About Petoro

Petoro is a state-owned limited company which manages the SDFI in the Norwegian oil and gas sector. These holdings comprise a third of Norway’s oil and gas reserves and associated facilities. Petoro’s formal role as the licensee acting on behalf of the state is described in this two-minute film. Animation on Petoro

Main duties

Three principal duties have been assigned to Petoro by the Ministry of Petroleum and Energy: management of the state’s participatory interests in the joint ventures where the state has such interests at any given time, monitoring Statoil’s marketing and sale of the petroleum produced from the SDFI, pursuant to the marketing and sale instruction issued to Statoil, and financial management, including preparation of budgets and keeping of accounts, for the SDFI.

Management

Key elements in creating and securing value for the state is achieving optimum recovery of resources within each licence, and ensuring that the government obtains its rightful share of this value. Petoro does this through active participation in priority licences and in every phase from exploration to development and  operation.

Operations in a licence – which contains a producing field, for example – are run through a committee structure. This comprises a management committee, with technical and financial/commercial sub-committees. Technical and commercial matters are dealt with in the sub-committees, and the conclusions submitted to the management committee.
Oil and gas reserves, as well as a substantial infrastructure of platforms, subsea installations and pipelines, in the Tampen area of the North Sea are among the most important assets in the SDFI portfolio. (Artist’s impression of the Snorre, Vigdis and Tordis fields, Statoil)
The latter has an important job to do in addressing forward-looking and strategic issues through long-term budgets and work programmes. Adopted on 1 January 2007, a general agreement on licence governance provides good guidance on the way work and decisions in these partnerships should be pursued. Petoro played a leading role in work on establishing this accord, which has given the licensees (partners) greater influence.
     
Responsibility for day-to-day operations rests with the operator, who ensures that the decisions taken are implemented.
     
The relationship between management committee and operator has similarities with that between the board of directors and executive management in a company. However, the partners in a licence do considerably more independent technical and financial work on and assessments of issues under consideration in the management committee than is normally done by a company’s non-executive directors.
     
Petoro is responsible for the SDFI in a large number of production licences, which collectively represent a third of Norway’s oil and gas reserves. The company’s attention is concentrated on the partnerships which represent the biggest value-creation potential, and where it can exert the greatest influence.

Read more in the latest directors’ report

Monitoring

As the majority shareholder in Statoil and sole owner of Petoro/the SDFI, the government pursues a common ownership strategy through its marketing and sale instruction. This is issued by the Ministry of Petroleum and Energy to Statoil. Pursuant to the instruction, the latter undertakes the marketing and sale of the state’s petroleum together with its own production. The object of the instruction is to secure the highest possible value for petroleum owned by Statoil and the state, and to ensure the rightful allocation of overall value creation.

The marketing and sale process differs between oil and gas. All oil and natural gas liquids from the SDFI portfolio are sold to Statoil at market price. However, all natural gas from the SDFI portfolio is sold by Statoil together with its own output as a unified portfolio.
     
Petoro is responsible for checking that Statoil’s marketing and sale of the SDFI’s petroleum is conducted in accordance with the object of the marketing and sale instruction. The company’s attention in this context is concentrated on marketing/sale strategy and risk management, and on assessing individual issues with great significance for value as well as matters of principle or related to incentives.

Read more in the latest directors’ report
 
Klikk på bildet for større kart. (Illustrasjon: Gassco)
Klikk på bildet for større kart. (Illustrasjon: Gassco)

Financial management

This duty relates to financial management of Petoro’s operations and the portfolio of oil, gas and facilities. That includes the preparation of accounts for the SDFI and Petoro, following up budgets and forecasts, and monitoring audit activities. Financial management of the SDFI portfolio also embraces commercial development, portfolio adjustments and decision suppor

Financial statements for the SDFI are prepared in accordance with Norwegian accounting legislation and the government’s cash accounting principle. Petoro’s management of the portfolio is subject to the accounting regulations for the government.
     

Read more in the latest directors’ report