperational

costsandrates.Thishelpsusmonitorhowthe

participationsoffshoreareperformingcomparedto

otherexplorationsandextractions.Weencourage

thesharingofBestPracticeswherepossible,sothat

operatorscanlearnfromeachother’sknowledge

andanalysis.

2.3.3 The output: What is the result?

ToEBN,knowledgeandeconomicvaluearethemost

importantelementsoftheoutput.Bothareusedas

investmenttosafeguardthecontinuityofenergy

productionintheNetherlands.

Seefigurepage10.

Ouractivities,andthoseofotherpartiesinthechain,

haveanimpactonsociety-particularlyontheenergy

supply,economy,thelivingenvironmentandthe

environment.Theimpactcanbepositiveaswellas

negative.

Positive impact

EBNsharesoperationalandtechnologicalknowledge

withpartnersinthesectorandalsosharesits

knowledgeofthesubsurfacetoacceleratetheenergy

transition,forexampleintheareaofgeothermal

energyandCO2storage.EBNcontributestothe

securityofsupplyofenergyintheNetherlands.

TheeconomicvaluecreationisthecashflowtotheDutch

State:thenetearningsplusleviesandtaxes.The

possessionofgashashadamajorimpactonprosperity

intheNetherlandsinrecentdecades,butthisimpact

hasbeenreducedinrecentyearsduetodecliningnatural

gasproduction.Therenewableenergysourcesfromthe

Dutchsubsurface,suchasgeothermalenergy,havethe

potentialtobeapowerfulengineforthelocaleconomy.

Theindustriesprovidedirectandindirectemployment.

Negative impact

InGroningen,theextractionofnaturalgashasa

majoreffectonthelocallivingenvironment.The

impactofearthquakesishuge.Theyresultindamage

tobuildingsandinfrastructure.Thedamageinthe

gasextractionareaismorethanjustmaterial.Many

peoplearefacedwithuncertainty.


Knowledge Impact

Valuecreation

Developingknowledge

Applyingknowledge

Input Results




Natural


infrastructure

Produced














Intellectual


Human





universities


Social/relational


Societaleffects







fallen into disuse





storage

Natural


Energy supply



Climate



Economy




Produced




Intellectual




Human




Social/relational



Financial


Theproductionofoilandgasaswellastheuseof

thesefossilfuelscause,amongotherthings,emissions

thatareharmfultotheenvironmentandcontributeto

thegreenhouseeffect.Thereisalsoaverylimited

riskofdirectpollution,forexamplebyleaks.The

infrastructureatoilandgasfields(offshoreaswellas

onshore)thatapproachestheendofitsusefullifeis

alwaysapointofattention.Platformsmustbecleared

awayorgivenanotherfunction.Offshorepipelines

andwellsmustbeleftbehindcleanandsafe.Insome

cases,theyneedtoberemoved.

2.4 Our position in the energy chain

Theillustrationonpage14showswhatour

involvementisintheenergychain.EBNisresponsible

forcertainpartsinthischainitselfortogetherwith

others.Wehaveasocialobligationtocontributeto

anindependent,reliableenergysupplyinthe

Netherlands.Weprovideessentialenergyfromthe

Dutchsubsurfaceincooperationwithourpartners.

Searching for and extracting energy sources

EBNinvestsintheexploration,extractionandstorage

ofenergysourcessuchasnaturalgas,oilandpossibly

alsogeothermalenergyfromtheDutchsubsurfacein

thefuture.Theseactivitiesarealsocalledupstream

activitiesandarepartofEBN’scoreactivities.

OperatorscarryouttheworkandEBNco-invests.

Asapartnerinajointventure,EBN(andindirectly

theState)alsocontributestotheincome,andisalso

responsibleforitsshareinthecostsincurredas

agreedinthecooperationagreement.Thedevelopment

ofoilandgasreservesandthedevelopmentof

geothermalenergyiscarriedoutinanumberof

steps, see page 15.

Sales of oil and gas

Theminingcompaniesoftensellnaturalgasandoil

towholesalecompanies,includingGasTerra.GasTerra

sellsgastovariousmiddlemenandendusers.EBNis

co-shareholderofGasTerra,andisinvolvedinthe

policyofGasTerraB.V.throughtwoseatsonthe

SupervisoryBoardandtwoseatsontheBoardof

DelegatedSupervisoryBoardmembers.EBNhasno

activeroleinthestepsthatfollowfromthesaleof

the own gas.

Storing energy sources

Emptygasfieldscanserveasstorageofenergysources,

includingforgasstorage.Thetimethatnaturalgasis

usedcandifferfromthetimethatitisproduced,

asaresultofwhichitisnecessarytoarrangestorage

capacity.EBNisthejointowneroffourunderground

gasstoragefacilities.Asaresult,EBNhassome

involvementinmidstreamactivities.

Inthefuture,emptyoffshoregasfieldsmayalso

beusedforthestorageofCO2.EBNexploresthe

possibilitiestogetherwithpartnersfromthesector.

Use of energy sources

EBNhasnoroleinthetransportanddistribution

ofenergyandthereforehasnoroleindownstream

activities.

Reuse and/or decommissioning of used infrastructure

Attheendofproduction,theusedinfrastructurewill

becomeobsolete,butitmaybemadeavailablefor

otherapplications.EBNisanenergiserfortheeffective

decommissioningandreuseofdisusedinfrastructure.

Wehaveapioneeringroleinthedecommissioning

issuetogetherwithNexstep,theNationalPlatformfor

reuseanddecommissioning.

Local gastransport

Geothermal energy

Integrating wind and gas

Gas storage Storage of CO2Exploration and production of oil and gas fields, both onshore and offshore

EBN is engaged in these activities EBN develops these activities EBN is not engaged in these activities

National gastransport

Gas collection pipelines at sea

Carbon capture


Seismic Design Exploration Drilling and construction

Decommisioning Production

Development of oil and gas field


2.5 The development of a geological resource

Theillustrationbelowshowshowthedevelopmentof

ageologicalresource(oil,gasorgeothermalenergy)

takesplace.Fromtheexplorationtoclearingupthe

infrastructure.Inthisprocess,therearemanyareas

ofoverlapforoilandgasandgeothermalenergy

respectively.

Prospecting

Oil and gas:EBNcarriesoutstudiesintopotentialnew

gasandoilsites,usingregionalknowledgeandseis-

micimages.

Geothermal energy:Feasibilitystudiesarebeingcon-

ductedtodeterminewhetheraregionissuitablefor

extractinggeothermalenergy.Theexplorationofthesoil

isdoneusingregionalknowledgeandseismicimages.

Start of exploration

Oil and gas:alongwithlicenceholders,wetest

possiblegasoroilresourcesthroughtestdrilling.

Geothermal energy:ifageothermalenergycompany

hasfoundasuitablelocationduringtheexploration

phasewheretheywishtodrillforgeothermalheat,

alicenceisrequired.Thecompanyappliesforthis

licencefromtheMinisterofEconomicAffairsand

ClimatePolicy.Thenthefirstwellisdrilled.

Construction

Oil and gas: together with our partners, we have

economicallyviableintentionsfordevelopment.

Geothermal energy:whenasuitableaquifer(an

undergroundlayerofwater-bearingpermeablerock)

isfoundwiththedesiredtemperature,andifit

appearsthatgeothermalenergyproductionis

possible,asecondwellisdrilled.Thesetwowells

arecalledadoubletandformtheproductionsite.

Development Decommissioning

!"#$"%%&%'(

Exploration

Development of Geothermal

Production Realization


Production

Oil and gas:thereservesareproducedaslongas

economicallyviable;atthisstage,theinvestments

earnthemselvesback(asarule).Thegasfindsitsway

inthechaintotheendusers.

Geothermal energy:hotwaterispumpedupfrom

thewell,passedthroughaheatexchangerandthen

pumpedbackintothegroundviatheotherwell.The

heatexchangerextractstheheatfromthewaterand

transfersittothewaterinaheatnetwork.Theheat

thenflowstotheendusersviatheheatnetwork.

Clean up

Oil and gas:onceagasproductionhascometotheend

ofitslifespan,wellsarepermanentlyclosedandthe

infrastructureisdecommissioned.Thesurroundings

arerestoredtotheirformerstate.Insomecases,the

infrastructurecanbereusedoranemptygasfield

canbeusedforthestorageofenergyorCO2.

Geothermal energy:whenalocationisnolongerin

use,thegeothermalenergycompanymustcleanitup.

Thewellsareclosedandtheinstallationsareremoved.

Thesurroundingsarerestoredtotheirformerstate.

Whendrillingforoil,gasorgeothermalenergy,State

SupervisionofMines(SSM)ensuresthatthisisdone

inasafemannerforpeopleandtheenvironment,

andcomplieswithlawsandregulations.Formore

informationonthedevelopmentofanoilorgas

field,visit:www.hoewerktgaswinnen.nl. For more

informationonthedevelopmentofgeothermal

energy,visit:www.hoewerktaardwarmte.nl.

http://www.hoewerktgaswinnen.nl

http://www.hoewerktaardwarmte.nl


Cooperation crucial to energy goals in coalition agreement“Wehaveambitiousgoals:wearegoingfora49%CO2reductionin2030andweareaimingfor55%inEuropetogetherwithlike-mindedcountries.Ambitious,butmostcertainlyfeasibleinouropinion. Theindustrialsector,thebusinesssector,centralandlocalauthoritieswillhavetoworktogethertoachievetheobjectivesofthecoalitionagreement.Formany,itwillrequireadifferentwayofthinkingandworking.Thebeautyofitisthatmoreandmorepartiesaretaking upthegauntlet.”

Interview


Interview

So says Maarten Camps, secretary general of the

Ministry of Economic Affairs and Climate Policy

(EZK). He spoke with Jan Willem van Hoogstraten,

CEO of EBN, about the challenges of the coalition

agreement.

VanHoogstraten:‘Collaborationisindeedcrucialto

achievingtheambitions.Wecanonlymoveforward

byjoiningforcesandusingeachother’sstrength.At

thesametime,theurgencyoftheclimateproblem

andwithitthenecessityoftheenergytransitionhas

notyetsunkinforeveryone.AndIamtalkingspecifi-

callyaboutthescopeoftheobjectives.Thatisimmense.

Inthatrespect,youcansaythatweneedarevolution

ratherthanevolution.Itrequiresadirector,adriver.

AsfarasIamconcerned,thisisataskforthe

government.Agoodexampleofthepositiveeffectof

governmentpolicyistheSDE+(incentiveschemefor

renewableenergyproduction).

Camps:‘Thedevelopmentsaremovingveryswiftly.

Weareleadinginternationallywithoffshorewind,

thefirstsubsidy-freeoffshorewindfarmseemstobe

becomingareality.Wewouldnothavedaredtodream

thatafewyearsago.Theapproximately12companies

thatareresponsibleformostoftheCO2 emissions are

feelingtheurgencyandaskingforgovernment

instrumentsfortheenergytransition.Innovationis

movingfast.CO2storageshouldalsomakeasubstan-

tialcontributiontothis.Iamconvincedthatin2030

wewilldothingsdifferentlythanwecannowforesee.

Forexample,lookatthepotentialofhydrogen.We

stilldonotknowenoughaboutthat,soitisusefulif

westartonsomepilotprojects.Andthatiswhyitis

alsoimportantthatanorganisationsuchasEBNhas

turnedaround.Ontheonehand,youarefacedwith

thefossilsideofthetransition-helpinginasafeway

toachievethereductionofoilandgas-ontheother

hand;yourknowledgeandskillsareessentialforthe

developmentofrenewableenergysources,inparticu-

largeothermalenergy.TheMinistryandEBNeach

workfromtheirownrolesonareliable,future-proof

andclimate-neutralenergysupply.Inrecentyears,

wehavegrownclosertowardseachother.Ifwelook

forwardtogether,wecanachievesuccesstogether.’

VanHoogstraten:‘Itotallyagree.AsEBN,ournew

rolemeansthatwealsohavetodealwithdifferent

partiesthanbefore,suchasIPOandVNG.Thissome-

timestakessomegettingusedtoforeveryoneinvol-

ved.Ifwejoinforceswiththeministryandtrusteach

other,thiswillgiveanimportantboosttothesupport

neededforthetransition.Incombinationwithlegisla-

tionaimedatsustainability,wecantakemajorsteps.

Ialsoseeanimportantroleforthegovernmentat

locallevel.Whenitcomestothedecommissioningor

Maarten Camps SecretarygeneraloftheMinistryofEconomicAffairsandClimatePolicy(EZK)

Jan Willem van HoogstratenCEOofEBN


Interview

conversionofexistinggasfacilities,theballliesinthe

municipalities’court.TheannouncedClimateActand

aNationalClimateandEnergyAgreementcanalso

providetherequiredaccelerationatlocallevel.Alt-

houghweasasocietymaybefacingourbiggestchal-

lengeever,Iamconfident.Itislikethatriddle,‘How

doyoueatanelephant?’Onebiteatatime.’

Camps:‘Weshouldindeednotbeputoffbythehigh

levelofambition.Wehavetoworktogetherandshow

couragetoinnovate.Inmyopinion,workingonpilot

projectsandifsuccessful,largescalerollout,is

essential.Iamthereforepleasedthatthiscoalition

agreementhascleargoals.Iamconfidentaboutour

sustainablefuture’.


TheNetherlandsisinthetransitiontoaCO2neutralenergysupplyin2050.Theenergysystemasweknowittodaywillchangedramatically.ThesedevelopmentsaffecttheenergysectorandthereforealsoEBN.Theenergytransitionandotherdevelopmentsalsoaffectourstrategy,ouractivitiesandbusinessoperationsintheshortandlongterm.EBN’sbusinessmodelisthereforegreatlysubjecttochange.

3. Strategy

Mission

Strategy

Stakeholders

MaterialityResults

Objectives

Value Creation

Trends & Developments

Risks

SWOT


Thefigurebelowshowshowourannualreportcan

beread.EBN’smissionandsocialroleareembedded

inourthreestrategicthemes.Theinterestsofour

stakeholdersareembeddedinourmaterialthemes.

EBN’sstrategyalsoprovidesanswerstotrendsand

developmentsthatinfluenceourdailypracticeand

thepossiblerisksthatthischangedenvironmenthas

broughtwithit.Theopportunitiesandthreatscome

totheforeintheSWOT.EBNhasformulatedobjectives

tofulfilitsmission.Theresultsperstrategicpillar

(page35)leadtothecreationofvaluethatcanbe

foundinourvaluecreationmodelonpage10.

3.1 Trends

Climatechangeisaglobaldevelopmentthathasa

majorimpactonourglobalsocietyanditseffecton

theimageofgas.EBNhasidentifiedthreetrendsthat

influenceourdailyactivities:theenergytransition,

thepublicbackingfortheoilandgasindustry,and

decliningproductionandprolongedlowprices.

Inrecentyears,thegasindustryhascomeunder

pressurebecauseofthesetrends.

The energy transition

Ambitiousclimateobjectiveshavebeenincludedin

thecoalitionagreementRutteIII‘Confidenceinthe

future’.Thecurrentgovernmentisaimingfora49%

CO2reductionin2030.Toachievethisreduction,

thegovernmentisprovidingatransitionphasefrom

fossilenergytosustainableenergy.

ThecoalitionagreementdescribeshowtheDutch

subsurfacewill(continueto)playanimportantrole

inthetransition:‘Thesubsurfacealsoplaysanincre-

asinglyimportantroleinsustainability,forexample

fortheextractionofgeothermalenergy,thestorage

ofsubstancesandtheextractionofdrinkingwater’.

TheDutchgovernmentisaimingataCO2neutral

energysupplyin2050,inlinewiththeParisclimate

agreement.EBNwouldalsoliketomakeaconstructive

contributiontotheenergytransition.Weareusing

ourknowledgeandexperienceintheareaofthe

subsurfaceforareliableandfuture-proofenergy

supplyinthelongterm.Forexampleinthefieldof

geothermalheatandthestorageofCO2.

Public backing for the oil and gas industry

Inrecentyears,thereputationoftheoilandgas

industryhasdeterioratedintheNetherlandsand

Europe.Issuessuchas‘safety’,‘environment’and

‘oldfashionedfossilindustry’arehighlightedinthe

socialdebate.TheearthquakesinGroningencause

damageresultinginafeelingofinsecurityanduncer-

taintyamongresidentsoftheprovinceofGroningen.

Thishasgreatlyreducedthepublicsupportforgas


extractionintheNetherlands.EBNiscommittedto

informingitsenvironmentascarefullyaspossible

andincreasingknowledgeinthefieldofoilandgas

extraction.

Declining production & prolonged low prices

Theavailabilityofeconomicallyrecoverablereserves

requiresmorecomplexexplorationandextraction

techniques.Thismeanshighercostsforoperators.At

thesametime,oilandgaspriceshavebeenrelatively

lowinrecentyears.Consequently,theproduction

fromoursmallfieldsisdeclining.Inaddition,the

numberofplatformsthatareattheendoftheirlife

spanandthatwillhavetobedecommissionedinthe

nextfewyearsisgrowing.Theextractionfromthe

Groningenfieldhasbeensharplyreduceddueto

safety.Allofthiscreatesfinancialpressureon

resultsoftheoilandgasindustry.

ItisnecessarythatEBNanditspartnersinvestmore

inefficiencyandinnovation.

3.2 SWOT and dilemmas

ASWOTanalysiswasdrawnuptoelaborateonthe

strategy. The SWOT provides insight into the

strengthsandweaknessesofEBN.Partlyonthis

basis,wecanidentifyanumberofdilemmas:

1. Thegasparadox:naturalgasispartofboth

theproblem(CO2emissions)andthesolution

(contributiontotheenergytransitionthrough

flexibility,transportability,storagepossibilities,

reuseofthegasinfrastructureandlowerCO2

emissionscomparedtocoal).Thechallenge

hereistodealwiththisascarefullyandbalanced

aspossible.

2. Thelackofsupportdiscouragesactivitiesrelated

togasextraction.Atthesametime,EBNisin

favourofcreatingeconomicandsocialvalue

bymeansof,amongotherthings,thisgas

extraction.Tensionexistsbetweenthem,which

iswhythoseconcernedmusthandlethisas

wellaspossible.

3. Thereisstillaconsiderableamountof

recoverablereservesintheNorthSea,whichare

oftendifficulttoaccess.Atthesametime,there

isthecallfordecommissioningexistinginfra-

structure.Itisatrickybalancebetween,onthe

onehand,notremovingimportantinfrastructure

toosoonsothatpotentialextractionofgas

resourcesremainpossibleand,ontheother

hand,heedingthestatutoryclean-upobligations.

Threats

• Oilandgaspriceslowforthelongterm,negative

investmentclimate

• SupportforE&Pactivitieshasdeteriorated

• EarthquakesinGroningenandotherdisasters

• Disappearinginfrastructure

• Long-termlowpricesgiverisetotheriskthatjoint

venturepartnerscannotsatisfyclean-upobligations

• DatatheftorITsystemsnotavailable

• EBNmaynotbeabletoparticipateadequatelyin

futurebecauseofinsufficientmandate

Strengths

• TrustedandactivepartnerintheE&Pindustry,also

whenitcomestoreuseanddecommissioning

• OverviewpositionintheE&Pindustry

• UniquedatapositionforE&Pactivities

• EncouragingE&Pactivitiesbyownstudies

• Facilitatingknowledgesharingwithinandoutside

ofthesector

• Qualifiedpersonnel

• Positivecompanyculture(greatplacetowork)

• Relativelysmallorganisationwithfinancialstrength

Weaknesses

• EBNrelativelyunknownamongrelevantstakeholders

• Notyetveryactiveinthecommunicationwith

externalstakeholders

• ITsystemsnotyetadequatelyadjustedinlinewith

revised strategy

• Collaborationamongthemes/departmentsat

EBNcouldbeimproved

Opportunities

• Uniquedatapositionforsubsurfaceactivities

• Contributingtotheaccelerationoftheenergytransition

• E&Pinfrastructurecanbeusedfortheenergytransition.

• Furtherfleshingoutapioneeringroleindecommissioning

and reuse

• Contributingtothedevelopmentof(ultradeep)

geothermalenergy

• DrivingefficiencyinE&Pactivities(low-costdevelopment)

• Encouragingnewactivitiesinopenareas(particularlyatsea)

• AttractingnewoperatorsfortheNetherlands

SWOT



3.3 Vision, mission and strategy

Duetothechangedenvironment,EBNfurther

examinedthefocusoftheactivitiesatthattimein

2016andweexplorednewactivities.Wehaveidentified

anumberofprioritiesinthestrategy.Afterthe

reassessmentofthestrategy,ourorganisationwas

adaptedtothenewstrategyin2017,sothatexisting

andnewactivitiescanbeproperlysecuredinthe

organisation. This is how we give meaning to the

moreactiveroleweaspireto.Readmoreaboutour

new organisation on page 54 and how it has been

fortifiedforfuturedevelopments.

3.3.1 Vision and mission

Ourvisionis:‘TheDutchgeologicalenergysources

playanimportantroleintheenergytransition’.

Ourmissionis:‘Realisingvaluefromgeological

sourcesofenergyinasafe,sustainableand

economicallyresponsiblemanner’.

3.3.2 Strategic priorities

Threestrategicprioritiesdetailourmission:

• Our Dutch Gas:MakingthemostofDutchenergy

sources;

• Return to Nature:takingtheleadinthe

decommissioningissueandcontributingtothe

developmentofCO2 storage

• New Energy:Contributingtoacceleratingthe

developmentof(ultradeep)geothermalenergy

and energy storage.

Our Dutch Gas

EBNisworkingonsolutionstooptimally,sustainably

andsafelyutiliseexistinggasfields.TheNetherlands

stillpossessesaconsiderablepotentialofgasresources,

whichcanbeusedfortheenergytransition.Wewant

tousetheDutchgasonlywheretherearenomore

sustainableorcleanerformsofenergyavailable(yet).

Thismeansgascanbethesupportandbackupfor

renewableenergy.Gaswillprobablycontinuetoplay

animportantroleuntilweareabletosetupour

entireenergysupplyinasustainablemanner.Here

werefertotheEnergyAgendaoftheMinistryof

EconomicAffairsandClimatePolicy,whichdescribes

theroleofgasasfollows:‘Gas, as the least polluting

fossil fuel, will continue to play an important role in the

transition for a long time [ed: decades] also on the transition

path to the ambitions of the Paris Climate Agreement’.

Return to Nature

EBNtakescontrolofeffectivelydecommissioningor

reusingdisusedoilandgasplatforms.IntheNorth

Sea,butalsoonshore,theoilandgasindustryfacesa

majorchallengeinthecomingyears.Moreandmore

fieldsarereachingtheendoftheirusefullife.

Thisallowstheoilandgasinfrastructuretobecome

availableforotherapplications.EBNandNOGEPAset

uptheNationalPlatformforReuseandDecommissio-

ning,Nexstep,inOctober2017,followingrecommen-

dationsintheNovember2016Masterplanfor

Decommissioning&Re-use.Wehavedrawnupthis

MasterPlanin=collaborationwiththesector.EBN

striveswiththesectortowardsasafe,sustainableand

cost-efficientreuseordecommissioningofexisting

infrastructure.Theenergytransitionoffersanoppor-

tunitytoreuseexistingelementsbeforetheultimate

safeandefficientdecommissioning.Forexample,CO2

canbestoredinempty-producedgasfieldsonthe

North Sea. This is seen as a good opportunity to

reduceCO2emissions.EBNsupportsprojectsforthe

developmentofCO2 storage.

New Energy

EBNdevelopspartnershipstousegeothermalenergy

efficiently.TorealiselowCO2energysupplyinthe

Netherlandsin2050,theDutchheatsupplymustbe

mademoresustainable.Geothermalenergycanmake

amajorcontributiontoCO2neutralenergymanage-

ment.TheMinistryofEconomicAffairsandClimate

Policy,togetherwithEBNandTNO,exploredthe

possibilitiesforrealisinggeothermalpilotprojects

lastyear.Onthebasisofthissurvey,twoGreenDeals

weresignedinJune2017;GreenDealBrabantandthe


GreenDealUltraDeepGeothermal.TheGreenDeal

partiesareworkingontherealisationofvarious

geothermalprojects.Asanon-operatingpartnerEBN

offersthesepartiessupportbymakingourknowledge

andexpertiseavailableandworkingwiththeparties

onaportfolioapproach.Thecoalitionagreement

of2017providesthatthesubsurfacewillplayan

increasinglyimportantroleinthetransitiontoa

sustainableCO2lowenergysupply.

AnamendmenttotheMiningActisnecessaryto

enableEBNtoplayagreaterroleinbothgeothermal

andCO2 storage.

3.4 Organisational change

Afterthechangeinstrategicpriorities,astartwas

madeonimplementationofthestrategywithinour

organisationattheendof2016.Thiswasfollowedup

onin2017.Toempowertheorganisationadequately

fortheimplementationofthestrategy,amore

thematicallydesignedorganisationalmodelwas

sought.Themanagementworkedonmorefocus,

moreflexibilityandworkinginamoreresult-oriented

mannerwiththeaimofcreatinganorganisation

thatistoughenoughforfuturedevelopments.

Asof1September2017,EBNisworkinginthenew

organisation.

Strategic pillar Material issue More information about this Page

Produced 1 Encouragingeffectivedetectionand

extractionofoilandgas

2 Effectivedecommissioningandreuse

Results2017:OurDutchGasInteractionwithstakeholders

Results2017:ReturntoNature

3750

43

Intellectual 5 Guidingandcoordinatinginnovation

3 Collectingandbringingknowledge

Results2017

Results2017and interactionwithstakeholders

35

35,50

Human 9 Attractinganddeveloptalent

4 Effectiveadviceandinfluence

ThepeopleofEBN

Businessmodel

53

10

Natural 6 Sustainabilityinthevaluechain

7 Developmentofnewenergy

EBNSustainabilityReport2016-2017GRIIndex2017

www.ebn.nl

Annex9.5

Financial 8 Creationofeconomicvalue Financialresults

FinancialStatements47100

Social/relational 10 Creatingsupportforourwork

11 Guaranteeing(external)safety

12 Contributingtotheenergytransition

StrategyMainstrategicrisksInteractionwithstakeholders

About EBNBusinessmodelStrategyResults2017Interactionwithstakeholders

256750

710253550


Material themes

3.5 Material themes

Whichmaterialissuesareimportantforusandour

stakeholderstoincludeinourpolicyandtoreporton

inourannualreport?Togaininsightintothis,we

performamaterialityanalysis.Wecarriedoutan

extensivematerialityanalysisforthe2016annual

report,andthisyearareassessmentwascarriedout.

Thematerialitymatrixonpage28showshowmuch

weightthevariousmaterialissuesputonthescales

fortherelevantinterestedpartiesandforEBN.The

chartrevealswheretheinterestsoverlap.Wehave

classifiedourmaterialissuesaccordingtothe

structurefromtheframeworkoftheInternational

IntegratedReportingCouncil(IIRC).Ourmaterial

themesarebasedonfourvalues:transparency,

integrity,cooperationandstayingcritical.These

valuesformanobviousbasisforus.

http://www.ebn.nl


Materiality matrix

Impa

ct s

urro

undi

ngs

(st

akeh

olde

rs)

Influence EBN

low

low

high

hig

h

medium

med

ium

1. Encouragingeffectivedetectionand


2. Effectivedecommissioningandreuse

3. Collectingandbringingknowledge

4. Effectiveadviceandinfluence

5. Guidingandcoordinatinginnovation

6. Sustainabilityinthevaluechain

7. Developmentnewenergy

8. Creationofeconomicvalue

9. Attractinganddevelopingtalent

10. Supportforourwork

11. Safeguarding(external)security

12. Contributingtotheenergytransition

6

4

8

3

5

12 7

21

10

9

11


3.6 SDGs

EBNwantstocontributetotheachievementof

SustainableDevelopmentGoals.In2017,weidentified

threeSustainableDevelopmentGoals(SDGs)ofthe

UnitedNationsandlinkedthemtoourstrategy.

Thesesustainabledevelopmentgoalsconsistof

seventeengoalsthatshouldmaketheworlda‘better

placein2030’,accordingtotheUnitedNationsin

theirproposalforanewglobalagenda.Thesegoals

addressmajorglobalproblemssuchashunger,

inequalityandclimatechange.TheUnitedNations

isappealingtothecorporateworldtocontribute

towardsresolvingtheseproblems.

EBNstrivestocontributetothesegoalsbyintegrating

thegoalsthataremostrelevantinourstrategyand

businessactivities.

Todeterminewhichtargetsarerelevanttous,we

analysedallseventeenSDGs.ThreeSDGsareinline

withouractivitiesandourroleintheenergychain,

namely:

• SDG7:Sustainableandaffordableenergy

• SDG9:Innovationandsustainableinfrastructure

• SDG12:Sustainableconsumptionandproduction

WeseetheSDGsasanincentivetomakeourvalue

chainmoresustainableandtomakeaconstructive

contributiontotheaccelerationoftheenergy

transition.BygivingsubstancetotheseSDGs,weare

continuingourmission:‘Realisingvaluefromgeological

energysourcesinasafe,sustainableandeconomically

responsiblemanner’.Weregardthisasoursocial

role.In2018,wewillfurtherdetailthesethree

objectives.

3.7 Connectivity matrix

Ourstrategyprovidesananswertonewdevelopments

intheenergysector,theenergytransitionand

society.Thisallowsustofollowacoursemaking

EBNbetterabletodealwithchallenges,risksand

opportunities.Thematerialtopicsindicatewhatis

importantforourstakeholdersandforEBN,and

wherewehaveinfluenceandthereforealsohavean

impact.Webelieveitisimportantthatthereisaclear

linkbetweenthesematerialissuesandourstrategy.

Atthesametime,wealsowanttomitigatethe

associatedrisksthroughactiveriskmanagement.

Theconnectivitymatrixonpage30makesthisclear.

Theconnectivitymatrixshowstheconnection

betweenthevaluewewanttocreateandourstrategic

pillarsandriskslinkedtoourobjectives.

Strategic pillar SDG’s Material themes Strategic risks Focal points of strategic objectives for 2017

Achieved result

Our Dutch GasTheoptimal,safeand sustainableuseof Dutchgasfields

• Creationofeconomicvalue

• Contributingtotheenergytransition

• Collectingandbringingknowledge

• Safeguarding(external)security

• Encouragingeffectivedetectionand


• Sustainabilityinthevaluechain

• Creatingsupportforourwork

• Effectiveadviceandinfluence

• Attractinganddevelopingtalent

• Guidingandcoordinatinginnovation

• Consequencesofearthquakes

Groningen

• Contingencies

• Supportactivitiesonshore

• Supportactivitiesoffshore

• Commodityprices

• Cooperationandknowledge

sharing

• SettingUp‘BestPracticesForum’

• Health,SafetyandEnvironment

(HSE)benchmark

• Implementation2017-

sustainabilitypolicyactions

• OrganisingExplorationDay

• OrganisingProspexstand

• Atleastthreeexploration

licenceswillbeappliedfor

Return to Nature

Takingaleadingrole

in the reuse and

decommissioningof

disusedinfrastructureand

contributingtothedeve-

lopmentofCO2 storage



• Effectivedecommissioningandreuse

• Collectingandbringingknowledge


• Sustainabilityinthevaluechain




• Contingencies

• Supportactivitiesoffshore

• Clean-upobligations


sharing

• LaunchofNationalPlatformfor

DecommissioningandReuse

• Organisedecommissioningand

reuseconference

• SettingUpNorthSea

DecommissioningForum

(NL,UK,DK,NO)

New Energy

Contributingtoaccelera-

tingthedevelopmentof

(ultradeep)geothermal

energy and energy storage



• Collectingandbringingknowledg


• Developmentnewenergy

• Creatingsupportforourwork




• Contingencies

• Supportactivitiesonshore


sharing

• Website

www.hoewerktaardwarmte.nl

• Studyofundergroundenergy

storageintheNetherlands

• DeterminevirtualCO2pricefor

investmentproposals


Connectivity matrix 2017

The objective has been realisedThe objective has largely been realised The objective has partly been realised


Strategic pillar Focal points of objectives for 2018 Our impact Information on page

Our Dutch GasTheoptimal,safeand sustainableuseofDutch gasfields

• SigningandimplementingDecommission-ing

SecurityAgreementandDecommission-ing

Security&MonitoringAgreement

• ElectrificationoftheNorthSeahub(s)

• Developmentofthreedualplayexplorationtargets

Energy supply

Securityofsupply,Supplysecurity

ClimateContributiontotheaccelerationoftheenergytransitionGreenhousegasemissions

Economy

Revenue/prosperity,Directandindirectemployment

Nature & environment

Environmentaleffects

x

x

x

x

x

x

x

x

x

Return to Nature

Takingaleadingroleinthe

reuseanddecommissioning

ofdisusedinfrastructureand

contributingtothedevelop-

mentofCO2 storage

• DevelopingtheNexstepinnovationprogram2019

• SignCC(U)SprogrammeRotterdam

Climate

Contributiontotheaccelerationoftheenergytransition

Economy

Competitiveness



x

x

x

x

x

x

New Energy

Contributingtoaccelerating

thedevelopmentof

(ultradeep)geothermal

energy and energy storage

• PerformingExplorationWorkProgramme

Ultra-DeepGeothermalEnergy

• Oneworkshoppermonthforlocal/regional

authorities, water boards

• PresenceatVNGcongress

Energy supply

Securityofsupply,Supplysecurity

ClimateContributiontotheaccelerationoftheenergytransition

EconomyYields,Direct/indirectemployment



x

x

x

x

x

x

x

x



“There are still surprises in the North Sea”Oranje-NassauEnergie(ONE) isoneoftheparties,which,incollaborationwithEBN,identifiesandproducesthegasreservesin theDutchNorthSea.ChrisdeRuytervanSteveninck,CFOofONE,andThijsStarink,ProgrammeManagerSmallFieldsatEBN,exchangedviewsontheroleofnaturalgas fromtheNorthSeafortheenergytransition.

Interview


DeRuytervanSteveninck:‘Asarelativelysmall

player,wecanandwillplayaninnovativerolein

extractingtheremainingreservesintheNorthSea.

Wewanttodothisassustainablyaspossible.Inthat

respect,agreatdealhaschangedinrecentyears.

Wheregaswaspreviouslyproducedinthetraditional

way,wenowoptforsustainablealternativeswherever

possible.Thisishowweareendeavouringtodevelop

ourrecentdiscovery-theRubygasfield-withas

smallaCO2footprintaspossible.Takeasanexample

whatwearedoingattheQ16gasfieldattheMaas-

vlakte.Theproductionlocationofthisfieldisconnec-

tedtotheelectricitygridandwecheckwhetherthe

fieldissuitableforCO2storage,andwhetherthewells

canbeusedforgeothermalenergy.Inthecontextof

thetransition,wearealsothinkingaboutthepossibi-

litiesofcombininglarge-scalewindorsolarenergy

withoffshoregasproduction.Welikethesekindsof

challengesandthecompanyisworkingonhowitcan

bedonemoreefficiently,butalsomoresustainably.’

‘Wenolongerwantmoreplatformslikethosethat

wereinstalledafewyearsago’,addsStarink.‘Inthat

respect,itisgoodiftheoperatorandEBNareonthe

sameline.

ThefocusatONEisongas,butyoualsohaveaneye

forcombinationswithsustainablesources.Inyour

view,whatisneededfornaturalgasfromtheNorth

Seatobeusedevenbetterfortheenergytransition?’

DeRuytervanSteveninck:‘Anumberofthingscan

beimproved.Forexample,largerpartiescanbe

encouragedtoworkmoreefficiently,theCO2price

cangoupanditwouldhelpifthereweremoreinsight

intothecostsofconnectingaplatformtoexisting

infrastructure.InNorway,thelatterisregulatedfor

example,whileintheNetherlandsthereisuncertainty

aboutgastransmissiontariffsoffshore.CanEBNdo

somethingaboutthis?’Starink:‘Ifexcessiveratesare

charged,thenwecanfightthem.Profitshouldnotbe

thestakeforsharinginfrastructure.Thisencourages

partiestoleanback,whileweactuallywantprogress

andinnovation.Thefocalpointforthecomingyears

isthereforecooperationandclustering.Wearegoing

totalktothebig(pipeline)operators,alsotomake

agreementsaboutrates.Itmaybelate,butifwecan

stillimprove,thenwehavetodothat.Thetimeto

exploreisrunning.Imissthaturgencywithanumber

ofcompanies.ThatiswhyEBNwillbeanactivist

partnermorethanbefore.Moreinsistent,more

rigorous.Whenitcomestoinfrastructuresharing

forexample’.

DeRuytervanSteveninck:‘That’sgoodtohear.As

anentrepreneurialparty,wefeelsupportedbyEBN.

Ofcourse,therearesometimestoughdiscussions,

butthatisgood.MyadvicetoEBN:Takeonthat

Chris de Ruyter van Stevenick CFOofONE

Thijs Starink ProgrammemanagerSmallfieldsEBN

Interview


moreactivistrole.Weallbenefitifallparties

proactivelyseekandextractgas.Thatbenefitsthe

entireindustryandtheenergytransition.Ifweare

goingtoproducelessfromsmallfields,thenwewill

havetoimportnaturalgas-thatwillmeanmore

CO2emissionsandlessrevenueforthegovernment,

whilewecouldusethatfortheenergytransition.

Therearecertainlystillexplorationpossibilitiesin

thenon-traditionalreservoirs,suchasRuby.Even

areasthathavebeenlookedatbeforemaynowbe

interestingthankstoadvancinginsightsandnew

techniques.TherearestillsurprisesintheNorth

Sea.Wehavetodaretoputonthoserose-tinted

spectacles,continuetoinnovateandseize

opportunities’.

Interview


Togivesubstancetoourcoreactivities(investingandcollaborating inpartnerships,managingourparticipations,anddevelopingand applyingknowledgeforourparticipationsandnewapplicationsof theDutchsubsurface):• wemaintainclosecontactswiththeoperators,partnersfrom

theenergysector,theMinistryofEconomicAffairsandClimatePolicy asshareholderandpolicymaker,andourotherstakeholdersand

• weconductourowntechnicalstudies.• Thisishowwecreateeconomicandsocialvalue.

FortheresultsachievedbyEBNin2017inanutshell,werefertotheoverviewofthekeyfiguresonpage6.

4.Resultsfor2017


Topic Explanatory notes Objective Realisation

EBN’s profit EBN’sprofit(aftertax)showninmillionEUR ≥161 556

Administration costs EBN’scostsforstaff,hiringexpertise,office,etc.showninmillionEUR ≤15,8 15,4

Reserves maturation small fields Thenetsupplementation(maturation)ofgasreservesintheNetherlandsinGNm3GE. ≥9,7 11,47

Drilling ThenumberofdrillsatnewlocationsintheNetherlands,onshoreoroffshore. ≥13 11

Score transparency benchmarkThetransparencybenchmarkisanannualstudyintothecontentandqualityofsocialreporting(max200points).

≥170 185

Setting up National Platform EBNislaunchingaNationalPlatformfordecommissioningandreusealongwithindustrypartners. Yes Yes

Participation EBN consortium UDGTogetherwithsevenconsortia,TNO,theMinistryofEconomicAffairsandClimatePolicyandtheMinistryofInfrastructureandWaterManagement,EBNisjoiningtheGreenDealUltraDeepGeothermal.

Yes Yes

General objectives

Topic Explanatory notes Achieved result 2017 More information on page

Setting up ‘Best Practices Forum’

EBNwantstosetupa‘BestPracticesForum’fortheoptimalexplorationandproductionofsmallfieldsintheNetherlands.

37

Health, Safety and Environment (HSE) benchmark

EBNwantstosetupanHSEbenchmarkandputitintouse. 42

Implementation 2017

sustainability policy

actions

EBNwantstoformulateactionsonthebasisofitssustainabilitypolicy.Theseactions,theso-calledsustainabilityobjectives,willbeformulatedin2017andimplementedinthe organisation.

52

Organising Exploration Day

EBNwillorganisetheExplorationDayagainin2017.AdaywherethemainthemeisEBN,operatorsandsupplierssharingknowledgeandstudies

39

Organising Prospex stand EBNisparticipatingintheProspexfairinLondonin2017. 39

At least three exploration licences will be applied for

EBNaimsatatleastthreeexplorationlicensesbeingappliedforbyoperatorsin2017. 37


4.1 General objectives

For2017,theExecutiveBoardalongwiththe

SupervisoryBoardhasdeterminedanumberof

generalobjectivesforEBN.Theseobjectives,

andtheresultsobtained,areshownonpage36.

4.2 Our Dutch Gas

EBNiscommittedtooptimumuseofDutchgas

stocks,amongotherthings,byconductingitsown

studiesandworkingtowardsactivelygainingand

aggregatingknowledge.Inaddition,EBNisworking

hardtosubstantiallyreducetheCO2 emissions in gas

exploration.

4.2.1 The active acquisition of knowledge

Studies on possible gas occurrences

Theaimofthestudiesintheareaofexplorationis

twofold:1)Theidentificationofpossiblenewgas

occurrencesandtheoptimaluseofalreadyknown

possiblegasoccurrencesintheDutchsubsurfaceand

2.Theactiveacquisitionandtransferofknowledge

withinandoutsidetheDutchgassector.

Wedoourownstudyworktoidentifypossiblenew

gasandoilresources.EBNtakespartinalarge

numberofcollaborationsandJointIndustryProjects.

Thestudiesfocusmainlyonareasonthecontinental

shelfwherecurrentlynoexplorationorextraction

licenseshavebeenissued.

Furtherprogresswasmadein2017withworkinthe

northernpartoftheNorthSea(theD,E,F,AandB

blocks).Inaddition,astudyhasbeenstartedinto

cracksinfields,toincreaseunderstandingofthisin

ordertogainmorecontrolformaximumdrainageofa

compartmentalisedgasfield,afielddividedupbycracks.

Reservoir property maps

Whenevaluatingthesuitabilityofreservoirsinthe

Dutchsubsurfacefortheeconomicexploitationofoil

Our Dutch Gas objectives 2017



andgasandgeothermalheat,knowledgeofthereser-

voirpropertiesisveryimportant.Thelasttimethat

reservoirpropertieswereidentifiedonalargescale

wasin2009.Since2009,approximatelytwohundred

newdrillshavebeenmadeandalargenumberof

reservoirstudieshavebeencarriedout.Thisnew

informationandtheseinsightsareessentialfor

makingmoreaccurateassessmentsofreservoirqua-

lityandproductivity,bothofwhichareextremely

importantforexplorationstudiesand,forexample,

theeconomicevaluationofmarginaloccurrences.

Toincludethisnewinformationinexistingsurveys,

EBN,togetherwithTNO,updatedthe2009data.We

useallthisinformationfor,amongotherthings:pre-

dictingreservoirpropertiesforexplorationforoiland

gas,animprovedestimationofproductioncharacte-

risticsofexistingandnewfieldsandevaluatingthe

geothermalpotential.

Earthquakes in Groningen

In2017,therewereeighteenquakeswithamagnitude

ofM≥1.5ontheRichterscale.Thatisfivemore

thanin2016,whentherewerethirteenquakes.

ThebiggestearthquakewasatSlochterenon27May

2017.IthadamagnitudeofM2.6ontheRichter

scale.Thepartiesinvolved,includingtheState

SupervisionofMines(SSM)andNAM,hadpredicted

thatatemporarydecreaseinthenumberofquakes

wouldoccurin2016asaresultofthereducedannual

production.Itwasalsopredictedthatthiseffectwould

betemporaryandthatthenumberofearthquakes

wouldincreaseagaineachyearwithequivalent

production.Thiseffectappearstobevisiblein2017,

alsoinproduction-limitedareassuchasinthe

Loppersumregion.Tobeabletomakepredictions

abouttheseismicactivitywithmorecertainty,

however, more study is needed.

TheMeasurementandControlProtocol(M&RP)came

intoeffecttwicethisyearasaresultoftheexceeding

ofsignalparameters.Thefirsttime,on29August

2017,theearthquakedensityintheAppingedamarea

washigherthan0.25quakes/(km2.12months).

On14December2017,thelimitvalueforearthquake

densitywasexceededforthesecondtime,theninthe

regionofZeerijp-‘tZandt.Inbothcases,thelevel

hasgoneto“signallinglevel”.Measuresrelatingto

thisexcesswereovershadowedbythequakeof

Zeerijp(M=3.4)on8January2018inthesame

region.

Afterthefirstexcessofasignalparameterwithinthe

M&RP,theMinisterofEconomicAffairsandClimate

Policydecided,partlybasedonadvicefromSSM,to

amendtheconsentdecisiononthe2016extraction

plansubmittedbyNAMfortheGroningengasfield

byreducingthemaximumgasannualproductionfor

thegasyear2017/2018bytenpercent.Sodoing,the

MinisterofEconomicAffairsandClimatePolicy

establishedthemaximumgasannualproductionat

21.6billionNm3withanopportunitytoextractan

extra5.4billionNm3inacoldwinter.Severalparties

objectedtoboththeconsentdecisionandthe

subsequentamendment.TheCouncilofStateissued

itsrulingon15November2017anditannulledboth

theconsentdecisionandtheamendmentdecision.

The minister now has a year to substantiate what the

maximumamountofgas-yearproductionshouldbe,

takingreductionscenariosforgasdemandinto

account.Aslongashedoesnottakeanewdecision,

themaximumgasyearproductionforthegasyear

2017/2018islimitedto21.6billionNm3.

AftertheearthquakeatZeerijpon8Januaryofthis

year,SSMadvisedareductionofgasproductionin

Groningen.ItadvisedtheMinisterofEconomic

AffairsandClimatePolicytoreduceproductionto

12Nm3peryear.TheMinisterofEconomicAffairsand

ClimatePolicywilldeterminewhichmeasureswillbe

takenwithregardtogasextractioninGroningen.

EBNundertookvarioussubstantiveactivitiesin2017

thatcontributetosaferandmoreoptimalproduction.

Thisisinlinewithitsmissionandthepolicyofthe


MinisterofEconomicAffairsandClimatePolicy.

EBNhasdevelopedanumberofstudiesthatshould

contributetobetterinsightsintotheprocessesinthe

subsurfaceandtheearthquakes.TheresultsofEBN’s

technicalstudiesaresharedwiththeseparties.This

workiscomplementarytothestudiescarriedoutby

NAM,oilandgascompaniesengaged,anddomestic

andforeignknowledgeinstitutes.EBNcarefully

monitorsallrelevantstudiesinthisarea.Inaddition,

theMinistryofEconomicAffairsandClimatePolicy

andSSMaresettingupanew,independentresearch

programmecalledtheKnowledgeProgramme

forMiningEffects(KEM).Therewillalsobean

independentresearchprogrammeunderNWO,

calledDeepNL.

Use of the North Sea and system integration

EBNworkstogetherwithresearchinstitutesand

industrialpartiesinanumberofTKIprojectsthat

investigatethepossibilitiesofsystemintegrationon

theDutchcontinentalshelf.Theresearchfocuseson

theintegrationofoilandgasinfrastructurewithwind

energyatsea,withstorageandtransportpossibilities

ofenergyandwithCO2storage.EBNcontributeswith

knowledgeandoperationalinsightstotheseprojects

andinitiatives.EBNalsoplaysaroleinbringing

togetherindustriestorealisethesystemintegration

initiatives.

Virtual CO2 price

AsaresultoftheDutchambitionsfortheCO2

emissionsandtheadditionalpolicythatensuesfrom

this,EBNsuspectsthatpricingoftheCO2footprintin

someformistobeexpectedinthenearfuture.Tobe

preparedforthis,in2017forthefirsttimescenarios

foravirtualCO2priceweredeveloped.Thesecan

beusedintheevaluationofE&Peuroinvestment

proposalsortheoptimisationthereof.

Apriceof40euros/tonCO2 is determined as a

mid-casescenario.Indoingso,accountwastakenof

boththeCO2pricinggivenintheCoalitionAgreement

forelectricityproductionandthepricechargedby

variouspeersofEBN.Fromnowon,thedetermination

ofaCO2priceispartoftheannualprocesstoupdate

theshortandmedium-termcommercialdeparture

points.

4.2.2 Actively aggregating knowledge

Weshareknowledgewithinterestedpartiesthrough

variousplatforms.In2017,EBNorganisedtheDutch

ExplorationDayforthesecondtime.Awidedelegation

ofoperatorsactiveintheNetherlandswaspresent.

EBNpresenteditsownstudiesthisyearbutalso

offeredoperatorsandconsultantsthechanceto

presentstudiesintotheDutchsubsurface.EBNwas

alsopresentagainattheProspexfairinLondonthis

year.Therewepresentedourownwork.Thisenabled

ustoreachoperatorswhoarenot(yet)activeinthe

Netherlands.

InAugust2017,afteratestphase,theGeo-drilling

Eventsdatabasewaslaunchedandmadeavailable

tooperators.Geo-drillingeventsareincidentswitha

geologicalcausethathaveledtoadelayinthedrilling

processandwhichcouldpossiblyhaveresultedin

adangeroussituation(Geo-Hazard).Thisdatabase

containsdescriptionsofdrillingincidentsinwhich

(surprising)geologyplayedarole.Examplesare

increasedporepressureorformationswithhigh

drillingresistance.AgoodoverviewofGeo-drilling

Eventshelpsinthedesignofanewwellandthesafe

andefficientpreparationoffuturedrilling.Thistool

waspresentedanddemonstratedattheDutch

ExplorationDayon23November2017.

Thisyear,EBNalsoexecutedtheBOONbenchmark

fortheyear2016.EBNisinvestigatingtheoperational

costsoftheactivitiesintheNorthSea.Thebenchmark

isperformedeverytwoyears.EBNhaspartlyauto-

matedthisbenchmarkinrecentyears.Operatorsnow

havedigitalaccesstotheirownresultsandcancarry

outtheirownanalyses.


4.2.3 Our Dutch Gas 2017 results

Joint ventures for detection and extraction

of oil and gas

Asat31December2017,EBNwasparticipatingin197

jointventures(31December2016:198).187ofthese

arepartnershipsinexplorationorextractionactivities.

Wearealsoparticipatinginfivepipelines(including

gaspurificationfacilities),fourgasstoragefacilities

andthegaswholesalerGasTerraB.V.Thetotal

numberofpartnershipsdroppedslightlycomparedto

lastyear.Wecommencedthreenewpartnershipsin

explorationandextractionactivities.Fourcooperative

venturesinexplorationorextractionactivitieswere

terminatedbecauseonelicencewasrenounced,

onelicencewaswithdrawnbytheministerand

twoexplorationlicenceswereconvertedintoone

(combined)productionlicence.

Drilling

Theplanwastocarryoutthirteendrillsin2017.

Ultimatelyelevenwerecarriedout:sixexploration

andevaluationdrillsandfiveproductionwells.The

activitylevelwaslowlastyearbecauseofthelowoil

andgasprices.Theelevendrillsperformedprovided

technicallyextractablegasintencases.Nogasoroil

wasfoundatonedrill.Operationally,alldrillswent

well.Therewerenineoffshoredrillsandtwoonshore.

Oil and gas production

Followingtheearthquakesintheprovinceof

Groningenandtheresultingsituation,theMinister

ofEconomicAffairsandClimatePolicydecidedin

2015tofurtherlowertheceilingofthegasproduction

fromtheGroningenfield.Asaresult,theproduction

fellfrom27.6billionNm3in2016to23.5billionNm3

in2017.ThesmallfieldsinwhichEBNparticipates

producedatotalof18.7billionNm3(2016:20.6

billionNm3).

Thegasstocksproducedduringthewintermonths

fromtheundergroundgasstoragesNorg,Grijpskerk

andAlkmaarareusuallyinjectedbackintothe

storagesduringthesummermonths.Thiscalendar

yearthereisasmallimbalanceofalmost0.37billion

Nm3betweenGrijpskerk(netproduction)andNorg

(netinjection).

Thetotalgasproductionfor2017is42.2billionNm3

(excludingtheimbalancefromthegasstorages).

120 110

33 33

11 12

3334

109

90

60

2017

Offshoreproductioncooperationagreement Offshoreexplorationcooperationagreement

Number of joint ventures at year-end

Offshoreproductioncooperationagreement Offshoreexplorationcooperationagreement

2016

30

0


TheEBNshareinthegasproductionin2017was

17.5billionNm3(2016:19.9billion).Themajorfocus

oncostcontrolandtheavailabilityoftheproduction

facilitiescontributedtothis.In2016,theproduction

fellbyeightpercent;in2017,thiswasninepercent.

Theshareofsmallfieldsintotalgasproduction

increasedslightlycomparedto2016(44percent

comparedto43percentin2016).Theoilproduction

totalled0.68millionSm3(Standardcubicmetre),

against0.62millionSm3in2016.Theproduction

fromsmallfieldsin2017wasslightlyhigherthan

budgeted.

Reserves of oil and gas in the netherlands

In2017,the(estimated)gasreserve,inwhichEBN

participates,willhavedecreasedintheDutchsoilby

44billionNm3to702billionNm3.EBN’sshareinthis

(estimated)gasstockamountsto283.4billionNm3.

Oil and gas portfolio

TheNetherlandshasasignificantpotentialofsmall

(oiland)gasfields,bothoffshoreandonshore.In

total,EBNparticipatesintheproductionofnatural

gas(andtoalesserextentofoil)fromapproximately

290smallDutchfields,240ofwhichwereproducing

in2017.In2017,twonewfieldswereputintoproduc-

tion.EngieE&PNederlandB.V.hasputanoffshore

fieldintouseandVermilionEnergyNetherlandsB.V.

hasputanonshorefieldintouse.

Newfield

Abandoning

Newwell


Seismic surveys

In2017,thereweretwoseismicsurveys.Offshore595

km2wassurveyedandonshore315km2.Bothwere3D

acquisitions.Intotal910km2wassurveyedin2017.

HSE benchmark

In2017,EBNsetuptheHealthSafetyandEnvironment

(HSE)benchmark.Thismakesitpossibletomakethe

performanceintheareasofhealth,safetyandthe

environmentofindividualproductionsitesandoil

andgascompaniescomprehensible,andtowork

towardsoptimalresults.Insettingupthisbenchmark,

twenty-fourrelevantparameterswereselectedfrom

theGRI-G4duringthefirstphase.Inthefollow-

upprocess,thebenchmarkwasfurtherextendedto

twenty-nineparameters,withthetrendbeingmade

clearperoperatoroverseveralyears.

Thedatawasalsoextractedfromthee-MJV

(electronic-EnvironmentalAnnualReport)database

withtheconsentoftheoperators.Operatorsenter

theirannualenvironmentalreportintothisdatabase.

Thetwenty-nineselectedparametersallowEBNto

analysetrendsandmakecomparisons.Aspartofthe

furtherimplementationofEBN’ssustainabilityplan,

theHSEbenchmarkwillbeusedin2018toachieve

objectivesofthesustainabilityplan.

4.2.4 Objectives for 2018

TheSupervisoryBoardhasformulatedvarious

strategicobjectivesforthestrategicpillarOurDutch

Gas.Theseobjectivesareimportantindicatorsof

performancewithinthestrategicpillar‘OurDutch

Gas’.Thesestrategicobjectivesmustcontributeto

achievingtheEBNobjectives(seepage57).

Topic Explanatory notes

DSA and DSMA signed and implemented

In2018,theDecommissioningSecurityAgreementandtheDecommissioningSecurityMonitoringAgreementwillbesignedandimplementedbyalloperators.

Define stage gate electrifi-

cation North Sea hub(s)

EBNensuresthattheprojectwithregardtoelectrificationoftheNorthSea

hub(s)willgettothe‘definestagegate’in2018.

The development of three

dual play exploration targets.

EBN’sobjectiveisthatatleastthree‘dualplay’explorationtargetsare

reprocessedin2018.

Our Dutch Gas 2018 objectives


4.3 Return to Nature

EBNtakescontrolofeffectivelydecommissioningor

reusingdisusedoilandgasplatforms.Moreandmore

fieldsarereachingtheendoftheirusefullife.This

willmaketheoilandgasinfrastructureavailablefor

otheruses.Theenergytransitionoffersanopportunity

toreuseexistingelementsbeforetheultimatesafe

andefficientdecommissioning.Forexample,empty-

producedgasfieldsontheNorthSeamaybeused

inthefutureforthestorageofCO2.


National decommissioning database

In2016,EBN,togetherwithNOGEPAandIRO,

designedtheMasterplanDecommissioning&Re-use.

In2017,thiswasfolloweduponinaJointIndustry

Project(JIP)forthefurtherelaborationoftheplan.

PartofJIPRe-use&Decommissioningissettingup

anationaldatabaseforupstreamoilandgas

infrastructure;wells,installationsandpipelines.EBN

fulfilledapioneeringroleinthisproject,butoperators

havealsoactivelycontributedtothedesignofthe

database.In2017,afirstversionofthenational

databaseforalloffshoreinfrastructurewascompleted.

Thepurposeofthisdatabaseistobetransparent

towardsstakeholderswiththehelpofdata,toprovide

insighttotheserviceindustryinthescopeoffuture

decommissioningactivities,tohelpoperatorsidentify

possiblejointdecommissioningactivitiesandtoallow

operatorstobenchmarkwithregardtothecostsof

decommissioning.

Sharing best practices

Animportantpartofthedecommissioningprocessis

toensurethattheempty-producedoilorgasreser-

voirs,whichareconnectedtothesurfacebymeansof

wells,areinsulatedsothatnoresidualhydrocarbons

canescapetothesurface.WithNexstep,EBNwantsto

encourageoperatorstosharebestpracticesinthis

areasothattheycanlearnfromeachother’ssuccess

andmistakes.Thismeansthatfutureprojectsforthe

decommissioningofwellscanbecarriedoutinan

evensaferandmoreefficientmanner.Byorganising

regularworkshops,relevantlessonsarerecordedina

database.In2017,EBNorganisedtwoshared-learning

workshops.Thedatabasecurrentlycontainsthirty

learnings.Theaimistoorganisethreetofour

workshopsannuallytoaddnewdatatothedatabase.

Legislation and regulations reuse and decommissioning

VariousworkinggroupsareactivewithintheNational

PlatformforReuseandDecommissioning,Nexstep.

ThesearecomposedofrepresentativesfromEBNand

theoperators.Oneoftheseworkinggroupsisactivein

Topic Explanatory notes Achieved results 2017 More information on page

Launch of National Platform for Decommissioning and Reuse

In2017,EBNwantstolaunchaNationalPlatformfordecommissioningandreusealongwithindustrypartners.

45

Organise decommissioning and reuse conference

EBNwillorganiseaconferencein2017ondecommissioningandreuse 44

Setting Up North Sea Decommissioning Forum (NL, UK, DK, NO)

In2017,EBNwantstosetupaforumfordecommissioningandreuseinwhichneighbouringcountries,theUnitedKingdom,DenmarkandNorway,areactivelyinvolved.

44

Return to Nature objectives 2017



thefieldoflegislationandregulations.Thisworking

groupaimsforefficientandeffectiveregulationsin

thefieldofreuseanddecommissioningofoilandgas

infrastructure.Thisisdoneonthebasisofalistof

prioritisedtopicsdefinedintheMasterPlanfor

DecommissioningandRe-use.In2017,theworking

groupcommencedonenshriningtheexistingindustry

standardforthedecommissioningofwellsinthe

miningregulations.Theworkinggroupalsostartedto

drawupacomparativeassessmentforoffshorepipeli-

nes.Theaimisagenericsystemforassessingwhether

apipelinecanremainwhereitisorifithastobe

removedafterithasbeendecommissioned.

Transport and storage of CO2

AttherequestoftheMinistryofEconomicAffairsand

ClimatePolicy,EBNcarriedoutaninventorystudy

withGasuniein2017intothepossibilitiesandcostsof

transportandstorageofCO2intheNetherlands.In

addition,anumberofscenarioshavebeenworkedout

inwhichdifferentquantitiesofCO2collectedannually

intheNetherlandsarestoredinemptyoffshoregas

fields.Oneoftheconclusionsisthatthereissufficient

offshorestoragespaceforallscenariosuntilafter

2060.Costscanbesavedwhenpartoftheoffshore

infrastructure(platformsandwells)isreusedforCCS.

ThereportofthisstudywasdeliveredinDecember

2017.Itisused,amongotherthings,asinputforthe

CCSRoadmapoftheMinistryofEconomicAffairsand

ClimatePolicy.

CO2 storage project

StorageofCO2inempty-producedoffshoregasfields

isseenasagoodopportunitytoreduceCO2 emissions.

EBNwantstocontributetotheachievementofthe

DutchCO2reductiontargets.Therefore,togetherwith

GasunieandthePortofRotterdamAuthority,EBNis

investigatingthepossibilitiesofrealisingabasic

infrastructureforcollectingandtransportingCO2 in

theRotterdamportarea,whichcanthenbestoredin

empty-producedoffshoregasfields.Theideaistoset

upatransportpipelineandstorageinfrastructureas

a‘collectivefacility’.Asaresult,thereareimportant

costadvantagesandseveralpartiescancollectand

storeCO2.


Offshore energy exhibition & conference

InadditiontothelaunchofNexstep(seepage45for

moreinformation),abreakfastsessionwasorganised

duringtheOffshoreEnergyExhibition&Conferencein

whichthestateofaffairsregardingdecommissioning

and reuse was presented. EBN presented an overview

ofthefuturedecommissioningtaskontheNorth

Seaandthepotentialforreuseofoilandgasinfra-

structure.

North sea decommissioning forum

On11October2017,theNorthSeaDecommissioning

ForumwasorganisedintheAmsterdamRAI.During

thisprivateevent,Dutch,Danish,EnglishandIrish

stakeholdersexchangedinformationaboutnational

andinternationaldevelopmentsconcerningthereuse

anddecommissioningofoilandgasinfrastructurein

theNorthSea.EBNandtheMinistryofEconomic

AffairsandClimatePolicywerepresentatthisforum

onbehalfoftheNetherlands.Thisforumwasafirst

steptowardsinternationalcooperation,includingwith

regardtoregulations.

4.3.3 Results for 2017

State of affairs decommissioning and reuse

In2017,noplatformswerecompletelydecommissioned

orremoved.However,preparationsdidstartfor

theremovaloftenplatformsandtheirassociated

pipelines.Preparationsalsostartedforthereuseofa

Self-InstallingPlatform(SIP)ofwhichtheproduction

wellwillbeabandonedin2018.

In2017,nineoffshoreproductionwellsandthree

explorationwellswerepermanentlyabandoned.An

offshoreproductionwellhasbeenleftfordrillingan

explorationwell,butthewelllockhasbeenreused.

Nineonshorewellshavebeendefinitivelyabandoned.


Launch of national platform for reuse and

decommissioning

On10October2017,Nexstep,theNationalPlatformfor

ReuseandDecommissioning,waslaunchedduringthe

OffshoreEnergyExhibition&Conferenceinthe

AmsterdamRAI.Nexstepisanassociationinwhich

theDutchState(EBN)andtheoilandgasindustry

(NOGEPA)arerepresented.Nexstepaimstofacilitate

andorganisethefuturedecommissioningandreuseof

oilandgasinfrastructure(wells,installationsand

pipelines)intheNetherlands.Inthecomingdecades,

theoptimalreuseofthisinfrastructurewillbekeyfor

theenergytransition.TopicsonNexstep’sagenda

are:sharingknowledgeandexperiences,innovation,

andimprovedregulationsinthefieldofreuseand

decommissioningofoilandgasinfrastructure.



strategicobjectivesforthestrategicpillarReturnto

Nature.Theseobjectivesareimportantindicatorsof

performancewithinthestrategicpillar‘Returnto

Nature’.Thesestrategicobjectivesmustcontribute

toachievingtheEBNobjectives(seepage57).

4.4 New energy

TorealiseaCO2neutralenergysupplyinthe

Netherlandsin2050,theDutchheatsupplymustbe

mademoresustainable.EBNusesitsknowledgeof

thedeepsubsurfaceforthedevelopmentofgeothermal

energyintheNetherlands.Thisisdone,forexample,

throughtheplayandportfolioapproach.Thepotential

oftheDutchsubsurfaceisbeingdevelopedinasafe,

responsible,cost-effectiveandrisk-reducingmanner.


Synergy geothermics and oil and gas

In2017,EBNcontributedtostudiesintosynergy

betweenoil,gasandgeothermalenergy.Theoiland

gassectorhasalotofknowledgeandexperiencein

thedeepsubsurface.Thisknowledgeandexperience

canbeappliedforthedevelopmentofgeothermal

energyintheNetherlands.In2017,EBNparticipated

inthereconnaissancetable‘Cooperationandsynergy

inthesubsurfaceforsustainableheat’.

Thisreconnaissancetableisaninitiativeofthe

KVGN(RoyalAssociationofGasManufacturersinthe

Netherlands).Topicsdiscussedatthesemeetingsare:

earlyaccessibilitytoconfidentialoil/gassubsurface

informationforthegeothermalsector,reusepossibi-

litiesofdischargedoilandgaswellsasgeothermal

well,dualplayexploration,andsafetyandresponsible

subsurfacecoordination.

Upscaling geothermal energy in heat networks

InDecember2017,thestudy‘UpscalingGeothermal

EnergyinThermalNetworks’waslaunched.The

analysisisbeingcarriedoutbyIFTechnology,CE

DelftandBerenschot.EBNcontributestheknowledge

andexperienceofdoingbusinessinthesubsurface

andtheplayandportfolioapproach.


Nexstep innovation programme 2019

In2018,EBNwantstostartonthedesignofaninnovationprogrammefor

reuseanddecommissioning.

CCS project Rotterdam In2018,EBN,togetherwithpartners,wantstocontributetothe

developmentoftheCCSprojectRotterdam.

Return to Nature objectives 2018


TogetherwithGasunie,EBNidentifiesthepotentialof

theDutchsubsurfaceandtheabovegroundheat

demand.Itidentifiestheareasinwhichthesupply

meetsthedemand.Basedonthisknowledge,astrategy

isdeterminedfortheoptimaldevelopmentof

geothermicsandheatnetworksintheNetherlands,

whichisefficient,safeandresponsible.Theplayand

portfolioapproachisusedhere.Theendresultofthis

studywillcontributetotheaccelerationandimprove-

mentofthedevelopmentofgeothermalenergyinthe

Netherlands.

Underground energy storage

EBNhadtheintentionofconductingastudyfor2017

intothepossibilitiesofundergroundenergystorage

intheNetherlands.Afterthesummer,theMinistryof

EconomicAffairsandClimatePolicyrequestedEBNto

conductastudytogetherwithTNOtoformthebasis

foravisiononundergroundstorageintheNether-

lands.Suchapolicyvisionwillmonitorallformsof

undergroundstorage,includingenergystorage.The

projectstartedinthethirdquarterof2017andwillbe

completedbymid-2018.Itisimportantthatthetech-

nicalpossibilitiesandtheofferofundergroundspace

are‘matched’withtheabovegrounddemandforsto-

rage.Thecalculationofrealisticstoragescenariosin

termsofbothenergyefficiencyandcostsandreve-

nuesispartofthisstudy.Theresultsofthestudywill

enablethegovernmenttobetterassesswhichunder-

groundspacecanbestbeusedforwhichapplication.


Launch of website hoewerktaardwarmte.nl

EBNlaunchedthewebsitehoewerktaardwarmte.nl

inNovember2017.Thiswebsitewascreatedin

collaborationwithStichtingPlatformGeothermie,

DAGO(DutchAssociationofGeothermalOperators)

andtheMinistryofEconomicAffairsandClimate

Policy.Thewebsitedescribesprocedures,techniques,

andenvironmentaleffectsandanyrisksassociated

withtheexploration,detectionandextractionof

geothermalenergy.Thepurposeofthiswebsiteisto

informstakeholdersproperlyandtransparently.The

informationonthewebsitehasbeendevelopedin

consultationwithvariousexpertsfromorganisations

thathavespecificknowledgeaboutgeothermal

energy,suchasmunicipalities,provinces,nature

Topic Explanatory notes Achieved result 2017 More information on page

Study of underground energy storage

In2017,EBNwillconductastudyintothepossibilitiesofundergroundenergystorageintheNetherlands.

46

Website hoewerktaardwarmte.nl

In2017,EBNwilllaunchthewebsitewww.hoewerktaardwarmte.nlincollaborationwithStichtingPlatformGeothermie,DAGO(DutchAssociationGeothermalOperators)andtheMinistryofEconomicAffairsandClimatePolicy,makinginformationaboutgeothermalenergyavailable.

46

Determine virtual CO2 price for investment proposals

EBNwantstodetermineavirtualCO2priceforinvestmentproposalsin2017. 39

New Energy objectives 2017


http://hoewerktaardwarmte.nl

http://hoewerktaardwarmte.nl



andenvironmentalorganisations,thenational

government,producersofgeothermalenergy,

theregulatorandTNO.

Exploration work programme UDG

EBNandTNOoffersupporttoconsortiabasedon

agreementsintheGreenDealonUltra-DeepGeothermal

Energy(seepage47),bymakingtheirknowledgeand

expertiseavailableinanExplorationWorkProgramme

thatfocusesoncoordinatedgeologicalresearchin

thethreeidentifiedregions.TheExplorationWork

Programme(EWP)describesthestudyactivitiesfor

theDinantienlimestone.Thesearenecessaryforeach

ofthesevenprojectsoftheGreenDealUDG.The

programmeoffersakick-starttothesesevenprojects

andatthesametimecreatesaddedvalueforpotential

futureprojects.Inthesecondhalfof2017,thepro-

grammewasdrawnupunderthesupervisionofEBN

andinclosecollaborationwiththeconsortiaandTNO.

4.4.3 Results for 2017

Accession to Green Deal Ultra Deep Geothermal

InJune2017,theGreenDealUltra-DeepGeothermal

EnergywassignedbyHydrecoGeoMEC,Huisman

Equipment,PortofRotterdam,ASR,Parenco,Vermilion

andFrieslandCampina,onbehalfofsevenconsortia,

eachconsistingofseveralcompanies,togetherwith

EBN,TNO,theMinistryofInfrastructureandWater

ManagementandtheMinistryofEconomicAffairs

andClimatePolicy.TheGreenDealUltraDeep

GeothermalEnergy(UDG)isacooperationprogramme

aimedatincreasingtheunderstandingofthepossibi-

litiesofgeothermalenergyatgreatdepth(fromfour

kilometres)withtheaimofmakinganimportant

contributiontoasustainableenergysupply.

Thetemperatureofthecurrentgeothermalprojects

isinsufficientforthesupplyofheattotheprocess

industry.Ultra-deepgeothermalenergyisexpectedto

makeamajorcontributioninparticulartotheheat

supplyfortemperaturesabove130degreesCelsius.

Accession Green Deal Geothermal Brabant

EBNjoinedtheGreenDealGeothermieBrabantatthe

requestofthepartnerson28June.Byjoining,EBN

canuseitsknowledgeandexpertisetospeedupthe

developmentofthegeothermalpotentialinNorth

Brabanttogetherwiththeotherparties.Theaimof

thisGreenDealistomaketheenergymixinBrabant

moresustainablebyprofessionalisingthesectorand

achievingeconomiceconomiesofscalethrough

upscalingandjoiningforces.EBN’sportfolioapproach

givesconcretesubstancetothis.


Execution of Exploration Work (EWP) Programme

TheEWPandthepertainingcooperationagreementwillbesignedinearly

2018.AttheendoftheEWP,awell-foundedbusinesscaseisdrawnup

foreachregionbasedontheresultsandanexplorationstrategy,anda

consortiumcandecidewhetherornottocontinuewiththerealisationof

apilotproject.

One workshop per month

for province/municipality/

water board

EBNgivesaworkshopeverymonthtoaprovince,municipalityorwater

boardinthefieldofthedevelopmentof(ultra-deep)geothermalenergy

intheNetherlands.

Presence at VNG congress EBNwillparticipateintheVNGcongressin2018.

Objectives for New Energy 2018


Accession to geothermal alliance South Holland

TheGeothermalAllianceSouthHollandwascreated

duringthecongress‘EnergyTransitionand

GeothermalEnergy’inthemunicipalityofWestland

on9November2017.Thisisajointventurebetween

theProvinceofSouthHolland,DAGO(DutchAssociation

ofGeothermalOperators),Eneco,HVC,Hydreco

GeoMEC,MunicipalityofWestlandandEBN.These

partiesaimtopromotetheextractionanduseof

geothermalenergyintheprovinceofSouthHolland.

Avisionwillbedevelopedfortheoptimaldevelopment

ofgeothermalenergyinSouthHolland.Theywill

endeavourtomakethisvisionconcreteinplansto

extractgeothermalenergyinasystematic,geographical

andsociallyresponsiblemannerwithanappropriate

connectiontoexistingandfuturelawsandregulations.



strategicobjectivesforthestrategicpillarNew

Energy.Theseobjectivesareimportantindicatorsof

performancewithinthestrategicpillar‘NewEnergy’.

Thesestrategicobjectivesshouldcontributeto

achievingtheEBNobjectives(seepage57).

4.5 Financial results

4.5.1 Financial course of affairs

Theannualsalesfor2017fellby3percentto

EUR3.0billion,comparedtoEUR3.1billionin2016.

Thedecreaseinsaleswasmainlycausedbylower

realisedsales(-16percent),whichwascompensated

byhigherrealisedprices(+13percent).Thenetprofit

amountedtoEUR556million.Operationalcosts

amountedtoEUR962million(2016:EUR982million).

Depreciations,includingimpairments,amounted

toEUR0.5billion(2016:EUR0.8billion).Total

paymentstotheDutchState,includinglevies,

amountedtoEUR1.5billion(2016:EUR1.3billion)

EBNgeneratesasignificantfreecashfloweveryyear

becauseofsubstantialandstrongpositivecashflows

fromoperatingactivities,whicharehigherthanthe

investmentexpenses.Thisisalsoexpectedtobethe

casein2018.Asaresult,solvencyisconsidered

excellent,evenifthesolvencyratioisnumerically

low.Thelatteriscausedbythefactthatupuntil

2016thefinancialresultswerefullydistributedto

theshareholder.

Startingfromthefinancialyear2016,oftheannual

netearningsremainingafterpaymentofthespecial

profitdistributions,60%isaddedtoequityand40%

ispaidoutasdividendtotheshareholder.Thisaddi-

tiontoequitytakesplaceinprincipleuntilEBNhas

reached10%solvency.EBN’sgoodsolvencyisalso

reflectedinthelong-termcreditratings,beingAAA

atMoody’sandAAatStandard&Poor’s.

Thecashpositionasatyear-end2017wasEUR

2,004million(2016:EUR1,566million).EBNisable

tocomfortablymeetitsoutstandingcurrentfinancial

obligationsbecauseofthispositionandduetothe

significantfreecashflowsthatarealsoexpectedfor

2018.Nolong-termloanwillmaturein2018.EBNhas

acommercialpaperprogrammeofEUR2billion.

EBNalsohasacommittedrevolvingcreditlinewith

threereputablebanks,whichallowsEBNtowithdraw

uptoEUR400millionforgeneralbusinesspurposes.

ThiscreditlinerunsuntilAugust2022.Neitherfacility

hadbeenusedatyear-end2017.Becauseofthis,the

liquiditypositionisexcellent,whichisalsoexpressed

intheshort-termcreditratings,beingP-1atMoody’s

andA-1+atStandard&Poor’s.


4.5.2 Investments

Theinvestmentsinproductionandstoragelicences

fellby44%:fromEUR281millionin2016toEUR156

millionin2017.Thisisaworryingdevelopment.Itis

importanttocontinuetodevelopoffshorefieldsand

toaddnewreservestokeepproductionuptolevelas

muchaspossible.Withoutsufficientinvestment,gas

productionfromsmallfieldswilldiminishconsidera-

bly.Thelowpointofthedownwardtrendofrecent

yearsseemstohavebeenrealisedin2017.Weexpect

investmentstoincreasein2018.

4.5.3 Sales

Gas and storage capacity

Duetoarelativelycoldwinterin2017andanincre-

asingdemandforgasontheworldmarket,gasprices

intheNetherlandsweretwentypercenthigherthan

in2016:onaverage17EUR/MWh.Thepricesonthe

TitleTransferFacility(TTF),oneofthemostliquid

virtualtradingplacesforgasinnorthwesternEurope,

peakedatmorethan22EUR/MWhinFebruary,butin

thesummergaswassoldat15EUR/MWhinaccordance

withtheregularseasonalpattern.

Thevolume-weightedaveragesellingpriceforthe

EBNgasportfoliowasfifteenpercenthigherthanin

2016:at16EUR/MWh.Totalsalesfellbysixteenper

centtolessthan17billionNm3.Thiswasmainlythe

resultoffurtherproductionlimitationofthe

Groningenfieldandthenaturaldecliningproduction

fromsmallfields.

Nogasstoragecapacitywasauctionedfromthe

Bergermeerundergroundstoragefacilityin2017.

Theavailable5TWhhasbeensoldthroughso-called

optimisationagreements,anewsalesconceptthat

enablestheBergermeerCapacityMarketingCompany

tobenefitfrominterimpricefluctuations.Theportfolio

nowincludesgasstoragecapacitysoldonthebasisof

multipliers(18TWh),basedonafixedprice(3TWh)

and via optimisation agreements.

Oil, condensate and lpg

AsaresultofOPEC’sproductionlimitingmeasures,

andtheotheroilexportingcountries,andanincre-

asingdemand,theaveragepriceforabarrelofcrude

4500

4000

3500

3000

2500

2000

1500

1000

500

02013 2014 2015 2016 2017

Payments to the State

Corporatetax Levies Netprofit


oil(DatedBrent)in2017cametoEUR48.Thatis

abouttwentypercentmorethantheyearbefore.

ThepricefluctuatedwithintherangeofEUR40to

EUR55perbarrelduringtheyear.

TheweightedaveragerealisedsalespriceforEBN’s

oilandcondensateportfoliocametoaboutEUR45per

barrelin2017,whichisovertwentypercentmore

thanin2016.Thedifferencecomparedtothepricefor

abarrelofDatedBrentcanbeexplainedbyquality

differences(higheracidity,poorerviscosity,and

highermercuryconcentrations),whichleadstoa

margincomparedtoDatedBrent.Totalsalesofoil

andcondensatein2017cametoover2.5million

barrels,sixpercentlessthanin2016.

TheoilfieldsAmstelandDeRuyterproducedbetter

thanexpectedandthebuildupofproductionfromthe

Schoonebeekoilfieldisprogressingwell.

4.6 Social results

4.6.1 Our stakeholders

EBNwantstransparentreportingonitsstakeholders:

whotheyare,howweshapeourinteractionandwhat

issuesarediscussed.For‘interestedparties’weusethe

definitionoftheword‘stakeholders’intheGlobal

ReportingInitiative,roughlymeaning:ontheonehand

stakeholdersareentitiesorindividualswhomayexpe-

riencesignificanteffectsfromouractivities,products

andservices;ontheotherhand,theactionsofstake-

holdersmayaffectachievingEBN’sstrategicobjectives.

Interaction with stakeholders in 2017

Indeterminingitsstrategyandbusinessoperations,

EBNnotonlytakestrendsanddevelopmentsinto

account,butalsotheinterestsofitsstakeholders.

Asapolicyparticipation,EBNservesasocialinterest:

contributingtoanindependent,reliableenergy

supplyintheNetherlands.Theinterestsofourstake-

holdersdiffer.Wehavecontactwithourstakeholders

onvariousmaterialissuesonaregularbasisandat

variouslevels.Wehaveincludedatableintheannex

155thatdescribeswhoourstakeholdersare,what

formtheinteractionwiththesepartieshas,and

whatthediscussionissueswerein2017.Herebelow

wefocusonanumberofspecialactivitiesthattook

placein2017.


Interaction in the context of the

implementation strategy

Fortheimplementationoftherevisedstrategyin

2016,aprocesswasstartedtoimplementthenew

strategyintheEBNorganisation.InNovember2016,

astartwasmadeoncreatinganewdesignforthe

organisation.Thiswasfolloweduponin2017.

ManyinternalEBNstakeholderswereinvolvedin

thecreationofthisnewdesign:themanagement,a

selectionofemployeesforaso-calledpracticaltest,

coordinatorsofthethemesandmembersofthetran-

sitionteam.Inordertorealisethetransitionofthe

neworganisationalstructure,atransitionteamhas

beensetuptogothroughtheprocesstogetherwith

theExecutiveBoardandtheWorksCouncil.InMay

2017,thedecisionoftheorganisationalchangewas

presentedtoallEBNemployeesandtheimplementation

oftheneworganisationcouldstart.From1September

2017,workhascommencedaccordingtothenew

structure.Priortothis,so-called‘onboardingdays’,

wheretheorganisationalchangewasthemaintheme,

wereheld.

Publication focus on energy 2017

On19June,EBNpresentedtheFocusonEnergyreport

foralargegroupofstakeholders.Partnersfromthe

sectorandvariousNGOsandpolicymakersattended

thisevent.Inthreeinteractivesub-sessions,

stakeholdersenteredintodialoguewitheachother

onvariouspropositionsandtopicsinwhichEBN’s

strategicthemes‘OurDutchGas’,‘ReturntoNature’

and‘NewEnergy’werekey.TheGreenDealfor

Ultra-DeepGeothermalEnergywasalsosignedbythe

MinistriesofEconomicAffairsandClimatePolicyand

InfrastructureandWaterManagement,EBN,TNOand

sevenconsortiumparties.

KVGN

AsacorporatememberofKVGN(RoyalAssociation

ofGasManufacturersintheNetherlands),wehave

workedtoshapethesustainabilityoftheDutchgas

sectorandtoenterintoadialoguewiththegovernment

andotherstakeholders.Aspartoftheproject‘Gas

inaLong-termSustainableEnergyManagement’

(GILDE),KVGNofficiallylaunchedthe‘Gas-to-

measure’visionandtheaccompanyingGILDEagenda

ataworkmeetinginearly2017.TheGILDEagenda

containsconcreteprojectstocontributetoaclimate-

neutralenergysupply.EBNisresponsibleforthe

GeothermalandCCSthemeswithintheGILDE

agenda.‘Gas-to-measure’andtheGILDEagenda

havebeendevelopedinconsultationandcooperation

withstakeholdersfromwithinandoutsidethegas

sector,suchasNGOs.Inaddition,theKVGNorganised

aseriesofsymposiainwhichthesubjectofEnergy

Transitionwascentral.

Participation in transition paths sessions

Apolicypathwayoffivedifferenttransitionpaths

waslaunchedinthe2016EnergyAgenda.TheMinis-

tryofEconomicAffairsandClimatePolicyorganised

variousstakeholdermeetings.Theseaimedto:gather

informationabouthowthetransitionpathsto2030

couldlookinordertoachievepolicyobjectives.EBN

participatedinseveralmeetings.

Transition coalition

TheTransitionCoalitionisaninitiativeofmore

than60organisationswithaninterestintheenergy

supply.Thiscoalitioniscommittedtospeedingupthe

energytransition,wherebytheeconomicandecological

opportunitiesareoptimallyutilised.TheTransition

Coalitionwants:

• aclimateactthatrealisestheobjectivesofParis

(COP21),includingintermediategoalsin2030and

2040thatareinlinewiththis;

• aguaranteemechanismforanenergeticand

consistentexecutionthatconnectsandappeals

to the parties, and guarantees agreements made

independentlyacrossgovernments;

EBNhasbeenamemberoftheTransitionCoalition

since2016,andparticipatesinmeetingsattheCEO,

communicationandYoungProfessionalslevel.For

moreinformation:www.transitie-coalitie.nl

http://www.transitie-coalitie.nl


Launch Nexstep – offshore energy

TogetherwithNOGEPA,EBNlaunchedtheNational

PlatformforReuseandDecommissioning,Nexstep,

duringtheOffshoreEnergyExhibition&Conferencein

October2017.Nexstepisamemberorganisationthat

wantstostimulateandfacilitatecooperationbetween

stakeholders.Itisarealisationbasedonrecommenda-

tionsintheso-calledMasterplanforDecommissioning

&Re-useinNovember2016.

Talks with local and regional authorities

in the field of geothermal energy

Variousmunicipalitiesandprovincesareinvolvedin

theGreenDealBrabantandtheGeothermieAlliantie

Zuid-Holland.EBNisregularlyaskedbylocaland

regionalauthoritiestojoinasaknowledgepartnerin

exploratorytalksinthefieldofgeothermalenergy.

Workshops ultra-deep geothermal energy

TheGreenDealUltraDeepGeothermalEnergy(UDG)

isacooperationprogrammebetweenthegovernment,

EBN,TNOandsevenconsortia.Theprogrammefocuses

onincreasingtheinsightintothepossibilitiesof

geothermalenergyatgreatdepths(fromfourkilome-

tres).Thegoalistomakeanimportantcontribution

toasustainableenergysupply,inadditionto

geothermalenergyatlesserdepthsthatalready

occursmorefrequentlyintheNetherlands.Inthe

programme,sevenconsortia,theMinistriesof

InfrastructureandWaterManagementandEconomic

AffairsandClimatePolicy,TNOandEBNarepooling

theirknowledgeandexpertisetoachievethis

development.In2018,variousstakeholdermeetings

willbeorganised.Forawidergroupofinterested

parties,thereisalsoapublicseminar.Duringthese

meetings,participantsareinvitedtodiscussthese

developments.

4.6.2 Sustainability

Withintheoilandgasindustrythereisstillalotof

profitabilityinthefieldofmakingthechainsustain-

able.Togetherwithourpartnersweareinventorying

thepossibilitiestotakestepsforward.In2017,we

shapedoursustainabilitypolicy.Withinourpolicy

frameworks,wehavegivenourcontributiontothe


energytransitionandthesustainabilityofouractivities

aconcreteform.Inthissustainabilitypolicy,EBNhas

formulatedshort-termactions,so-calledsustainability

objectives.In2017,theseshort-termactionsfromthe

sustainabilitypolicywereimplementedwithinthe

organisation.In2018,thesustainabilityobjectives

willbeupdatedonthebasisofthesustainability

policy,andwillbeimplemented.

Inordertoprovideinsightintooursustainability

policy,wepublishedtheSustainabilityReport

2016/2017in2017.Wealsoreportonouroperational

performanceindicators,i.e.ourownsustainability

performanceandthatofthesector.

The2016/2017SustainabilityReportcanbefoundat

www.ebn.nl/publicaties.In2018,wewillreporton

theprogressofoursustainabilitypolicyinthe

SustainabilityReport2017/2018.Wewanttoinvolve

ourstakeholdersbyensuringthatEBN’ssustainability

policyisinlinewiththeexpectationsofourstake-

holders.Thesustainabilityreportwillbepublishedin

thesummer.WeherebyreportaccordingtoGRIguide-

lines.Foranoverviewofthemostimportantissues

forEBNanditschainpartnersandtheassociatedGRI

indicators,wereferyoutotheGRI-tableintable9.5.

4.6.3 The people of EBN

EBNisa‘GreatPlacetoWork’.Theresultsofthe

GreatPlacetoWorksurveyin2017diddecrease

slightlyinthesupportdepartmentscomparedto

2015.Anorganisationalchangewasimplementedon

1September2017,whichmayhaveinfluencedthis.

EBNthereforeregardstheresultsofthe2017

satisfactionsurveyasabaselinemeasurement.

In2018,attentionwillbepaidtotheoutcomesofthe

satisfactionsurvey,whichwillbeusedasinputfor

ourExecutiveBoardandthemanagement,forthe

improvementinoperationalmanagementandan

increaseinemployeesatisfaction.EBNhasdecided

toparticipateintheGreatPlacetoWorksurveyagain

attheendof2018inordertomonitortheresultsof

theeffortsin2018.

Operational performance indicators up until 20162 2016 2015

Energy consumption 18.2PJ 20.2PJ

Energy-efficiency improvements (result vs. target) 12.8vs15.1% 10.5vs15.1%

Energy consumption as a percentage of the energetic carbon production

2,72% 2,8%

CO2-emission 655Kton 772Kton

Methane emissions 5.0Kton 6.0Kton

Fatal accidents 0 0

Industrial accidents that led to absenteeism 20 27

Industrial accidents that did not lead to absenteeism 17 22

2 Operational performance indicators are reported based on statements by operators and consolidated by the Netherlands Enterprise Agency. These figures

relate to the calculated EBN share in Dutch gas production and annual drilling activities. The 2017 figures will only be available later this year and will be

published in the EBN sustainability report 2017/2018.

http://www.ebn.nl/publicaties


Training and development

Thereare82employeesatEBN.In2017,EBNalso

investedinthedevelopmentofitsemployees.Various

company-widetrainingsessionstookplacein2017.

Thesetrainingcoursesmatchedthedemandsofthe

changingmarketandthenewstrategicobjectives.

Thehoursthatemployeesspentintrainingand

development(training,seminars,coursesandconfe-

rences)comparedto2016thereforedroppedfrom

45to38traininghoursonaverageperemployee.We

encourageemployeestotakeappropriatetrainingand

courses.In2018,thiswillbegivenmoreemphasis

andguidancethrougharecalibrationofthestrategic

trainingpolicyandthefocusofPrincipals(functional

managerofdisciplines).

Inadditiontoknowledgedevelopment,EBNinvestsin

coachingandtrainingforpersonaldevelopment.For

example,inthefieldofcommunicationskills,energy

managementandpersonalleadership.Inaddition,

weinvestinprofessionaldevelopmentbyhaving

employeescarryoutassignmentsatoneofour

partnersforseveralmonths.Since1June2017,an

employeeofEBNhasbeensecondedfull-timetothe

MinistryofEconomicAffairs.Anotheremployeehas

carriedoutanexternalassignmentatPetrogasE&P

NetherlandsB.V.

Organisational change

Anorganisationalchangetookplaceinmid-2017.

Theorganisationisnowmanagedonathematicbasis,

withseparationofmanagementtasksintooperational,

functionalandhierarchicalmanagementtasks.The

primaryprocessisorganisedwithmultidisciplinary

teams.Theseteamsaredistributedoversixthemes

thatareledbyprogrammemanagers.Withthis

adjustment,EBNaimstoachieveitsobjectiveswith

moreresponsivenessandfocus.

AllEBNemployeesareassessedannuallybytheir

hierarchicalmanager.Thisisdoneonthebasisof

inputfromtheoperationalmanagersandteam

members.EBNemployeesalsohaveanannual

developmentinterviewwiththeirfunctionalmanager

wheretheydiscusstheirshort-termandlong-term

objectivesinthefieldof(career)development.2017


wasatransitionalyearforEBN,alsowithregardto

theHRcycle.Normally,thedevelopmentinterviews

takeplaceinthesummer.Inthesummerof2017,

EBNwasinthemidstofthereorganisationthat

becameeffectiveon1September2017.Wearecurrently

workingontheroll-outofthenewHRcycle,in

whichthedevelopmentplansareintegratedinto

anannualplan.Theannualplanconsistsofperfor-

manceagreementsanddevelopmentobjectives.The

annualplanisdrawnupatthebeginningoftheyear.

Allemployeesdrawupanannualplanfor2018.

EBN core values

ThecorevaluesofEBNwerealsoevaluatedduring

theorganisationalchange.Anassessmenthasbeen

madeoftheextenttowhichthecorevaluesdemon-

strablycontributetotherealisationofthestrategic

objectives.Thenewcorevaluesare:

Core values

• Westandforthepubliccase

• Weaddvalue

• Wedaretoleadtheway

• Wecreateconnection

• We do what we promise

EBN employees

Theaverageagewas43.7in2016,in2017itwas

44.5.EBNisattemptingtobringaboutarejuvena-

tionofitsworkforcethroughtheinfluxofyoungand

ambitiousprofessionals.EBNisinvestinginthe

developmentofyoungtalent.Weofferthema

three-yeartraineeshipintechnicalandcommercial

positions.Wearefocussingonthedevelopmentof

Topic Objective Result in 2017

Total absenteeism

(short-term, medium-

term, long-term)

EBNstrivesforatotalabsenteeism

rate(short-term,medium-term,

long-term)oflessthan3%.

The absenteeism rate was

4percent.

Short-term and medium-

term absenteeism

Theshort-termandmedium-term

absenteeismrateislessthan2.5%.

Theshort-termandmedium-term

absenteeismratewas1.4percent.

Employee satisfaction EBNisaGreatPlacetoWorkTheresultsfor2017arenotyetknown.For

thisreasontherewillbereportedon2016

Career guidance

Allemployeeshaveanannual

performanceanddevelopment

appraisalmeeting.

In2017,allemployeeshadaperformance

appraisalmeeting.Inafewcases,a

developmentinterviewwasnotofficially

recordedduringtheperiodofthe

organisationalchange

Diversity

EBNstrivestohaveamoregender-

balancedworkforce.Thereby,EBN

continuestoaimforamale-female

ratioof65/35percent.

32.9percentoftheworkforceisfemale

HR objectives


anewgenerationofambitiousyoungpeoplewho

consciouslychooseafutureintheenergysectorand

wanttocontributetotheenergytransition.

Inthepastyear,theaveragenumberofFTEsatEBN

increased.In2016,thiswas74.8FTEandin2017

thiswas77.66FTE.Femaleemployeesmakeup

thirty-threepercentofthecomplement.Female

employeesareemployedatalllevels,frommanage-

menttotheSupervisoryBoardwiththeexceptionof

theteamofdirectors.Twenty-onepercentofthe

managerialand/orprofessionalrolesarefilledby

femaleemployees.

Duetoanumberoflong-termsickemployees,the

absenteeismfigurein2017wasonthehighside,but

hadclearlydecreasedcomparedto2016.In2016,the

absenteeismrateforthewholeyearwas4.9per

cent.In2017,itfellto4percent.Short-termand

medium-termabsenteeismincreasedslightlyfrom

1.2percentto1.4percentin2017.EBNsupervises

sickemployeesthroughcarefulreintegrationproces-

ses,theuseofassessmentoffices,externalmultidis-

ciplinarysupport,andpersonalsupervisionfromHR,

managersandcolleagues.Inthecontextofpreven-

tionEBNorganisedatrainingcourseonenergy

managementandstresspreventionforall

employees,andatrainingsessiononabsenteeism

meetingsformanagersin2017.Inaddition,EBN

investsinindividualcoachingprogrammes,sports

instructiononlocation,chairmassagesandregular

workplacesurveys.

4.6.4 Employee participation

In2017,theWorksCouncilmetwiththedirectorfour

times.AmemberoftheSupervisoryBoardwasalso

presentattwoofthesemeetings.Followingthe

implementationofthenewstrategy,variousconsul-

tationsontheorganisationalchangetookplaceinthe

firstquarterinadditiontotheregularmeeting.The

WorksCouncilreceivedarequestforadviceonthe

organisationalchangeon28MarchandtheWorks

Councilissueditsrecommendationon5May.The

WorksCouncilhasgivenapositiverecommendation,

subjecttoanumberofconditions.TheWorksCouncil

explaineditsadviceintwosessionswiththe

employees.On22May,theWorksCouncilreceived

asecondrequestforadvice:‘Requestforadviceon

SupportforImplementationStrategy’.TheWorks

Councilgaveapositiverecommendationon2June

andgaveanumberofconcreterecommendationsto

thedirector.Afterissuingtheserecommendations,

theWorksCouncilwasinvolvedintheimplementa-

tionprocessinthesecondquarter.Thiswasnotpart

oftherequestforadvice.

TheregularconsultationsconcernedaWOR(Works

CouncilsAct)article24meeting.Thegeneralcourse

ofeventswasdiscussedinthepresenceofSBmember

JaapHuijskes.Furthermore,thenewsicknessabsence

andhomeworkingarrangementswerediscussed

duringthemeeting.Intheregularconsultations

ofthethirdquarter,thedirectorexplainedthe

investigationthatwascarriedoutwithregardtofacility

matters,andtheintentiontoimplementatime

registrationsystemwasdiscussed.Furthermore,the

expectationsregardingEBN’sfinancialresultswere

discussedthisyear.Withregardtotheimplementation

oftheneworganisationalstructure,threeconsultations

tookplace.Amongotherthings,thefirstfindingson

thenewwayofworkingwerediscussed.

ChairmanoftheSupervisoryBoardHeinvanOorschot

waspresentatthelastregularmeetingoftheyear.

Animportanttopicofdiscussionwastheresultsof

theGreatPlaceToWorkstudyandthesurveyonthe

neworganisationalstructurethattheWorksCouncil

heldamongemployees.Inaddition,thestrategic

objectivesandmanagementobjectiveswerediscussed.

InDecember,theWorksCouncilalsoreceiveda

requestforconsentfortheSickLeaveScheme,

LimitedTimeRegistrationandPerformance

ManagementRegulations.


4.7 Objectives 2018

TheSupervisoryBoardhassetanumberofgeneral

EBNtargetsfor2018.Theseobjectivesareimportant

indicatorsofEBN’sperformance.Thatiswhytheyare

alsothestartingpointforremuneration.Formore

information,seeAnnex9.4.

ToachievetheEBNobjectives,theteamofdirectors

formulatesthestrategicobjectives.Theseobjectives

generallycontainconcreteprojectsthathavetocon-

tributetoachievingtheEBNobjectives.Thestrategic

objectivescanbefoundforeachstrategicpillarinthe

resultssections.Duringtheyear,theprogressof

theseobjectiveswillbemonitoredandreportedon

intheannualreportfor2018.

Topic Explanatory notes Objective

ProfitEBNaftertax EBN’sprofitshowninmillionEUR ≥300

AdministrationcostsEBN’scostsforstaff,hiringexpertise,office,etc.

showninmillionEUR≤19.8

ReservesmaturationsmallfieldsThenetsupplementation(maturation)ofdeveloped

gasreservesintheNetherlandsinGNm3GE.≥7.2

OffshoreDrills Thenumberofoffshoredrills ≥18

DefinestageprojectPorthosachieved

TheCCSPorthosprojectinRotterdamwillbelaunched

in2018inthedefinestage.Yes

FinancialparticipationEBNingeothermalenergy

EBNalsocontributesfinanciallytothedevelopmentof

geothermalprojectsintheNetherlands2

EBN objectives 2018

Interview


The North Sea as a Northwestern European powerhouse

“IROwassetupasatradeassociationforservicecompaniesintheoilandgassectoralmost50yearsago.IROnowhas450membersandalmostallmembersarealsoinvolvedinsustainableenergy.ChairmanPietervanOord,alsochairmanoftheboardofVanOord,andEricKreftonbehalfofEBN(programmemanagerofNexstep),exchangedviewsonthefutureoftheNorthSea.WhatroledoestheNorthSeaplayintheenergytransition?AndhowcanNexstep-theinitiativeofEBNandtheDutchoilandgasindustryfocusedonthereuseanddecommissioningofoilandgasinfrastructure-contributetotheshift tosustainable?”


VanOord:‘Intheseventies,theNorthSeawasthe

breedinggroundoftheoffshoregasandoilindustry.

ThankstotheuniquepossibilitiesoftheNorthSea,a

disproportionateoffshoresectorhasdeveloped.Look

attheIROmembers,weallworkinternationally.All

theknowledgeandexpertisewehaveacquiredover

thepast50years-fromplatformsandpipelinesto

drillingtechniques-canbeusedfortheNorthSea’s

newfuture.Afuturewithfewergasandoilproduc-

tionplatforms,butwithagreatdealmoresustainable

energysources.Nexstepisthereforeagoodinitiative,

justbecauseofthefactthatpossiblesynergiesare

givenverycarefulthought.Thecombinationwith

offshorewindisoneofcourse,buttherearesomany

otherpossibilitiesforusingtheinfrastructurediffe-

rently.Atthesametime,contractorsstillhaveawait

andseeapproachtodecommissioning.Asacontrac-

tor,howdoyoubuildabusinesscasefordecommis-

sioning?Youdonotknowwhatyouwillencounter

andthechanceofcostoverrunsishigh.Nexstep

needstogetagriponthis.’

“Thatiswhyjointknowledgedevelopmentisoneof

Nexstep’sfocalpoints’saysKreft.‘Theinfrastructure

oftheNorthSeaoffersopportunitiesforproduction,

storageandtransportofsustainableenergybutitis

notasimpletask.Justlookattheinfrastructure.

Adjustmentsareneededtobeabletouseitinthe

newsituation,andthevariousownersmustcontinue

tocarryoutmaintenance.Whoarrangesthat?Who

paysforthat?Etc.Wearedealingwithmanyparties,

therearemanydifferentinterestsandtherearesub-

stantialinvestmentsinvolved.Thedecommissioning

oftheentireNorthSeaisestimatedat100billion,

theDutchpartat6.7billion.

ForthetimebeingNexstepisformedbyEBNandthe

operators.WithinNexstepweformsteeringgroups

thatfocusonthefurtherdevelopmentofspecific

disciplines;fromwellsandpipelinestooffshore

platformsandonshoreproductionsites.Weshare

knowledgeandexperience,encourageinnovation

andpromoteeffectiveandefficientregulations.The

servicecompaniescanalsomakeavaluablecontribu-

tion.IROisthereforegenuinelyinvitedtoparticipate

inNexstep.Sharedlearningisimportant’.

Repeatability is the magic word

VanOord:“ReallyitislikeanIkeacupboard.Ifyou

havetoputfourtogether,Iknowthatyouwill

managethefourthcupboardquickerthanthefirst

one.Repeatabilityisthemagicword.Fordecommis-

sioning,butalsoforCO2storage.WithoutCO2 storage

wewillnotmeetthe2030targetsofthecoalition

agreement.Wealsoneedtodevelopknowledgeabout

thistogether.TheinteractionbetweenCCSandthe

Pieter van Oord ChairmanoftheboardofVanOord

Eric Kreft EBN-ProgrammemanagerofNexstep

Interview


NorthSeaisextremelyinterestingbutwearenotthat

faryet.Wearestillinthewaitingroom.Assoonas

theindustryabandonsitscynicismandprepares

itself,materialsareneededandtheservicecompanies

willspringintoaction’.Kreft:‘It’sapuzzle.The

changingoftheguardisimminent,butitisnotyet

clearwhatthetimeframelookslikeandwhenthe

transitionfromgastowindforexamplewillbea

reality.Theenergyagreementsthatarecomingwill

providedirection”.

Powerhouse of Northwestern Europe

“Let’sseethenecessarytransitionfromgasandoilto

sustainableenergyasanopportunity’,continuesVan

Oord.‘Wearerealisinganewlabour-intensive

industry.From2020,morepeoplewillbeworkingin

therenewableenergysupplythanintheoilandgas

industry.Innovationandknowledgedevelopment

willgetaboost.Completelynewdisciplineswillarise

suchasmaintenanceofwindmills.Andjustlikein

theseventies,thankstotheNorthSea,wehavethe

opportunitytolearnthisinthehomemarket,then

standardiseitandexportittotherestoftheworld.

Notthatwearethefirstworldwide,buttheNorthSea

isauniquearea;shallow,sandyandthereisalways

wind.TheNorthSeaisnotgoingtobeemptier,butif

wedoitright,wecangrowintothepowerhouseof

NorthwesternEurope.TheSaudishaveoil,wehave

theNorthSea”.

Interview

5.Governance andRisk


5.1 Risk management

5.1.1 Risk management system

Inthepastyearandahalf,EBN’sriskmanagementsystem hasattractedagreatdealofattentionfromtheExecutiveBoardandtheSupervisoryBoard.Ontheonehandbecauseofthedevelopmentofthenewstrategicthemes‘ReturntoNature’ and‘NewEnergy’andontheotherhandduetodevelopmentsconcerningtheearthquakeproblem.


StrategicRiskAnalysis

OperationalRiskAnalysis

Policy,schemes,codes

Adoptedworkprocesses

Planning&controlcycle/

performancemeasurement

Self-evaluation

Internalaudits

Joint operations audit

ln-controlstatements

Externalaudit

EBN strategy

Annualworkprogramme

and budget

EBN framework containing the key risk management components per pillar

Risks and opportunities

Vision, mission and strategy

Certainty and effect

Control


Asapolicyparticipation,EBNseescontrollingthe

risksinthemosteffectivewaywithintheframeworks

thattheDutchStatehasprovidedasaveryimportant

task.Lastyearmanagementalsodevotedextra

attentiontoevaluatingEBN’sriskappetiteandto

reinforcingriskculturethroughoutthecompany.

Theriskmanagementsystem,basedontheCOSO

model,consistsoffourseparatepillars,withinwhich

wehavedesignatedvariousactivitiesthatarecarried

outinconjunction.

Identifying,assessingandcontrollingriskshelpsus

toachievegoalsinaresponsiblemanner,complywith

lawsandregulationsandcontinuouslymonitorthe

managementoftherisksand,wherenecessary,

changeandimprovethem.

Managementisultimatelyresponsibleforthe

designandsupervisionofaneffectiveinternalrisk

managementandcontrolsystem.Wedevelopdifferent

activitiesinordertomanageriskseffectively.During

annualsessions,strategicrisksareupdatedand

determinedbytheExecutiveBoard,whichresultsin

theStrategicRiskAnalysis(SRA).

Atdepartmentlevel,strategicrisksarelinked

annuallytodepartmentobjectives,andanOperational

RiskAnalysis(ORA)isdrawnupannually.Since2017,

theORAshavebeenstructuredonthebasisofbusiness

processesrelatedtostrategicthemes.Duringthese

sessions,aself-assessmentoftherisksandthe

designandoperatingeffectivenessoftheidentified

controlmeasurestakesplace.Basedonthis,action

holderswithinthedepartments/themesaredesigna-

tedanddepartmentalandthemeobjectivesare

adjustedifnecessary.Theresultsarediscussedwith

therelevantportfolioholderintheExecutiveBoard

andanchoredintherelevantdepartmentplans.

Riskmanagementactivitiescontinuouslytakeplace

basedontheplanningandcontrolcycle,onthebasis

ofdefinedpolicies,workprocessesandbylinking

individualgoalstomanagingrisks.

Employeesarethemostimportantsuccessfactor

foraneffectiveriskmanagementsystem.Toenhance

riskawareness,weinvolveemployeesfromalllevels

inORAsessions.Thisalsocontributestoreinforcinga

professionalcriticismatEBN.Westrivefortheright

balancebetweenstructuralelementsandcultural

aspectssuchasunwrittenrules,behaviour,together-

nessandexperiencewithintheorganisation.In2017,

thecorevalueswereredefinedwithinputfromall

employees.In2018,wewillfacilitatespecificdialogue

sessionsforallemployeesabouttheunwrittencultural

aspects.Wewanttofurtherstrengthenour

risk-awareculturewithafocusonvaluecreation

inthelongterm.

Withintheplanningandcontrolcycle,EBNusesa

performancemanagementsystem.Thiswasintroduced

in2013andrecalibratedin2016.Weworkwith

reportsinwhichweperiodicallymonitortheper-

formanceofthepartnershipsanddepartmentsonthe

basisofestablishedperformanceindicators.Actions

fromtheSRAandORA,andthefollow-upofrelevant

internalandexternalauditfindingsareanintegral

partofthis.TheExecutiveBoardfollowstheperfor-

manceofEBNasawholebasedonmonthlyreporting

andadjustswhereneeded.Thevariousreportsare

regularlydiscussedandpublishedinternallyinthe

variousdepartments.Inaddition,quarterlyreports

are issued to the Supervisory Board and the Ministry

ofEconomicAffairsandClimatePolicy.Thelast

reportof2017wasstructuredforthefirsttimeon

thebasisofthestrategicthemes.

5.1.2 Risk profile

Inthischapter,EBN’smostimportantstrategicrisks

areexplained,includingtheriskappetite,management

measurestaken,and,whererelevant,ageneral

descriptionofthesensitivityoftheresultstomaterial

externalevents(suchas,forexamplecommodity


pricesorincidentsatthirdparties).Financialrisks

areincludedinthechapter‘Policytocontrolfinancial

risks’onpage125.Operationalrisksandcompliance

risksareincludedintheotherchapters.

Thefigurealongsideshowsthemostimportant

strategicrisksforEBN,includingtherelative

developmentcomparedtoayearago.Theriskswith

regardto‘commodity’prices,compliancewithour

decommissioningobligations,cooperationandknow-

ledgesharinghavedecreasedthisyear.Ontheother

hand,therisksrelatingtoproductioninGroningen

andthesupportforonshoreactivitieshaveincreased

significantly.Inthefollowingsections,weexplain

therisksinvolved,includingtheactionsthatEBN

takestomaintainexposurewithintheriskappetite.Low

Reasonable

Little Limited Significant Critical

Clear

High

Likelihood

Effect

Support activities onshore

Support activities offshore

Cooperation and knowledge sharing

Calamities

Decommissioning obligations

‘Commodity’ prices

Consequences of earthquakes

in Groningen

Speed of risks arisingChange compared to last year

Less than 1 year

Within 2 to 3 years

After 3 years

Risk has increased

Risk remained the same

Risk has decreased


5.2 Risk appetite

Lastyearriskappetitewasintroducedperthemein

theEBNannualreport.Thisyear,thiswasfurther

substantiatedbyspecifyingtheriskappetiteperrisk.

Thefigurealongsideshowstheriskappetiteforthe

mostimportantstrategicrisks.Theriskappetitefor

financialandoperationalrisksincludedinother

chaptersisneutral.Forcompliancerisksitisrisk

averse.

Consequences of earthquakes in Groningen

Calamities



‘Commodity’ prices



Risk averse Risk-neutral Risk-taking


Consequences of earthquakes in Groningen

Risk

TheproductionofgasfromtheGroningenfield(withtheoperatorNAM)causesearthquakes,resultingindamagetohousesandbuildings.Reinforcement

programmestobepreparedforpossiblefuturequakeshavebeenandarebeingdefined.Contingenciesintheformofpersonalaccidents(personalinjury)

asaresultof,forexamplecollapse,cannotbeentirelyruledout.EBNhasa40%interestintheGroningenpartnershipandwillproportionallybearthe

costsoftheconsequencesofearthquakes.

AsaresultoftheearthquakesinducedbynaturalgasextractioninGroningen,theMinisterofEconomicAffairsandClimatePolicyhaslimitedthe

productionofnaturalgasfromtheGroningenfield.Thisproductionlimitationisfixedinaconsentdecisionthatstateswhen,whereandhowmuch

naturalgasmaybeproducedfromtheGroningenfield.

Risk appetite

Theministerdetermineshisconsentdecisiononthebasisof,amongotherthings,asafetyassessmentfromStateSupervisionofMines.NAMproducesno

morethantheconsentdecisionandactivelymonitorstheseismicactivityintheGroningenfield.EBNtriestoestimatetheconsequencesofthisdecisionas

wellaspossibleand,wherepossible,tospecifyitsadvisoryroletowardstheministryandtowardsNAMpriortodecision-making.EBNfollowstheposition

oftheministrywithitsriskappetiteandisthereforeriskaverse.

Control measures

ForthethemeGroningen,EBNhasputtogetheraspecialteamthatresearchesandpublishesonthemovementinthesubsurfaceoftheGroningenfield

invariousproductionscenarios.Theresultsofthesestudiesarecombinedwithlargerstudiesof,amongothers,NAM,KNMI,SSMandTNO.

TheultimategoalistocreateascientificallybasedideaofthesafetyofgasextractionfromtheGroningenfield.Inthisway,EBNcontributes‘indirectly’

tobetterdecision-makingonsafetybyprovidingknowledgeandcooperatingwiththeoperators.

5.3 Main strategic risks


Calamities

Risk

Calamitiescanoccurintheareaofsafetyandtheenvironmentduringtheoperationsofouroperators.Forexample,blowout,collisions,leaks,

emissionsandothersafetyincidents,withpossibleinjuriesasaresult.Disasterscancausesocialresistanceagainsttheactivitiesperformedbythe

partnershipsinwhichEBNhasaninterest.ThiscanalsoleadtoresistancetotheroleEBNperformsaspartofitsstatutorytask.Theultimateconsequence

couldbethatEBNwillhavetoterminatetheseactivities.

Risk appetite

AnimportanttaskofEBNistorealisevaluefromgeologicalenergysourcesinasafe,sustainableandeconomicallyresponsiblemanner.Safetycomesfirst.

E&Pactivitiesareassociatedwithrelativelyhightechnicalrisks.ThishasledtoahighlydevelopedsafetycultureintheE&Pindustry.Inrecentyears,the

non-technicalriskshavegrown.Non-technicalrisksarisefrominteractionwiththeenvironmentandstakeholders.Weighingalltherisksanddealing

withtheserisksinaresponsiblemannerisinherenttothistask.Wetakehealth,safetyandtheenvironment(HSE)intoaccount.Dependingonthe

situationEBNismoreorlesswillingtotakerisks.Onaverage,EBN’sriskappetiteonthisthemeisrisk-neutraltorisk-taking.

Control measures

EBNdevelopsanHSEbenchmarkforallextractionactivities.Theaimistoenterintoanexplicitdialoguewithoperatorsaboutthesafetyand

environmentaleffectsofgasextraction.And,asamajorpartner,havingameanstoassessandpositivelyinfluencetheHSEperformanceofouroperators.

Theimportanceofsafetyandtheemphasiswewanttoputonitrequirescommunicationoncalamitiestobeanessentialpartofriskmitigation.

EBNstrivestocommunicateastransparentlyaspossibleintheeventofcalamities.

Fornewactivities,suchasgeothermalenergy,theindustryisstillataninitialstagecomparedtooilandgasextraction.Thisindustrycanmakean

importantcontributioninthecontextoftheenergytransition.Thetechnicalandsafetyrisksareoftencomparabletothoseofonshoregasproduction.

ThepotentialoperatorsandpartnersofEBN(inthecaseofparticipation)inthefuturehavelessknowledgeofandexperiencewiththesubsurface.

ThisinformationinitiallyrequiresahigherriskappetitefromEBN,andinordertomanagetherisks,itrequiresmoreexplicitinvolvementofEBNin

activitiessuchasseismicresearch,drillingandheatproduction.



Risk

Duetotheearthquakeproblem,andwithregardtothesafetyoftheresidentsofGroningen,thereputationoftheE&PsectorintheNetherlandsis

generallyunderpressure.Long-termenvironmentalobjectivesplayanimportantroleinthepublicdebateandasignificantlyreducedgasconsumption

isanticipatedinthefuture.TheserisksaffecttheactivitiesofEBNandtheoperators.Productionrestrictionsareimplemented(Groningen),andfurther

developmentsofsmallfieldsaremademoredifficult(stoptoonshoreexplorationlicences).Itisnotexcludedthatthisemanatesintheformofsocial

resistancetootheronshoreprojects.Forexample,forgeothermalenergy,thecomponentsofCO2projectsthatarecarriedoutonshore,licensingprocesses

withalongleadtime,stricterlegislationandregulationsthatareintroducedandtheactivitiesconcerningproductionandabandonmentthataresubjectto

strictersupervision.

Risk appetite

Sufficientsupportfortheonshoreactivitiesisofcourseverydesirable.Duetotheearthquakeproblembutalsoduetootherfactors,thereisnotmuch

support.EBNhasa‘following’roleinthis.EBNfollowstheMinistryofEconomicAffairsandClimatePolicy.ThatisthereasonwhyEBNhasarisk-neutral

positiontoariskaverseposition.

Control measures

EBNremainsinclosecontactwiththeministryregardingtheofficiallinetobefollowed.EBNadviseswherepossibleandnecessary,sothatoptimal

decisionmakingtakesplaceinTheHague,withaviewtotheinterestsofallstakeholders.EBNhascontactswithotherindustrypartiestoensurethat

thecommunicationongasextractionintheNetherlandsisfactuallyaccurateandneutral.

Theimportanceofsafetyandtheemphasisweplaceonitrequirescommunicationarounddisasterstobeanessentialpartofriskmitigation.

WithregardtogeothermalandCO2storage,allpartiesinvolvedareinformedandactivelyinvolvedintheprocessasearlyaspossible.Thismeanssufficient

guaranteesforsocialacceptancearebuiltin.



Risk

Risksrelatedtooffshoreactivitiesincludeclimatechangeandwithittheincreasinglystrongvoicesagainsttheuseoffossilenergysources,therelatively

limitedspaceontheNorthSea,andthestrongcompetitionfromwindfarms,sandextractionandnaturereservesforexample.Duetodecliningproduction

atconstantorincreasingcosts,theriskofacceleratedterminationoftheseactivitiesincreases.

Risk appetite

EBNisoftheopinionthatthegasthatcanstillbeextractedfromtheNorthSeacanmakeanimportantcontributiontotheaccelerationoftheenergy

transition.EBNispartlydependentonotherpartiesinthis.Wherepossible,EBNtakestheriskofshowcasingtheimportanceoftheNorthSea.

Heretoo,EBNisoftendependentonthevisionoftheMinistryofEconomicAffairsandClimatePolicy.TheriskthatEBNtakescanthereforebest

bedescribedasneutral.

Control measures

EBNhasrecalibrateditsstrategywithactiveparticipationandclosecollaborationwithabroadgroupofstakeholders,bothinternallyandexternally.

Thisincreasessupport.

EBNproactivelytargetsoperators,sothatitalsohasanon-operatorinfluenceinthesector.Duringtherecalibrationofthestrategytherewasintensive

cooperationandparticipationbetweenEBNanditsstakeholders.EBNisincreasinglypresentduringsymposiums,conferencesandtradefairs.Thepurpose

ofthisistoincreaseawareness,informvisitorsandtherebyshareknowledgeandincreasesocialsupport.

Withthe‘EnergyintheNetherlands’infographic,EBNishelpingtoinitiateaninformeddialogue.Ontheonehandtotransferknowledge,ontheother

handtoincreasetheunderstandingandhencetheacceptanceofgas.

Toprovidetransparencyabouttheactivitiesoftheindustry,wereportonourownactivitiesandthoseofourpartnersinourannualreport,intheannual

FocusonEnergyreportandonourwebsite.In2017,thishascontributedtomoretransparencyaboutouractivitiesandgasproductionintheNetherlands

asawhole.



Risk

Thereisariskthatreuseanddecommissioningwillbecarriedoutsub-optimally,bothtechnicallyandfinancially.Thetechnicalriskmainlyconcernsinade-

quatemutualcoordinationandknowledgesharingbetweenlicenceholders.Thefinancialriskconcernstheavailabilityofsufficientfinancialresourcesand

cashflowfromallpartnersinordertobeabletomeettheobligationsregardingthedecommissioningofinfrastructurethatisnolongerinuseinthefuture.

Risk appetite

InthecomingyearsitwillbeamatterforEBNtotakealeadingroleindecommissioningactivitiesontheNorthSea,becausetheseareincreasingin

number.Becauseoftheemergingbuturgentnatureofthetheme,theriskappetiteisriskaverse.

Control measures

Followingthe‘MasterplanDecommissioningandRe-use’in2016,EBNlaunchedanationalplatformforreuseanddecommissioningin2017incollaboration

withNOGEPAunderthename‘Nexstep’.Nexstep’smissionistoserveasaninclusiveandcooperativeumbrellaorganisationthatcoordinatesand

facilitatesthedialogueonthereuseanddecommissioningagendafortheoilandgasinfrastructureintheNetherlands.

TheE&Poperators,unitedinNOGEPA,designedafinancialguaranteesystemtogetherwithEBNin2017.Throughthissystem,theparticipatingpartners

willprovideeachotherwithfinancialguaranteesperlicenceforthedecommissioningobligations.

Intheeventthatinfuturethereisnolicenceholderforaparticularlicencethatisabletocomplywiththedecommissioningobligations,theStatebecomes

thebeneficiaryofthesefinancialguarantees.Thissystemwillbeformalisedin2018.Theaimistohavetheagreementsoperationalisedon1January2019.


’Commodity’ prices

Risk

Theriskisthatstructurallylowoilandgaspricesorevenafurtherfallinoilandgaspriceswillnegativelyaffecttheinvestmentclimate,orthat

investmentsand/ormaintenanceworkwillbepostponed,asaresultofwhichtheundergroundpotentialoftheNetherlandswillnotbefullyutilisedand

infrastructurewillagemorequickly.Lowpricesanduncertaintyabouttheinvestmentclimateandcostsmaydiscouragebothcurrentoperatorsand

potentialnewpartiesfrominvestingintheNetherlands.Ultimately,thismayresultinlowerrevenueforEBN,lessrevenuefortheStateandmayeven

leadtoimpairments.

Risk appetite

EBNhasthepolicyofnothedgingand,asaresult,deliberatelydoesnothedgeagainstdownwardpricetrends.Theriskappetitecanthereforebe

characterisedasrisk-taking.

Control measures

EBNadvisedtheMinistryofEconomicAffairsandClimatePolicyin2016ontaxmeasures.Inaddition,EBNencouragesknowledgesharing.Wedothis,

forexample,byorganisingworkshopsinthefieldoflow-costdevelopment,byusingourNOVmanagementwithintheSmallFieldsthemetoinfluence

operators,andbyissuingtheOPEXOffshorebenchmark.Forthelongerterm,EBNconductsitsownstudieswithinthethemesExploration,Reuse&

Decommissioning,Geo-EnergyandAdvice&Innovation.ThesestudiescontributetotheoptimaluseoftheDutchsubsurface.Along-termgoalandaction

planhavebeenrecordedforallareas.EBNthuscontributestothefuture-proofingofoperators.



Risk

PartiesinvolvedinoilandgasextractionintheNetherlandsbenefitgreatlyfromcooperationandthesharingofdataandknowledge.Thisisevenmorethe

caseatthetimeofcomplexdecommissioningdecisionprocesseswheremultipleparties(operators)sometimeshavetooperateinacluster,butalsowhen

enteringintonewexplorationactivitieswhereexistinginfrastructureofotheroperatorsmustbeused.Specificdomainsincludecostsavingsthrough

cooperation,innovationanddigitisation,bothinoilandgasextractionanddecommissioning,andinnewactivitiesrelatedtotheenergytransition.

TheriskisthatinsufficientcoordinationandknowledgesharingtakesplacefromEBNand/orbetweentheindustrialpartiesthemselves,

creatinginefficienciesandambiguities.

Risk appetite

EBNalsoplaysaroleinthedialogueontheenergytransition:itisapolicyparticipationandhasextensiveknowledgeofandexperienceindoingbusiness

inthesubsurface.Contributingtostrengthening,improvinganddevelopingnewenergysourcessuchasgeothermalenergyandotherformsofutilising

thesubsurfacearenewstrategicprioritiesforEBN.Asaresult,theriskappetiteisrisk-takingwherethisfitswithinthepolicythatthegovernmentis

developingaroundtheenergytransition.

Control measures

EBNactivelyandoftenleadsincollaborativeventures,atconferencesandsymposia,inJointIndustryProjects(forexampleintheTKIcontextandinthe

NewEnergyCoalition)butalsoabroad,suchasProspex.EBNalsoorganisesthematicworkshopswithoperatorsandstakeholders.

EBNhasconductedstudiesforallthemesanddefinedlong-termobjectivesandactionplans.EBNalsodrawsuptheBOONreport(OPEXOffshoreNL

benchmark),asustainabilityreportandanHSEbenchmark.ACAPEXbenchmarkisusedforthis.AfterthedraftingofaMasterPlanin2016,Nexstep,

theNationalPlatformfordecommissioningandre-usewasalsolaunchedinOctober2017.

Inaddition,EBNhasfrequentconsultationswithNOGEPAanditsmembers,thereisanactiveparticipationinKVGNandGildeandgoodcontactsare

maintainedwiththeUniversities(includingDelft,UtrechtandGroningen).DiscussionisalsostimulatedbytheEBNpublicationFOCUSandbytheannual

energyinfographics.Forgoodandtransparentcommunicationabouttheenergytransition,theEBNwebsitewasrevisedin2017andaninformative

websitewaslaunchedonhoewerktaardwarmte.nl.

Thesecontrolmeasurestogethercontributetobetterknowledgesharingwithinthesector.


In2016,changemanagementwasincludedinthe

riskmatrixasoneofthestrategicrisks.Basedonthe

measurestakenandevaluationcriteria(likelihood,

effect,speedofoccurrence),theExecutiveBoardhas

concludedduringitsSRAthatthisriskisnotincluded

intheriskmatrixpresented.Operationally,thereis

undiminishedattentiontooptimiseEBN’scapacityto

change.

5.3.1 Reviews and audits

In2017,variousinternalauditswerecarriedout

basedonourauditannualplan.Theseareaimed

atevaluatingthequalityandeffectivenessofthe

importantworkingprocessesand/oranumberof

specificthemeswithinthoseworkingprocesses.

Thisconcernsauditsontreasury,thedetermination

oflong-termcommercialassumptionsandIT

governance.Basedonthefindings,wehave

establishedactionsthatareassignedtoowners.

Thefindingsarepresentedandexplainedtothe

ExecutiveBoard.Themostimportantonesarealso

discussedwiththeAuditCommitteeoftheSuper-

visoryBoard.TheExecutiveBoardmonitorsthe

implementationoftheactionsonaquarterlybasis.

In2017,likeeveryotheryear,inadditiontothe

internalauditsEBNdeployedjointventureauditsto

conductafinancialauditofthecostschargedonto

ourorganisationwithinthecontextofthevarious

jointventures.Thefindingsofthejointventure

auditswerediscussedwiththepartnersand

adjustmentsweremadewherenecessary.

Thereisalsoanannualexternalreviewoftheprocess

forthedeterminationoftheoilandgasreservesand

resources.Adetailedreviewisperformedonninefields

thathaveundergonematerialchangesand/orare

materialintheportfolioofEBN.Therecommendations

ofthereviewareimplementedandfollowedtogua-

ranteeacontinuousimprovementofthisprocess.

Inadditiontotheidentifiedimprovementpoints

arisingfrominternalandexternalaudits,andreviews

relatingtoprocessesincludingIT,nosignificant

shortcomingswerefoundintheoperationofthe

internalriskmanagementandcontrolsystems.

5.3.2 In-Control statement

TheExecutiveBoardsupervisestheeffectiveoperation

oftheinternalriskandcontrolsystemthroughits

day-to-daysupervisionandperiodicreports.These

reportsincludetheresultsoftheSRA,ORAs,internal

andexternalreviewsandaudits,andanycomplaints

andwhistleblowernotifications.Themostimportant

resultsarediscussedbytheExecutiveBoardwiththe

auditcommitteeandtheSupervisoryBoard.

Basedonitsownobservations,andadditional

assurancederivedfrominternalandexternalreviews

andaudits,theExecutiveBoarddeclaresthat:

• theannualreportprovidessufficientinsightinto

shortcomingsinthefunctioningoftheinternal

riskmanagementandcontrolsystems;

• theaforementionedsystemsprovideareasonable

degreeofcertaintythatthefinancialandnon-

financialreportingcontainsnoinaccuraciesof

materialimportance;

• itisjustifiedunderthecurrentstateofaffairsthat

thefinancialreportinghasbeenpreparedona

goingconcernbasis;

• theannualreportmentionsthematerialrisksand

uncertaintiesthatarerelevanttotheexpectation

ofthecontinuityofthecompanyforaperiodof

twelvemonthsafterpreparationofthereport.

5.4 Corporate Governance

Shareholder

General

EBNisaprivatecompanywiththeDutchstateasthe

soleshareholder.Managementofthesharesisinthe

handsoftheMinistryofEconomicAffairsandClimate

Policy.EBNisapolicyparticipation.Shareholder

statusandtheroleofpolicymakerarevestedinthe

same ministry.


EBN’sissuedandpaidupcapitalisEUR128,137,500

andisdividedinto284,750ordinaryshareswitha

nominalvalueofEUR450pershare.

Theshareholderappointsthedirectorandthe

supervisorydirectorsofEBN.TheSupervisoryBoard

submitsanominationfortheappointmentofthe

directortotheshareholder.TheMinisterofEconomic

AffairsandClimatePolicyhastoapprovethat

recommendationbeforehand.

TheshareholderappointsaSupervisoryDirectoron

thebasisofarecommendationbytheSupervisory

Board.Theshareholderappointsachairmanfrom

themembersoftheSupervisoryBoard.

EBN’sarticlesofassociationalsostatethatthe

directorrequirespriorapprovalfromtheSupervisory

Boardortheshareholderforcertaindecisions.

ConcerningtheapprovaloftheSupervisoryBoard,

pleaserefertopage76.Theshareholder’sapproval

isrequiredforthefollowing:

• Enteringintoorterminatinganysustainable

collaborationorinvestmentwithavalueexceeding

EUR200million;

• Closingthebusiness,orwindingupthecompanyor

asubsidiaryorimportantdivisionofthebusiness;

• DecisionsoftheExecutiveBoardabouta

significantchangeintheidentityorcharacterof

thecompany.Thisincludestakingordisposingof

asubstantialstakeinthecapitalofanother

companyandtransferringthebusinesstoathird

party.

Shareholders’ meeting

Theannualshareholders’meetingwasheldinMarch

2017.Thedirector,theFinanceDirectorandthe

SupervisoryBoardattendedthisshareholders’meeting.

Thefollowingtopicsareontheagendaoftheannual

shareholders’meetinginanycase:

• Discussingthewrittenannualreportbythe

ExecutiveBoardonissuesconcerningthecompany

anditsmanagement;

• Adoptionofthefinancialstatementsand

determinationoftheprofitappropriation;


• Dischargingthedirectorofresponsibilityforhis

managementoverthepastfinancialyear;

• DischargingtheSupervisoryBoardofitsresponsi-

bilityforsupervisionoverthepastfinancialyear.

• Thefinancialstatementsfor2016wereadopted

andtheExecutiveBoardandtheSupervisoryBoard

weredischargedoftheirresponsibility.

Informal consultation

Inadditiontothegeneralmeetingofshareholdersthe

shareholderrepresentativesoftheMinistryandthe

FinanceDirectorofEBNhadregularinformalconsul-

tations:in2017,fourtimes.Theobjectiveofthis

informalconsultationistoprovidetheshareholder

withalltherelevantfinancialinformationthatthe

shareholderneedstoexercisehisauthority.Providing

relevantinformationisoneoftheExecutiveBoard’s

obligations.

Thepolicymakerisalsoregularlyconsultedonan

informalbasis.Therearefixedconsultationtimes,

suchasthestrategicconsultation,theexecutive

consultationandtheminingandgasproduction

consultation.Inthesefixedconsultationmeetings,

informationisexchangedondevelopmentswithin

thetwoorganisations,anychangestotheenergy

policyandrelevantdevelopmentsinEBN’stasks

andactivities.Inadditiontomembersoftheteamof

directors,otherEBNemployeesalsoattendthese

meetings.Inadditiontothedirector,thechairmanof

theSupervisoryBoardisalsopresentatthestrategic

consultation.

Supervisory board

TheSupervisoryBoardisresponsibleforsupervising

theExecutiveBoard’ssocialpolicyandthegeneral

courseofaffairswithinEBNandadvisestheExecutive

Boardwhennecessaryanddesired.Inturn,the

ExecutiveBoardprovidestheSupervisoryBoardwith

allnecessaryandrelevantinformationtoenableitto

executeitstasksandresponsibilities.EBN’sarticles

ofassociationalsostatethattheExecutiveBoard

requirespriorapprovalfromtheSupervisoryBoard

forcertaindecisions.Forexamplewhen:

• establishingandamendingtheoperatingbudget

andtheinvestmentandfinancingplan;

• appointingproxyholders;

• makinginvestmentsand/ordisinvestments;

• conductingotherlegaltransactionstothevalueof

morethanEUR50million.

ThecompositionoftheSupervisoryBoardwas

changedin2017bytheappointmentofMrdeVries

on1March2017,theresignationofMrGratamavan

Andelattheshareholders’meetinginMarch2017,and

bytheappointmentofMrSamsomon22March2018.

TheregulationsoftheSupervisoryBoardchangedin

2017tobringtheprovisionsinlinewiththecorporate

governancecode2016.

Executive board

EBN’sExecutiveBoardcomprisesoneexecutive

director.TheExecutiveBoardisresponsibleforgeneral

policyandstrategywiththecompany’sassociated

riskprofile.TheExecutiveBoardisalsoresponsible

forachievingthecompany’sobjectives,theresults

achievedandthesocialaspectsofbusinessrelevantto

thecompany.Wherenecessary,theExecutiveBoard

submitsdecisionstotheshareholderortheSuper-

visoryBoardforapproval.Italsoensurestheproper

functioningoftheinternalriskmanagementand

controlsystem.

Team of directors

TheExecutiveBoardisassistedbytwofunctional

directorswho,togetherwiththeexecutivedirector,

constitutetheteamofdirectors.Theexecutive

directorischairmanoftheteamofdirectors.The

currentteamofdirectorsconsistsoftheexecutive

directorJanWillemvanHoogstraten(CEO)aswellas

thefollowingpersons:MrScheffers(DirectorStrategy

&Technology)andMrBoekelman(DirectorFinance).

Theorganisationchartisshownonpage9.


Until1September2017,theteamofdirectorsconsisted

oftheexecutivedirectorandthreefunctionaldirectors.

DuetotheorganisationoftheEBNorganisationin

themes(seealsopage54),thepositionofDirector

AssetManagementhasbecomeredundant.TheExecutive

Boardregulationshavebeenadjustedtothison1

September2017,withtheapprovaloftheSupervisory

Board.TheExecutiveBoardregulationshavealsobeen

amendedtocomplywiththecorporategovernance

code.

TheExecutiveBoardregulationsstatehowthetasks

aredistributedamongtheteamofdirectors.Theteam

ofdirectorsactsonthebasisofjointresponsibility.

Withinthatjointresponsibility,thetasksaredivided

intofunctionalareas.Thisspecifictaskdivisionisset

down in writing.

Eachmemberoftheteamofdirectorsisresponsible

forpreparingpolicymattersanddecisionsinhisor

herownoperationalarea.Afterdecisionmaking

withintheteamofdirectors,themembersofthe

teamofdirectorsensurethepromptimplementation

ofthedecisionsmade.Inprinciple,theteamof

directorsmeetseverysecondweek.

IntheannualreporttheExecutiveBoarddescribesthe

mainrisksrelatedtoEBN’sstrategyandthedesign

andoperationoftheinternalriskmanagementand

controlsystems.TheExecutiveBoardalsoindicates

whatsignificantchangeswereimplementedandwhat

significantimprovementswereproposed.Forthis

description,seepage61.

Remuneration

Theshareholderdeterminesthepolicyonthe

ExecutiveBoard’sremuneration.TheSupervisory

Boarddeterminestheactualremunerationofthe

individualmembersoftheExecutiveBoardwithin

theframeworkofthatpolicy,includingthevariable

remuneration.TheremunerationoftheExecutive

Boardisexplainedintheremunerationreportofthe

Supervisory Board.

Governance table

Thegovernancetableinannex9.3containsthe

followingdatafortheteamofdirectorsandthe

SupervisoryBoard:age,otherpositions,terms,

profiles/specificknowledgeandtaskwithinEBN.

Conflicts of interest

EBNendorsesprinciple2.7oftheCorporate

GovernanceCode(seebelowApplicationoftheDutch

CorporateGovernanceCode’)thatanyformorappea-

ranceofconflictofinterestbetweenthecompanyand

theExecutiveBoardorSupervisoryBoardmustbe

avoided.Thearticlesofassociation,theExecutive

BoardregulationsandtheregulationsoftheSuper-

visoryBoardcontainruleson(potential)conflictsof

interestbetweenthecompanyandtheExecutive

BoardorSupervisoryBoard.Any(potential)conflict

ofinterestthatisofmaterialsignificancetothe

companyortherelevantdirectororsupervisorydirector

mustbereportedimmediatelytothechairmanofthe

Supervisory Board. No reports were made by the

directororbyasupervisorydirectorin2017.

External auditor

Theshareholderisresponsibleforappointingthe

externalauditors,withtheSupervisoryBoardhaving

arightofnomination.Ontherecommendationofthe

SupervisoryBoard,in2015,theshareholderappointed

PwCasauditorfortheyears2016,2017and2018

(withapossibilityforrenewalfor2019).

Application of the dutch corporate governance code

EBNattachesgreatvaluetoagoodcorporate

governance.Forthisreason,EBNvoluntarilysubjects

itselftotheprinciplesandbestpracticeprovisionsof

theDutchCorporateGovernanceCode(insofaras

theseapplytoEBN).EBNthusfollowsthepolicyof

thegovernmentwithregardtostateparticipations

andtheCode.


TheDutchCorporateGovernanceCodeand

informationaboutthiscanbefoundat:

http://commissiecorporategovernance.nl.

AnEBNreportoutlinesforeachprincipleandbest

practiceprovisionhowitimplementsthese.

Thisimplementationreportcanbefoundat:

www.ebn.nl/ebn-over/corporate-governance/.

EBNwillputtheimplementationreportontheagenda

fortheshareholders’meetingin2018inaccordance

withtherecommendationofthecorporategovernance

committee.

Diversity policy

Inconsultationwiththeteamofdirectors,the

SupervisoryBoarddrewupadiversitypolicyatthe

endof2017forthecompositionoftheSupervisory

BoardandtheExecutiveBoard.EBNstrivestobea

goodreflectionofDutchsociety.Diversitywithinan

organisationcontributestoahealthycorporateculture,

resilienceandcreativity.Thisalsoappliestothe

compositionoftheSupervisoryBoardandtheteamof

directors.Thefollowingaspectshavebeentakeninto

accountindeterminingtheobjectivesofthediversity

policy:nationality,age,genderandbackground

regardingeducationandprofessionalexperience.

TheSupervisoryBoardhasdeterminedthefollowing

objectives:

SinceEBNhasonedirector,itiscurrentlynotuseful

toincludeaspecificobjectiveforthisperson.A(re)

appointmentisonlyrelevantfrom2020.Atthattime,

thecompositionoftheteamofdirectorswillbe

examined,aswellastheaspectsofnationality,age,

genderandbackground.

Theteamofdirectors(excludingthedirector)now

consistsoftwofunctionaldirectors(withthesame

nationality,genderandagegroup).Whenrecruiting

anewdirector,considerationwillalsobegivento

variationinnationality,age,genderandbackground

(culturaldiversity).

Sincethediversitypolicywasadoptedattheendof

2017,itisnotyetpossibletoreportonhowthepolicy

wasimplementedin2017.Thisalsoappliestoany

resultsinthepastfinancialyear.

TheSupervisoryBoardconsistsoffourmenand

onewoman.Thepercentageoffemalesupervisory

directorsistwentypercentandremainedthesame

2019-2023

Supervisory Board

Atleast2femalemembers,atleast2malemembers,twomembers<55

yearsonappointment,amaximumof2memberswithE&Pexperience,a

maximumof2memberswithexperienceatgovernmentorganisations

Executive Board Relevantfrom2020

Team of directorsAtleast1woman,averageageoragenewteamofdirectorsmember

<50years

http://commissiecorporategovernance.nl

http://www.ebn.nl/ebn-over/corporate-governance/


duringthe2017financialyear.Asaresult,EBNhas

notyetachievedabalanceddistributionofseatswith

atleast30percentoftheseatsoccupiedbywomen

andatleast30percentoftheseatsoccupiedbymen.

TheSupervisoryBoardpaysattentiontothebalanced

distributionofseatswhenrecruitingeverynew

supervisorydirector.TheSupervisoryBoardnotes

thatitdidnotsucceedinthiswhenrecruitingthe

mostrecentsupervisorydirector.

5.4.1 Integrity

Code of conduct, internal complaints

board and confidential adviser

Theimportanceweattachtotransparencyandclarity

externallyalsoapplieswithintheconfinesofourown

organisation.IntegrityisoneofEBN’ssustainability

themes.TheareasoffocusthatEBNdistinguishes

fortheintegritythemeare:humanrights,non-

discrimination,anti-corruption,competitionand

transparency.EBNalsodetailsitseffortstoactwith

integrityandinaresponsiblemannerthroughits

CodeofConduct.TheCodeofConductisapplicableto

alltheemployeesandaccessibletoall.Thisprovidesa

guidelineformakingpersonalchoicesandindividual

decisions.WealsousetheCodeofConducttotest

theactualconductofourcompanyandemployees.

Trainingsessionsaregivenregularlytoensure

compliancewithcompetitionlaw.Ifinternalemployees

havecomplaints,theycanspeaktoaconfidential

adviserorthecomplaintsboard.

In2017,thecomplaintsboarddidnotreceiveordeal

withanycomplaints.Theconfidentialadviserhad

discussionswithtwoemployeesin2017.TheCodeof

Conductisavailableat:

www.ebn.nl/ebn-over/corporate-governance.

ThegeneralobjectivesofEBN’sprocurementpolicy

arethereductionofpurchasingcosts,decreasing

supplyrisks,increasingproductandvendorquality

andimprovingtheprocurementfunction.Theprocu-

rementpolicyisbasedonthefollowingpurchase

vision:‘EBNdealswithprocurementandsuppliersin

aprofessionalmanner.EBNpurchasesattheright

price/qualityratio,undercontrolledrisksinatrans-

parentmanner.EBNwantstobeareliableandcareful

http://www.ebn.nl/ebn-over/corporate-governance


partnerforsuppliersandpotentialsuppliers,offering

fairandequalopportunities.’Purchasingiscoordina-

tedbyapurchasingmanagerandaprocurement

procedureappliesforpurchasesdependingonthe

financialvalue.AspartofthepurchasingpolicyEBN

hasGeneralPurchasingTermsandConditions.These

aredeclaredapplicableasmuchaspossibletothegoods

orservicesthatEBNpurchasesitself.TheseGeneral

PurchasingTermsandConditionscanbefoundonthe

website under https://www.ebn.nl/over-ebn/juridisch/.

Ifasupplierdoesnotactinaccordancewiththese

GeneralPurchasingTermsandConditions,hewillbe

calledtoaccountaboutthis.

Whistleblowers’ scheme

Onthebasisoftheregulationsprotectingwhistle-

blowers,employeescanreportanyallegedabuseto

theExecutiveBoardortheSupervisoryBoard.The

currentregulationsprotectingwhistleblowerscanbe

foundat:www.ebn.nl/ebn-over/corporate-governance.

International conventions and guidelines

EBNasapolicyparticipationnaturallycomplieswith

conventionsandguidelines,whichtheDutchState

approves,includingtheOESOguidelinesforinter-

nationalcompaniesandtheUNGuidingPrinciples

onBusinessandHumanRights.

https://www.ebn.nl/over-ebn/juridisch/

http://www.ebn.nl/ebn-over/corporate-governance


Focus on geothermal energy“The train is moving, we are speeding

up, more passengers are boarding andthetraincannolongerbestopped. The energy transition isinfullswingandgeothermal energyisoneofthepillars”.SaskiaHagedoorn,directorofHydrecoGeomec,believesinthevalueofgeothermalenergyforasustainableenergysupply.ShespokewithEvelineRosendaal,programmemanagerforGeo-EnergyatEBN,about the opportunities and challengesofgeothermalenergy.

Interview


Interview

“Ourambitionisclear;wewanttobeoneofthe

largestgeothermalenergycompaniesinthe

Netherlands”,saysHagedoorn.‘Asfarasstaffare

concerned,wearealreadygrowingthisyearto

20FTEs.Andwearealsooneofthefront-runnersin

termsofprojects;currentlyweareworkingonthe

developmentoftwelveconcreteprojects.Ultra-deep

geothermalenergywillrequireafewmoreyearsof

preparation,butthebasisisalsothere.Wefollowa

portfolioapproachinallourgeothermalprojects

becausewebelievethatwecanreducethecostsand

theriskprofileofprojectsandincreasethepaceand

quality.TogetherwithEBN,welookathowwecan

acceleratethedevelopmentofgeothermalenergy.

EBNhasrelevantknowledgeandisusedtogeological

risksandprojectsthatrequirelong-termthinking.

Wespeakeachother’slanguage.Inaddition,geother-

malenergyiscapitalintensiveandanEBNshareof

30to40%isverywelcome.Despitethepotentialfor

thelongerterm,wearestillfacedwithsubstantial

investmentsanduncertainties.Butitisbeyonda

doubtthatgeothermalenergycanmakeasignificant

contributiontotheenergytransition’.

The industry can make the difference

“True,wealsoseeagreatfutureforgeothermal

energy’,addsRosendaal.‘Collaborationand

knowledgesharingareessentialtoachievingthis.

ThatiswhyitisgoodthatweworkforUDGwith

sevenconsortia,governmentandknowledgeinstitutes

withintheGreenDealUltraDeepGeothermalEnergy

(UDG),withtheaimofincreasingtheinsightintothe

opportunitiesofgeothermalenergyataminimumof

fourkilometres”.

“Itotallyagree,’Hagedoorncontinues.‘Withinthe

GreenDeal,thepartiesarenotonlyoccupiedwith

theirownproject.Allparticipantsunderstandthat

UDGonlygetsoffthegroundwhenweapproachitas

acollective.Wearealearningsector.Youcouldsay

thatweareintheadolescentphase.Manylessons

havealreadybeenlearned,butthereisstillmuch

tobelearneduntilthereisamaturegeothermal

industry.Thisappliestotheindustry,butalsotothe

competentauthority.Howdoestheregulatorfulfil

itsrole?Whichgamerulesapply?Thattooisinfull

swing. Sometimes we are rowing against the tide,

butthatcertainlydoesnotdiscourageme.Duringmy

geologystudies,IknewthatIwantedtocommitto

sustainableenergy.In2005,Iimmersedmyselfin

geothermalelectricityproductioninIcelandandItaly.

ThenIhadtheintentionthatifgeothermalenergy

intheNetherlandsisgoingtomeansomethingthat

Iwanttofullycommitandcontributetowardsthe

realisationofthesesustainableGigajoules.Iam

happythatIcandothatandIamconvincedthat

Saskia Hagedoorn DirectorofHydrecoGeomec.

Eveline Rosendaal ProgrammemanagerforGeo-EnergieatEBN.


Interview

theindustrycanmakethedifference.Theballisin

ourcourt.Afterthatwehavetoeffectthechangein

cooperationwiththegovernment’.

“Innovationandlearningareinherenttothetransition,”

saysRosendaal.‘Youalsoseethatintheotherenergy

sourcesthatarepartofafuturesustainableenergy

mix.Windenergywithoutasubsidywasunthinkable

untilrecently.Forthedevelopmentofthesector,it

isgoodthattherearepartiessuchasHydrecoGeomec

withpracticalexperienceandfocusontheprofessio-

nalismandaccelerationofgeothermalenergy.

Lookatthequality,safety,healthandenvironmental

managementsystemthatyouhavespecificallyset

upandimplementedforgeothermalenergyinaccor-

dancewiththerequirementsofStateSupervisionof

Mines.Foryou,geothermalenergyisnotsomething

thatyou‘do’ontheside’.

“Ontheotherhand,itisniceforustobeableto

meetthechallengesofgeothermalenergywithan

independentpartysuchasEBN.EBNhasavision

andputsitsmoneywhereitsmouthis”.


6.Reportfromthe Supervisory Board

6.1 General

TheSupervisoryBoardastheemployerofthedirectorhas thejobofsupervisingthepolicyoftheExecutiveBoardand thegeneralcourseofaffairswithinEBN.Inthisreport, theSupervisoryBoardexplainshowithasimplementeditsmethodsofsupervisionandadvisedtheExecutiveBoard.


InaccordancewiththeCentralGovernmentHoldings

PolicyMemo2013,EBNappliestheCorporate

GovernanceCode.ThesectiononCorporateGovernance

andRiskManagementinthisannualreportaddresses

theapplicationoftheCorporateGovernanceCodein

moredetail.ArevisedCorporateGovernanceCodewas

publishedinDecember2017.Thiswaschangedtothe

DutchCivilCodeinSeptember2017.EBNreportsin

thisannualreportontheapplicationofthisrevised

CorporateGovernanceCodebyEBN.

6.2 Composition of the Supervisory Board

Thefollowingchangestookplaceinthecomposition

oftheSupervisoryBoardin2017.

• Witheffectfrom30March2017,MrGratama

vanAndelsteppeddownasamemberofthe

SupervisoryBoard.TheSupervisoryBoardthanks

MrGratamavanAndelforhislongandintensive

involvementwithEBNasamemberofthe

SupervisoryBoard.Hisknowledgeaboutthehistory

ofEBNinDSMrespectwasindispensable.

• MrDeVrieswasappointedbytheshareholderasa

memberoftheSupervisoryBoardon1March2017

andtheSupervisoryBoardappointedMrDeVries

aschairmanoftheAuditCommitteeduetothe

resignationofMrGratamavanAndel.

• MrSamsomwasappointedbytheshareholderas

amemberoftheSupervisoryBoardon22March

2018andtheshareholderappointedMrHuijskes

asChairmanoftheSupervisoryBoardon22March

2018duetotheresignationofMrvanOorschot.

ForallvacanciesontheSupervisoryBoardtheprofiles

asapprovedbythegeneralmeetingofshareholdersin

June2015wereused.Theprofileisalsopublishedon

EBN’swebsite:https://www.ebn.nl/ebn-over/rvc/.

Theprofileindicatestherequiredcharacteristicsof

theindividualmembersandthecollectiveSupervisory

Board.TheSupervisoryBoardmustbecomposedin

suchawaythatthememberscanoperateindependently

andcriticallyinrelationtoeachother,theExecutive

Boardandeachpartialinterest.Thecompositionof

theSupervisoryBoardwilltakeintoaccountthe

natureoftheactivitiesofEBN,itsmissionandobjec-

tives,thetasksoftheSupervisoryBoardandexpertise

oftheothermembersoftheSupervisoryBoard.

ThechairmanoftheSupervisoryBoard,MrVan

Oorschot,istheprimarycontactpersonforEBN’s

ExecutiveBoard.TheentireSupervisoryBoardhasa

jointresponsibility.AllmembersoftheSupervisory

BoardarealsomembersoftheAuditCommitteeand

theRemunerationCommittee/Selectionand

AppointmentCommittee(hereinafter:remuneration

committee).Thegovernancetable(annex9.3)shows

membershipandchairmanshipoftheBoardandthe

committees.

ThemembersoftheSupervisoryBoarddonot

maintainanyotherbusinessrelationshipswiththe

company.Noconflictofinteresthasbecomeapparent

betweenthecompanyandmembersoftheSupervisory

Board.TheSupervisoryBoardmeetstherequirements

forindependenceasstatedintheCorporateGover-

nanceCode(bestpracticeprovisions2.1.7to2.1.9).

Thepersonaldetails,thecurrentancillarypositionsof

themembersoftheSupervisoryBoardandtheretirement

schedulearepublishedonthecompany’swebsite,

underCorporateGovernance-SupervisoryBoard

(https://www.ebn.nl/over-ebn/raad-van-comissarissen/).

Personaldetails,otherpositions,tasksatEBN,

appointmenttermsandagescanbefoundinthe

governancetableannex9.3.

6.3 Composition of the Executive Board

Per1March2016,MrVanHoogstratenwasappointed

asdirectorbythegeneralmeetingofshareholders.

Theprecedingnominationprocedurewascarriedout

bytheSupervisoryBoardinconsultationwiththe

shareholderandtheWorksCouncilwasinvolved

https://www.ebn.nl/ebn-over/rvc/

https://www.ebn.nl/over-ebn/raad-van-comissarissen/


inthisprocedure.Simultaneouslywiththe

appointmentofMrVanHoogstraten,theshareholder

establishedtheremunerationpolicyforthedirector.

Withregardtotheremunerationpolicy,theSuper-

visoryBoardhasestablishedtheremunerationand

furthertermsandconditionsofemploymentofMr

VanHoogstraten.TheWorksCouncilhasgivenits

opinionontheremunerationpolicy.IntheCorporate

Governancesectionofthisannualreport,thecompo-

sitionanddivisionoftasksoftheExecutiveBoard

willbeaddressedinmoredetail.

6.4 Meetings of the Supervisory Board

TheSupervisoryBoardmetfivetimesin2017.Three

meetingstookplaceattheofficeofEBNinUtrecht;

onemeetingwasheldatanexternallocation,andone

meetingwasheldbyphone.

InadditiontothemembersoftheBoard,themembers

ofEBN’steamofdirectorsattendedthesemeetings.

Theexternalauditorwaspresentatthefirstmeeting

of2017.Atthatmeeting,thefinancialstatementsand

annualreportsontheadministrativeorganisation

andinternalcontroloftheexternalauditorwere

discussed.AttherequestoftheSupervisoryBoard,

EBNemployeesattendedanumberofmeetingsto

clarifywhichprojectstheseemployeesareinvolved

in.TheSupervisoryBoardgetstoknowtheorganisa-

tionofEBNbetterasaresult.

In2017,theSupervisoryBoardattendedtwo

consultationmeetingswiththeExecutiveBoard

andtheWorksCouncil.

Meeting Mr Van Oorschot Mr Huijskes Ms Kneppers-Heijnert Mr De Vries Mr Weck

AC March 2017 X X X X X

Supervisory Board March 2017 X X X X X

Remuneration March 2017 X X X X X

Supervisory Board June 2017 X X X X X

Remuneration June 2017 X X X X X

AC September 2017 X X X X X

Supervisory Board September 2017 X X X X X

Supervisory Board December 2017 X X X X X

Remuneration December 2017 X X X X X

Supervisory Board January 2018 X X X X X


Thetablebelowshowsthepresenceofthesuper-

visorydirectorspermeeting.Foreverysupervisory

director,anattendancepercentageof100percentof

themeetingsoftheactualSupervisoryBoardandof

thecommitteesapplies.

6.5 Approvals by the Supervisory Board

TheSupervisoryBoardapprovedthefollowing

mattersin2017:

• InMarch2017,theSupervisoryBoardacceptedthe

positiveadvicefromtheAuditCommitteeabout

the2016financialstatements,andadvisedthe

shareholdertoadoptthe2016financialstatements

andtograntdischargetotheExecutiveBoardfor

thepolicyandthesupervisionthatwasconducted.

• The Supervisory Board has approved an amended

versionoftheauthorisationandproxyscheme.

Theadjustmentshavebeenmadebecauseofthe

differentsetupoftheEBNorganisationasof1

September2017.

• AnamendmenttotheTreasuryStatuteofEBNhas

been approved by the Supervisory Board.

• TheSupervisoryBoardapprovedthework

programmeandbudgetofEBNandEBNCapital

for2018,includingthefinancingplan.

• EBNaskstheSupervisoryBoardforapprovalfor

investmentproposalsofwhichtheEBNshareis

EUR50millionormore.EBNrequestedthis

approvalin2017fortwoinvestmentproposals;

theSupervisoryBoardapprovedbothproposals.

Inparagraph1.8.4theapprovalsanddecisionsare

mentionedasaresultoftheimplementationofthe

corporategovernancecode.

6.6 Cooperation between EBN and the Ministry

of Economic Affairs and Climate Policy

EBNandtheMinistryofEconomicAffairsandClimate

Policyhaveconsultationswitheachotheronaregular

basis.Adistinctionismadebetweensubjectsthat

concerntheshareholdingandpolicyenergyissues.

EBNinformstheSupervisoryBoardaboutboth

contacts.

In2017,thechairmanoftheSupervisoryBoardand

thechairmanoftheteamofdirectorsheldastrategic

meetingwiththedirector-generalofEnergy,Telecom

andCompetition,andotherMinistryemployeesatthe

MinistryofEconomicAffairsandClimatePolicy.

Thestrategicdiscussionsfocusedonexchangingand

aligninginformationaboutstrategicissuesand

developmentsinthefieldofenergypolicyingeneral.

The(policy)goalsandprioritiesoftheMinistryand

EBNforthecomingyearwerealsodiscussedatthis

meeting.Theministryexplainedthecoalition

agreementanditsconsequencesforEBN’sactivities.

TheSupervisoryBoardattachesgreatvaluetoagood

relationshipwiththeMinistry,andthevisitsto

the Ministry are important to maintaining a good

relationship.

6.7 Strategy of EBN

In2016,theSupervisoryBoardapprovedanamended

EBNstrategy.ComponentsofEBN’sstrategyare

discussedateverymeetingoftheSupervisoryBoard.

Forexample,in2017theSupervisoryBoardtooknote

ofdevelopmentsintheareaofgeothermalenergyat

everymeeting.Thesubjectgeothermalenergyis

discussedinsection1.8.3andforthesubjectof

strategytheSupervisoryBoardreferstopage21.

6.8 Issues discussed 2017

Onthebasisofquarterlyreports,theExecutiveBoard

informedtheSupervisoryBoardabouttherelevant

developmentswithinEBN.Thesequarterlyreportsare

distributedinadvanceofthequarterlymeetings.In

these meetings, the Supervisory Board pays attention

toatleastsocialdevelopments,theproductionofgas,

oilandcondensateintherelevantquarter,therecent

pricedevelopmentsandthedevelopmentofthe

turnoverandnetprofits.Initsquarterlyreports,

EBNalsogivesanoverviewofinvestmentlevels.

Thequarterlyreportsalsodealwiththedevelopments

inEBN’sjointventures.


6.8.1 Earthquakes in Groningen

Atallmeetingsin2017,theSupervisoryBoardwas

informedofthedevelopmentsinGroningen,including

recentquakes,thenumberofdamagereportsand

theirhandling,thereinforcementtaskandthe

changesintheclaimshandlingprocess(NAMata

distance).EBNhasinformedtheSupervisoryBoard

aboutthemostimportantlegalproceedingsagainst

NAM,suchastheproceedingsinwhichthepartiesare

claimingcompensationfor(immaterial)damageand

thedepreciationofhomesduetoearthquakesin

Groningen.ThedecisionoftheCouncilofStateof

17November2017abouttheconsentdecisionand

theminister’samendeddecisiononthemaximum

permittedproductionfromGroningenwasalso

discussed.Finally,theSupervisoryBoardisinvolved

intheinterpretationbyEBNofitspositionsonthe

boardsoftheGasgebouw.

6.8.2 Decommissioning and reuse

Atseveralmeetings,EBNinformedtheSupervisory

Boardabouttheremovalofinfrastructureandthe

systemunderdevelopmentinwhichlicenceholders

willfurnishfinancialcollateralonthebasisofmodel

agreementsduetotheclean-upobligationsinthe

existingproductionlicences.Theformationofthe

Nexstepassociationasanationalplatformfordecom-

missioningandreusehasalsobeendiscussedwith

the Supervisory Board. The Supervisory Board

referstopage43oftheannualreportforfurther

informationonthismatter.

6.8.3 Geothermal energy

Thetopicofgeothermalenergyhasbeendiscussedat

allSupervisoryBoardmeetings.Amongotherthings,

thegreendealsUDGandBrabantinwhichEBN

participates,thepossibleroleofEBNinthedevelop-

mentofgeothermalenergyasasourceofenergy,the

technicalandfinancialaspectsofgeothermalprojects,

andtherisksandsocialaspectsoftheseprojectswere

discussed.TheSupervisoryBoardhastakennoteof

theStateSupervisionofMinesReportonthestateof

thesector.InSeptember,theSupervisoryBoardpaid

aworkingvisittoageothermalprojectofECWat

AgriportA7,asiteforlarge-scalegreenhouse

horticulture.TheSupervisoryBoardalsobecame

acquaintedwithDAGOduringthisvisit.

TheMinistryofEconomicAffairsandClimatePolicy

hasinitiatedexplorationintoapossibleroleforEBN

intheaccelerationofthedevelopmentofgeothermal

energyasasustainableenergysource.EBNandthe

MinistryofEconomicAffairsandClimatePolicy

organisedanumberofworkshops.TheSupervisory

Boardreferstopage46oftheannualreportfor

furtherinformationaboutgeothermalenergy.

6.8.4 Miscellaneous/corporate governance code 2016

Theimplementationofthe2016corporategovernance

codeledtothefollowingactionsfortheSupervisory

Board:

• TheregulationsoftheSupervisoryBoardwere

amendedin2017tobringtheprovisionsintoline

withthe2016CorporateGovernanceCode.

• The Supervisory Board has approved an amended

versionofthemanagementregulations.The

managementregulationshavebeenamended

tobringtheprovisionsintolinewiththe2016

corporategovernancecodeandbecauseofthe

differentcompositionoftheteamofdirectorsas

of1September2017.

• InconsultationwithEBN’steamofdirectors,

theSupervisoryBoardhasestablishedadiversity

policyfortheSupervisoryBoarditselfandforthe

teamofdirectors.Seethecorporategovernance

section(p.74)forfurtherexplanation.

• TheSupervisoryBoardhastakennoteofthe

newcorevaluesofEBN(seep.55forfurther

explanation).

• TheBoarddiscussedtheancillarypositionsof

theSupervisoryBoardandtheteamofdirectors

(seep.160forthecurrentancillarypositions).

• Onthepositiveadviceoftheauditcommittee,

theSupervisoryBoardapprovedEBN’sappointment

oftheinternalauditmanager.


6.9 Evaluation of the Executive Board and

self-evaluation

TheSupervisoryBoardevaluateditsownperformance,

theperformanceoftheindividualcommitteesofthe

SupervisoryBoardandthatoftheindividualmembers

oftheSupervisoryBoard,aswellastheperformance

oftheExecutiveBoard,intheabsenceoftheteamof

directors.Thisevaluationtookplaceonthebasisof

individualquestionnaires;theHRmanagerprovided

thefeedbackonthebasisoftheindividuallists.Based

onthis,theconclusionsrelatedtotheevaluationwere

discussed.TheExecutiveBoardwasalsopresent

duringthediscussionoftheconclusions,sincethe

evaluationalsoconcernedcooperationbetweenthe

ExecutiveBoardandtheSupervisoryBoard.Thecon-

clusionsoftheevaluationwerediscussedinthe

SupervisoryBoard;thedifferencesandsimilarities

betweenthemembersoftheSupervisoryBoardin

answeringvarioustopicswerediscussed.Anumber

ofconcretepointsforimprovementhavealsobeen

identified(ofvariouskinds)withwhichthe

SupervisoryBoardhasimmediatelystarted.

6.10 Meetings of the Audit Committee

ThetasksandmethodsoftheAuditCommitteeare

setoutintheSupervisoryBoard’sregulationsfor

theAuditCommittee.TheAuditCommittee’stasks

includesupervising,auditingandadvisingthe

ExecutiveBoardonthefunctioningofinternalrisk

managementandcontrolsystemsandsupervising

thecompany’sdisclosure.TheAuditCommitteemet

twicein2017.Inadditiontothemembersoftheaudit

committee,theteamofdirectors,thecontrollerand

thesecretaryattendedthesemeetingsfromEBN’s

side.Theexternalauditorattendedbothmeetings.


Inthefirstmeeting,theAuditCommitteereviewed,

amongstotherissues,theannualreport,thefinancial

statementsandtheauditor’sreportfor2016.The

auditor’sreportwasdiscussedatlengthwiththe

externalauditor.Afterdiscussingthefinancialstate-

mentsandtheannualreport,theAuditCommittee

advisedtheSupervisoryBoardtoadopttheannual

reportfor2016.Inaddition,theinternalauditplan

for2017(includingthefindingsoftheinternalaudits

carriedoutin2016)wasdiscussed.Suggestionsfrom

theauditcommitteewereprocessedinthefinal

internalauditplan.In2016,thefollowingaudits

wereperformed:newsalesandbalancingagreements,

cashmanagementandlegalriskreporting.Theaudit

committeewasinformedoftheresultsoftheaudits

carriedout,themostimportantfindingsandrecom-

mendations,andthefollow-upoftheaudits.

Atthesecondmeetingof2017,theauditcommittee

paidattentiontothefollowingtopics:theperformance

oftheexternalauditorincludingtheexecutionofthe

jointventureauditsbytheexternalauditor,thereturn

requirementsofEBNforitsactivitiesandthepost

investmentreview.Fordeterminingtheeconomicvalue

ofinvestmentprojects,EBNusesareturnrequirement

thatisbasedontheWACC(weightedaveragecostof

capital).TheWACCisdeterminedannuallyandthe

resultthereofisdiscussedwiththeAuditCommittee.

Duringthismeeting,EBN’shalf-yearreportwas

discussedinthepresenceoftheexternalauditor.

Theexternalauditorprovidedanexplanationofthe

assessmentreportandtheaccompanyingreview.

Theauditcommitteeissuedapositiveopinionon

EBN’skeyfiguresforthefirsthalfof2017.This

positiveadvicewasadoptedbytheSupervisoryBoard.

Theexternalauditor,PwC,alsoexplainedthe2017

auditplanatthismeeting(theauditplanfortheaudit

ofEBN’sfinancialstatementsforthe2017financial

year).PwCdiscussedthedraftauditplanwiththe

teamofdirectorsbeforetheauditplanwassubmitted

totheauditcommittee.PwCdiscussedtheauditplan

withtheauditcommittee,payingparticularattention

tothescope,thematerialityoftheauditplan,the

auditor’sfeeandthemainrisksoftheannualrepor-

tingthattheexternalauditorhasnamedintheaudit

plan.TheAuditCommitteeproposedtotheSuper-

visoryBoardthattheauditofthefinancialstatements

beestablishedinaccordancewiththeauditplan.The

SupervisoryBoardgavethisassignmentinaccordance

withtheproposaloftheauditcommittee.

PwC as accountant

In2015,thegeneralmeetingofshareholdersengaged

PricewaterhouseCoopersAccountantsN.V.toperform

theauditofthefinancialstatementsofEBNfor

thefinancialyears2016-2018withanextension

possibilityforthedurationofoneyear.PwC’swork

startedin2016.

EBN’s credit rating

In2017,EBNinformedtheSupervisoryBoardabout

thecreditratingofEBNbyMoody’sandStandard&

Poor’s.Per6July2017,Moody’ssetEBN’scredit

ratingatAaa/P-1(withtheprospectof‘stable’).

Per14June2017,Standard&Poor’smaintained

EBN’screditratingatAA/A-1+(withtheprospect

of‘negative’).

Declaration of the Executive Board

TheSupervisoryBoardaskedtheExecutiveBoardto

providetheSupervisoryBoardwithadeclarationfor

2017tosupporttheusualreportstotheExecutive

Board.TheExecutiveBoardissuedthatdeclaration,

whichservestosupportprovision1.4.3ofthe

CorporateGovernanceCode.Inaccordancewith

thisprovision,theSupervisoryBoarddiscussedthe

followingissueswiththeExecutiveBoard:the

company’sstrategyandprimaryrisksandtheresults

oftheExecutiveBoard’sevaluationofthestructure

andfunctioningoftheinternalriskmanagementand

controlsystems.Thisissueisdiscussedinmore

detailinthesectionCorporateGovernanceandRisk

Management.


6.11 Meetings of the remuneration committee/

selection and appointment committee

Thedutiesandworkingmethodsoftheremuneration

committeearelaiddowninthe‘Regulationsof

theRemunerationCommittee’andthedutiesand

workingmethodsoftheselectionandappointment

committeearelaiddowninthe‘Regulationsof

theSelectionandAppointmentCommitteeofthe

SupervisoryBoard’.Thedutiesofthesecommittees

include,amongotherthings,makingaproposalto

theSupervisoryBoardfortheremunerationofthe

director,drawingupselectioncriteriaandappoint-

mentproceduresforthedirectorandsupervisory

directorsandtheperiodicevaluationofthe

performanceofthedirectorandSupervisoryBoard

members.Themeetingsofthesecommitteesare

combinedandarethendesignatedasmeetingsof

theremunerationcommittee.

Theremunerationcommitteemetfourtimesin2017

inthepresenceoftheExecutiveBoard,thesecretary

andtheHRmanager.In2017,thecommitteeengaged

indeterminingtheobjectivestobeachievedforEBN

andfortheteamofdirectorsfor2017,therealisation

oftheobjectivesover2016forEBNandtheteamof

directors,updatingthedistributionoftasksofthe

teamofdirectorsandtherecruitmentandselection

ofanewsupervisorydirector.EBN’sorganisational

changeasof1September2017,includingthe

structureofthethemes,consultationwiththe

workscouncilandtheselectionoftheprogramme

managers,hasbeendiscussedseveraltimes.

TheGeneralMeetingofShareholdersadopted

theremunerationpolicyfortheExecutiveBoard

simultaneouslywiththeappointmentofMrVan

Hoogstratenper1March2016.Theremuneration

reportfurtherdiscussestheremunerationpolicy.

6.12 Financial Statements

TheSupervisoryBoardreviewedtheannualreport,

thefinancialstatementsandthedeclarationand

managementletterfromtheauditorPwC.TheSuper-

visoryBoardcanaccepttheseandrecommendsthat

theGeneralMeetingofShareholdersshouldadoptthe

financialstatementsaccordingly.TheSupervisory

BoardadvisestheGeneralMeetingofShareholders

todischargetheExecutiveBoardofresponsibilityin

respectofthepolicyithasimplementedandthe

SupervisoryBoardofresponsibilityinrespectofits

supervision.

SupervisoryBoard,Utrecht,14March2018

MrH.M.C.M.vanOorschot(chairman)

MrJ.Huijskes

MrsE.M.Kneppers-Heijnert

MrW.S.deVries(from1March2017)

MrJ.W.Weck


7.Aboutthisreport

Inthisannualreportoverthe2017financialyear,EBNaccountsforitsfinancialandnon-financialperformance.Thereportisintendedforallstakeholdersthataredirectlyorindirectlyinvolvedinouractivities.Inthe‘OurStakeholders’sectiononpage50,wediscussinmoredepthwhomweconsideramongourstakeholders,andhowwediscussrelevantissueswiththem.


Reporting policy

EBNreportsannuallyonitsfinancialperformancein

accordancewithIFRSandonitssocialandsustaina-

bilityperformancesinaccordancewiththeapplicable

guidelinesoftheGlobalReportingInitiative(GRI).

Thisenablesustoalsoofferthetransparencyour

shareholderdesiresandweclarifyoursocialrole.

TocontinuecomplyingwiththeGRIguidelines,

EBNbasesitsreportingsincethe2014reporton

theGRIG4guidelinesattheCoreapplicationlevel.

WealsousetheOilandGasSectorSupplement.

Theannualreportissetupasanintegralreport,

whereby we note that we are going through a

developmentonthispoint.Intheannualreportfor

2015,avaluecreationmodelwasincludedforthe

firsttime,basedonsixcapitalsoftheIRframework

oftheInternationalIntegratedReportingCouncil.

Thismodelenablesustoshowthecoherencyofour

strategy,risks,environmentalfactors,resultsand

theresultingsocialimpact.Intheannualreportfor

2016wehaveaddedanoverviewofthelinkbetween

thetrendsthatweidentifyinourenvironment,the

opportunitiesandriskstheyofferandhowweare

responding to this with our strategy. Our ambition

forthe2017annualreportistotakefurthersteps

toincreasethestructureandmutualcohesion

ofinformation.

Tomakethecohesionmoretransparent,aconnecti-

vitymatrixhasbeenaddedthisyearforexample.

Reporting process

Thereportingprocessisstructuredasfollows:

Creation of executive board report

Theprocesswithregardtothenon-financialpartof

theannualreportwasasfollows.Akick-offmeeting

washeldatthebeginningofOctober2017.EBN’s

annualreportcommitteeinformedtheExecutive

Boardabouttheissue,themannerofpublicationand

thetimetable.AmonthlaterEBNemployeesinvolved

werealsoinformedaboutthetimetableofthereport,

therequiredinformationandtheissue.Subsequently,

Strategicreview ExecutiveBoard

Riskanalysis Departments

Materialityanalysis Internalandexternalstakeholders

Determinationofmaterialtopics ExecutiveBoardandemployees

Determinationofcontrolframework ExecutiveBoard

Checkofvalidationprocess/data Internalaudit

Datacollection Topicowners/departments

Preparationofsynopsis Annualreportcommittee

Staticpartofreport Annualreportcommittee

Dynamicpartofreport Annualreportcommittee

Assurance Externalauditor


datacollectiontookplacebymeansofaninternal

request.EBNemployeesinvolvedwereaskedto

provideinformationforthereport.Atthesametime,

thethemeoftheannualreportwasdevelopedinthe

formoffourinterviews.Intheseinterviews,fourEBN

employeestalkedtorepresentativesfromdifferent

organisations.Thisyeartheannualreportcomprises

astaticpart(forwhichnoyear-enddataisrequired)

andadynamicpart(forwhichyear-enddatawas

needed).Aninternalsurveytookplaceforboththe

staticandthedynamicpart.Theannualreportwas

writtenbytheannualreportcommittee.TheExecu-

tiveBoardandtheshareholderwereabletoviewthe

textsonseveraloccasionsandrespondtothem.

Eventually,thestaticanddynamicpartsofthe

annualreportweremergedintoonecompletereport.

Thesustainabilityinformationintheannualreport

hasbeenreviewedbyanexternalauditor;theassurance

reportisincludedinthisannualreport.Theexternal

auditoralsoauditedthefinancialstatements;the

auditor’sreportisincludedintheotherinformation

inthefinancialstatements.Theannualreportwas

alsosubmittedtotheSupervisoryBoard.Finally,the

entireannualreportwasdefinitivelyadoptedatthe

GeneralMeetingofShareholders.

Materiality analysis

Thematerialityprincipleisthekeyelementinboth

theIRframeworkandtheGRIguidelines.According

totheIRframework,materialityhasabroader

contextthanjusttheannualreport;itisalsoabout

controloftheorganisationoverissuesthathavean

impact.Emphasisonthesubstantiveissuesaccording

tothe<IR>frameworkshouldimproveinternaland

externaldecision-making.TheGRIguidelinesrequire

anorganisationtofindoutwhich(material)aspectsit

ismostimportanttoreportonfromasocialpointof

view.Forthisprocess,GRIexpresslyrequeststhatthe

reportingorganisationconsiderwhereinthechain

certainaspectsoccurandwhatinfluenceithason

them.ForEBN,thismeanslookingatthemateriality

ofaspectsforourownorganisation,butalsoatour

roleandinfluencewithregardtooperators,partners

andcustomers.


Inthebusinessmodelonpage10,weprovidea

descriptionofourcoreactivitiesandourpositionin

theenergychain.Intheannex(155),basedonachart

weshowwhichstakeholderswearedealingwithand

onwhichmaterialaspectsEBNhasadirectorindirect

influence.

SinceasignificantpartofEBN’soperationsisthe

financialparticipationinoilandgasactivitiesand

tradinginhydrocarbons,thematerialaspectsofthese

activitiesshouldbeincludedinEBN’sreporting.

We do add that EBN is not the operating party in

theoilandgasextraction;thosearetheoilandgas

companiesthatweworkwith.

Materiality determination

Theannualmaterialitydeterminationformsthebasis

fordeterminingthecontentofourannualreport.In

ourannualreportweprovideanexplanationofthe

issuesthatweconsidertobeofmaterialimportance

forthevaluechainwithinwhichweoperateand

issuesthatourstakeholdershaveindicatedareof

materialinteresttoEBN.In2016,wecarriedoutan

extensivematerialityanalysis.In2017,areviewofthe

materialityanalysistookplace.Wehavetakenthe

followingstepsinwhichemployeesareexplicitly

involved:

Step 1: Updating material issues

In2017,thematerialissuesandtheirdefinitionswere

updated.Itwasinvestigatedwhetherthedescription

ofthematerialissueswasstilladequate.Itwasalso

investigatedwhetherissueswerenolongerrelevant

to EBN and whether there were issues that might be

materialforEBN.Onthebasisofthisupdate,no

materialissueshavelapsedandnonewmaterial

issueshavebeenadded.However,thedescriptionsof

theissuesandtheirdefinitionshavebeentightened

upbasedonaninternalconsultationamong

employees.

Step 2: Ranking of the material issues

Wedeterminedtheimportanceofmaterialissuesfor

ourstakeholdersin2016usingastakeholdersurvey

inwhichvariousstakeholdergroupsparticipated.In

2017,thepriorityofthematerialissuesforourorga-

nisationwasreassessedbasedonaninternalreview

bymeansofadesktopanalysisanddiscussionswith

ourmanagement.Theinternalandexternalscores

areequallyweightedinthisanalysis.

Step 3: Drawing up a materiality matrix

Thematerialitymatrixwasadjustedonthebasisof

thisreview.Theresultsareshownonpages27and

28.Thetopicsfromthismatrixformthebasisofthis

integratedannualreport.

Thenewmaterialitymatrixhasbeensubmittedand

approved by the management.

Shifts 2017

Aninternalrankingwasmadein2017,asaresultof

whichthematerialsubjectswereonlyshiftedonthe

x-axisofthematerialitymatrix.Comparedto2016,

materialissuesaremorecentredin2017.Theencou-

ragementofefficientexplorationandextractionofoil

andgasandeffectivedecommissioningandre-use

remainimportantforourorganisation,andshowa

highscore.Othermaterialissuesshowashiftcompa-

redto2016.Abig‘riser’isthedevelopmentofnew

energy.Thiscanlargelybeexplainedbythefactthat

EBNhasstartedtofocusmoreonthisstrategicprio-

rity.Thesteeringandcoordinationofinnovationhas

alsoincreasedcomparedto2016.Innovationisof

greatimportancetoEBNanditspartnerswithinthe

oilandgasindustry,partlybecauseofthefinancial

pressureontheindustry.Theissuesofgainingand

aggregatingknowledge,andeffectiveadviceand

influencehavedeclined.Thiscanpartlybeexplained

bythefactthatinanumberofcasesEBNhasnodirect

influenceandcanonlyuseitsinfluenceindirectly(via

thirdparties).Contributionstotheenergytransition

havealsodecreased.Anexplanationforthisisthat

thisissuehasbeenadjustedinrelationto2016to

makeanactivecontributiontothediscussionabout


theenergytransitiontocontributetotheenergy

transition.Theconnotationoftheissuehaschanged.

EBNmayhavelessinfluenceontheentireenergy

transitionthanonthediscussion.

Choice of issues

Inthisreportinanycaseweaddresstheissuesthat

havehighpriorityforstakeholdersaswellasforEBN.

By2016wecompletelyrevisedourmaterialitymatrix

toallowittoconnecttotherevisedstrategicpriori-

ties.Thisyeararecalibrationofthemateriality

matrixwascarriedout.Nonewtopicshavebeen

selectedforourmatrixthisyear.Thedefinitionand

formulationofvarioussubjectshashoweverbeen

tightenedup(seealsotabledefinitionsmaterial

issuesonpage96).Thechoiceofsubjectforthe

annualreport2017isdescribedintheGRI-indexin

annex9.5.

Thematerialitymatrixalsolistsissuesthatrelateto

theactivitiesoftheoperatorsandwhichEBNcannot

orcanonlypartiallyinfluence.Wereportonmost

socialandenvironmentalaspectsintheseparate

publication‘EBNSustainabilityReport’.Wepublish

these on our website.

Encouraging effective

detection and extraction

of oil and gas

Encouragingeffectivedetectionandextractionofoilandgas

(includingoptimisationofinfrastructure)throughdeploymentofNOV

management and own investigations.

Effective decommissioning

and reuse

Facilitatingandencouragingeffectivereuseanddecommissioningofexistingoil

andgasinfrastructure,includingthroughthedevelopmentandimplementationof

amasterplan.

Collecting and bringing

knowledge

Theactivesharingofknowledgeinpartnershipsandknowledgenetworks,among

othersthroughstudiessuchasBOON,andFocusonEnergy;thegatheringof

knowledgefromchainpartnersthroughpartnershipsandknowledgenetworks.

Effective advice and

influence

Encouragingemployeestoinfluencetheoperators(throughNOVmanagement),

partnersandotherstakeholdersthroughdialogueandadvice.

Guiding and coordinating

innovation

Thesmarterandmoresustainabledevelopmentofexistingandnewpotential,

byprivateresearchandbyworkingwithpartnersandresearchinstitutions.

Sustainability in the value

chainWorkingtowardsenvironmentalimpactofgas,includingemissionsandleaks.

Development new energyGeneratinginsightsintoopportunitiesandpossibilitiesforthedevelopment

ofnewenergyandstorage,suchasgeothermalenergy,CAES,andCCS.

Creation of economic valueOptimisingfinancialresults,suchasnetincome,naturalgasincome,sales,

investmentanddepreciation.

Attracting and developing

talent

Findingandhiringtalentedemployees,offeringthemgooddevelopment

opportunities and inspiring them.

Support for our work

Workingonsupportforourwork.PropagatingthesocialresponsibilityofEBNby,

amongotherthingsenvironmentalmanagement,andprojectswithinandoutside

thegassector.

Safeguarding (external)

security

Promotingagoodsafetyculture,meaningsafetyriskssuchasearthquakes,

spillsandexplosionsarelimited.

Contributing to the

energy transition

Makingaconstructivecontributiontotheaccelerationoftheenergytransition

throughtheuseofknowledgeandexpertiseofthesubsurface.


Transparency benchmark

EBNparticipatesannuallyinthetransparency

benchmark,abiannualstudy(from2018)intothe

contentandqualityofsocialreporting.In2017(for

theannualreport2016),EBNobtainedascoreof185

pointsoutofthepossible200.In2019,EBNwillagain

participateinthetransparencybenchmarkforthe

2018report.

Tasks and responsibilities

In2016,wemadeastartonsecuringtheresponsibilities

forG4requiredaspects,indicatorsandobjectivesin

ourorganisation.In2017,wehavegiventhisfurther

shape.TheExecutiveBoardbearstheultimate

responsibilityforallmaterialaspectsthatimpactthe

strategyandEBN’ssocialpolicy.TheExecutiveBoard

hasallocatedtheresponsibilityfortheimplementation

ofthepolicyandthedatacollectionforeachissueto

variousdepartmentsin2016.Thisprocesshasnotyet

beencompletedin2017.AfterEBN’sorganisational

change,theissueshavetobereassigned.Thisprocess

willthereforebecontinuedinearly2018.EBNwill

alsoswitchfromGRI-G4totheGRIStandardsin

2018.

ThereportaboutEBN’snon-financialperformance

willbedevelopedfurtherin2018.Wewillclassifythe

significantindicatorsthatwereselectedwiththe

materialityanalysisunderanumberofthemes.Sub-

sequently,foreachthemewewillformulaterelevant

goalsthatwillsteerthevariousindicators,inpart

genericallyandinpartspecifically.

Thisallwillresultinasustainabilityplan,whichis

preparedincloseconsultationwiththeindustry.It

remainsourgoaltocreateclaritywithourpartners

abouttheinterestofreportinginaccordancewiththe

GRIguidelines.

Scope

EBNonlyhasactivitiesintheNetherlands.The

(indirect)economicperformancesconcernEBNand

itsshareinparticipations.Weaccountforthisin

theResultsfor2017sectionandintheFinancial

Statements.Thesocialperformanceprimarilyconcerns

EBN.Theseperformancesaredescribedinmoredetail

inthesectionentitled‘ThepeopleofEBN’.


Theenvironmentalperformancesregardingemissions,

energyconsumption,waste,dumpingandcompliance

mainlyconcernouroilandgasparticipations,

(giventhelimitedsizeofourorganisation,EBN’s

environmentalperformanceisnotmaterial);they

arerelatedtotheperformanceoftheentireindustry

activeonDutchsoil.Theindividualenvironmental

reportsbytheoperators,formulatedannuallyinthe

contextoftheMinistryofEconomicAffairsand

ClimatePolicy’s‘DeclarationofIntent,Execution

ofEnvironmentalPolicyOilandGasProducingIndus-

try’,constituteaguideline.TheDutchoperatorsadd

theenvironmentalandenergyperformancesinthe

electronicEnvironmentalAnnualReport.Thesedata

formthebasisfortheperformance,aspresentedin

thisreportandtheEBNSustainabilityReport

2016-2017.ThisreportispreparedannuallybyEBN.

Operationalperformanceindicatorsprocessedin

thiscontextaredrawnuponEBN’sinstructionsby

theNetherlandsEnterpriseAgency(RVO).

Frameworks, measuring methods and definitions

Allperformancesdescribedfollowspecificframeworks.

Therelationshipofcertainindicatorswiththeannual

gasandoilproductionisevidentand,foranumberof

indicators,therelationshipwiththenumberofdrills

isobvious.However,frameworksarealsodefinedby

lawsandregulations.Theseframeworksaredescribed

infurtherdetailwhererelevant.Theresults

provideanoverviewofEBN’sshare(unlessotherwise

specified)intheperformancesoftheentireoiland

gasproductionindustry.

Dutchproductionofgas,oilandcondensate

comprisesthefiscallyreportedgas,oilandconden-

sateproductionfiguresreportedbytheoperators.

Theinjectionandproductionvolumesofgasinthe

gasstoragefacilityareseenasinternalcompany

activities.Thegasisfiscallyreportedthemomentit

isdeliveredtothirdparties.

Theenergyconsumptionofdrillingactivitiesisnot

included;theCO2andCH4emissionsfromdrilling

activitiesare.

EBN’sshareiscalculatedasEBN’spercentageof

thetotalgas,condensateandoilproductioninthe

Dutchgas,condensateandoilproductioninthe

environmental-technicalandeconomicperformances.

Forthesocialperformancesthatspecificallyconcern

theactivitiesofoperators,theshareoftheentire

industry(100percent)ispresented,asitisirrelevant

tomentionEBN’sshareinthese.

Therewerenochangestothemeasuringmethods

anddefinitionsinthereportingyear2017.Formore

information,werefertotheEBNSustainabilityReport

2016/2017thatwaspublishedonourwebsiteinJune

2017(www.ebn.nl/publicaties).

Disclaimer

Inthisreport,wereportoneffortsandachievements

withregardtotheobjectivesin2017.Wealsopresent

ourplansandvisionforthefuture.Thisfuture-

orientedinformationischaracterisedbywordssuch

ascontinue,want,aim,predict,expect,target,objective,

vision,planning,ambition,scenario,resolutionand

forecast.Inherenttofutureexpectationsisthatthe

outcomeissubjecttorisksanduncertaintiesandtheir

achievementisthereforenotassured.

Assurance of non-financial information

EBNhasrequestedPwCtoassessthesustainability

information(intheForeword,KeyFigures,About

EBN,StrategyandResults2017sections)andtoissue

anassurancereportwithalimiteddegreeofcertainty.

Youcanfindtheassurancereportonpage151.

GRI-index

YoucanfindtheGRIindexinannex9.5.

Publication date annual report 2017

EBN’sannualreportfor2017ispublishedon

6April2018.

http://www.ebn.nl/publicaties


8.FinancialStatements


General information

EBNB.V.(“EBN”)withitsregisteredofficeand

principalplaceofbusinessinUtrecht(Chamberof

Commerce14026250),theNetherlands,wasincorpo-

ratedon2January1973inMaastricht.Allsharesin

EBNareheldbytheDutchState.

EBNfocusesontheparticipationinoilandgas

explorationandproductionactivitiesintheNetherlands

andtheDutchpartofthecontinentalshelf.Inaddition,

EBNparticipatesinundergroundgasstoragesandin

transportandgasprocessingfacilities.

TheconsolidatedfinancialstatementsofEBNoverthe

year2017arepreparedandapprovedbytheExecutive

Boardaccordingtoitsresolutionof13March2017.

Thefinancialstatementsweresubsequentlysubmit-

tedtotheSupervisoryBoard.PursuanttoArticle19.2

oftheArticlesofAssociation,theSupervisoryBoard

alsoprovidesapreliminaryrecommendationtothe

shareholders.

TheconsolidatedfinancialstatementsofEBNhave

beenpreparedinaccordancewiththeInternational

FinancialReportingStandards(IFRS)andinterpreta-

tionsoftheInternationalFinancialReporting

InterpretationsCommittee(IFRIC)asapplicableon

31December2017andasendorsedbytheEuropean

UnionandwithPart9,Book2oftheDutchCivilCode.

EBN’scompanyprofitandlossaccountispreparedin

asimplifiedmannerinaccordancewitharticle402

Title9Book2oftheDutchCivilCode.

Basis for consolidation

EBN’sfiguresandthefiguresoftheentitiesit

controlsareincludedintheconsolidatedfinancial

statements.EBNhascontrolofasubsidiaryifbased

onitsinvolvementintheentity,itisexposedto,or

entitledto,variableresultsandhastheabilityto

influencethoseresultsonthebasisofitscontrolover

theentity.Thesubsidiary’sfinancialstatementsare

preparedbasedonthesameprinciplesasEBN’s.All

transactions,balances,assetsandliabilitieswithin

thegroupareeliminatedonconsolidation.Theresults

ofsubsidiariesacquiredordisposedofduringthe

yearareincludedintheconsolidatedstatementof

comprehensiveincomeincludedasofthedateof

acquisitionofcontrolrespectivelythedateof

disposal,asappropriate.

EBNCapitalB.V.(‘EBNCapital’)isthesolesubsidiary

ofEBN.

Joint arrangements

EBNconductsitsactivitiesthroughpartnershipsthat

aresetoutincontractualarrangements(agreements

ofcooperationorJointOperatingAgreements).EBN

hasassessedthecontrol,votingrights,dutiesand

obligationsthatarisefromtheseagreements.The

conclusionisthat,exceptforNGT-Extension,EBN

hasjointcontrolwithoneormorepartnersinthe

agreementsanddefinestheseasjointoperations.

Togetherwiththeotherpartiesinthejointagreement,

EBNisentitledtotheassetsandisliableforthe

debtsrelatingtotheagreements.EBN’sinterestin

thejointoperationsisrecordedinthefinancialstate-

mentsbyincludingtheassets,liabilities,incomeand

expenditureforitsshare.

FortheNGT-ExtensionjointventureEBNhasnojoint

controlwithinthemeaningofIFRS11,asaresultof

whichitsinterestisrecognisedinaccordancewith

IAS28.Becausefactsandcircumstances(including

votingrightsfordecisionmaking)leadtothe

conclusionthatEBNexertssignificantinfluenceon

NGT-Extension,NGT-Extensionisprocessed

andpresentedaccordingtotheequitymethodas

associate.


Themostimportantjointoperationsbasedonthe

carryingvalueofthetangiblefixedassetsat31

December2017areasfollows:

Associates

EBNhasa40%shareinGasTerraB.V.(‘GasTerra’)

basedinGroningenandwithmainactivitytradingin

naturalgas.

Inaddition,EBNhasaparticipationof45%inNOGAT

B.V.(‘NOGAT’)locatedinZoetermeerandwithmain

activitynaturalgastransportfromtheNorthSea.

InaccordancewithIAS28the12%stakeofEBNin

theNGT-Extensionpartnershipisaccountedforusing

theequitymethodandpresentedasassociate.

NGT-ExtensionisbasedinZoetermeeranditsmain

activityisthetransportofnaturalgasfromthe

North Sea.

Key accounting estimates and judgements

Forthepreparationofthefinancialstatements

estimatesandjudgementsaremade.Thesehave

consequencesfortheamountsreportedforassets

andliabilities,incomeandexpenditureitemsandthe

relatedreportingofcontingentassetsandliabilities

atthedateofthefinancialstatements.Resultscanbe

influencedbysuchestimatesandjudgements.The

paragraphsbelowgiveanexplanationofthematters

thatmanagementconsidersmostimportantand

which,duetointrinsicuncertainties,areoftenthe

mostdifficulttoestimate.Inadditionwerefertothe

section‘Impairment’whichalsoincludesinformation

aboutassumptionsandestimationuncertainties

underlyingtherecoverableamountofafixedasset.

Name Interest Operator Operator’s place of business

Groningen 40% NAM Assen

Norg 40% NAM Assen

Schoonebeek 40% NAM Assen

JDAUnit 40% NAM Assen

L05a 40% Neptune Zoetermeer

BergermeerUGS 40% TAQA Alkmaar

Noord-Friesland 40% NAM Assen

K04b/K05a 50% Total TheHague

K04a 50% Total TheHague

A&BUnit 47% Petrogas Rijswijk

K18b 40% Wintershall Rijswijk

L09 50% NAM Assen

A18a 40% Petrogas Rijswijk

K05b 50% Total TheHague

L13 40% NAM Assen

BlockM7 50% ONE Amsterdam


Decommissioning and restoration costs

Theprovisionsforrestorationcostsandtheactivation

ofrestorationcostsonthebalancesheetisbasedon

informationfromoperators.EBNevaluatesthis

informationbasedonitsownknowledgeandexperi-

enceandamendsitwherenecessary.Theultimate

decommissioningandrestorationcostsareuncertain

andcostestimationscanvaryasaresultofnumerous

factors,suchasmarketprices,changesinlegal

requirements,newdecommissioningtechniquesor

experience.Theanticipatedtimingandscopeofthe

costscanchangeasaresultof,forexample,changes

ingasandoilreservesandchangestolegaland

regulatoryrequirementsandtheirinterpretation.

Significantestimatesandjudgementsaremade

whenestablishingtheprovisionfordecommissioning

andrestorationcosts.Substantialrevisionsofthe

provisioncanthereforeinfluencefutureresults.

Formoredetailsonthecourseofthisprovisionwe

refertonote16.

Reserves

TheUnitofProduction(UOP)depreciationisbased

onEBN’sestimatesofthegasandoilreservesand

productionprofiles.EBNdeterminesthegasandoil

reservesinaccordancewiththedefinitionslaiddown

bytheSocietyofPetroleumEngineers(SPE),World

PetroleumCouncil(WPC),AmericanAssociationof

PetroleumGeologists(AAPG)andSocietyofPetroleum

EvaluationEngineers(SPEE)inthePetroleum

ResourcesManagementSystem2007(PRMS)andthe

newguidelinesfrom2011.Thereservesusedforthe

depreciationarebasedonEBN’scurrentestimations

ofprovenandprobabledevelopedreserves(PRMS

category1)andtheassociatedproductionprofiles.

Estimationsofreservesare,bydefinition,inaccurate

andbasedoninterpretationsthatcan,overtime,

change,onthebasisofnewinformationobtainedfrom

drillingnewwells,reservoirproductionbehaviour

andchangesineconomicfactors(suchasprice

expectations).Thiscanresultinupwardordownward

revisionstothereserves.Changesinreserveshavean

effectonthefuturedepreciationandtherecoverable

amountofproductionassets(seealsonotestothe

principlesof‘Tangiblefixedassets’).

Earthquake-related costs

Theprovisionforcostsasaresultofearthquakesin

theprovinceofGroningenisbasedoninformation

fromtheoperator,publicinformationandEBN’s

informationandinsights.Thisprovisionrelates

mainlytodamagerepairasaresultofearthquakes

relatedtotheproductionuptoandincludingthe

balancesheetdate,architecturalreinforcements

ofbuildings,strengtheningtheinfrastructure,

compensationmeasuresanddeclineinvalue.

Theassumptionsusedfortheestimatesforthe

provisionarebasedonpaymentsalreadymade,

experience,statisticalinformationandcalculation

models,internalandexternalinvestigationsand

informationfromtheoperator.Theultimateamount

ofthecostsdependsamongotherthingsonthe

extentofthedamageandadvice,valuationbyexperts

and/orbilateralagreementsandcanthereforediffer

fromthecurrentexpectedcost(seealsonote16).

Recoverable value

Thecalculationoftherecoverablevalueofassetsis

partlybasedonestimatesofreserves,production

profiles,futuresellingprices,operatingcosts,explora-

tionpotential,expectedfutureinvestments,expected

futurelevies,earthquake-relatedexpenditureandthe

discountrate.Futureeventscanhaveanimpacton

thesepredictionsandestimates,withtheresultthat

theestimatesofrecoverablevaluescanchange.

Summary of significant accounting policies

Thefinancialstatementshavebeenpreparedin

accordancewiththehistoricalcostconvention,andon

a‘goingconcern’basis,unlessstatedotherwise.

Conversion of foreign currencies

Thefunctionalcurrencyandpresentationcurrency

ofEBNistheeuro.Commercialtransactionsand


borrowingsinforeigncurrenciesareconvertedatthe

spotexchangeratesasapplicableonthetransaction

dates.Balancesheetitemsdenominatedinforeign

currenciesareconvertedatthespotexchangerates

applyingonthebalancesheetdate.Differencesin

exchangeratesresultingfromsettlementofthese

transactionsandconversionofbalancesheetitems

arechargedtotheprofitfortheyear.

Distinction between current and long term assets and

obligations

Anassetisclassifiedascurrentifitisexpectedtobe

realisedwithin12monthsafterthebalancesheet

date.Aliabilityordebtisclassifiedascurrentifitwill

besettledwithin12monthsofthebalancesheetdate.

Ifanunconditionalrighttopostponepaymentforat

least12monthsexiststhensuchdebtisclassifiedas

long-term.

Property, plant and equipment

Property,plantandequipmentarevaluedatthe

acquisitioncostlessdepreciationandanyimpairment

losses.Replacementinvestmentsarecapitalised

inaccordancewiththeIAS16generalcapitalisation

criteria.

Theestimatedcostsfordecommissioning,decommissi-

oningandremovalofplatformsandotherinstallations

arecapitalisedaspartofthepurchasevalueofthe

tangibleassetinquestion.

Property,plantandequipmentisnolongerincluded

inthebalancesheetwhenitisdisposedoforwhenno

futureeconomicbenefitsareexpectedfromitsfurther

use,orincasethelicenceisrelinquishedorsold.Any

profitorlossensuingfromtheassetthatisnolonger

includedinthebalancesheetisincorporatedintothe

result.

Exploration and evaluation assets

Expenditureforthefollowingactivitiesarecapitalised

aspartoftheexplorationandevaluationassetsunder

construction:acquisitionofexplorationlicences,

explorationdrillingincludingtest,samplingand

activitiesinrelationtoevaluationofthetechnicaland

commercialpossibilityofextractinghydrocarbons.

Ifitturnsoutthatanexplorationwellisdrythen

costsincurredarechargedtotheconsolidatedstate-

mentofcomprehensiveincomeanddisclosedunder

write-downsintheoperatingexpenses(note4).

Thefollowingcostsarenotcapitalised:topographical,

geological,geochemicalandgeophysicalsurveys

(unlesstheyarerelatedtoexistingandproven

reserves).

Explorationandevaluationcoststhatareonthe

balancesheetformorethan12monthsarechargedto

theconsolidatedstatementofcomprehensiveincome

(underwrite-downinnote4)unless:

• theyareinanareawheresubstantialinvestments

arerequiredbeforeproductioncanstart,or

• commerciallyrecoverablequantitieshavebeen

found,or

• furtherexplorationorevaluationactivitiestake

place,thatis,additionalexplorationwellsaredril-

ledorfirmplanstodosointhenearfutureexist.

EBNregularlyassesswhetheractivationofthe

expenditureforexplorationdrillingstillmeetsthe

criterialistedaboveandwhetherthedrillingactivities

cancontinue.Explorationwellsthathavebeenon

thebalancesheetformorethan12monthsare

re-evaluatedtodeterminewhetheranyfactsor

circumstanceshavechangedandwhethertheabove

criteriastillapply.

Explorationandevaluationcostsunderconstruction

andinvestmentsunderconstructionarecategorised

asdrillingorproduction,transportandstorage

facilitiesfromthestartofproductionor

commissioning.


‘EBN’s reimbursements’

EBNreimbursements-‘farmin’costsinexploration

licences-arecapitalisedanddepreciatedbasedonthe

UnitofProduction(UOP)method.

Depreciation

Property,plantandequipmentforgasandoildrilling

aredepreciatedbasedontheUnitofProduction

method.ThismethodisbasedonEBN’sestimations

oftheprovendevelopedreserves(PRMScategory1)

andproductionprofilesinaccordancewiththedefini-

tionslaiddownbytheSocietyofPetroleumEngineers

(SPE),WorldPetroleumCouncil(WPC),American

AssociationofPetroleumGeologists(AAPG)and

SocietyofPetroleumEvaluationEngineers(SPEE)in

thePetroleumResourcesManagementSystem2007

(PRMS)anditsnew2011guidelines.

TheUOPratesforthefinancialyearindicatetheratio

betweentheproductionovertheyearandtheproven

andprobablydevelopedreserves(PRMScategory1)at

thebeginningoftheyear.Thesereservesaredeter-

minedbyincreasingthereservesasestablishedatthe

endofthefinancialyearwiththeproductionforthe

year.

Theotherproperty,plantandequipmentaredepreci-

atedovertheestimatedusefullifeonastraight-line

basis.Twentyyearsistakenastheinitialbasisfor

maintransportpipelinesandthirtyyearsforfacilities

forundergroundstorageofnaturalgas.Aten-year

usefullifeappliestoindustrialbuildings.Landisnot

depreciated.

Theestimatedremainingusefullifeofproperty,

plantandequipmentisreviewedeachyearbased

onthepatternoffutureuse.Ifchangesoccur,the

depreciationmethodisadjustedinordertoreflectthe

adjustedusefullifeandtheassociatedfutureusage

pattern.Theeffectthereofisincorporatedinthe

consolidatedstatementofcomprehensiveincome

ofthecurrentand/orfutureperiods(prospective).

Borrowing costs

Financingcostsofprojectsarecapitalised.Theinte-

restrateusedforthefinancialyearisbasedonthe

averageinterestrateapplicabletoconcurrentborro-

wingsinthepastfinancialyear.

Associates

AnassociateisaninterestinanentityonwhichEBN

canexertsignificantinfluence,butoverwhichit

cannotexercisedecisivecontrol.

Associatesareprocessedonthebasisoftheequity

method.ThismeansthatEBN’sshareinanassociate

isrecognisedasEBN’sshareinthenetassetsofthis

entity,lessanyimpairment.

EBN’sshareintheprofitorlossofanassociate

isincludedintheconsolidatedstatementofcompre-

hensiveincome.WhenEBN’sshareinthelossof

anassociateexceedsthecarryingamountofthat

associate-includinganyotherlong-termreceivables

thatarepartofthenetinvestment-thecarrying

amountisreducedtonil.Nofurtherlossesare

accountedforunlessEBNhasassumedresponsibility

fortheassociatethroughaguaranteeorothercom-

mitments.Unrealisedgainsandlossesontransactions

withassociateareeliminatedinproportiontoEBN’s

shareintheseassociates.

Impairment

Anassessmentismadeannuallyatbalancesheetdate

astowhetherthecarryingamountofanon-current

asset(property,plantandequipmentorassociates)

exceedsitsrecoverableamount(higheroffairvalue

lesscosttosellandvalueinuse).Inthatcase,an

analysistoidentifypossibleimpairmentrequirements

iscarriedout.

Whenanassetdoesnotgeneratesufficientindependent

cashflows,therecoverableamount(seealsosection

‘Estimatesandjudgements’)isdeterminedforthe


cashflowgeneratingunittowhichtheassetbelongs.

Ingeneral,EBN’scash-generatingunitisasales

contract.Inaddition,‘hubs’(mainplatformand

satellites)canbeusedasacashgeneratingunit.

Forvalueinuse,estimatedfuturecashflowsare

discountedataratebeforetaxes,basedonthemarket

interestrateplusamark-upfortherisksspecificto

theasset.EBNusestheWACC(WeightedAverage

CostofCapital)forthiscalculation.Thisis6%for

midstreamactivities(2016:6%)and7%forexploration

andproductionactivities(2016:8%),aftertax.

Adiscountratebeforetaxisalsodetermined,

onthebasisofaniterativemethod.

Whentherecoverableamountofanassetislessthan

thecarryingamount,thecarryingamountiswritten

downtotherecoverableamount.Impairmentcanbe

reversed,eitherwhollyorpartially,intheeventofa

changeintheestimatethatisofsignificancefor

determiningtherecoverableamount.Impairment

ispresentedasaseparateitemintheconsolidated

statementofcomprehensiveincome.

Formoredetailabouttheassumptions,uncertainties

inestimatesandasensitivityanalysiswithrespectto

impairmentlosseswerefertonote5.

Stock

Undergroundgasstocksandsuppliesofmaterialsare

valuedattheaveragepurchasepricesorlowernet

realisablevalue.Thestockofabove-groundconden-

sateandoilisvaluedattheaveragepurchaseprices

orlowernetrealisablevalue.

Receivables

Receivablesarerecognisedatamortisedcostlessany

adjustmentforbadanddoubtfuldebts.Onfirst

recognition,receivablesarepresentedatfairvalue.

Cash and cash equivalents

Cashandcashequivalentsarecashinhand,bank

balancesandshort-termmoneymarketinstruments

whichcanbeconvertedintocashatshortnotice,of

whichtheamountisknownandthatbearnomaterial

riskofchangeinvalue.

Shareholder’s equity

EBN’sequityconsistsofsharecapital,retained

earningsandanydividenddeclared.TheDutchStateis

EBN’ssoleshareholder.Interimdividendpayabletothe

shareholderisincludedasanobligationintheperiod

overwhichitisdue,inaccordancewiththeEBN’sArticles

ofAssociation.Theexceptiontothisistheproposed

finaldividend.Thatisonlyrecognisedasanobligation

afteradoptionbytheGeneralMeetingofShareholders.

Provisions

Provisionsarerecognisedinthebalancesheetifthe

followingconditionsaresatisfied:

• thereisalegalorconstructiveobligationasa

resultofapastevent,and

• itislikelythatcashoutflowwillberequiredto

settlethepresentobligation,and

• areliableestimateoftheamountoftheobligation

canbemade.

Iftheeffectofthetimevalueofmoneyismaterial,pro-

visionsaredeterminedbycalculatingthepresentvalue

oftheforecastcashflowsatadiscountratebeforetax.

Oncethepresentvaluehasbeencalculated,

anyincreaseinprovisionsasaresultofthepassing

oftimeispresentedasinterestexpense.

Theprovisionfordecommissioningandrestoration

costsisdesignedtocovertheestimatedcostsof

decommissioning,decommissioningandsiterecovery

basedonthecurrentrequirements,technologyand

costestimates.Theamountofthisprovisionisbased

oninformationfromtheoperator,andanychanges

inestimateswill,afterEBNhasmadeitsown

assessment,resultinacorrespondingchangeinthe

capitaliseddecommissioningandrestorationcostsof

therelevantproperty,plantandequipment.


Theprovisionforgroundsubsidenceisdesignedto

covercertainadditionalliabilitiesarisingduringthe

productionphase.









compensationmeasuresanddeclineinvalue.The

assumptionsusedfortheestimatesfortheprovision

arebasedonpaymentsalreadymade,experience,

statisticalinformationandcalculationmodels,

internalandexternalinvestigationsandinformation

fromtheoperator.

Liabilities

Loansarerecordedatamortisedcostprice.Onfirst

recognition,suchitemsarepresentedatfairvalue

lesscosts.Borrowingsinforeigncurrenciesarecon-

vertedattheexchangeratesapplicableonthebalance

sheetdate.Interestexpenseischargedtotheresultin

theperiodtowhichitpertains,usingtheeffective

interest rate method.

Pensions

ThepensionobligationsofEBNarehousedatthe

pensionfund:StichtingPensioenfondsABP(‘ABP’).

InlinewithIFRSthisarrangementcanbeclassified

asadefinedcontributionplanformultipleemployers.

Thisisbecausethepensionfundisnotabletobreak

downtheshareofEBNintheunderlyingpension

obligation,planassetsandcostoftheschemeina

consistentandreliablemanner.

Thepensionpremiumowedisapercentageofthe

premiumbase.Thepremiumbaseisthepensionable

incomeminusafranchise.Thepremiumsare

determinedbyABPinaccordancewiththerelevant

applicableregulationsinthewayasdescribedinthe

ActuarialandOperatingMemorandum(“ABTN”)

andatacost-coveringlevel.

IfABPhasacoverageratiopolicylowerthan128%,

thenthereisashortage.Inthiscase,ABPmust

prepareandsubmitarecoveryplantothesupervisor

(DeNederlandseBank).Thisrecoveryplanmustshow

thatthefinancialpositionwillimprovewithina

maximumof12yearswiththecoveragelevelback

above128%.Anyadjustmentofpensionpremiums

(surcharge)asaresultofthisrecoveryplanisapplied

prospectivelyandwithinacertainbandwidth.

ThecoverageofABPasat31December2017was

104.4%(2016:91.7%).

Contingent assets and liabilities

Contingentassetsandliabilitiesarenotincludedin

thebalancesheet.

Sales

Salesfromthesaleofgas,oilandcondensateis

recognisedattimeofdelivery.Thatisthetimewhen

ownershipandtherisksassociatedwiththedelivered

goodspasstothecustomer.

Revenuesfromoilandgasproductiongeneratedfrom

assetsinwhichEBNparticipateswithotherproducers

areaccountedforinproportiontoEBN’srelative

interest in these assets.

Financial income and expenditure

Interestincomeandexpensearerecordedbasedon

theeffectiveinterestmethod.Interestexpensealso

includesinterestaccruedonprovisions.

Share of profit from associates

Theshareintheprofitfromassociatesisrecognised

astheshareoftheprofitfortheyearunderreview

correspondingwithEBN’sinterest,afterdeduction

oftaxes.


Taxes

Taxesisdeterminedaccordingtothe‘balancesheet

method’.Taxliabilitiesarespecifiedintheconsolidated

statementofcomprehensiveincomeexceptifthey

relatetoanitemincludedinothercomprehensive

income.

Currenttaxexpensesaretaxesthatareexpectedto

bepayableonthetaxableprofitfortheyear,basedon

thetaxratesapplyingonthebalancesheetdate,

netofanyadjustmentsfortaxespayableinrespect

ofpreviousyears.

Deferredtaxassetsandliabilitiesarerecordedbased

ontheexpectedtaxconsequencesoftemporarydiffe-

rencesbetweenthetaxandthecommercialcarrying

valueofassetsandliabilitiesrelatingtotheground

subsidenceandrestorationcosts.Deferredtaxassets

andliabilitiesarecalculatedonthebasisofthetax

ratesthatareapplicableormateriallydeterminedon

thebalancesheetdate,andinaccordancewiththe

taxregulationsexpectedtoapplywhenthespecific

deferredassetsandliabilitiesaresettled.

Financial derivatives

Derivativefinancialinstrumentsarerecognisedatfair

valueoninitialrecognitionandthenatthecurrent

fairvalueprevailingoneachsubsequentbalancesheet

date.Thecurrentfairvalueiscalculatedwiththe

appraisalmodelofReuters,usingyieldsfromReuters.

Anyresultantgainsorlossesarechargedto

comprehensiveincome.

Forfurtherinformationontheconclusionofthe

fairvaluesseenote19(‘Fairvalueoffinancial

instruments’).

Derivativeswhichservetohedgelong-term

instruments(andthusthemselvesarealsolong-

term)areclassifiedunderthefixedfinancialassets

orlong-termliabilities.

International Financial Reporting Standards (IFRS)

NewandamendedIFRSstandardsandIFRICinterpre-

tationsthatcameintoforceasofthefinancialyear

2017havebeenincorporated:

• AnnualImprovementstoIFRS–2014-2016cycle:

AmendmentstoIFRS12

• AmendmentstoIAS12IncomeTaxes–Recognition

ofDeferredTaxAssetsforUnrealisedLosses

• AmendmentstoIFRS7StatementofCashFlows

–DisclosureInitiative

Theimplementationofthesestandardshasno

significanteffectonthefinancialstatements.

Thefollowingstandards,amendmentstostandards

andinterpretationsthathavenotyetcomeintoforce

orhavenotbeenendorsedbytheEuropeanUnionare

notyetappliedbyEBN:

• IFRS9FinancialInstruments

• IFRS15RevenuefromContractswithCustomers

• IFRS16Leases

• IFRS17Insurancecontracts

• Interpretation22ForeigncurrencyTransactions

andadvanceConsideration

• AmendmentstoIFRS2–ClassificationandMeasu-

rementofShare-basedPaymentsTransactions

• AmendmentstoIFRS4–ApplyingIFRS9Financial

InstrumentswithIFRS4InsuranceContracts

• Annualimprovements2014–2016cycle

• AmendmentstoIAS40–TransfersofInvestment

Property

• AmendmentstoIFRS10andIAS28–Saleor

contributionofassetsbetweenaninvestorand

itsassociateorjointventure

IFRS 9 – Financial Instruments

ThenewpublishedaccountingstandardIFRS9must

beappliedasper1January2018andisnotmandatory

forthefinancialstatements2017.EBNhasnotearly

adoptedthisstandardoverthefinancialyear2017.

IFRS9addressestheclassification,measurement

andderecognitionoffinancialassetsandfinancial

liabilities,introducesanewimpairmentmodelfor


financialassetsandnewrulesforapplyinghedge

accounting.

EBNwilladoptIFRS9prospectively,withadjust-

mentsofestimatedimpactwithinequity.Basedupon

theassessmentexplainedfurther,EBNconcludedthat

theadjustmentsofestimatedimpactofadopting

IFRS9willbelimited.

EBNconductedanassessmentoftheimpactand

consequencesofthisnewstandard.Theassessment

issummarisedasfollows:

• Implementationofthenewstandardwillnot

impacttheclassificationofthefinancialassets

andliabilities.

• EBNassessedthepossibleimpactofthenew

impairmentmodelfortradeaccountsreceivable

andotherreceivables.EBNwilluseamatrixfor

thecalculationofaprovisionforthesefinancial

assets,whereasthehistoricalrealizedcreditlosses

willbeusedfortheestimatedexpectedcredit

lossesonaportfoliobasis.

• Thenewhedgeaccountingruleswillnotimpact

thefinancials,duetothefactthatEBNnotapplies

hedgeaccounting.

IFRS 15 – Revenue from Contracts with Customers

ThenewpublishedstandardIFRS15mustbeapplied

asper1January2018andisnotmandatoryforthe

financialstatements2017.EBNhasnotearlyadopted

thisstandardoverthefinancialyear2017.IFRS15

relatestotheaccountinganddisclosuresofrevenue

andreplacesthestandardsIAS18andIAS11and

relatedinterpretations.

Thestandardoffersafivestepsmodelwhichmustbe

appliedbyentitiesthatenterintocontractstoprovide

goodsorservicestotheircustomersinthenormal

courseofbusiness:

1. Identifythecontract(s)withthecustomer

2. Identifytheperformanceobligationinthe

contract

3. Determinethetransactionprice

4. Allocatethetransactionpricetotheperformance

obligationsinthecontracts

5. Recogniserevenuewhen(oras)EBNsatisfiesa

performanceobligation

EBNconductedanassessmentoftheimpactand

consequencesofthisnewstandard.Theassessment

issummarisedasfollows.

EBNidentifiedforthedistinctrevenuescontracts,

wherebyEBNisthecontractingparty,withcomparable

featuresandassessedthesecontractsaccordingto

steps2uptoandincludingstep5.

Forits‘own’contracts,thetransportationofnatural

gasisseenasinextricablylinkedtothesupplyofgas,

asaresultofwhichbothobligationsaretreatedas

oneperformanceobligation.Subsequentpricecorrec-

tionsandsettlementofmore/lessdeliverycanbe

consideredasavariablecomponent,butwillnotbe

accountedfordifferentlyaccordingtoIFRS15thanin

accordancewithIAS18.Thetransactionpriceincludes

transportcosts(net)andtheturnoverwillbedisclosed

net(notunlikeunderIAS18).Deliveryofnaturalgas

ischaracterizedbyatransferatspecificmoments,

thereforetherevenuesfromthesaleofgasare

recognizedunderIFRS15aswellasIAS18atthe

timeofdelivery.

ForcontractswhereEBNitselfisnotacontracting

partybutwheretheturnoverisaccountedforin

accordancewiththejointarrangementsinlinewith

IFRS11,EBNhasnotcarriedoutanyimpactanalysis.

IFRS 16 – Leases

ThenewpublishedstandardIFRS16mustbeapplied

asper1January2019.IFRS16relatestoleases.EBN

investigatestheeffectsofthisstandard.Onthebasis

ofprovisionaloutcome,EBNexpectsthatIFRS16

whichappliestoleasecontractsinwhichthecontrac-

tingpartyEBNitselfiswillhavelimitedimpacton

futurefinancialstatementsofEBN.


ForcontractswhereEBNitselfisnotacontracting

partybutwheretheassetsandliabilitiesareaccounted

forinaccordancewiththejointarrangementsinline

withIFRS11,EBNhasnotcarriedoutanyimpact

analysis.

Other standards

Other standards, amendments to standards or new

IFRICinterpretationsdonotapplytoEBNorhave

limitedconsequencesforthefinancialstatementsin

futurefinancialyears.


Consolidated statement of comprehensive income

inEURmillion

note 2017 2016

sales 2 3,015 3,094

levies 3 826 848

operationalcosts 4 962 982

impairments 5 35 299

depreciations 5 434 490

operating expenses 2,257 2,619

operating profit 758 475

financialincome 6 121 24

financialexpense 6 -183 -105

shareofprofitfromassociates 7 34 35

pre-tax profit 730 429

taxes 8 -174 -96

net profit 9 556 333

othercomprehensiveincome - -

total comprehensive income 556 333


Consolidated balance sheet

inEURmillion

assets noteyear end

2017year end

2016liabilities note

year end2017

year end2016

non-current assets shareholder’s equity 15

property,plantandequipment 10 2,841 3,292 sharecapital 128 128

associates 11 107 108 retained earnings 89 50

deferredtaxasset 8 80 11 217 178

derivatives 19 88 188

3,116 3,599 provisions

provisions 16 3,284 3,238

3,284 3,238

non-current liabilities

borrowings 17 1,078 1,173

derivatives 19 6 -

1,084 1,173

current assets

inventories 12 29 27 current liabilities

receivables 13 383 422 borrowings 17 130 369

taxreceivables 13 16 - taxpayable 13 - 54

derivatives 20 - 22 tradeaccountspayable 18 67 67

cashandcashequivalents 14 2,004 1,566 other 18 766 557

2,432 2,037 963 1,047

total 5,548 5,636 total 5,548 5,636


Consolidated statement of changes in shareholder’s equity

inEURmillion

shared capital retained earnings total equity

balance at 1 January 2016 128 56 184

netprofit - 333 333

othercomprehensiveincome - - -

totalcomprehensiveincome - 333 333

finaldividend2015 - -56 -56

interim dividend - -283 -283

balance at 31 December 2016 128 50 178

netprofit - 556 556

othercomprehensiveincome - - -

totalcomprehensiveincome - 556 556

finaldividend2016 - -20 -20

interim dividend - -497 -497

balance at 31 December 2017 128 89 217


Consolidated statement of cash flows

inEURmillionnoot 2017 2016

Operating activitiesnetprofitfromcontinuingactivities 9 556 333conversiontonetcash:-incomefromparticipations 7 -34 -35-depreciationandimpairment 5 469 789-write-off 10 54 64-changesincapitalisationofdecommissioningandstoragecosts 10 84 --changesinprovisions(additions,revisionsandinterestaccrued) 16 158 175-changesinfairvalueCCIRS 19 106 26-changesinfairvaluerepaidborrowings 16 --revaluationrepaidborrowings 5 --revaluationofborrowings 17 -95 15 -otherfinancialincomeandexpense -chargedtocomprehensiveincome 22 12 -taxes -chargedtocomprehensiveincome 8 174 96-changeinworkingcapital -inventories 12 -2 6

-receivables 13 39 -15-otherliabilities(excludingloans,debtstocreditinstitutionsandprofitdistribution)

18 180 61

-withdrawalfromprovisions 16 -111 -111-interest -received 24 3

-paid -49 -14-taxes -received - 69

-paid -313 -104727 1,037

Net cash from operating activities 1,283 1,370

Investing activitiesproperty,plantandequipment 10 -156 -281dividendreceived 11 35 36Net cash used in investing activities -121 -245

Financing activitiesprofitdistributionanddividendpaid 13,15,18 -486 397repaymentforstockdividend - -17changesindebtstoassociates 17 -92 -changesindebtstocreditinstitutions 17 -146 -601Net cash from financing activities -725 -221changeincashandcashequivalents 438 905

Balancecashandcashequivalentsat1January 14 1,566 661Balancecashandcashequivalentsat31December 14 2,004 1,566


Notes to the consolidated financial statements

(1) General information

Allamountsintheseexplanatorynotesareinmillions

ofeurosunlessotherwisestated.

Notes to the consolidated statement of

comprehensive income

(2) Sales

EBNexercisesonemainactivity,namelytheexplora-

tionandproductionofnaturalgasandoil.Allsales

arerealisedintheNetherlands.Theassetsinwhich

EBNparticipatesarealsolocatedintheNetherlands.

Informationonthemaindebtorscanbefoundin

note 22.

The2017revenuefrombusinessoperationswasEUR

3,015million.Comparedto2016thisisadecreaseof

EUR79million(-3%).Thisdecreaseinrevenuewas

mainlycausedbyhigherprices(+13%)andlower

production(-16%).

(3) Levies

LeviesamountedtoEUR826million(2016:EUR848

million)3%lessthanin2016.Thisitemmainly

comprisesthespecialpaymentsmadetotheDutch

StateinrespectofproductionfromtheGroningen

fieldin2017,i.e.theMOR(yieldincreaseregulations)

payments,amountingtoEUR802millionandthe

State’sshareofEUR17million.Thedecreasein

paymentsin2017resultedfromlowerprices

applicableforGroningen.

(4) Operational costs

inEURmillion 2017 2016

G&Gcosts 16 15

write-downs (unsuccessfulwells)

54 64

earthquakes-relatedcosts 349 173

production,transportand otheroperationalcosts

543 730

total 962 982

Geologicalandgeophysical(G&G)costscomprise

thecostsofgeological,geochemicalandgeophysical

surveys(includingseismicstudies).

Theearthquakes-relatedcostsofEUR349million

(2016:EUR173million)includeactualcostsand

additionstotheprovisionrelatedtoearthquakesin

theprovinceofGroningen.

Totalsalarycostsaspresentedunderoperational

costsareasfollows:


grosssalaries 8 8

socialsecurities 1 1

pensioncosts 1 1

otheroperationalcosts 1 1

total 11 11

TheaveragenumberofFTEsin2017was77.7

(2016:74.8)

(5) Impairments and depreciation

BecauseofthelowgasandoilpricesEBNhas

performedanalysestoidentifyapossibleimpairment

ofsomeofitsupstreamandmidstreamassets.

Therecoverableamountisdeterminedforthecash

flowgeneratingunittowhichtheassetbelongs.In

thecaseofEBNacashflowgeneratingunitingeneral

correspondstoasalescontract.Inaddition,‘hubs’

(mainplatformandsatellites)canbeusedasacash

generatingunit.Therecoverableamountisbasedon

thehighestofthedirectandindirectnetrealisable

value.


Futurecashflowsareestimatedonthebasisofthe

mostrecentbudgetsanddittopricescenarios.For

periodsbeyondtheavailableprojections,cashflows

areextrapolatedbasedoninflation.

Fortheindirectincomemethod,theestimatedfuture

cashflowsareconvertedintocashatadiscountrate

beforetaxes,basedontheWACC(WeightedAverage

CostofCapital).Thisis6%formidstreamactivities

(2016:6%)and7%forexplorationandproduction

activities(2016:8%),aftertax.Adiscountratebefore

taxisdeterminedonthebasisofaniterativemethod.

For7upstreamgascashflowgeneratingunitsthe

carryingvalueat31December2017(EUR390million)

iswrittendowntoitsrecoverableamount(intotal

EUR316million).Thismakestheimpairment

EUR74millionin2017.In2016,theimpairmentwas

EUR299millionfor11cashflowgeneratingunitsin

upstreamoil,upstreamgasandmidstream.

For2upstreamgascashflowgeneratingunitsthat

havebeenimpairedinpreviousyears,thecarrying

valueat31December2017(EUR369million)isreversed

toitsrecoverableamount(intotalEUR408million).

Thereversalofimpairmentin2017amountstoEUR

39million.Thereversaliscausedbysustainablecost

reductions.

The graph above shows the sensitivity, i.e. the

impairmentchargeinchangesinassumptionsthat

managementconsidersimportant(priceandvolume).

Price(+2ct/-1ct)

Volume(+5%/-10%)

ImpairmentlossinEURMLN

High

Low

-150 -100 -50 0 100 150 200


Thetotalimpairmentscanbespecifiedasfollows:


impairments 74 299

reversals -39 -

total 35 299

Thedepreciationcanbespecifiedasfollows:


depreciationofproperty,plantandequipment

314 389

depreciationofproperty,plantandequipmentduetodecommissioningandrestoration

120 101

total 434 490

(6) Financial income and expense

inEURmln 2017 2016

interestincomeonderivatives 16 19

revaluationincomeonderivatives - 4

revaluationincomeonotherfinancialinstruments

101 -

otherfinancialincome 4 1

total financial income 121 24

interestoncashandcashequivalents

-4 -

interestexpensesonborrowings -16 -19

interestexpensesonderivatives -21 -26

revaluationexpensesonderivatives

-112 -

revaluationexpensesonotherfinancialinstruments

- -14

interestexpensesondiscountedprovisions

-26 -43

otherfinancialexpense -4 -3

total financial expense -183 -105

nett financial expense -62 -81

TheinterestratechargesonderivativeswereEUR5

millionlowerthanin2016duetorepaymentsand

lowerinterestrates.

Thebalanceoftherevaluationsonderivativesand

otherfinancialinstrumentsprimarycomprisesthe

revaluationresultsonthenon-currentborrowings

andthedirectlyrelatedderivatives.In2017,on

balance,thisisanegativeresultofEUR11million

(2016:EUR10millionnegative),ofwhichEUR112

millionrevaluationexpensesonderivativesand

EUR101millionrevaluationexpensesonotherfinan-

cialinstruments.Thebalanceoftheresultonthe

revaluationofloansandassociatedderivativesis

specificallytheresultofdevelopmentsintheyield

curvesoftheCHFandJPYcomparedtotheEUR.

(7) Share of profit from associates


GasTerraB.V. 14 14

NOGATB.V. 15 15

NGT-Extension 5 6

total 34 35

(8) Taxes


currenttaxexpensescurrentyear 245 120

adjustmentpreviousyear -2 -2

deferredtaxexpensesarisingfromtemporarydifferences

-69 -22

total 174 96


Theeffectivetaxratefor2017amountsto25.0%

(2016:24.4%).Thedecreaseintheeffectivetaxrateis

theresultofcorrectiononthepreviousyear.In2017,

thenominalcorporationtaxrateintheNetherlands

was25%(2016:25%).


Totaltaxes 174 96

Pre-taxprofit 730 429

Incomefromparticipations -34 -35

696 394

total 25,0% 24,4%

Thebalanceofdeferredtaxassetsandliabilities

declinedbyEUR69millionasaresultofthe

followingchanges:


balance at 1 January

deferredtaxassets 131 149

deferredtaxliabilities -120 -193

total 11 -44

movementsasaresultof:

-correctiontothe2015return(valuationofprovisions)

- 33

-differencesbetweencommercialandfiscalvaluationofproperty,plantandequipment2017

63 73

-differencesbetweencommercialandfiscalvaluationofprovisions2017

6 -51

balance at 31 December 80 11

ofwhich:

-deferredtaxassets 137 131

-deferredtaxliabilities -57 -120

movement in assets 6 -18

movementinliabilities 63 73

Deferredtaxassetsandliabilitiesincludefuture

taxcreditsandliabilitiesarisingfromtemporary

differencesbetweentheamountscalculatedin

accordancewiththecommercialprinciplesand

thosecalculatedinaccordancewithfiscalstandards.

Thedeferredtaxassetrelatestothetaxvaluation

oftheprovisionandthedeferredtaxliabilityrelates

tothetaxvaluationoftheproperty,plantand

equipment.

(9) Net profit

Anetresultfromcontinuingoperationsresultsin

EUR556millionin2017.ThatisEUR223million

(67%)higherthanfor2016.


Notes to the consolidated balance sheet

(10) Property, plant and equipment

totalproduction,

transport and storage facilities

drilling reimbursements

capitalisation of decommissioning

and restoration costs

exploration and evaluation assets

under construction

capital expenditure and wells under

contruction

balance at 1 January 2016

cumulativecost 15,424 7,669 4,086 1,462 1,873 115 219

cumulativedepreciationsandamortisation 11,564 6,113 3,072 1,427 946 - 6

carrying amount at 1 January 2016 3,860 1,556 1,014 35 927 115 213

changes in 2016:

cost:

-investments 281 67 67 - - 60 87

-commissioning - 107 99 - - -17 -189

-capitalisationofdecommissioningand storagecosts

4 - - - 4 - -

-write-downs -64 - - - - -48 -16

depreciation and impairments

-depreciationsandamortisation -490 -188 -192 -9 -101 - -

-impairments -299 -159 -131 -11 -4 - 6

balance at 31 December 2016

cumulativecost 15,645 7,843 4,252 1,462 1,877 110 101

cumulativedepreciationsandimpairments 12,353 6,460 3,395 1,447 1,051 - -

carrying amount at 31 December 2016 3,292 1,383 857 15 826 110 101

changes in 2017:

cost:

-investments 156 31 30 - - 40 55

-commissioning - 34 83 - - -12 -105

-capitalisationofdecommissioningandstoragecosts -84 - - - -84 - -

-write-downs -54 - - - - -52 -2

depreciation and impairments

-depreciationsandamortisation -434 -155 -156 -3 -120 - -

-impairments -74 -20 -45 - -9 - -

-reverals 39 39 - - - - -

balance at 31 December 2017

cumulativecost 15,663 7,908 4,365 1,462 1,793 86 49

cumulativedepreciationsandimpairments 12,822 6,596 3,596 1,450 1,180 - -

carrying amount at 31 December 2017 2,841 1,312 769 12 613 86 49


Investmentsin2017atEUR156millionwere44%

lowerthanin2016(EUR281million).Onshore

investmentsamountedtoEUR25million(2016:

EUR37million).Offshoreinvestmentsamountedto

EUR131million(2016:EUR244million).

Thedecreaseinthecapitalisedrestorationcostof

plantsamountedtoEUR84millionin2017(2016:

EUR4millionincrease).Forfurtherexplanation,

seenote16.

In2017,animpairmentlosswasrecordedof

EUR35million(2016:EUR299million).Formore

detailswithregardtotheimpairment,seenote5.

Thecumulativeacquisitionvalueoftheassetsthat

arealreadyfullydepreciatedbutstillinuseamounts

toEUR1,012million(2016:EUR1,118million).

(11) Associates

EBNclassifiesasassociatesits40%participationin

GasTerra,its45%participationinNOGATandthe

12%participationintheNGT-Extension.

Theassociatesarerecognisedbasedontheequity

method.Theprofitsaredistributedannually.

inEURmillion GasTerra NOGATNGT-

Extension2017total GasTerra NOGAT

NGT-Extension

2016total

balance at 1 January 86 13 9 108 86 13 10 109

profitshare 14 15 5 34 14 15 6 35

dividendreceived -14 -15 -6 -35 -14 -15 -7 -36

changeindeferredcorporatetaxassets

- - - - - - - -

balance at 31 December 86 13 8 107 86 13 9 108

Thefollowingtableshowssummarisedfinancial

informationontheGasTerra,NOGATand

NGT-Extensionassociatesona100%basis.



NGT-Extension

2016total

assets current 1,789 38 - 1,827 1,976 39 - 2,015

non-current 13 49 65 127 19 49 75 143

liabilities current 1,586 35 - 1,621 1,779 37 - 1,816

non-current - 24 - 24 - 23 - -

netinvestments(100%) 216 28 65 309 216 28 75 342

EBN’sshareinassociates 40.0% 45.0% 12.0% - 40.0% 45.0% 12.0%

carryingamountoftheshareinassociates

86 13 8 107 86 13 9 108




NGT-Extension

2016total

netsales 9,601 47 63 9,711 9,865 44 75 9,984

netprofit(100%) 36 33 40 109 36 32 50 118

othercomprehensiveincome(100%)

totalcomprehensiveincome

36 33 40 109 36 32 50 118

EBN’sshareintotalcomprehensiveincome

14 15 5 34 14 14 6 35

(12) Inventories


materials 24 23

gas 1 1

condensateandoil 4 3

total 29 27

(13) Receivables


accountsreceivable fromassociates

105 112

othertradeaccountsreceivable 267 299

total trade accounts receivable 372 411

otherreceivablesand

deferreditems 11 11

total 383 422

AccountsreceivablefromassociatesrefertoGasTerra,

inwhichEBNhasa40%participation.Thetrade

accountsreceivablehavedroppedbyEUR32million

mainlyduetolowervolumes.

ThetaxreceivablesofEUR16million(2016:taxpayable

EUR54million)consistsmainlyofcorporation

incometax.

(14) Cash and cash equivalents

Thecashandcashequivalentsconsistofbankbalances

EUR306million(2016:EUR10million),bankdeposits

EUR880million(2016:EUR500million),investments

inmoneymarketfundsEUR249million(2016:EUR

260million)andcommercialpaperEUR569million

(2016:EUR796million).

(15) Shareholder’s equity


balance at 1 January 178 184

netprofit 556 333

finaldividendpreviousyear -20 -56

interim dividend -497 -283

balance at 31 December 217 178

Onthebasisofarticle20(2)ofEBN’sArticlesof

AssociationthenetprofitofEBN(afterreductionby

the statutory reserves and the interim dividend to the

State)ismadefreelyavailabletotheGeneralMeeting.

AfterdeductionofinterimdividendofEUR497million

thenetprofitisEUR59million.TheGeneralMeeting

resolvestoaddanamountofEUR59millionto

theequity.

In2017,theauthorised,issuedandpaidupsharecapital

amountedtoEUR128million(2017:EUR128million)

andcomprised284,750shares(2016:284,750shares),

eachwithanominalvalueofEUR450.Thedeclared

dividendforthepreviousyearpershareamountedto

EUR70pershare(2016:EUR197).

NodividendwillbepaidoutoncetheGeneral

MeetingofShareholdershasadoptedthefinancial

statements(2016:EUR20million).


Thetotalresultfor2017wasEUR1,953pershare.

Thatisanincreaseof67%from2016.

(16) Provisions


costscoversobligationswithatermdependingon

theusefullifeofthefields.Theprovisionforground

subsidencealsoincludesliabilitieswithamaturity

dependingonthelifeofthefields.Thedurationof

theprovisionforcostsasaresultofearthquakesthat

takeplaceupuntilbalancesheetdatedependsonthe

speedofsubmittingtheclaimsandsettlementof

submittedclaims.Theprovisionforearthquake-

relatedcostsisexpectedtohaveamaturityof

1 to 5 years.


costsisbasedoninformationfromtheoperatorsat

31December2017andownanalysesandisdeter-

minedbyestimatingthecostsonthebasisofthe

currentpricelevel,takingintoaccountaninflation

of1.4%,anddiscountingatanominalinterestrate

of1.081%(2016:0.967%).Theequivalentofthe

provisionstatedatthepresentvalueisrecognised

underproperty,plantandequipmentanddepreciated

onthebasisoftheUOPmethod.Nominalinterestis

addedtotheprovisionat0.967%(2016:1.23%).









compensationmeasuresanddeclineinvalue.

Theprovisionforclaimsisbuiltonthebasisofthe

numberofoutstandingclaimsasat31December

2017andanestimateoftobeexpectedclaimsbased

uponhistoricalinformationandinternalmodels.

Theexpectedaveragepaymentamountisbasedon

historicaldata.

Theprovisionforpreventivereinforcementhasbeen

builtuponthebasisofspecificagreedarrangements

thatincludeanestimateforexpectedcosts.

Theprovisionforcompensatorymeasuresincluding

declineinvalue,compensationforimmaterialdamage

andlostlivingpleasureisbasedontheexpected

numberofhouseholdsentitledtothecompensation.

Theestimateoftheexpectedcompensationamountis

basedoninternaland/orexternalinformation.

Giventhebandwidthofthevariousscenariosthat

couldleadtoapossiblepositiveornegativeeffecton

theamounttosettletheliabilities,EBNhasassessed

thattheprovisiondisclosedinthefinancialstatements

isthemostplausibleandsubstantiatedoutcomeon

thebasisofthecurrentlyavailableinformation.


Therevisionintheprovisionfordecommissioning

andrestorationofEUR102millionismainlycaused

byanadjustmentofthediscountrateandinflation.

Additionally,theestimatedcostsfordecommissioning

andremovinginstallationshavebeenupdatedforthe

decreaseintheestimatedcostsandnewinsight

regardingcutoffproductiondates.

Theincreaseintheprovisionforearthquakesis

relatedtoadditionsforcompensationofdeclinein

value,immaterialdamageandnewclaimsbasedon

newavailableinformationandinsights.

(17) Current and non-current borrowings

In2017aprivateloanofJPY10,000millionwas

repaid.Nonewdebentureorprivateloanswere

issued.Nosecurityhasbeenprovidedforthe

outstandingborrowings.Clausesareincludedinthe

agreementsforthedebentureandprivateloansthat

restrictthesecuritythatcanbedemanded.EBNhasa

commercialpaperprogrammeofEUR2,000million.

Thisisunchangedcomparedto2016.Atyear-end

2017,nocommercialpaperisoutstanding(neither

atyear-end2016).

ThecashloansconcerndepositsGasTerrahasplaced

withEBN.ThisisbasedonaDepositandLoanFacility

AgreementwhichEBNandNederlandseAardolie

Maatschappij(NAM)enteredintowithGasTerrain

2014.Underthisagreement,GasTerracanproposeto

EBNandNAM(asjointparties)placingadepositwith

EBNandNAMforaperiodfrom3daysto3months.

GasTerracanalsorequestaloanfromEBNand

NAM(asjointparties)forasimilartermunder

this agreement.

Thecollateralonderivativesconcernscashdeposited

bybanksforthedifferencebetweenthemarketvalue

oftherespectiveportfolioandthethresholdasagreed

perbank.Thisdepositedcollateralisinterestbearing

andisnettedundercashandcashequivalentsand

willnotbeusedforcommercialpurposes.

Agreementsabouttheexchangeofcollateralare

recordedinCreditSupportAnnexes(CSAs)asAnnex

totheInternationalSwapsandDerivativesAssociation

(ISDA)agreementswiththerespectivebanks.

inEURmillion decommissioning subsidence earthquakes other total

balance at 31 december 2015 2,679 106 388 1 3,174

additions 9 7 106 58 180

withdrawals -25 - -68 -18 -111

revision -6 - -43 1 -48

interest 43 - - - 43


additions 18 4 240 - 262

withdrawals -37 - -46 -28 -111

release - - - -12 -12

revision -102 - -17 - -119

interest 26 - - - 26


ThetotaloftheprovisionsisincreasedbyEUR46million.Thisisthebalanceofthefollowingchanges:


CSAswereconcludedwithallbanks,exceptforone

bank,andwithonebanknotallderivativesfallunder

theCSA.

On18August2015,acommittedrevolvingcreditfaci-

litywasagreedwiththreebanks(INGBank,BNP

ParibasandRabobank)foraninitialperiodoffive

years.ThisfacilityoffersEBNthepossibilitytomake

withdrawalsuptoEUR400millionincreditforgene-

ralbusinesspurposes.Fromthestart,thisfacilitywas

notused.Theinterestexpenseoveranyusedpartof

thecreditlinedependsontherelevantEuriborrate

thatappliesfortherespectivecreditperiod,increased

withamargin.Ascompensationfortheprovisionof

thisfacility,thebanksareowedanannualcommit-

mentfeeovertheoutstandingandunusedpartofthe

facility.Nosecurityisprovidedtothebanksforthis

facility,andnofinancialratiocovenantsareincluded.

Clausesarerecordedintherespectiveagreementthat

restricttheprovisionofsecurity.Inboth2016and

2017,anoptionwasusedforrenewalandthefacility

wasextendedbytwiceayear,untilAugust2022.

Therearenofurtherextensionoptions.

Non-current borrowings

Non-currentborrowings,includingthoseborrowings

withaduedatewithinoneyear,arecomposedas

follows:


total non-currentpart currentpart total non-currentpart currentpart

debentureloans 1,078 1,078 - 1,173 1,173 -

privateloans - - - 81 - 81

totalnon-currentborrowings

1,078 1,078 - 1,254 1,173 81

cashloans 108 - 108 200 - 200

collateralonderivatives 22 - 22 88 - 88

total 1,208 1,078 130 1,542 1,173 369


JPY 10.000million 1,775% privateloan 2007/2017 - 81

CHF 325million 2,125% debentureloan 2010/2020 278 303







1,078 1,254


InadditiontotherepaymentoftheJPY10.000million

privateloanthereisadifferenceintheamountsof

outstandingnon-currentborrowingsattheendof

2017comparedto2016becauseofexchangedifferences,

whichareincorporatedintheconsolidatedstatement

ofcomprehensiveincomeunderfinancialincome

andexpense(seenote6).

Theprincipalsumsoftheseborrowingsandthe

associatedinterestexpensesinforeigncurrencyare

fullyconvertedtoEurosviacrosscurrencyinterest

rateswaps.Asaresult,therateeffectsonthe

non-currentliabilities,suchasthosefromthetable

appear,areneutralised.Theaverageinterestrateof

alloutstandingnon-currentborrowingspertheend

oftheyear,includingtheeffectsofthecrosscurrency

interestrateswaps,is2.12%(2016:1.98%).This

increaseismainlyduetotherepaymentoftheJPY

privateloanandthederivativein2017with,on

balance,alowvariableEURinterestrate.Allcross

currencyinterestrateswapshavefixedinterestrates,

exceptthoseassociatedwiththeCHF2014/2022and

CHF2014/2026loans.Atyear-end2017,25%(in

2016:28%)ofthefinancingthroughtheoutstanding

crosscurrencyinterestrateswapshasvariable

interest rates.

Thefollowingtableliststheoutstandingdebenture

loansandprivateloansinorderoftheirmaturity.


within 1 year - 81

within 1 to 2 years 201 -

within 2 to 3 years 385 219

within 3 to 4 years - 419

within 4 to 5 years 150 -

after5years 342 535

total 1,078 1,254

Morethan46%oftheoutstandingnon-currentbor-

rowingshaveremainingtermstomaturityofmore

than three years. Borrowings with a due date within

oneyeararepresentedundercurrentliabilities.

(18) Current liabilities

TradeaccountspayableofEUR67million(2016:

EUR67million)arejointinterestbillingsofoperators

tobepaidforinthemonthofDecember.

Theotherdebtsconsistof:


payments to the State 314 283

interest payments 19 20

levies 352 181

otherliabilities 81 73

total 766 557

Theincreaseintheleviesisduemainlytothe

outstandingMORobligation.

Policy to control financial risks

(19) Risk management

General information

Inadditiontothestrategicrisksreferredtoonpage

67to73,therearealsofinancialrisks.Themain

financialrisksforEBNareliquidityand(re)financing

risk,creditrisk,interestraterisk,currencyriskand

marketpricerisk.EBN’sfinancialpolicyfocuseson

limitingtheeffectsofcurrencyandinterestrate

fluctuationsonassetsandliabilities.EBNusesfinancial

derivativestomanageinterestandcurrencyrisks,

specificallythoserelatingtothefundingofitsopera-

tions.Thecompanydoesnottakeanyspeculative

positionsusingfinancialderivatives.


Liquidity and (re)financing risk

Liquidityand(re)financingriskistheriskthatEBN

doesnothave,orcannotraise,sufficientfinancial

resourcestomeetitsfinancialobligations.Theobjective

forEBNisthatitwill,undernormalcircumstancesat

alltimes,haveatitsdisposaltherequiredcashfor

operationalprocesses.

Theselectionofthe(durationof)cashmanagement

andfinancialinstrumentsensuresthatatalltimes

sufficientimmediatelyretrievableliquidityispresent

orcanbemadeavailabletomeetfinancialobligations.

HightrustinEBNbythecapitalandmoneymarkets,

andfinancialinstitutions,iscrucialforoptimal

funding.Importanttoolsforthisare:

• optimalmanagementofallfinancialstakeholders,

and

• maintainingEBN’shighlevelofcreditworthiness

inthelongandshortterm,amongothersbya

focusedcreditratinganddividendpolicy,and

• continuouslymonitoringandcontrollingfinancial

creditratios.

EBNhasacommercialpaperprogrammeofEUR2,000

million.EBNalsohasacommittedrevolvingcredit

facilityatreputableandcreditworthybanksinthe

amountofEUR400million.Thisenablesquickand

sufficientshort-termfundingwherenecessary.

Forfurtherinformationpleaseseenote17.

Indeterminingthedurationofnewlong-termloans

anendeavourismadetopreventtheconcentrationof

redemptionsinacertainfutureyearandsotospread

thematurityprofile.

Thefactthattheannualresultsarelargelypaidout

totheshareholder,leadstoanannuallownumerical

solvencyratio.However,therearesignificantand

robustannualpositivecashflowsfromoperating

activities,whicharehigherthanthecapitalexpendi-

tures.Becauseofthis,eachyearEBNgeneratesa

significantfreecashflow,resultinginasolvency

beingconsideredexcellent.Thenetdebtisnegativeat

bothyear-end2016andyear-end2017andtherefore

representsanetreceivable.


borrowings:

non-currentborrowings 1,078 1,173

currentborrowings 130 369

total borrowings 1,208 1,542

cashandcashequivalents -2,004 -1,566

financialderivatives -82 -210

net liabilities (A) -878 -234

shareholder’sequity(B) 696 178

gearingratioA/(A+B)*100% 0% 0%


Thefollowingtableshowstheexpectedannual

contract-basedcashflowsfromtherepayments

andinterestpayableontheborrowingsandthe

associatedderivatives:

Inadditiontothecashflowsfromborrowingsand

relatedderivativestherearecashflowsfromtrade

creditorsandothercurrentliabilities.Theseexpire

within one year.

Credit risk on financial instruments

CreditriskistheriskforEBNthatacounterparty

doesnotfulfilitscontractualfinancialobligations.

Asaresultofcashmanagementtransactionscredit

riskatcounterpartiesoccurs.Thiscanrelatetobank

balances,deposits,bonds(includingcommercial

paper),moneymarketfundsandderivatives.Bythe

sometimeshighliquiditypositionandmarketvalues

ofderivativestoomuchofaconcentrationoffunds

atatoolimitednumberofpartieswouldmeana

significantfinancialriskforEBN.Thepolicyisthere-

forefocusedonreducingcounterpartyriskbyonly

doingbusinesswithpartieswithahighcreditrating

toaleveldeemedacceptableinrelationtothe

creditworthinessoftherelevantcounterparty.

Theallowedlimitspercounterpartythatapplyto

thetotalofbalancesonbankaccounts,depositsand

bonds(includingcommercialpaper)plusthemarket

valueofderivativesminusassociatedcollateral,

dependonthecreditratingofthecounterparty.

Tobeabletoplacefundsintheseinstrumentsatleast

aP-1,A-1andF1shorttermratingfromMoody’s,

StandardandPoor’sandFitchrespectivelyanda

minimumlong-termratingofA2fromMoody’sandA

fromStandard&Poor’sandFitchapplies.Inaddition,

thereisthepossibility,underadditionalconditions,to

placefundsatfullypubliccompaniesthathavealong

inEURmillionBorrowing

loansNet interest

loans & derivates

2017 Payment atredemption

Cash flowderivatives

2017 Total

cash out

2016 Total

cash out

within 1 year 130 -21 -130 0 -151 -370

within 1 to 2 years 201 -21 -201 5 -217 -21

within 2 to 3 years 385 -17 -385 69 -333 -217

within 3 to 4 years 0 -7 0 0 -7 -333

within 4 to 5 years 150 -7 -150 5 -152 -7

after5years 342 -9 -342 10 -342 -493

total 1,208 -81 -1,208 89 -1,201 -1,441

inEURmillionBorrowing

loansNet interest

loans & derivates

2016 Payment atredemption

Cash flowderivatives

2016 Total

cash out

2015 Total

cash out

within 1 year 369 -21 -369 20 -370 -884

within 1 to 2 years 0 -21 - - -21 -81

within 2 to 3 years 219 -21 -219 23 -217 -21

within 3 to 4 years 419 -17 -419 103 -333 -217

within 4 to 5 years 0 -7 - - -7 -334

after5years 535 -16 -535 58 -493 -502

total 1,542 -103 -1,542 204 -1,441 -2,039


andshort-termcreditratingthatisonelevellower

thanthelevelshownabove.

Formoneymarketfundsaminimumcreditratingof

AaafromMoody’sandAAAfromStandard&Poor’s

andFitchappliesandEBN’sparticipationpermoney

marketfundismaximizedto5%ofthefund.

Ifderivativestransactionsarecarriedoutinthe

contextoflong-termfinancingthisisonlydonewith

acounterpartypossessingaminimumofA2Moody’s

orAStandard&Poor’sandFitchlongtermrating,

withwhichEBNhasenteredintoan‘International

SwapsandDerivativesAssociation’(ISDA)agreement.

Newlong-termderivativesareconcludedwitha

CreditSupportAnnex(CSA).Thisisacontractin

whichitisagreedwiththecounterpartytodeposit

collateralifaderivativespositionhasasubstantial

value,toreducethecounterpartyrisk.

In2017,asin2016,therewerenocreditlosseson

financialinstruments.

Withtheexceptionofonebank,CreditSupport

Annexes(CSAs)areenteredintowithallbankswith

whichcurrentderivativesareconcluded.

Inrespectofcrosscurrencyinterestrateswapswitha

nominalvalueofEUR779million(CHF960million),

CSAshavebeenagreedwiththerelevantcounterpar-

ties.Forthatreason,attheendof2017onbalance,

therewasEUR22millioncollateralplacedatEBNby

banks(attheendof2016:EUR88million).Thecolla-

teralonderivativesconcernscashdepositedbybanks

intheamountofthedifferencebetweenthemarket

valueoftherespectiveportfolioandthethreshold

agreedintheCSA.Thispaidcollaterallargelybears

interestandisnettedundercashandcashequivalents

andwillnotbeusedforcommercialpurposes.The

correspondingliabilityisincludedincurrentliabilities

aspartofborrowings.Themaximumcreditriskon

theoutstandingderivativesasatyear-end2017is

EUR60million(EUR82millionmarketvaluederiva-

tivesminusEUR22millioncollateral).

Withthevaluationofthederivatives,thecreditrisk

oncounterpartiesistakenintoaccountincaseofa

positivemarketvalueandthecreditriskofbankson

EBNincaseanegativemarketvalue.Ifthemarket

valueofthetotalofderivativespercounterpartyis

positive,thenaCreditValuationAdjustment(CVA)is

includedinthevaluation;ifitisnegativethenaDebt

ValuationAdjustment(DVA)isincluded(IFRS13.48

portfolioexception).Theseadjustmentsarebasedon

CreditDefaultSwap(CDS)spreadsassociatedwiththe

weightedaverageremainingtermoftheportfolioand

themarketvalueofthederivativesforeachcounter-

party.Consequently,thevaluationofthederivatives

hasdecreasedbyEUR0,6millionattheendof2017

(thedecreasein2016was:EUR3,5million).

Credit risk on receivables

Thecreditriskonreceivablesfromsalesislow.EBN

mainlysellstocounterpartieswithahighcreditrating.

27%ofthereceivablesarefromGasTerra(longterm

creditratingStandard&Poor’sAA+)and69%ofthe

receivablesfromNAM(JointVentureShellandExxon

Mobil).In2016thiswas32%and60%respectively.

EBNmonitorsthecreditworthinessofallcustomerson

aperiodicbasisandappliescreditlimitspercustomer.

Interest rate risk

Interestrateriskistheriskoffinancialresultsor

changesinthebalancesheetcausedbyfluctuationsof

marketinterestrates.Nexttoachievingminimalnet

interestcharges,thegoalofEBN’sinterestraterisk

policyistolimitinterestraterisksarisingfromthe

company’sfunding.Amaximumof60%ofthe

non-currentborrowingsandfinancialderivatives

shallhaveavariableinterestrateinaccordance

withinternalguidelines.Atyear-end2017,25%

(2016:28%)ofthisnon-currentdebtpositionwas

atavariableinterestrate.


Thefollowingtableshowstheinterestratesensitivity

ofthefinancialinstrumentsontheshareholders’

equityandtheresult.Theanalysisofthesensitivity

ofborrowingsandrelatedfinancialderivativesto

interestratemovementsisbasedonadirectchange

of1percentagepointintheinterestratescomparedto

31December2017.Allothervariablesremainunchan-

ged.Areductionof1percentagepointininterestrates

wouldresultinanestimateddecreaseofEUR19

millioninnetfinancingcosts,basedontheportfolio

offinancialinstrumentsat31December2017.An

increaseininterestratesby1percentagepointwould

resultinanestimatedincreaseofnetfinancingcosts

ofEUR18million.Themainreasonfortheseeffects

isthatachangeinthefairvalueofderivativesasa

resultofachangeininterestrateischargeddirectly

totheconsolidatedstatementofcomprehensive

income.

Currency risk

Thecurrencyriskistheriskoffinancialresultsor

changesinthebalancesheetcausedbyfluctuationsin

acurrencyrateontheforeignexchangemarket.EBN

aimstoeliminateorreducethesefluctuations.

Theforeigncurrencyriskmanagementinstruments

includespot,forwardexchangetransactionsandcross

currencyinterestrateswaps.

2017inEURmillion

carrying amount

fair value

effect of the change in interest rate +1%

effect of the change in interest rate -1%

cashandcashequivalents 2,004 2,004 - -

receivables 417 417 - -

currentborrowings -130 -130 - -

othercurrentliabilities -517 -517 - -

non-currentborrowings -1,078 -1,136 - -

crosscurrencyswapspositiveusedfornon-currentborrowings

82 82 -18 19

crosscurrencyswapspositiveusedforcurrentborrowings

- - - -

total 778 720 -18 19

2016inEURmillion

carrying amount

fair value

effect of the change in interest rate +1%

effect of the change in interest rate -1%





non-currentborrowings -1,173 -1,259 - -


188 188 -26 28


22 22 -1 1

total -22 -109 -27 29


EBNfullyhedgescurrencyrisksarisingfromsales

andpurchasesatthetimethetradereceivablesor

tradeliabilitiesarise.Expectedtransactionsthathave

notyettakenplacearenothedged.Atyear-end2017,

therewasoneoutstandingUSDtradereceivableof

USD3,8million,whichwashedgedbymeansofa

forwardexchangetransaction(atyear-end2016,

therewerenooutstandingtradereceivablesorliabili-

tiesinforeigncurrencies).Incaseofinvestmentsor

fundinginforeigncurrency,thecurrencyriskis

immediatelyhedged.Incaseoffundinginforeign

currency,boththecurrencyriskontheprincipaland

interestobligationsarefullycovered.

Currencyrisksoncurrentborrowingsinforeign

currenciesarehedgedwithforwardexchange

contracts.Atyear-end2017therewerenoforward

exchangecontractsrelatingtocurrentborrowings

issuedinforeigncurrencies(year-end2016:nil).

Currencyrisksonnon-currentborrowingsinforeign

currencyarehedgedwithcrosscurrencyinterestrate

swaps(seenote17).

Thesensitivityofthefinancialinstrumentsto

exchangeratefluctuationsisshownontheshare-

holders’equityandtheresults.Itisbasedona10%

movementinallexchangeratesinrelationtothe

2017inEURmillion

carrying amount

fair value

effect movement in exchange rate +10%

effect movement in exchange rate -10%





non-currentborrowings -1,078 -1,136 -127 104


82 82 127 -104


- - - -

total 778 720 - -

2016inEURmillion

carrying amount

fair value

effect movement in exchange rate +10%

effect movement in exchange rate -10%



currentborrowings -369 -370 -9 7


non-currentborrowings -1,173 -1,259 -141 115


188 188 141 -115


22 22 9 -7

total -22 -109 - -


eurocomparedtothelevelsat31December2017,with

allothervariablesremainingunchanged.Achangeof

+10%meansthattheeuroweakensinrelationtothe

foreigncurrencies.Achangeof-10%meansthatthe

eurostrengthensinrelationtotheforeigncurrencies.

Fair value of financial instruments

Derivativeswhichservetohedgelong-term

instruments(andthusthemselvesarealsolong

term)areclassifiedunderthefixedassetsor

long-termliabilities.

Thetablesummarisesthecarryingamountsandesti-

matedfairvaluesoffinancialinstruments.

Fairvaluesoflistednon-currentborrowingsare

basedonpublishedrates(level1accordingtoIFRS).

Theotherfairvaluesarecalculatedonthebasisof

availablemarketinformation,includinginterestrate

andexchangeratelevels(level2accordingtoIFRS).

Allfinancialassetsandliabilitiesatfairvalueswith

changesinvaluerecognisedincomprehensiveincome

ofprofitareclassifiedatlevel2.Thesevaluation

techniquesareassessedannually.Thevaluation

techniqueswerenotadjustedin2017.

Thefairvalueofthenon-currentborrowings

amountstoEUR1,136millionasat31December2017

(2016:EUR1,259million).Thevaluationtechniqueis

inlinewithlevel1(asin2016).

Thecarryingamountoftheaforementioned

non-currentborrowingsamountedtoEUR1,078

million(2016:EUR1,173million).

Thenon-currentborrowingsinforeigncurrencyare

recognizedat‘mid-market’rates,aspublishedby

Reuters.Thecorrespondingderivativesarerecognized

atmarketvalue.Asaresultofthis,fluctuationsin

marketinterestratesinforeigncurrenciesinrelation

toeachothercancausetemporaryunrealisedresults

intheincomestatement.

31 december 2017 31 december 2016

inEURmln carrying amount fair value carrying amount fair value

assets

currentreceivables 417 417 422 422

non-currentfinancialderivatives 88 88 188 188

currentfinancialderivatives - - 22 22

cashandcashequivalents 2,004 2,004 1,566 1,566

liabilities

listednon-currentborrowings 1,078 1,136 1,173 1,259

othernon-currentborrowings - - - -

non-currentfinancialderivatives 6 6 - -

othercurrentborrowings 130 130 369 370

othercurrentliabilities 833 833 678 678


Currentreceivables,cashandcashequivalentsand

currentliabilitiesarerecognizedattheircarrying

amount.Inviewoftheshorttermtomaturityof

theseinstruments,theseamountsapproximatetheir

fairvalues.

Thefollowingtablesummarisesthecarryingamounts

offinancialderivatives,specifiedaccordingtotype

andobjective:

inEURmillion assets liabilities total

crosscurrencyinterest rate swaps

210 - 210

forwardcurrencycontracts

- - -

totalfinancialderivativesinrelation to borrowings

210 - 210

Balance at 31 December 2016 210 - 210

crosscurrencyinterest rate swaps

88 6 82

forwardcurrencycontracts

- - -

totalfinancialderivativesinrelation to borrowings

- - -

Balance at 31 December 2017 88 6 82

Market price risk

EBNhasthepolicynottohedgeagainsttheriskof

fluctuationsinoilandgaspricesontheoilandgas

markets.Thesemarketpricefluctuationscansignifi-

cantlyaffectEBN’sresults.However,sincetheserisks

originatedirectlyfromthecoreactivitiesofEBNthey

are not hedged.

Other notes

(20) Contingencies

Asindicatedinthesummaryofsignificantaccounting

policiesEBNtakespartinamultipleofjointoperati-

ons.Thebasisforthesejointoperationsislaiddown

inagreementsofcooperationorJointOperating

Agreements,fromwhichmulti-yearfinancialrights

andobligationsarise.Theinvestmentobligationsat

year-end2017amounttoEUR443millionandthe

majorityoftheseobligationshasadurationshorter

than1year.Atyear-end2016,theobligation

amountedto328million.

Moreover,EBN’s(in)directshareofprovenand

probablegasreservesoffieldsinwhichEBNpartici-

patesat31December2017is283billionNm3GE

(2016:301billionNm3GE).

Asusualintheindustry,includingthroughthe

associatedparticipationGasTerra,continuous

renegotiationstakeplaceoverthepricingofsales

contracts.Theresultsofthesenegotiationscanhave

asignificantpositiveornegativeimpactonEBN’s

results.Itisnotpossibletomakeareliableestimate

oftheoutcomesoftheserenegotiationsorrelated

arbitrationproceedings.

Asaresultoftheearthquakescausedbygas

productionfromGroningen,futureobligationsarose.

Theseobligationsprimarilyconcerndamagerepair,

preventivereinforcementofbuildingsandinfrastruc-

ture,compensationmeasurestoimprovethesafety

andliveabilityoftheearthquakearea.

Aprovisionisincludedondamageclaims,anumberof

structuralreinforcementsofbuildingsandinfrastructure

,compensationmeasures,declineinvalue,compensation

forimmaterialdamageandlossoflivingenjoyment(see

note16).Thecostofthestructuralreinforcementsof

buildingsandcompensationmeasurescannotalwaysbe

reliablyestimated,aprovisionistherebyonlyincluded

whenconcreteagreementsareundernegotiationorin

thecaseofongoinglegalprocedureswherethechance

thatEBNisorderedtopayearthquakecostsisgreater

than50%.Thetotalscopeofthecostscouldtherefore

be higher.


BasedonitsparticipationintheGroningenlicence,

EBNwillcontribute40%ofthesecosts.

Inaddition,thereisarentalobligationuntil2026for

thebusinessaddressofthecompanyatDaalsesingel1

inUtrechtofEUR6,0million(2016:EUR6,7million).

(21) Notes on the statement of cash flows

Inthepreparationofthecashflowsstatementthe

indirectmethodwasappliedwithacomparisonof

openingbalancesheetandclosingbalancesheet.

Movementsnotresultinginaninfloworoutflowof

cashweresubsequentlyeliminated.Informationon

movementsinthestatementofcashflowscanlargely

bederivedfromthestatementsofmovementsinthe

relevantbalancesheetitems.

(22) Related parties

GasterraandEBNarerelatedparties.EBNhas65

(2016:69)gassalescontractswithGasTerra.Ofthe

netsalesofEUR3,015million,EUR1,083millionis

realisedthroughGasTerra(2016:EUR3,094million

respectively.EUR1,001million).Thereceivables

in2017includeanamountofEUR105million

(2016:EUR112million)forsuppliestoGasTerra.

TogetherwiththeNederlandseAardolieMaatschappij

B.V.(NAM)EBNenteredintoaDepositandLoan

FacilityAgreementwithGasTerra.Underthis

agreement,GasTerracanproposetoEBNandNAM

(asjointparties)placingasumofmoneywithEBN

andNAMforaperiodoffrom3daysto3monthsasa

fixedtermdeposit.GasTerracanalsorequestaloan

fromEBNandNAM(asjointparties)forasimilar

termunderthisagreement.Forfurtherinformation,

pleaserefertonote17.

TheStateasashareholderisclassedasanassociated

party.Alllevies,corporationtaxesandnetprofitsare

paidtotheState.Moreinformationcanbefoundin

notes3,15and18inthesefinancialstatements.

NOGATandNGT-Extensionasassociatesareclassed

asrelatedparties.EBNpaystransportcoststoNOGAT

andNGT-Extensionintheframeworkofitsjoint

operations.Thishappensinordinarycourseof

businessandatmarketconditions.

(23) Key management

Thetotalchargeforremuneration,pensionsandother

salarycostsofthekeymanagement(3membersofthe

managementteam,ofwhich1isstatutorydirectorand

5supervisorydirectors)amountedtoEUR1,0millionin

2017(2016:EUR1,0million;4membersofthemanage-

mentteamand5supervisorydirectors).Asfrom31

August,onememberofthemanagementteamresigned.

Thetotalsalarycostsofthemanagementteamcanbe

specifiedasfollows:

inEUR 2017 2016

regularremunerations 892,770 975,661

pensions 59,607 53,292

total 952,377 1,028,953

Periodicremunerationsaspresentedinthetable

aboveincludecompensationsforthecappingonthe

pensionaccrual.

ThegrossremunerationoftheSupervisoryBoard

(excludingVAT)canbespecifiedasfollows:

inEUR 2017 2016

Mr.H.M.C.M.vanOorschot 24,500 24,500

Drs.A.H.P.GratamavanAndel(until30March2017)

7,582 22,263

Ir.J.G.Huijskes 20,000 20,000

Prof.Mr.E.M. Kneppers-Heijnert

20,000 20,000

Drs.W.S.deVries (from1March2017)

16,667 -

Mr.J.W.Weck 20,000 20,000

total 108,749 106,763


In2017therehasbeenonechange.Drs.W.S.deVries

hasreplacedDrs.A.H.P.GratamavanAndelasa

supervisorydirector.Inadditiontotheirgrosssalary

eachsupervisorydirectorreceivesanexpense

allowanceofEUR2,400peryear.

(24) Events after the balance sheet date

On8January2018,anearthquakewithmagnitude

3,4ontheRichterscaletookplaceinZeerijp.Itis

likelythatthisearthquakeistheresultofGroningen

productionbeforethebalancesheetdate.Theexpected

financialconsequencesarethereforeincludedinthe

determinationoftheprovisionforearthquake-related

costsasatthebalancesheetdate.

Utrecht,14March2018

Executive Board

Ir.J.W.vanHoogstraten

Supervisory Board

Mr.H.M.C.M.vanOorschot

Ir.J.G.Huijskes

Prof.Mr.E.M.Kneppers-Heijnert

Drs.W.S.deVries(from1March2017)

Mr.J.W.Weck


Company profit and loss account

inEURmillion

note 2017 2016

sales 2 2,971 3,042

operating expenses

levies 3 826 848

operationalcosts 4 936 955

impairments 5 35 299

depreciations 5 432 485

Totaloperatingexpenses 2,229 2,587

operating profit 742 455

financialincome 6 124 28

financialexpense 6 -182 -104

shareofprofitfromassociates 7 43 46

pre-tax profit 727 425

taxes 8 -171 -92

total comprehensive income 9 556 333


Company balance sheet

inEURmillion

assets note year end 2017 year end 2016 assets note year end 2017 year end 2016

non-current assets non-current assets B, 15

property,plantandequipment 10 2,701 3,167 sharecapital 128 128

associates A 317 395 retained earnings 89 50

deferredtaxasset 8 75 6 217 178

3,093 3,568

provisions 16 3,218 3,188

non-current liabilities

borrowings 17 1,078 1,173

other 18 6 -

1,084 1,173

current assets current liabilities

inventories 12 28 26 borrowings 17 130 369

receivables 13 383 420 taxpayable 13 - 54

taxreceivables 13 20 - tradeaccountspayable 18 67 68

derivatives 19 - 22 other 18 736 533

cashandcashequivalents 14 1,928 1,527

2,359 1,995 933 1,024

total 5,452 5,563 total 5,452 5,563


Notes to the company financial statements

General information

EBN’sseparatefinancialstatementsarepreparedin

accordancewiththeprinciplesforfinancialreporting

generallyacceptedintheNetherlandsandthelegal

stipulationsregardingthefinancialstatementsas

definedinPart9,Book2oftheDutchCivilCode.

Forthedeterminationofthebasisforthevaluationof

assetsandliabilitiesanddeterminationofresultsof

theseparatefinancialstatementstheoptionprovided

forinarticle2:362(8)oftheDutchCivilCodeisused.

Theprinciplesforthevaluationofassetsandliabilities

anddeterminingtheresultoftheseparatefinancial

statementsarethereforethesameasthoseusedin

theconsolidatedfinancialstatements.Participations

whereanysignificantinfluenceisexertedonthe

commercialandfinancialpolicyarevaluedonthe

basisofthenetassetvalue.

Theconsolidatedfinancialstatementsareprepared

incompliancewithInternationalFinancialReporting

Standards(‘IFRS’)asadoptedbytheEuropeanUnion

(EU-IFRS)andwithPart9ofBook2oftheDutch

CivilCode.Foradescriptionoftheprinciplesapplied,

pleaserefertopages103to110.Theseparateprofit

andlossaccounthasbeenformulatedinaccordance

withthelimitationspermittedpursuanttoarticle

2:402oftheDutchCivilCode.

Participatinginterestsareasshownintheabovetable.

Theloanshavebeenusedfortheinvestmentsinthe

Bergermeer gas storage.

B) Shareholder’s equity

Theresultaftertaxover2017,afterdeductionofthe

interimspecialprofitdistribution,isincludedinthe

itemretainedearningsofshareholder’sequity.Fora

furtherexplanationofshareholder’sequitywerefer

tonote15oftheconsolidatedfinancialstatements.

Profit distribution proposal

TheGeneralMeetinghasbeenproposedthatthenet

profitasreferredtoinarticle21.2ofEBN’sArticlesof

Associationisappropriatedasfollows:EUR59million

isaddedtotheshareholder’sequityandfor2017no

dividend is proposed.

inEURmillionGroup

companyAssociates Loans

2017total

Groupcompany

Associates Loans2016total

balance at 1 January 21 86 100 207 -11 86 102 177

changes - - - - - - -2 -2

profitshare 28 14 - 42 32 14 - 46

dividend paid - -14 - -14 - -14 - -14

balance at 31 December 49 86 100 235 21 86 100 207

A) Financial fixed assets

FinancialfixedassetscompriseparticipatinginterestsEUR235millionandderivativesEUR82million.

Fordetailsofderivativespleaseseenote19.


Other notes

Thefinancialfixedassetsintheseparatebalancesheet

includethevaluationofthe100%participationEBN

CapitalB.V.,whichisconsolidatedintheconsolidated

financialstatements.Thedifferencesintheother

itemsbetweentheconsolidatedandseparatefinancial

statementsmainlyconcernthebalancesheetpositions

ofEBNCapital.Theprimarybalancesheetpositions

withinEBNCapitalareproperty,plantandequipment

(EUR140million)andtheprovisionfordecommissio-

ningandrestorationcosts(EUR66million).

Giventheminimaldifferencesbetweentheother

balancesheetitemsincludedintheconsolidated

financialstatementsandtheseparatefinancial

statementsforfurtherinformation,pleasereferto

theexplanatorynotestotheconsolidatedfinancial

statements. These are set out on page 115 to 134.

Security

EBNhasissuedaliabilitystatementforEBNCapital

incompliancewithSection2:403oftheDutchCivil

Code.

Fiscal unity

EBNformsafiscalunitywithEBNCapitalfor

corporateincometaxandvalueaddedtax.EBNand

itssubsidiarytogetherarejointlyandseverally

responsibleforthetaxespayablebythefiscalunity.

InthefinancialstatementsofEBNCapitalB.V.thetax

burdeniscalculatedonthebasisofthecommercial

resultobtainedbyEBNCapitalB.V.EBNB.V.settles

thistaxburdenwithEBNCapitalB.V.viathecurrent

account.

Events after the balance sheet date

Formoreinformation,pleaserefertonote24ofthese

financialstatements.

Fees paid to external auditors

Thecostofexternalauditors,PricewaterhouseCoopers

AccountantsN.V.,for2017wereEUR370,000for

statutoryauditservices(2016:EUR370,000)andEUR

381,000forotherauditservices(2016:EUR396,000).

Directors’ remuneration

Theremunerationofthedirectorsofthecompanyis

asfollows:

In2017therearenopaymentstoformerdirectors

whoarenolongeremployedbyEBN(2016:

EUR419,330).

By2017theremunerationtotheSupervisoryBoard

amountedtoEUR0,1million(2016:EUR0,1million).

Seenote23forfurtherdetailsabouttheremuneration

oftheindividualsupervisorydirectors.

Utrecht,14March2018

Executive Board

J.W.vanHoogstraten

Supervisory Board

Mr.H.M.C.M.vanOorschot

Ir.J.G.Huijskes

Prof.Mr.E.M.Kneppers-Heijnert

Drs.W.S.deVries(from1March2017)

Mr.J.W.Weck

inEUR 2017 2016

J.W. van Hoogstratenfrom01March2016

J.W. van Hoogstratenuntil29February2016

A.J. Boekelman

regularremunerations 259,066 209,303 29,204

variableremunerations 37,587 30,800 27,706

pensions 16,256 13,323 2,220

total 312,909 253,425 59,131


Other information

Profit appropriation

Theprofitappropriationtakesplaceinaccordance

withtheprovisionslaiddowninarticle20(2)ofthe

ArticlesofAssociationoftheCompanyandinaccor-

dancewithcurrentagreementswiththeshareholder.

Totheshareholder:

• eachyear,oncethefinancialstatementshavebeen

adopted,aportionoftheprofitasfinalspecial

distributionofprofits,afterdeductionof

provisionalpaymentsispaidout;

• theremainderofthenetprofitismadeavailable

totheshareholder.


Report on the financial statements 2017

Our opinion

Inouropinion:

• EBNB.V.’sconsolidatedfinancialstatementsgive

atrueandfairviewofthefinancialpositionofthe

Groupasat31December2017andofitsresultand

cashflowsfortheyearthenendedinaccordance

withInternationalFinancialReportingStandards

asadoptedbytheEuropeanUnion(EU-IFRS)and

withPart9ofBook2oftheDutchCivilCode;

• EBNB.V.’scompanyfinancialstatementsgivea

trueandfairviewofthefinancialpositionofthe

Companyasat31December2017andofitsresult

fortheyearthenendedinaccordancewithPart9

ofBook2oftheDutchCivilCode.

What we have audited

Wehaveauditedtheaccompanyingfinancial

statements2017ofEBNB.V.,Utrecht(‘theCompany’).

Thefinancialstatementsincludetheconsolidated

financialstatementsofEBNB.V.anditssubsidiaries

(together:‘theGroup’)andthecompanyfinancial

statements.

Theconsolidatedfinancialstatementscomprise:

• theconsolidatedbalancesheetasat31December

2017;

• thefollowingstatementsfor2017:theconsolidated

statementofcomprehensiveincome,changesin

equityandcashflows;and

• thenotes,comprisingasummaryofsignificant

accountingpoliciesandotherexplanatory

information.

Thecompanyfinancialstatementscomprise:

• thecompanybalancesheetasat31December2017;

• thecompanyprofitandlossaccountfortheyear

thenended;

• thenotes,comprisingasummaryoftheaccoun-

tingpoliciesandotherexplanatoryinformation.

Thefinancialreportingframeworkthathasbeen

appliedinthepreparationofthefinancialstatements

isEU-IFRSandtherelevantprovisionsofPart9of

Book2oftheDutchCivilCodefortheconsolidated

financialstatementsandPart9ofBook2oftheDutch

CivilCodeforthecompanyfinancialstatements.

The basis for our opinion

WeconductedourauditinaccordancewithDutch

law,includingtheDutchStandardsonAuditing.

Ourresponsibilitiesunderthosestandardsarefurther

describedinthesection‘Ourresponsibilitiesforthe

auditofthefinancialstatements’ofourreport.

Webelievethattheauditevidencewehaveobtainedis

sufficientandappropriatetoprovideabasisforour

opinion.

Independence

WeareindependentofEBNB.V.inaccordancewith

the‘Wettoezichtaccountantsorganisaties’(Wta,Audit

firmssupervisionact),the‘Verordeninginzakede

onafhankelijkheidvanaccountantsbijassurance-

opdrachten’(ViO–CodeofEthicsforProfessional

Accountants,aregulationwithrespecttoindependence)

andotherrelevantindependencerequirementsinthe

Netherlands.Furthermore,wehavecompliedwiththe

‘Verordeninggedrags-enberoepsregelsaccountants’

(VGBA–CodeofEthicsforProfessionalAccountants,

aregulationwithrespecttorulesofprofessional

conduct).

Our audit approach

Overview and context

Asstatedonpage7oftheannualreportisEBNB.V.a

companythatinvestsintheexploration,extraction

andstorageofgasandoilonbehalfoftheDutch

State.EBNisapartnerinparticipationwithvarious

oilandgascompanies.EBN’sshareinthesejoint

arrangementsisgenerally40%,insomecases50%,

andcomprisesnon-operatesventures(NOV’s).

Independentauditor’sreportTo: the general meeting and supervisory board of EBN B.V.


AspartnerEBNisinvolvedinprojectsinwhichthey

invest,howevertheoperatorisresponsibleforthe

daytodayoperations.EBN’scoreactivitiesareinves-

tinginandmanagingNOV’sandthedevelopmentand

applicationofknowledgefortheseNOV’s.EBNalso

hasholdingsininfrastructure:offshorepipeline

systemsandgasstorage,aswellasa40%interest

inGasterraB.V.Viathisgaswholesalerthegas

productionofEBNissold.

EBNisdependentonthedevelopmentofoil-andgas

prices,asaresultofwhichvolatilityintheannual

resultscanoccur.Inaddition,theresultsareimpac-

tedbyimpairmentsofproperty,plantandequipment

andearthquakerelatedexpenses.Theseaspectshave

influencedthedeterminationofourmaterialityas

describedinthesection‘Materiality’ofthisaudit

opinion.Theindicateditemshavealsobeensubjectto

specificfocusinouraudit,referenceismadetothe

section‘Keyauditmatters’ofthisauditopinion.

Thegroupcomprisesoftwocomponents,EBNB.V.

andEBNCapitalB.V.,andthereforeweconsideredour

groupauditscopeandapproachassetoutinthe

scopeofourgroupauditsection.

Aspartofdesigningouraudit,wedetermined

materialityandassessedtherisksofmaterialmissta-

tementinthefinancialstatements.Inparticular,we

consideredwherethedirectorsmadeimportant

judgements;forexample,inrespectofsignificant

accountingestimatesthatinvolvedmakingassumptions

andconsideringfutureeventsthatareinherently

uncertain.Inparagraph‘keyaccountingestimates

andjudgements’ofthefinancialstatementsthe

companydescribestheareasofjudgmentinapplying

accountingpoliciesandthekeysourcesofestimation

uncertainty.Giventhesignificantestimationuncer-

taintyintheimpairmentassessmentofassetsandthe

determinationoftheprovisionfordecommissioning

andrestorationandcostsasaresultofearthquakes,

weconsideredthesetobekeyauditmattersassetout

inthekeyauditmattersectionofthisreport.

Asinallofouraudits,wealsoaddressedtheriskof

managementoverrideofinternalcontrols,including

evaluatingwhethertherewasevidenceofbiasby

thedirectorsthatmayrepresentariskofmaterial

misstatementduetofraud.

Theauditofacompanyoperatingintheenergy

industrywithnon-operatedventureinterests.We

thereforeincludedspecialistsintheareasoftheoil&

gasindustry,treasury,ITandtaxationinourteam.


Materiality

• Overallmateriality:EUR46.500.000whichrepresents4%oftheaverageprofitbeforetaxoverthecurrent

financialyearandthepast2years,adjustedforimpairmentsonproperty,plantandequipmentand

additionstotheprovisionforcostsrelatedtoearthquakes.

Audit scope

• WehaveperformedauditproceduresonbothEBNB.V.andEBNCapitalB.V.bywhichallgroupcompanies

havebeenincludedinthescopeofouraudit

Key audit matters

• Valuationofproperty,plantandequipmentandtheunderlyingtriggeringeventanalysisincludesignificant

managementestimates;

• Determinationoftheprovisionfordecommissioningandrestorationandcostsasaresultofearthquakes

includesignificantmanagementestimates.

Theoutlineofourauditapproachwasasfollows:

Materiality

Key audit matters

Audit scope

Materiality

Thescopeofourauditisinfluencedbytheapplication

ofmaterialitywhichisfurtherexplainedinthesection

‘Ourresponsibilitiesfortheauditofthefinancial

statements’.

Basedonourprofessionaljudgment,wedetermined

certainquantitativethresholdsformateriality,including

theoverallmaterialityforthefinancialstatementsasa

wholeassetoutinthetablebelow.These,togetherwith

qualitativeconsiderations,helpedustodetermine

thenature,timingandextentofourauditprocedures

ontheindividualfinancialstatementlineitemsand

disclosuresandtoevaluatetheeffectofidentifiedmis-

statements,bothindividuallyandinaggregate,onthe

financialstatementsasawholeandonouropinion.


Wealsotakemisstatementsand/orpossible

misstatementsintoaccountthat,inourjudgement,

arematerialforqualitativereasons.

Weagreedwiththesupervisoryboardthatwewould

reporttothemmisstatementsidentifiedduringour

auditaboveEUR2.325.000(2016:EUR3.000.000)as

wellasmisstatementsbelowthatamountthat,inour

view,warrantedreportingforqualitativereasons.

The scope of our group audit

Thefinancialinformationofthisgroupisincludedin

theconsolidatedfinancialstatementsofEBNB.V.One

componentisconsolidatedbyEBNB.V.,beingEBN

CapitalB.V.Basedonthestatutoryauditrequirement

ofthiscomponent,anauditoftheircompletefinancial

informationisperformed.Theseauditprocedures,

aswellastheauditofthecompletesetoffinancial

informationofEBNB.V.,areperformedbythegroup

audit team.

Byperformingtheproceduresabovewehaveobtained

sufficientandappropriateauditevidenceregarding

thefinancialinformationofthegroupasawholeto

provideabasisforouropinionontheconsolidated

financialstatements.

Overall group materiality EUR46.500.000(2016:EUR63.000.000).

Basis for determining

materiality 4%oftheaverageprofitbeforetaxoverthecurrentfinancialyearandthepast

2years,adjustedforimpairmentsonproperty,plantandequipmentand

additionstotheprovisionforcostsrelatedtoearthquakes.Theseitemsare

incidentalbynatureandhaveaspecificauditfocus,referto‘Keyaudit

matters’.

Rationale for

benchmark applied

Wehaveappliedthisbenchmark,agenerallyacceptedauditingpractice,based

onouranalysisofthecommoninformationneedsofusersofthefinancial

statements.Onthisbasiswebelievethatprofitbeforetaxisanimportant

metricforthefinancialperformanceofthecompany.TheresultofEBNhave

beenvolatileoverthepastfewyears,mainlyduetoexternalfactorsas

fluctuatingoil-andgasprices.Itemslikethenumberofparticipations,

transactions,financingactivitiesandtheorganisationalstructurearepart

ofEBN’snormalcourseofbusinessandarenotdirectlyimpactedbyprice

orproducedvolumes.Wethereforedeemusinganaverageprofitasthebasis

forourmaterialityassessmentappropriatefortheactivitylevelofEBN.

Component materialityThefinancialsofEBNCapitalB.V.areauditedusingthematerialityallocated

tothiscomponent,whichislessthanouroverallgroupmateriality.


Key audit matters

Keyauditmattersarethosemattersthat,inour

professionaljudgement,wereofmostsignificancein

theauditofthefinancialstatements.Wehavecom-

municatedthekeyauditmatterstothesupervisory

board.Thekeyauditmattersarenotacomprehensive

reflectionofallmattersthatwereidentifiedbyour

auditandthatwediscussed.Inthissection,we

describedthekeyauditmattersandincludeda

summaryoftheauditproceduresweperformed

on those matters.

Thekeyauditmatterswereaddressedinthecontext

ofourauditofthefinancialstatementsasawhole,

andinformingouropinionthereon.Wedonot

provide separate opinions on these matters or on

specificelementsofthefinancialstatements.Any

commentsorobservationswemakeontheresults

ofourproceduresshouldbereadinthiscontext.


Valuation of property, plant and equipment and the underlying triggering event analysis

include significant management estimates

Duringtheannualreviewprocessofthevaluationofassets,managementidentified

atriggeringeventforimpairments,beingthelowoil-andgasprices.

Asaresultofthistriggeringevent,EBNperformedanalysestoidentifypotential

impairmentsforanumberofherupstreamandmidstreamassets.Eachanalysis

includesvariousvariablesthataresubjectto(significant)estimates,includingthe

priceexpectations,availablereservesandproductionprofiles,expectedoperational

expensesandwhenapplicablecapitalexpendituresandthediscountrate.Alsorefer

tonote5‘Impairmentsanddepreciation’.

Theavailableoilandgasreservesincludeacertainamountofestimationuncertainty.

Inadditiontotheimpactontherecoverableamountoftheasset,availablereserves

alsoimpacttheUnitofProduction(UoP),thebasisfordepreciations.Asincludedin

‘Keyaccountingestimatesandjudgement’,estimatesofreservesarebydefinition

inaccurateandbasedoninterpretationsthatcan,overtime,change,onthebasis

ofvariousfactors.Criticalassumptionsusedintheseestimatesarethedevelopment

ofgaspricesandproductionprofiles.

Wehavemarkedthisareaaskeyauditmatterduetothematerialimportanceof

theproperty,plantandequipment,asaresultofwhichapotentialimpairmentor

changeinUoPcanhaveasignificantimpactonthefinancialstatements.Given

theanalysisofpotentialimpairmentsandtheassessmentofavailableoilandgas

reservesrequiresignificantestimates,wehaveidentifiedaheightenedriskonthe

valuationoftherelevantproperty,plantandequipment.

Inourauditwehavegivenattentiontomanagements’identificationoftriggering

eventsandwehaveanalysedtheprocessforestimatingreservesandproduction

profilesandhaveevaluatedwhethertheseareclassifiedinaccordancewith

PetroleumResourcesManagementSystem.Weagreeontheexistenceof

managementsidentifiedtriggeringevents.

Wehaveperformedsubstantiveauditprocedurestoverifytheinformationusedby

managementintheanalysistoidentifyapotentialimpairment.Wehave,using

internalvaluationexperts,discussedandtestedthereasonablenessofestimatesand

assumptionsmadebymanagement.Wehavereceivedsufficientappropriateaudit

evidencesupportingtheseassumptionsandestimates.Wehaveamongstothers

comparedtheproductionandcostinformationfromoperatorswithauthorised

budgets.Wehaveperformedareconciliationbetweentheproductionexpensesand

expectedvolumesregardingtheproductionprofiles.Withregardstotheexpected

developmentofgasprices,wehaveassessedthefuturepricecurvesandreconciled

thesetoexternalsources.Wehaveevaluatedthereasonablenessofbothshortterm

andlongtermprices.

Wehavere-calculatedmanagementcalculationsandcomparedtogenerallyaccepted

valuationtechniques.

Key audit matter How our audit addressed the matter


Determination of the provision for decommissioning and restoration and costs as a result of

earthquakes include significant management estimates

Thevaluationofprovisionsfordecommissioningandrestorationandcostsasaresult

ofearthquakesiscomplex.Provisionsrelatedtothesecostsare57%(EUR3.165

million)ofEBN’sbalancesheettotal.Significantestimatesandassumptionsof

management are needed to determine these provisions.

Themainestimatesintheprovisionfordecommissioningandrestorationarethe

expectedcostsperindividualassetandthetimingofthedecommissioningactivities;

whichisdependentontheexpectedenddateoftheproductionofthefieldtowhich

theassetisrelated.

Estimatesandassumptionsforcostsasaresultofearthquakescomprisethetotal

numberofexpectedclaimsandtheamountoftheseclaims,theexpectedpaymentof

compensationforthedecreaseinvalueofrealestateandimmaterialdamage,the

expectedamountthatneedstobepaidforbuildingnew/strengtheningofschools

andinfrastructureandtheexpectedamountthatneedstobepaidforstrengthening

ofhouses.Expectedcostsasaresultofearthquakesaredependentoncostestimations

fromvarioussourcesandtheoutcomeofongoinglegalprocedures.

Referenceismadeto‘Keyaccountingestimatesandjudgement’andnote16

‘Provisions’.

Wehavemarkedthisareaaskeyauditmatterduetothematerialimportanceofthe

provisionscomparedtothebalancesheettotal.Giventhevaluationrequiressignificant

estimates,wehaveidentifiedaheightenedriskonthevaluationprovisionsfor

decommissioningandrestorationandcostsasaresultofearthquakes.

How our audit addressed the matterKey audit matter

Ourauditproceduresfortheprovisionfordecommissioningandrestorationcomprise

amongstotherstheevaluationofestimatesandassumptionsofmanagement.Wehave

donethisbyreconcilingtheinformationusedbymanagementtoinformationreceived

fromoperatorsforestimatedcosts,comparingcostestimatesbetweenoperatorsand

reconcilingtoinformationwithregardstooilandgasreserves.Wehaveassessedthe

reasonablenessoftheuseddiscountrateandhaveevaluatedmanagementsprocessfor

adjustingoperatorinformationandobtainedauditevidenceforadjustmentsmade.

Wehaveverifiedcostestimatesforearthquakedamages,basedontheoperator

information,butwheremanagementdeterminesherownposition,toexternal

availableinformationfromothersources,previouspaidclaimsandEBN’sinternal

technicalstudies.Wehavere-performedmanagements’calculationsandassessed

whethertheseareperformedinaccordancewiththestandardsandconsistentwith

priorperiods.Wehaveassessedtheacceptabilityofthesupportinginformationfrom

operators and deviations made by EBN.

Wehaveassessedthereasonablenessofthedisclosuresandtheuncertainties

includedinthosedisclosures.


Report on the other information included in the

annual report

Inadditiontothefinancialstatementsandouraudi-

tor’sreportthereon,theannualreportcontainsother

informationthatconsistsof:

• Foreword;

• AboutEBN;

• Strategy;

• Results2017;

• Governanceandrisk;

• Reportfromthesupervisoryboard;

• Aboutthisreport;

• Annexes.

Basedontheproceduresperformedassetoutbelow,

weconcludethattheotherinformation:

• isconsistentwiththefinancialstatementsand

doesnotcontainmaterialmisstatements;

• containstheinformationthatisrequiredbyPart9


Wehavereadtheotherinformation.Basedonour

knowledgeandunderstandingobtainedinouraudit

ofthefinancialstatementsorotherwise,wehave

consideredwhethertheotherinformationcontains

materialmisstatements.

Byperformingourprocedures,wecomplywiththe

requirementsofPart9ofBook2oftheDutchCivil

CodeandtheDutchStandard720.Thescopeofsuch

procedureswassubstantiallylessthanthescope

ofthoseperformedinourauditofthefinancial

statements.

Thedirectorsareresponsibleforthepreparationof

theotherinformation,includingthedirectors’report

andtheotherinformationinaccordancewithPart9


Report on other legal and regulatory

requirements

Our appointment

WewereappointedasauditorsofEBNB.V.on16

November2015bythesupervisoryboardfollowing

thepassingofaresolutionbytheshareholdersatthe

annualmeetingheldon16November2015andthe

appointmenthasbeenrenewedannuallybyshare-

holdersrepresentingatotalperiodofuninterrupted

engagementappointmentof2years.

Responsibilities for the financial statements

and the audit

Responsibilities of the directors and the supervisory

board for the financial statements

Thedirectorsareresponsiblefor:

• thepreparationandfairpresentationofthe

financialstatementsinaccordancewithEU-IFRS

andwithPart9ofBook2oftheDutchCivilCode;

andfor

• suchinternalcontrolasthedirectorsdetermine

isnecessarytoenablethepreparationofthe

financialstatementsthatarefreefrommaterial

misstatement,whetherduetofraudorerror.

Aspartofthepreparationofthefinancialstatements,

thedirectorsareresponsibleforassessingthecompa-

ny’sabilitytocontinueasagoingconcern.Basedon

thefinancialreportingframeworksmentioned,the

directorsshouldpreparethefinancialstatements

usingthegoing-concernbasisofaccountingunless

thedirectorseitherintendtoliquidatethecompanyor

toceaseoperations,orhavenorealisticalternative

buttodoso.Thedirectorsshoulddiscloseeventsand

circumstancesthatmaycastsignificantdoubtonthe

company’sabilitytocontinueasagoingconcernin

thefinancialstatements.


Thesupervisoryboardisresponsibleforoverseeing

thecompany’sfinancialreportingprocess.

Our responsibilities for the audit of the

financial statements

Ourresponsibilityistoplanandperformanaudit

engagementinamannerthatallowsustoobtain

sufficientandappropriateauditevidencetoprovide

abasisforouropinion.Ourauditopinionaimsto

providereasonableassuranceaboutwhetherthefinan-

cialstatementsarefreefrommaterialmisstatement.

Reasonableassuranceisahighbutnotabsolutelevel

ofassurancewhichmakesitpossiblethatwemaynot

detectallmisstatements.Misstatementsmayarise

duetofraudorerror.Theyareconsideredtobemate-

rialif,individuallyorintheaggregate,theycould

reasonablybeexpectedtoinfluencetheeconomic

decisionsofuserstakenonthebasisofthefinancial

statements.

Materialityaffectsthenature,timingandextentof

ourauditproceduresandtheevaluationoftheeffect

ofidentifiedmisstatementsonouropinion.

Amoredetaileddescriptionofourresponsibilitiesis

setoutintheappendixtoourreport.

TheHague,14March2018

PricewaterhouseCoopersAccountantsN.V.

Originalsignedby

I.J.C.LefebureRA

Note:Thisindependentauditor’sreportisan

unofficialtranslationofthereportissuedwiththe

DutchversionoftheAnnualreport2017ofEBNB.V.

(“Jaarverslag2017EBNB.V.”).


Appendix to our auditor’s report on the

financial statements 2017 of EBN B.V.

Inadditiontowhatisincludedinourauditor’sreport

wehavefurthersetoutinthisappendixourrespon-

sibilitiesfortheauditofthefinancialstatementsand

explainedwhatanauditinvolves.

Theauditor’sresponsibilitiesfortheauditofthe

financialstatements

Wehaveexercisedprofessionaljudgementand

havemaintainedprofessionalscepticismthroughout

theauditinaccordancewithDutchStandardson

Auditing,ethicalrequirementsandindependence

requirements.Ourobjectivesaretoobtainreasonable

assuranceaboutwhetherthefinancialstatementsasa

wholearefreefrommaterialmisstatement,whether

duetofraudorerror.Ourauditconsisted,among

otherthingsofthefollowing:

• Identifyingandassessingtherisksofmaterial

misstatementofthefinancialstatements,whether

duetofraudorerror,designingandperforming

auditproceduresresponsivetothoserisks,and

obtainingauditevidencethatissufficientand

appropriatetoprovideabasisforouropinion.

Theriskofnotdetectingamaterialmisstatement

resultingfromfraudishigherthanforone

resultingfromerror,asfraudmayinvolve

collusion,forgery,intentionalomissions,

misrepresentations,ortheintentionaloverride

ofinternalcontrol.

• Obtaininganunderstandingofinternalcontrol

relevanttotheauditinordertodesignauditpro-

ceduresthatareappropriateinthecircumstances,

butnotforthepurposeofexpressinganopinion

ontheeffectivenessofthecompany’sinternal

control.

• Evaluatingtheappropriatenessofaccounting

policiesusedandthereasonablenessofaccounting

estimatesandrelateddisclosuresmadebythe

directors.

• Concludingontheappropriatenessofthedirectors’

useofthegoingconcernbasisofaccounting,and

basedontheauditevidenceobtained,concluding

whetheramaterialuncertaintyexistsrelatedto

eventsand/orconditionsthatmaycastsignificant

doubtonthecompany’sabilitytocontinueasa

goingconcern.Ifweconcludethatamaterial

uncertaintyexists,wearerequiredtodraw

attentioninourauditor’sreporttotherelated

disclosuresinthefinancialstatementsor,ifsuch

disclosuresareinadequate,tomodifyouropinion.

Ourconclusionsarebasedontheauditevidence

obtaineduptothedateofourauditor’sreportand

aremadeinthecontextofouropiniononthe

financialstatementsasawhole.However,future

eventsorconditionsmaycausethecompanyto

ceasetocontinueasagoingconcern.

• Evaluatingtheoverallpresentation,structureand

contentofthefinancialstatements,includingthe

disclosures,andevaluatingwhetherthefinancial

statementsrepresenttheunderlyingtransactions

andeventsinamannerthatachievesfairpresen-

tation.

Consideringourultimateresponsibilityforthe

opiniononthecompany’sconsolidatedfinancial

statementsweareresponsibleforthedirection,

supervisionandperformanceofthegroupaudit.In

thiscontext,wehavedeterminedthenatureand

extentoftheauditproceduresforcomponentsofthe

grouptoensurethatweperformedenoughworktobe

abletogiveanopiniononthefinancialstatementsas

awhole.Determiningfactorsarethegeographic

structureofthegroup,thesignificanceand/orrisk

profileofgroupentitiesoractivities,theaccounting

processesandcontrols,andtheindustryinwhich

thegroupoperates.Onthisbasis,weselectedgroup

entitiesforwhichanauditorreviewoffinancial

informationorspecificbalanceswasconsidered

necessary.


Wecommunicatewiththesupervisoryboard

regarding,amongothermatters,theplannedscope

andtimingoftheauditandsignificantauditfindings,

includinganysignificantdeficienciesininternal

controlthatweidentifyduringouraudit.

We provide the supervisory board with a statement

thatwehavecompliedwithrelevantethicalrequire-

mentsregardingindependence,andtocommunicate

withthemallrelationshipsandothermatters

thatmayreasonablybethoughttobearonourinde-

pendence,andwhereapplicable,relatedsafeguards.

Fromthematterscommunicatedwiththesupervisory

board,wedeterminethosemattersthatwereofmost

significanceintheauditofthefinancialstatementsof

thecurrentperiodandarethereforethekeyaudit

matters.Wedescribethesemattersinourauditor’s

reportunlesslaworregulationprecludespublic

disclosureaboutthematterorwhen,inextremely

rarecircumstances,notcommunicatingthematter

isinthepublicinterest.


Assurance report on the sustainability

information in the annual report 2017

Our conclusion

Basedonourreview,nothinghascometoour

attentionthatcausesustobelievethatthe

sustainabilityinformationintheannualreport2017

ofEBNB.V.doesnotpresent,inallmaterialrespects,

areliableandadequateviewof:

• thepolicyandbusinessoperationswithregardto

sustainability;and

• theeventsandachievementsrelatedtheretofor

theyearended31December2017

inaccordancewiththeSustainabilityReporting

GuidelinesversionG4oftheGlobalReporting

Initiative(GRI)andtheinternallyappliedreporting

criteria.

What we have reviewed

Thesustainabilityinformationcontainsa

representationofthepolicyandbusinessoperations

ofEBNB.V.,Utrecht(hereafter:“EBN”)regarding

sustainabilityandtheeventsandachievements

relatedtheretofor2017.

Wehavereviewedthesustainabilityinformationfor

theyearended31December2017,asincludedinthe

followingsectionsintheannualreport2017

(hereafter:“thesustainabilityinformation”):

1. Foreword+keyfigures;

2. AboutEBN;

3. Strategy;

4. Resultsfor2017.

Thelinkstoexternalsourcesorwebsitesinthe

sustainabilityinformationarenotpartofthe

sustainabilityinformationitselfreviewedbyus.

Wedonotprovideassuranceoverinformationoutside

ofthissustainabilityinformation.

The basis for our conclusion

WeconductedourreviewinaccordancewithDutch

law,whichincludestheDutchStandard3810N

‘Assuranceengagementsoncorporatesocial

responsibilityreports’(‘Assurance-opdrachteninzake

maatschappelijkeverslagen’),whichisaspecified

DutchstandardthatisbasedontheInternational

StandardonAssuranceEngagements3000:

’AssuranceEngagementsotherthanAuditsor

ReviewsofHistoricalFinancialInformation.This

reviewisaimedtoobtainlimitedassurance.Our

responsibilitiesunderthisstandardarefurther

describedinthesection‘Ourresponsibilitiesfor

thereviewofthesustainabilityinformation’of

thisAssurance-report.

Webelievethattheassuranceinformationwehave

obtainedissufficientandappropriatetoprovidea

basisforourconclusion

Independence and quality control

WeareindependentofEBNinaccordancewith

the‘CodeofEthicsforProfessionalAccountants,

aregulationwithrespecttoindependence’

(‘Verordeninginzakedeonafhankelijkheidvan

accountantsbijassurance-opdrachten’-ViO)and

otherfortheengagementrelevantindependence

requirementsintheNetherlands.Furthermorewe

havecompliedwiththe‘CodeofEthicsforProfessional

Accountants,aregulationwithrespecttorulesof

professionalconduct’(‘Verordeninggedrags-en

beroepsregelsaccountants’-VGBA).

Weapplythe‘detailedrulesforqualitysystems’

(Naderevoorschriftenkwaliteitsystemen)and

accordinglymaintainacomprehensivesystemof

qualitycontrolincludingdocumentedpoliciesand

proceduresregardingcompliancewithethical

requirements,professionalstandardsandother

applicablelegalandregulatoryrequirements.

Reporting criteria

EBNdevelopeditsreportingcriteriaonthebasisof

theSustainabilityReportingGuidelinesversionG4

AssurancereportoftheindependentauditorTo: the Executive Board of EBN B.V.


ofGRI,asdisclosedinsection“7.Aboutthisreport”

oftheannualreport2017.Theinformationinthe

scopeofthisassuranceengagementneedstoberead

andunderstoodinconjunctionwiththesereporting

criteria.Theabsenceofasignificantbodyof

establishedpracticeonwhichtodraw,toevaluate

andmeasurenon-financialinformationallowsfor

different,butacceptable,measurementtechniques

andcanaffectcomparabilitybetweenentitiesand

over time.

Inherent limitations

Thesustainabilityinformationincludesprospective

informationsuchasexpectationsonambitions,

strategy,plansandestimatesandriskassessments

basedonassumptions.Inherently,theactualresults

arelikelytodifferfromtheseexpectations,dueto

changesinassumptions.Thesedifferencesmaybe

material.Wedonotprovideanyassuranceonthe

assumptionsandachievabilityofprospective

informationinthesustainabilityinformation.

Responsibilities for the sustainability

information and the assurance-engagement

Responsibilities of the Executive Board

TheExecutiveBoardofEBNisresponsibleforthe

preparationofthesustainabilityinformationin

accordancewiththeSustainabilityReporting

GuidelinesversionG4ofGRIandtheinternally

appliedreportingcriteriaasdisclosedinsection

“7.Aboutthisreport”oftheannualreport2017,

includingtheidentificationofstakeholdersandthe

definitionofmaterialsubjects.Thechoicesmadeby

theExecutiveBoardregardingthescopeofthe

sustainabilityinformationandthereportingpolicy

aresummarizedinsection“7.Aboutthisreport”.

TheExecutiveBoardisresponsiblefordetermining

thattheapplicablereportingcriteriaareacceptable

inthecircumstances.

TheExecutiveBoardisalsoresponsibleforsuch

internalcontrolasitdeterminesisnecessaryto

enablethepreparationofthesustainability

informationthatisfreefrommaterialmisstatement,

whetherduetofraudorerrors.

Our responsibilities for the review of the

sustainability information

Ourresponsibilityistoplanandperformthereview

engagementtoobtainsufficientandappropriate

assuranceinformationtoprovideabasisforour

conclusion.

Thisreviewengagementisaimedatobtaininglimited

assurance.Inobtainingalimitedlevelofassurance,

theperformedproceduresareaimedatdetermining

theplausibilityofinformationandarelessextensive

thanthoseaimedatobtainingreasonableassurance

inanauditengagement.Theassuranceobtainedin

reviewengagementsaimedatobtaininglimited

assuranceisthereforesignificantlylowerthanthe

assuranceobtainedinassuranceengagementsaimed

atobtainingreasonableassurance.

Misstatementsmayariseduetoirregularities,

includingfraudorerrorandareconsideredtobe

materialif,individuallyorintheaggregate,they

couldreasonablybeexpectedtoinfluencethe

economicdecisionsofuserstakenonthebasisofthe

sustainabilityinformation.Thematerialityaffectsthe

nature,timingandextentofourreviewandthe

evaluationoftheeffectofidentifiedmisstatements

onourconclusion.

Procedures performed

Wehaveexercisedprofessionaljudgementandhave

maintainedprofessionalscepticismthroughoutthe

assuranceengagement,inaccordancewiththeDutch

Standard3810N,ethicalrequirementsand

independencerequirements.


Ourmainproceduresinclude:

• Performinganexternalenvironmentanalysisand

obtaininginsightintorelevantsocialthemesand

issues,relevantlawsandregulationsandthe

characteristicsoftheorganization.

• Identifyingandassessingtherisksofmaterial

misstatementofthesustainabilityinformation,

whetherduetoerrorsorfraud,designingandper-

formingreviewproceduresresponsivetothose

risks,andobtainingreviewevidencethatissuffi-

cientandappropriatetoprovideabasisforour

conclusion.

• Developinganunderstandingofinternalcontrol

relevanttotheassuranceengagementinorderto

designassuranceproceduresthatareappropriate

inthecircumstances,butnotforthepurposeof

expressingaconclusionontheeffectivenessofthe

company’sinternalcontrol.

• Evaluatingtheappropriatenessofthereporting

criteriausedanditsconsistentapplication,including

theevaluationoftheresultsofthestakeholders’

dialogueandthereasonablenessofestimatesmade

bytheExecutiveBoardandrelateddisclosuresin

thesustainabilityinformation;

• Evaluatingtheoverallpresentation,structureand

contentofthesustainabilityinformation,inclu-

dingthedisclosures.

• Evaluatingwhetherthesustainabilityinformation

representstheunderlyingtransactionsandevents

freefrommaterialmisstatement.

• Interviewingmanagement(orrelevantstaff)res-

ponsibleforthestrategy,policyandachievements

ofsustainabilityoperations.

• Interviewingrelevantstaff,responsiblefor:

• providingtheinformationinthesustainability

information,

• carryingoutinternalcontrolproceduresonthe

data, and

• consolidatingthedatainthesustainability

information.

• Reviewinginternalandexternaldocumentationto

determinewhetherthesustainabilityinformationis

substantiatedadequately.

• Ananalyticalreviewofthedataandtrends

submittedforconsolidationatcorporatelevel.

• Assessingtheconsistencyofthesustainability

informationandtheotherinformationinthe

annualreport2017notinscopeforthisassurance

report.

• Reconcilingthe‘Operationalperformanceindica-

torsuptoandincluding2016’tolistingsfromthe

operators.

• Assessingwhetherthesustainabilityinformation

hasbeenprepared‘inaccordance’withtheSustai-

nabilityReportingGuidelinesversionG4ofGRI.

DenHaag,14March2018

PricewaterhouseCoopersAccountantsN.V.

OriginalhasbeensignedbyI.J.C.LefebureRA

(Thisassurancereportisatranslationoftheoriginal

assurancereportaccompanyingtheoriginalannual

report2017,bothstatedinDutch.Incaseofany

conflictbetweenthistranslationandtheoriginal

assurancereport,thelatterwillprevail.Theoriginal

assurancereportcanbefoundonthewebsiteofEBN

B.V.)


9.Annexes


Stakeholder Organisation Form of interaction Discussion points

National government

Shareholder:Ministerof EconomicAffairsandClimatePolicy/SecretaryGeneral

AnnualShareholdersMeetingInformalconsultationsBiennialcoordination&strategyupdate

Annualreport,results,dividendCorporategovernanceCurrentdevelopments

PolicymakerMinisterofEconomicAffairsandClimatePolicy/(Direc-tor-GeneralEnergy,TelecomandCompetition)

Regular:StrategicconsultationandExecutiveBoard consultationMiningandgassupplysystemconsultationAd-hoc

InformationtoassessfeasibilitywithrespecttoplannedenergypolicyCooperationJoint venturesCurrentdevelopmentsDecommissioningandreuse

PolicymakerMinisterof InfrastructureandWaterManagement

WorkshopsInterviewAd-hoc

StructuralVisionSubsurfaceDecommissioningandreuseMiningandwaterprotection

Local authorities Provincialandmunicipalofficials Ad-hoc ProvisionofinformationDevelopmentofgeothermalenergy

Supervisor StateSupervisionofMines RegularmeetingsAd-hoc

Safety,efficientextraction,decommissioningandreuse Development(ultra-deep)geothermalenergy,HSEbenchmark

AuthorityforConsumersandMarkets

Ad-hoc Competition

Operators/ licence holders

OilandgascompaniesoperatingintheNetherlandsForeign(non-)operatorsGeothermalenergyoperators

Regularmeetings(TCMs,OCMs)ProcessingofinvestmentproposalsStrategicmeetingsInformalcontactsWorkshopsConferencesConsultingadhoc

ProjectsCooperationInvestmentsCostmanagementReservesDecommissioningandreuseLong-termstrategiesoperatorsPublicsupportPromotionofexplorationpotentialintheNetherlandsHSEbenchmark

BranchorganisationNOGEPA RegularmeetingsInformalcontactsReportsWorkshopsConferences

CooperationCostmanagementDecommissioningandreusePublicsupportRoleofnaturalgasEnergy transitionCommunication

BranchorganisationDAGOandStichtingPlatformGeothermie

RegularmeetingsInformalcontactsWorkshopsConsultingadhoc

GeothermalenergydevelopmentintheNetherlandsProjectsCooperationPublicsupportCommunicationandstakeholder

Gasgebouw(NAM,GasTerra,Shell,Exxon)

Regularmeetings (CVG,RVC,AGM,AC,CBM,BudgetCommission)ExpertmeetingInformalcontacts

CooperationInvestmentsCostmanagementRoleofnaturalgasEnergy transitionEarthquakes

9.1 Interaction with our stakeholders



Financial institutions

Creditproviders:ING, RabobankandBNPParibas

AnnualmeetingsAd-hoc

FinancingneedCreditconditions

Capitalmarket: banksandadvisers

Ad-hoc FinancingneedCapitalmarketdevelopments

Moneymarket:banks, commercialpaperdealers andmoneymarkettraders

Ad-hoc InvestmentopportunitiesMoneymarketdevelopments

CreditratingagenciesS&PandMoody’s

AnnualreviewmeetingAd-hoc

Financialandoperationaldevelopmentsandexpectations

Insurance Insurancebrokers andcompanies

Ad-hoc DamageclaimsInspectionsofinstallations

Wholesale GasTerra(gasbuyer) Regularmeetings(CVG,RVC,AC,AGM)GILDE,KVGNAd-Hoc

SalespricesProcessingandtransportationLiabilityGuaranteesPublicsupportRoleofnaturalgasEnergy transition

Gas transport Gasunie/GTS RegularmeetingsGILDE,KVGNAd-Hoc

InputconditionsPublicsupportRoleofnaturalgasEnergy transition

Gas storage Taqa(Bergermeer) Regularmeetings(TCMs,OCMs) ProjectsCooperation

Gasgebouw(Norg,Grijpskerk,Alkmaar)

Regularmeetings ProjectsCooperationInvestments

Buyers Oil/condensate:Oilandgascompanies (midstream)

RegularmeetingsAd-Hoc

SalespricesProcessingandtransportationLiabilityGuarantees

Gas:Energycompanies

Viawholesale(GasTerra) SalespricesProcessingandtransportationLiabilityGuarantees

Supply E&PservicecompaniesBranchorganisationIRO

Projectbasis(JointIndustryProjectsorJIPs)WorkshopsConferences

ProjectsCostmanagementDecommissioningandreuse



CCS GasunieandPortofRotterdam(Jointventurepartnersin projectgroepPorthos)

Projectbasis(JointIndustryProjectsorJIPs) JV termsAcquisitioncustomersProjectexecutionAgreementswithserviceproviderse.g.TAQA/ONE

Social

organisations

NGO’s Incidental EBN’sroleandstrategyGasintheenergytransitionDecommissioningandreuseGeothermalenergy

Residents LocalresidentparticipationsInterestgroups

Via operators ImpactonsurroundingsofdrillingandproductionsitesSafetyandpossibledamageUseandneedInvolvementindecisionmakingLocalconcessionsInformationsessionsforlocalresidents

Knowledge and

training centres

Knowledgeinstitutions: CIEP,EAE,TNO

ManagementofTKI-GasSupervisoryCommittee(EAE)StrategicAdvisoryBoard(EAE)RegularmeetingsJIPs(TNO)Ad-Hoc

CooperationTKIprojects

Trainingcentres:UniversitiesTrainingcentresStudents

StudentconferenceInternshipsEBNJIPS(3TUs,UU,VUA,RUG,Leeds,Durham)WorkshopsVeerstichtingfoundation

EnergyTransition(EnergyTransitionScholarship)Socialtrade-offsaroundprojects(AllEnergyDay2017)CareeropportunitiesDecommissioningandreuse

Employees HR:GPTW,InContext,Arbobutler,

Fourtimesayear,townhallSurveys360,offsiteretreats,personalitytests

SatisfactionWellbeingPhysicalandmentalwell-being,complaints.

AWVN(branchorg.), lawyers,taxadvice,Training and educationinstitutesBerenschot

Sicknessabsenteeismguidance,coaching,advice,PMO,workplaceresearchLabourmarketdevelopmentAdvisingCoaching,guidanceAdvice,projectguidance

SocialdevelopmentsTrainingandcoursesImplementationstrategy

WorksCouncil Fourtimesayearregularconsultationwithdirector(twiceayearSupervisoryBoardmemberpresent)Ad-hocconsultationwithdirector(formalandinformal)ConsultationwiththeemployeesSurvey

StrategyandmarketdevelopmentsGeneralcourseofaffairsEBNRequestforadviceontheimplementationofanewstrategy(reorganisation)RequestforconsentRegulationsforworkingfromhome,Sickleavescheme,HRcycle,TimeregistrationsystemStaffwelfareVacanciesandstaffturnover


77,7

Number of FTE employed at EBN

(year-end 2017)

Percentage of women employed

at EBN (year-end 2017)

How many women are in scale 9 or higher and/

or are hierarchical managers? (compared to the

total number of employees in management and

professional positions) (year-end 2017)

21%

Average age

(end of 2017)

44.5

37.5 384.8

Percentage under the age of 45

(end of 2017)

Academic

(end of 2017)

HBO

(year-end 2017)

MBO

(end of 2017)

52.4% 77% 7% 16%

Average training hours per year

(end of 2017)

Total number of training days

(end of 2017)

33%

9.2 The people of EBN


4.03%

1.01%

1.33%

0.36% 2.66%

Absenteeism (for all of 2017)

Short-term absenteeism Medium-long term absenteeism Long-term absenteeism

Average notification frequency

Number of externals in staff positions

(average FTE 2017)3

3EBN determines how many and what positions it has within its organisation; these are called staff positions. The scope of a staff position is expressed in FTE. EBN also puts externals on projects in project-based deployment which does not fall under staff positions and is not counted here.

Number of trainees/graduates

(during 2017)

Number of trainees/graduates

(average FTE 2017)

3.58 16 6.92


9.3 GovernancetabelGovernance table team of directors

Name Age* Profile/specific knowledge Task at EBN Appointment term

(Relevant) Ancillary positions

J.W. van Hoogstraten

53 • Miningengineering&petroleum extraction(engineer),TUDelft

• Workedintheenergysectorforvariousoilandgascompanies

• MDofTAQANederland• ChairmanNOGEPA,thetradeassociationofoilandgasproducersinthe Netherlands

CEO:JanWillemleadstheteamof directorsandmaintainscontactswiththeSupervisoryBoardandtheshareholder.Hefulfilstheemployerrolefortheprogrammemanagers,theAM/BD/CommercialfieldandthedepartmentsHR&facility,LegalandCommunications&PublicAffairs.

1March2016-1March2020

• MemberoftheSupervisoryBoardofGasTerraB.V.

• MemberoftheBoardofDelegatedCommissionersofGasTerraB.V.

• MemberoftheBoardofBeheerMaatschapGroningen

• MemberoftheAdvisoryBoardofClingendaelInternationalEnergyProgramme

• MemberStrategicAdvisoryBoardTNO Energy

• MemberoftheSupervisoryBoardoftheNexstepassociation

A.J.

Boekelman

58 • Econometrics(drs.),UniversityofAmsterdam

• WorkedatShellinRotterdamandabroad,includingasCFOofShell SurinameandGroupControllerofPDOOman.

• EmployedatNuonasGroupController.• Workedinthenon-profitsector asDirectorHR&FinanceatSNV DevelopmentOrganisation.

FinanceDirector:JanisresponsibleforEBN’sfinancialeconomicpolicyandfordirectingallfinancialrelatedjobareas.Hefulfilstheemployerroleforthe BusinessFinancefieldandtheAccounting&Reporting,TreasuryandICT departments.

From2011 • ChairmanAuditCommittee GasTerraB.V.

• MemberoftheSupervisoryBoardofOasenDrinkwater

B.C.

Scheffers

54 • Geophysics(drs.),UtrechtUniversity• Doctorateintechnicalphysics(seismo-logy)attheTUDelft.

• WorkedinvariouspositionsatTNO,includingasGeophysicist,GroupLeaderandDirector

• ChiefInspectoratStateSupervisionofMines(2006-2007)

• TechnicalManageratEBN(2007-2011)

DirectorStrategy&Technology:Berend isprimarilyresponsibleforassistingtheCEOindeveloping,communicating,implementingandmaintainingthe strategicinitiatives.BerendischairmanofthereserveboardandfulfilstheemployerroleforthefieldsGeoscience,EngineeringandData&Knowledge.

From2011 • MemberoftheBoardoftheTKIGasFoundation

• MemberoftheSupervisoryBoardofStichtingDelftAardwarmteProject

• MemberoftheSocialAdvisoryBoardofearthsciencesstudiesattheUniversityofUtrecht

• MemberofthestrategicpartnercouncilNewEnergyCoalition

• ChairmanpartnerresearchcouncilESTRAC

• MemberoftheSupervisoryBoardoftheNexstepassociation

• BoardmemberofWorldEnergyCouncil

*ages per date of RvC meeting 14 march 2018


Governance table supervisory board

Name Age* Profile/specific knowledge

Task at EBN Year of appointment

Reappointments End of term

(Relevant) ancillary positions

H.M.C.M. van Oorschot

65 • chairmanSB ChairmanoftheSupervisoryBoard,memberoftheauditcommitteeandmemberof theremunerationcommittee/selectionandappointment committee

2006 First:2010Second:2014

2018 • ChairmanoftheExecutiveBoardofNHTVinBreda(mainposition)

• ChairmanoftheSupervisoryBoardofLysias Advies B.V.

• MemberoftheSupervisoryBoardofElisabethziekenhuishospital,Tilburg

• MemberoftheboardofSt.PetrusDondersTilburg

J.G.

Huijskes

53 • profileknowledge oftheoilandgassector

MemberoftheSupervisoryBoard,memberoftheauditcommitteeandmemberoftheremunerationcommittee/selectionandappointmentcommittee

2016 - 2020 • NonExecutiveDirectorGulfKeyStonePetroleumPLC.

E.M.

Kneppers-

Heijnert

66 • profileCommuni-cationandHR

MemberoftheSupervisoryBoard,memberoftheauditcommitteeandmemberoftheremunerationcommittee/selectionandappointmentcommittee

2016-2020 - 2020 • Professoremeritusofbusiness administration,inparticularthelegalaspects,Universityof Groningen,theNetherlands

• MemberoftheSupervisoryBoardofWoltersKluwerHoldingNederlandB.V.

• PresidentAdvisoryBoardfoundation• StichtingInstituutGAK• MemberoftheboardoffoundationSt.FondsBijzondereVoorzieningen MartiniZiekenhuisGroningen

W.S. de Vries 64 • profilefinancial-eco-nomic,knowledgeoftheoilandgassector

MemberoftheSupervisoryBoard,chairmanoftheauditcommitteeandmemberoftheremunerationcommittee/selectionandappointmentcommittee

1March2017 - 2021 -

J.W. Weck 70 • profilepublicsectororganisations

MemberoftheSupervisoryBoard,memberoftheauditcommittee,memberoftheremunerationcommittee/selectionandappointmentcommittee

2016 - 2019 • ChairmanoftheSupervisoryBoardofEconomischeImpulsZeelandN.V.

• MemberoftheAdvisoryBoardoftheNetherlandsInstituteforNew Technology,EconomicandSocial Studies(Nintes)

• MemberoftheBoardD&ICompany• ChairmanoftheSupervisoryBoardofStichtingBuddyNetwork

*ages per date of RvC meeting 14 march 2018


9.4 Remuneration report

Thisremunerationreportcontainsanexplanationof

theremunerationpolicyin2017forthedirectorand

theSupervisoryBoardofEBN.

In2017,MrJ.W.vanHoogstratenwasdirectorofEBN.

TheshareholderappointedMrVanHoogstratenasof

1March2016foraperiodoffouryears,afterwhich

reappointmentispossible.Simultaneouslywiththe

appointmentofMrVanHoogstraten,theshareholder

establishedtheremunerationpolicyforthedirector.

Theshareholderdidthisontherecommendationof

theSupervisoryBoard,whereittooktheadviceofthe

remunerationcommitteeintoaccount.TheWorks

Councilwasalsogiventheopportunitytotakea

positionontheremunerationpolicy.Theremuneration

policyadoptedin2016bytheSupervisoryBoardwas

usedtodeterminetheremunerationandfurther

termsandconditionsofemploymentofthedirector.

Inlinewiththeremunerationpolicyforthedirector

aseparateremunerationpolicywasdrawnupforthe

threedirectorswhoarenotexecutivedirectors.This

remunerationreportdealsonlywiththeremuneration

policyforthestatutorydirector.

General

TheremunerationpolicypursuedatEBNisbasedon

thefollowingprinciplesoftheparticipationspolicyof

thecentralgovernment:

1. Theremunerationpolicyshouldallowthe

participationstoattractqualifieddirectors,

however, this must be done in an austere manner.

2. Thetotalamountoftheremunerationis

determinedbylookingbothattheprivateand

publicmarket;tothisend,privateandpublic

referencegroupsareestablished,aswellasthe

applicableratioofprivateandpublicactivities

fortherelevantparticipation.

3. Thevariableremunerationsarecappedat20per

centofthebasicsalary.

EBN,onthebasisoftheMiningAct,amongother

things,participatesinexplorationandproduction

activitiesforoilorgasaccumulationsoffshoreand

onshore.Inadditiontothebasicprinciples,itis

importantforEBNthatthedirectorhasspecific

knowledgeandexperienceintheoilandgassector.

Informulatingtheremunerationpolicythefactthat

thereisnolongeranylong-termvariableremuneration

istakenintoaccount.Aconversionfactorof0.4is

usedtoconvertthelong-termvariableremuneration

inaccordancewithgovernmentpolicy.

TheSupervisoryBoardindeterminingthetotal

remunerationhastakenintoaccountthattheamount

ofremunerationscanbeasensitiveissueinpublic

debate,sothatanaustereinterpretationisself-evident.

At the same time, the Supervisory Board in the

interestofEBNmustensurethatEBNhasadirector

withtherequiredqualitiesandexperience.

Construction of remuneration package

Fortheremunerationofthedirectorsofthe

companyin2017,pleaseseepage138ofthefinancial

statements,whereadistinctionismadebetweenthe

fixedsalary,variableremunerationandanyother

remunerationcomponents.

ForthefixedannualincomeappliesthattheSuper-

visoryBoarddeterminesthepossibleannualgrowth

ofthefixedannualincome.Ifthemaximumofthe

fixedannualincomeisreached,furthergrowthis

limitedtoindexationofthefixedannualincome.

Anyindexationtakesplaceasof2016inaccordance

withEBN’sworkingconditionsregulations(acombi-

nationofthederivedConsumerPriceIndex,indexation

intheDutchoilandgasindustryandindexationat

theshareholder).Indexationmayvarybetween0per

centandnotmorethanthederivedCPIrate.


Variable income

Theremunerationstructurealsohasavariablecom-

ponent.Thevariableremunerationelementsamount

toamaximumof14percentofthefixedannual

incomeifobjectiveshavebeenfullyachieved.In

exceptionalcircumstances,theSupervisoryBoardmay

grantanadditionalvariableremunerationof6per

cent,meaningthevariableremunerationisamaximum

of20percent.Thismaximumvariableremuneration

policyisinlinewiththeparticipationspolicyofthe

centralgovernment.

Theobjectivesofthevariableremunerationare

determinedannuallybytheSupervisoryBoard.The

objectivesincludeteam-relatedobjectives(forthe

entireteamofdirectors)andobjectivesforallofEBN.

Theobjectivesarebasedonthecompany’sstrategy.

TheSupervisoryBoardmakestheobjectivesboth

realisticandchallenging.Theobjectivesshouldbe

measurableandinfluenceableandarelinkedto

thestrategy.Theprogressisdiscussedwiththe

SupervisoryBoardonthebasisofquarterlyreports.

Theobjectivesarediscussedintheremuneration

committeeinthefirstquarteroftheyearfollowing

theyearwhichtheobjectivesreferto.Afterthisdis-

cussiontheSupervisoryBoarddeterminestheextent

towhichtheobjectivesofthevariableremuneration

arerealised.Paymentofthevariableremuneration

takesplaceaftertheGeneralMeetingofShareholders

hasadoptedthefinancialstatements.

For2017,theremunerationcommitteehassetthe

followingobjectivesforEBN:

Fortherealisationoftheobjectives,allobjectivesare

equallytakenintoaccount.Thepartialachievement

ofobjectivesispossible.Theextenttowhichthatis

possibleisdeterminedbeforehand.Theremuneration

committeeisfurtherentitledtoadjusttheoverall

scorepositivelyornegatively.Objectives1to4are

Topic Explanatory notes Objective

1 EBN’sprofit EBN’sprofit(aftertax)showninmillionEUR ≥161

2 AdministrationcostsEBN’scostsforstaff,hiringexpertise,office,etc.showninmillionEUR

≤15,8

3Reserves maturation smallfields

Thenetsupplementation(maturation)ofgasreservesintheNetherlandsinGNm3GE.

≥9,7

4 DrillingThenumberofdrillsatnewlocationsintheNetherlands,onshoreoroffshore.

≥13

5Scoretransparency benchmark

Thetransparencybenchmarkisanannualstudyintothecontentandqualityofsocialreporting(max200points).

≥170

6SettingupNational Platform

EBNislaunchingaNationalPlatformfordecommissio-ningandreusealongwithindustrypartners.

Yes

7ParticipationEBN consortiumUDG

Togetherwithsevenconsortia,TNO,theMinistryofEco-nomicAffairsandClimatePolicyandtheMinistryofInfra-structureandWaterManagement,EBNisjoiningtheGreenDealUltraDeepGeothermal.

Yes


determinedonthebasisoftheworkprogrammeand

budgetdrawnupinDecember2016.Objective5is

determinedbythescorefromthepreviousyearanda

lowerlimitof149points.Objectives6and7arespeci-

ficallyincludedfor2017.Associalresultsinanycase

objective1and3aredesignated,wherethesocial

resultscountfortwosevenths.

Theteam-relatedobjectivesarederivedfromtheEBN

objectivesandthusderivedfromthestrategy.35pro-

jectshavebeendesignatedfor2017,dividedoverthe

sixthemesandthecorporatedepartments.

Pension

Thedirectorparticipatesinapensionschemeofthe

GeneralPensionFundforPublicEmployees(ABP),

inaccordancewiththetermsforEBNemployees.

Other fringe benefits

EBNoffersapackageoffringebenefitsthatalso

appliestothedirector.Nooptionrightsorsharesare

allocatedtothedirector.Thecompanyhasalsonot

giventhedirectoranyloans,advancesorguarantees.

Inadditiontothefringebenefits,thedirectorhasan

expenseallowanceanduseofacar(forbusinessand

privateuse).EBNhastakenoutadirectors’andoffi-

cers’liabilityinsurancepolicyforthedirector.

Other principles of the remuneration policy

Appointment term

Onthedirector’sappointmentanappointmenttermof

fouryearsapplies.Reappointmentcanalwaystake

placeeachtimeforamaximumperiodoffouryears.

Period of notice

Forthedirector,athreemonthperiodofnoticeofthe

employmentcontractappliesandforEBN,asixmonth

periodofnotice.

Severance pay

Thedirectorisonlyawardedseverancepayinthe

eventofinvoluntarydismissal.Unlessthereis

manifestunreasonablenessthepayforthedirectoris

amaximumofonefixedannualincome,inaccordance

withtheCorporateGovernanceCode.Thesaid

maximumpaymentincludesthetransitionallowance

insofarasthisisowedtothedirectorundertheWork

andSecurityAct(WWZ)since1July2015.

Claw back and adjustment variable remuneration

Theemploymentcontractwiththedirectorcontains

aclawbackclause(CorporateGovernanceCode

provisionII.2.11)andtheemploymentcontract

containsaprovisionunderwhichtheSupervisory

Boardhasthepowertoamendanyvariable

remunerationifthisleadstounfairoutcomes

becauseofexceptionalcircumstanceswithinthe

performanceperiod(CorporateGovernanceCode

provisionII.2.10).

Includingaclawbackclauseisinlinewiththecentral

government’sholdingspolicy.

Balanced composition director

Thedirectorconsistsofonenaturalperson,sothata

balanceddistributionoftheseatsoftheExecutive

Boardcannotbeapplied.

Variable remuneration over 2017

Theremunerationcommitteetooknoteofthe

preliminaryrealisationoftheobjectivesfor2017

inDecember2017.Therealisationoftheobjectives

over2017isdeterminedinmidMarch2018.

Remuneration ratio at EBN

ThemedianofthetotalremunerationofEBN

employeesisEUR102kgross.Thisconcernsthe

grosssalaryincludingvariableremuneration,holiday

pay,paidholidays,expenseallowancesandpension

cappingpayment.Ifthisamountisdeductedfromthe

grosssalaryreceived(includingtheaforementioned

elements)ofMrVanHoogstraten,beinganamount

ofEUR297kgross,thisresultsinaremuneration

ratioof1:2.9.


Thisremunerationratiowasdeterminedforthefirst

timethisyearsothatnochangesaremadetothe

changesinthisratiocomparedto2016,theprevious

financialyear.

Remuneration of the supervisory board

TheremunerationofthemembersoftheSupervisory

Boardisfixedandindependentoftheresultsofthe

company.Theshareholderdeterminestheremunera-

tionofthemembersoftheSupervisoryBoard,simul-

taneouslywiththeappointment.Theremunerationof

theChairmanoftheSupervisoryBoardamountsto

EUR24,500peryear.Theothermembersreceivea

remunerationofEUR20,000peryear.Allmembersof

theSupervisoryBoardareentitledtoreimbursement

ofexpenses.TheremunerationoftheChairmanofthe

SupervisoryBoarddiffersfromtheothermembersof

theSupervisoryBoardbecauseoftheextratasksofthe

chairman.

Noloans,advancepaymentsorguaranteeswerepro-

videdtothemembersoftheSupervisoryBoardbythe

company.Aliabilityinsurancewastakenoutforthe

membersoftheSupervisoryBoard.

ThetotalremunerationoftheSupervisoryBoardfor

2017isstatedonpage133underKeymanagement.

Utrecht,14March2018

9.5 GRI-index 2017

PwChasperformedanassuranceassignmentaimed

atobtainingalimitedmeasureofassuranceaboutthe

sustainabilityinformationinEBN’s2017annual

report.Forthescopeofthisassuranceassignment,

werefertotheassurancereportoftheindependent

accountantonp.166ofthisreport.


CORE General Standard Disclosures

G4 code Disclosure/Indicator Explanatory notes Reference Page

Strategy and analysis 21

G4-1 CEOStatement Foreword 3

Profile 7

G4-3 Organisation’sname EnergieBeheerNederlandB.V. (EBNB.V.)

Profile 7

G4-4 Primarybrands,productsand/orservices ProfileBusinessmodel

710

G4-5 LocationHeadOffice Utrecht OrganisationchartContactinformation

9177

G4-6 Countrieswheretheorganisationisactive TheNetherlands ProfileBusinessmodel

710

G4-7 Ownershipstructureandlegalform Corporategovernance 74

G4-8 Markets Profile 7

G4-9 Sizeoftheorganisation Keyfigures 6

G4-10 Informationaboutsizeandfeaturesofstaffbase Non-reported:a:Accordingtotypeofemployment

and genderb:Permanentemployees:fulltimeor

part time by genderc:Permanentandtemporary

employeesbygenderd:Regionnotapplicablesincethe

NetherlandsistheworkingareaandtheheadofficeislocatedinUtrecht

e:SoletraderconstructionsdonotapplytoEBN,onlyemploymentrelationships

f: SeasonalworkdoesnotapplytoEBN

KeyfiguresThepeopleofEBNPartially reported: not by gender or employees category. In 2017, EBN examined whether a subdivision is relevant for a, b, and c. There are no relevant differences so that a subdivision has not proved relevant.

653

G4-11 PercentageofemployeesunderCAO NoCAOapplicable

G4-12 Descriptionofthesupplychain Ourpositionintheenergychain 13

G4-13 Significantchangesduringthereportingperiodwithregardtoorganisationsize,structure,ownershipratioorsupplychain

Nosignificantchanges

GRI Index 2017




G4-14 Precautionaryprinciple:whetherandhowthisisapplied Riskmanagement 61

G4-15 Externallydevelopedeconomic,environmentalandsocialcharters,principles,orotherinitiativesthattheorganisationapproves and endorses

EBNasapolicyparticipationisboundbythecharters,principlesandotherinitiativesoftheDutchstate.

G4-16 Participationin(international)associations EBNparticipatesinKVGNintheformof:financial,inputintogovernanceandKVGNworkinggroups

ResultssectionOurstakeholdersInteraction with our stakeholders Substantial contribution is qualitatively expressed in the investment in knowledge and hours

35

50

Materiality and scope

G4-17 Legalentitiesthatarepartofthefinancialreporting(scope) FinancialStatements 100

G4-18 Processcontentprovisionandhowthereportingprinciples areapplied

About this report 92

G4-19 Materialaspects Materialthemes 27

G4-20 Scopeofmaterialaspectswithintheorganisation About this report 92

G4-21 Scopeofmaterialaspectsoutsidetheorganisation Aboutthisreport: Choiceofissues,table

92

G4-22 Effectofrevisedinformationcomparedtopreviousreports Norevisedinformation Aboutthisreport:choiceofissues,table

92

G4-23 Changesthatmayrestrictcomparabilitywithpreviousreports Changesareexplainedinthetextorasafootnotetotable/chart

About this report 92

Stakeholder engagement

G4-24 Listofstakeholders OurstakeholdersAnnex1:TableInteractionwithourstakeholders

155

G4-25 Inventoryandselectionofstakeholders Ourstakeholders 50

G4-26 Howdoestheorganisationinvolvestakeholders,bytype,andhowoften

Annex1:TableInteractionwithourstakeholders

155

G4-27 Themainsubjectsandissuesthathaveemergedthroughtheinvolvementofstakeholdersandhowtheorganisationhasresponded.

SectorDisclosureOil&Gasasksthattheperspectiveoftheindigenouspopulationbeconsidered.InviewoftheworkingareaofEBNNederland,thisdoesnotapply.

Interactionwithourstakeholders,differentdialoguesperstrategicthemeAnnex1:TableInteractionwithourstakeholders

50

155




Reporting parameters

G4-28 Reporting period 1January2017to31December2017

G4-29 Dateofmostrecentreport Yearunderreview2016

G4-30 Reportingcycle Calendaryear

G4-31 Contactinformation Credits 177

G4-32 a.The‘inaccordance’optionthatischosenb.ReferencetoGRIContentIndexc.ReferencetoAssuranceReport

AccordingtotheGRI-G4guidelines

atapplicationlevelCORE

AssurancereportAbout this report

15192

G4-33 Assurancepolicy About this report 92

Governance

G4-34 Governancestructure Corporategovernance 74

Ethics and integrity

G4-56 Internallydevelopedmissions,codesofconduct,declarationsof

principlerelevanttoeconomic,environmentalandsocial

performanceandthestatusofimplementation

Integrity 79


Specific Standard Disclosures

Indicator Description Materiality + definition Demarcation Reference, DMA and performance Page

Economic

Economic performance EBN/O

DMAa.Statewhytheissueismaterialand

theimpactoftheissue.b.Statehowtheorganisationdeals

withthematerialissueanditsimpact.

c. Evaluationofthemanagementapproach

Creationofeconomicvalue BusinessmodelStrategyResultsfor2017RiskmanagementInteractionwithstakeholders

1021356150

G4-EC1Directeconomicvalue

CreationofeconomicvalueOptimisingfinancialresults,suchasnetincome,naturalgasincome,sales,investmentanddepreciation.

FinancialresultsFinancialStatementsSectorDisclosureOil&Gassector:EBNonlymakespaymentstotheDutchState.

47100

Reserves EBN/O





Encouragingeffectivedetectionandextractionofoilandgas

BusinessmodelStrategy Resultsfor2017Interactionwithstakeholders

10213550

OG1Volumeandtypeoftheexpectedandprovenreservesandproduction

EncouragingeffectivedetectionandextractionofoilandgasWorkingtowardsencouragingeffectivedetectionandextractionofoilandgas(includingoptimisationofinfrastructure)throughdeploymentofNOVmanagementand own investigations.

Results2017,paragraphOurDutchGas 35,37




Intellectueel:



withthematerialissueandtheimpact.


GuidingandcoordinatinginnovationGainingandpassingonknowledgeDevelopmentofnewenergy

BusinessmodelStrategy Resultsfor2017Interactionwithstakeholders

10213550

OG2Totalinvestedinrenewableenergy

GuidingandcoordinatinginnovationThesmarterandmoredurabledevelopmentofexistingandnewpotential,byprivateresearchandbyworkingwithpartnersandresearchinstitutions.

EBN Resultsfor2017Qualitatively expressed in the investment in knowledge and hours

35


GainingandaggregatingknowledgeTheactivesharingofknowledgeinpartnershipsandknowledgenetworks,amongothersthroughstudiessuchasBOON,andFocusonEnergy;gainingknowledgefromchainpartnersthroughpartnershipsandknowledgenetworks

EBN/O Resultsfor2017Qualitatively expressed in the investment in knowledge and hours

35


DevelopmentnewenergyGeneratinginsightsintoopportunitiesandpossibilitiesforthedevelopmentofnewenergyandstorage,suchasgeothermalenergy,CAES,andCCS.

EBN/O Results:NewEnergyQualitatively expressed in the investment in knowledge and hours

45

Social: employer

Training and courses





Attractinganddevelopingtalent Businessmodel 10




G4-LA9Averagenumberoftraininghoursperemployee.

AttractinganddevelopingtalentFindingandhiringtalentedemployees,offeringthemgooddevelopmentopportunitiesandinspiring them at EBN.

EBN ThepeopleofEBNPartially reported: not by gender or employee category. In 2017, EBN examined whether a subdivision into gender was relevant. There appeared to be no significant differences as a result of which this subdivision proved irrelevant.

53

G4-LA11Percentageofemployeesthatregularlyhasaperformance/developmentappraisal.

EBN ThepeopleofEBNPartially reported: not by gender or employee category. Since the score for performance interviews is 100%, the breakdown is not relevant. Development interviews normally take place in the summer months of the year, but in the summer of 2017 EBN was in the midst of the reorganisation that became effective from 1/9/2017. As a result, development interviews have not all taken place. A subdivision per employee category or gender is therefore not relevant this year in the area of development interviews.

53





Effectiveadviceandinfluence BusinessmodelInteractionwithstakeholders

1050

Ownindicatorunderdevelopment EffectiveadviceandinfluenceEncouragingemployeestoinfluencetheoperators(throughNOVmanagement),partnersandotherstakeholdersthroughdialogueandadvice.

EBN Reason for omission: in verband met de herziening van de strategische prioriteiten van EBN is er nog geen kwantitatieve indicator beschikbaar. EBN is een betekenisvolle indicator aan het ontwikkelen waarover in 2018 zal worden gerapporteerd.

Social: Society

Local community





SafeguardingexternalsafetySupportforourwork

BusinessmodelStrategyResultsfor2017MainstrategicrisksInteractionwithstakeholders

1021356750




OwnindicatorNumber and severity of the earthquakes

SafeguardingexternalsafetyPromotingagoodsafetyculture,meaningsafetyriskssuchasearthquakes,spillsandexplosionsarelimited.

EBN/O OurDutchGas2017resultsMainstrategicrisks

3767

G4-SO2Activitieswithsignificantandpotentialnegativeimpactonthe localcommunity.

SupportforourworkWorkingonsupportforourwork.PropagatingthesocialresponsibilityofEBNby,amongotherthingsenvironmentalmanagement,andprojectswithinandoutsidethegassector.

EBN/O BusinessmodelStrategyRiskmanagementMainstrategicrisksInteractionwithstakeholders

1021616750





Contributingtotheenergytransition ProfileBusinessmodelStrategyResultsfor2017SocialresultsInteractionwithourstakeholders

71021355050

Ownindicatorunderdevelopment ContributingtotheenergytransitionMakingaconstructivecontributiontotheaccelerationoftheenergytransitionthroughtheuseofknowledgeandexpertiseofthesubsurface.

EBN Resultsfor2017InteractionwithourstakeholdersReason for omission: in view of the revision of EBN’s strategic priorities, no quantitative indicator is yet available. EBN is developing a meaningful indicator that will be reported on in 2018.

3550





Effectivedecommissioningandreuse BusinessmodelStrategyResults2017,ReturntoNatureMainstrategicrisksInteractionwithstakeholders

1021436750

OG11

Numberofsitesthathavebeen

decommissionedorwhere

decommissioninghascommenced.

EffectieveontmantelingenhergebruikFacilitatingandencouragingeffectivereuse anddecommissioningofexistingoilandgasinfrastructure,includingthroughthedevelopmentandimplementationofa masterplan.

EBN/O Results2017,ReturntoNature 43




Millieu




c. Evaluationofthemanagementapproach.

Verduurzamingindewaardeketen BusinessmodelStrategyResultsfor2017SocialresultsSustainability

1021355052

AllenvironmentalindicatorsasstatedintheEBNSustainabilityReport2015-2016*

SustainabilityinthevaluechainWorkingtowardsenvironmentalimpactofgas,includingemissionsandleaks.

O SustainabilityEBNSustainabilityReport2016-2017GRIIndex2016

52

Demarcation

Ownorganisation=EBNOperators=O

*As indicated in the table the EBN Sustainability Report 2016-2017 that is published on the

website is referred to for a number of indicators. This report is not parallel to the financial year.

No assurance has been received on the EBN Sustainability Report 2016-2017.


9.6 10-year key figures

inEURmln 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

numberofEBNparticipationsinjointventures:

-productionlicencesonshore 33 33 33 31 29 27 24 23 22 21

-productionlicencesoffshore 110 109 109 107 106 101 101 103 103 100

-productionlicences 44 46 48 55 56 48 47 48 45 41

sales(blnm3,100%) 39 46 51 66 79 73 72 80 70 73

changein%comparedtopreviousyear(100%) -15 -10 -22 -17 8 1 -10 14 -5 11

-salesGroningen(blnm3,EBNshare) 9 11 12 17 21 19 18 20 15 15

-salessmallfields(blnm3,EBNshare) 7 9 9 10 11 11 12 13 14 15

totalsales(blnm3,EBNshare) 16 20 21 27 32 30 30 33 29 30

averagesellingpriceofgas(€-centsperm335.17MJ/m3) 15,68 13,68 20,26 22,23 25,52 26,76 22,63 18,58 20,72 26,91

salesfrom:

-continuingoperations 3.015 3.094 4.766 6.598 8.809 8.528 7.103 6.486 6.387 8.698

-discontinuedoperations - - - - - - - - - -

totalsales 3.015 3.094 4.766 6.598 8.809 8.528 7.103 6.486 6.387 8.698

changefromcontinuingoperationsin%comparedtopreviousyear -3 -35 -28 -25 3 20 10 2 -27 43

netprofitfrom:

-continuingoperations 556 333 450 1.614 2.327 2.360 2.131 2.076 2.211 3.269

-discontinuedoperations - - - - - - - - - -

totalprofit 556 333 450 1.614 2.327 2.360 2.131 2.076 2.211 3.269

netprofitfromcontinuingactivitiesin%ofsales 18 11 9 24 26 28 30 32 35 38

property,plantandequipment

-capitalexpenditureonshore 25 37 102 290 275 202 228 224 238 129

-capitalexpenditureoffshore 131 244 462 475 377 419 383 383 475 447

totalcapitalexpenditure 156 281 564 765 652 621 611 607 713 576

depreciations 434 490 557 660 652 745 617 499 462 501

impairments 35 299 660 - - - - - - -

shareholder’sequity 217 178 184 199 219 200 204 174 158 160

gearingratio(%) - - 87 90 87 88 91 91 93 91

outsidecapital 4.368 5.458 5.644 5.465 5.309 5.565 5.684 5.146 4.520 5.386


Aquifer

Anundergroundlayerofwater-bearingpermeablerockfromwhichheatcanbe

extracted

CCS

Carboncaptureandstorage.

Corporate Governance Code (old)

CodeofConductforCompanieslistedonthestockexchange.

Corporate Governance Code (new)

TheDutchCorporateGovernanceCodeoftheMonitoringCommittee.

Consortium

Anassociationorcooperationofatemporarynature,setupbyanumberofpartiesto

carryoutaspecificproject.

DAGO

DutchAssociationofGeothermalOperators

Dinantian

TheoldesteraoftheCarboniferous.

Downstream activities

Saleandtransportationofgeologicalresources

DSA

DecommissioningSecurityAgreement

DSMA

DecommissioningSecurity&MonitorAgreement

Energy mix

ProportionofenergyusedintheNetherlandsfromdifferentsourcesofenergy.

E&P

ExplorationandProduction.

EZK

DutchMinistryofEconomicAffairsandClimatePolicy

Gasgebouw

Public-privatecooperationintheGroningenPartnershipandGasTerra.

Gas resources

Subsurfacegasresourcesthatcanbeproduced.

GE

Groningenequivalent(Nm3naturalgaswithcalorificvalueof35.17MJat0degrees

Celsiusand101.325kPa).

Geothermal energy

Thermalenergygeneratedandstoredintheearth.

Green Deal

GreenDealsareagreementsbetweenthenationalgovernmentandotherparties.AGreen

Dealhelpstoimplementsustainableplans.

HR

HumanResources.

ICT

InformationandCommunicationTechnologies.

IFRIC

InternationalFinancialReportingInterpretationCommittee.

IFRS

InternationalFinancialReportingStandards.

IMS

IntegralManagementSystem.

IPO

Interprovincialconsultation

IRO

AssociationoftheIndustrialCouncilforOilandGas

JIP

JointIndustryProject.

KNMI

RoyalDutchMeteorologicalInstitute

KVGN

RoyalAssociationofGasManufacturersintheNetherlands

Maatschap Groningen

JointventureformanagingtheproductionoftheGroningenfield.

Midstream activities

Transportandstorageofgeologicalresources

9.7 Glossary and reference list


Mining Act

DutchActcontainingregulationsgoverningtheexploration,productionandstorageof

minerals.

MOR+SA

AdditionalrevenueschemeforGroningen+Stateshare.

CSR

CorporateSocialResponsibility.

NAM

NederlandseAardolieMaatschappij(DutchoilcompanyinwhichRoyalDutchShelland

ExxonMobilhaveequalshares).

Nm3

Normalcubicmetres;thestandardunitinwhichnaturalgasismeasured.

Nexstep

NationalPlatformforreuseanddecommissioning

NOGEPA

NetherlandsOilandGasExplorationandProductionAssociation.

NOV management

Non-operatedventuremanagement.

ONE B.V.

Oranje-NassauEnergyB.V.

Operating partner

See operator.

Operator

Partyintheproductionprocessthatcarriesoutproductionactivitiesonbehalfofthe

partners.

OvS

CooperationAgreementbetweenEBNandlicenceholder(s)

Sm3

Standardcubicmetre

SodM

StateSupervisionofMines.

Policy participation

ShareholderstatusoftheDutchState.

TNO

NetherlandsOrganisationforAppliedScienceTNO.

Treasury

Managementofacompany’scashandcashequivalents.

Triassic

TheTriassicisageologicperiodthatlastedfromabout252.2to201.3millionyearsago.

Upstream activities

Explorationandproductionofgeologicalresources

TWh

Terawatt hour

VNG

AssociationofDutchMunicipalities

VPB

Corporationtax.

WACC

WeightedAverageCostofCapital

Heat exchanger

Removestheheatfromthewaterandtransfersittothewaterinaheatingnetwork

Zechstein

TheZechsteinortheZechsteinGroupisaunitofrocklayersinthesubstratumoflarge

partsofWesternandCentralEurope.

9.8 Contact information

Didourannualreportgetyou

thinking,raisequestionsorinspire

you?Pleasedonothesitatetocontact

ustoaskquestionsortoexchange

views.

Visiting and postal address

EBN B.V.

Daalsesingel1

3511SVUtrecht

Phone:+31(0)302339001

Fax:+31(0)302339051

Email:[email protected]

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