Statoil’s DevelopmentThe NOC perspective

Berlin, 2 February, 2006

Njål GjedremSpecial AdvisorStatoil

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This is Statoil

• A major oil and gas producer:1.1 million boe per day

• World’s third largest net seller of crude oil

• Markets two-thirds of all Norwegian gas to European customers

• Largest retailer of oil products in Scandinavia

• A group with clear growth targets

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This is Statoil

In Salah gas treatment plant in Algeria

• A highly competent technology company

• Operations in 30 countries

• Annual turnover of NOK 306 billion (2004)

• About 24,000 employees

• Established in 1972 Partially privatised in 2001

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Operations in 30 countries

Saudi Arabia

Turkey

Kazakhstan

United ArabEmirates

Algeria

Denmark

Nigeria

Norway

Brazil

IrelandBelgium

France

Sweden

UK

PolandGermany

Russia

Azerbaijan

Angola

Mexico

USA

Singapore

Iran

Lithuania

LatviaEstonia

Venezuela

Libya ChinaQatar

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Estimated market position in 2007 based on current

contracts*

*Statoil incl. SDFI

Natural gas:Solid market position• Rising exports and

big reserves close to the main market

• Covers 10 per cent of European consumption

• Delivers to the USA and 13 countries in Europe

• Gas deliveries from Algeria and Azerbaijan

Statoil of total (%)

Country

GermanyFranceBelgium

Czech Rep

Italy<5%Turkey

IrelandAustria

10-15%NetherlandsSpain5-10%UK

~20%

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Harstad

Stjørdal

Bergen

StavangerCore areas

OfficesFields operatedby Statoil

Largest operator on the NCS

• 48% of Norway’soil production

• 82% of Norway’sgas production

• 22 oil and gas fields

Halten/NordlandGrowth area

TampenMatured area

Troll/SleipnerGas machine

A world-class oil and gas province Statoil operates:

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Gas transport and terminals

• Export pipelines to Germany, Belgium, France and the UK

• High regularity and great flexibility

• Statoil is technical operator for 6,000kmof pipeline

Nyhamna

Europipe II

Europipe I

Norpipe

Emden

Teesside

ÅTS

Norne

Åsgard

Haltenpipe

Heidrun

Franpipe

Zeebrugge

Zeepipe I

St Fergus

Vesterled

Frigg

Statfjord

Kårstø

Kollsnes

Melkøya

Snøhvit

Ormen Lange

Easington

Langeled

Ekofisk

Sleipner

Troll

Dunkerque

Kristin

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The Norwegian objective in 1972

• Petroleum resources belong to the nation

• Development of the resources must benefit the society as a whole

• National involvement, but strong international participation

• Resource management

• Technology and competence

• Three national oil companies

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The 10 petroleum ”commandments”

Principles laid down by Parliament in 1971:• Secure national control

• National independence in supply of oil

• Develop a petroleum-based onshore industry

• Secure the environment and existing industries

• Burning of gas on the NCS not acceptable

• Petroleum to be transported ashore to Norway from the offshore fields

• The state an active player promoting national interestsin resource management

• A state oil company to take care of the state’s businessinterests and to cooperate with Norwegian and foreign companies

• Special requirements for petroleum activies in Northern Norway

• Major petroleum dicoveries will introduce new challenges for Norwegian foreign policy

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Arm’s length to the Minister of Petroleum and Energy

The national oil company goalsStatoil was established as an instrument in 1972

• To secure national control of the energy resources

• To become a fully integrated, commercial and operating oil company

• To develop a strong national support industry

• Board of non-executive directors

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Statoil through changing environments

Yearly production 2004: 1005 mboepd

Target 2007: 1400 mboepd

Statoil establisheda national project

Domestic focus

Commercialisation

Designing a new industry

Gradually increasingCompetitive exposure

A competencecompany

1972 1985

Focus on Scandinavia

Organizational and competence development

Delivery

Profitability and shareholder return

Focus onperformance

2001

Strategic alliance

with BP

Internationalisation

1990

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Striking the right balanceNational versus international involvement

• Encourage partnerships between foreign and domestic companies

– Diversity in participation

– Long term perspectives

• Active Norwegian involvement after the first discoveries

– Statoil 100% state-owned

– Hydro 51% state-owned

– Saga 100% private

• Transfer of technology requires involvement

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• Statoil was organised as a 100% shareholding company – where the government owned the shares, but the company was independent of the annual state budgets

The initial “Norwegian Model”A structure for clear responsibilities

Statoil

NPDNorwegian Petroleum

Directorate

MPEMinistry of Petroleum and

Energy

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Evolution of the ownership modelFrom policy instrument to listed industry engine

Government Government

The original Norwegian model

Changes in 2001

SDFI*)

100 per cent

82 per cent

100 per cent

*) State’s Direct Financial Interest.

100 per cent

• Separation of assets between Statoil and SDFI

• 2001: Listed in Oslo and New York

• 2005: Government stake down to 70 per cent

MPEMinistry

NPDDirectorate

Policydesign

Monitoringand regulation

Commercialoperation

Changes in 1985

Rationale:

Statoil’s dominating role in the Norwegian economy

Rationale:

Access to capital markets and new roads to growth

More loosely linked to Norwegian politics

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Stronger portfolio, better performancePreparations started internally

Portfoliorestructuring

Market valueBook value

Bokført verdi

Focused growth

Costreduction

Management and control

• High-grading the portfolio

– 1999-2001: 21 per cent ofcapital employed divested

– 2003: Navion divested

– 2005: Borealis divested

– Strategic acquisitions

• Improvement efforts

– 1999-2001: NOK 4.4 bn

– Another 3.1 bn by 2004

– Performance managementsystems implemented

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Privatisation process and new industrial landscape

1 Equity story

2 Marketing

3 Performance

Valuation/share price

2000 2001 2002 2003

Preparations Marketing IPO Investor relations

• Integrated oil and gas company

• Large operator on the NCS

• Private owners

• International activities

• Full exposure to competition

• Manager of the State’s Direct Financial Interests (SDFI)

• No operatorships

• 100 per cent state-owned

• Operator for the gas grid on the NCS

• Capacity administrator

• Balance the interests of all shippers

• 100 per cent state-owned

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The way forward:A globally competitive company

Strictly managed, prudently controlled:

Board of directors

General meeting

President and CEO Corporateaudit

Externalauditor

Corporate assembly

Robust industrial platform:

Success factors:

•Sound policies, regulations and governance

•A large resource and value potential

•Flexible and reliable gas supply

•Courageous technology attitude

•Competent and motivated people

•High HSE standards and performance

Shareholdervalue

Shareholdervalue

Creditors

Partners

Suppliers

The public

Customers

NGOsEmployees

Performance contracts

• Strategic direction• Balanced

scorecard• Key results• Incentive-based

remuneration

Performance contracts

• Strategic direction• Balanced

scorecard• Key results• Incentive-based

remuneration

Corporate governance:

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Building future growthInternational E&P

0

50

100

150

200

250

300

2001 2004 2007 mål

Azerbaijan

•In Salah regularity 99%

•Hassi Mouinacommenced seismic, first expl well planned for 4Q 05

Algeria

•Kizomba B on stream

•Juno I discovery (block 31)

Angola

Gulf of Mexico

•BTC linefill started

•ACG West Azeri platform jacket installed

China

•Ballena 1 well on Plataforma Deltana suspended

•Sincor royalty issue

Venezuela •Lufeng production resumed

•USD 2 bnacquisition of GoM deepwater portfolio completed

•3 wells being drilled in 2005

Barents Sea•Shtokman development proposal submitted to Gazprom

•Collaboration agreement with Gazprom and Hydro Kazakhstan

•MoU with KazMunayGaz on joint exploration of Abay in Caspian

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New leadership and operating model

People &Leadership

”Licenceto operate”

Results

• New operating model to balanceperformance and health

• Corporate initiatives to drive step-change in performance

• New managementteams

• Clear corporatevalues

• Sound operating principles

• Strengthen relationsbetween companyand society