Petoro’s main duties are specified in Chapter 11 of the Petroleum Act and the company’s articles of association, and are defined in more detail by the Ministry of Petroleum and Energy in the annual letter of assignment.
The objective of the company is, on behalf of the state and at the expense and risk of the state, to be responsible for the commercial aspects related to the State’s Direct Financial Involvement in petroleum activities on the Norwegian Continental Shelf (NCS), and associated activities.
The company has three main duties:
- Management of the state’s participating interests in the joint ventures where the state has such interests at any given time
- Monitoring Equinor’s marketing and sale of petroleum produced from the state’s direct participating interests, pursuant to the marketing and sale instruction issued to Equinor.
- Financial management, which includes preparing and following up budgets as well as accounting and financial reporting, on behalf of the state’s direct participating interests.
Petoro’s operations are subject to the Norwegian Limited Liability Companies Act and the Norwegian Petroleum Act, as well as the Regulations on Financial Management in Central Government — including the rules on appropriations and accounting. Its management of the SDFI’s activities is governed by the Ministry of Petroleum and Energy’s instructions for financial management of the SDFI and the annual letter of assignment. In addition, the company’s articles of association, strategy, values and guidelines on business ethics, including its guidelines for exercising the company’s CSR, provide guidance for exercising Petoro’s activities.
Petoro’s strategy are based on the company’s vision and overall goals. The objective is to create the greatest possible value and achieve the highest possible income to the government from the state’s direct participating interests in Norwegian petroleum activities (SDFI). The company’s vision is to be a driving force on the Norwegian shelf. The consideration for safety and climate makes up an important framework for the strategy.
Each primary task is broken down into defined strategic areas and strategic prioritisations. Strategic areas signify which areas are most important to influence in order to realise the overall goals. Strategic prioritisations elaborate on which key measures must be developed to realise the strategy.
The tools to realise the company’s strategy are based on the company’s systems, structure, resources and competence. These tools will be shared and applied across the strategies for the company’s three primary tasks:
- future-oriented and flexible organisation
- values and risk-based resource management
- project-oriented in-depth efforts
Petoro’s core values are included in the strategy.
The Strategy for Safeguarding Participating Interests takes a point of departure in the fact that the portfolio’s competitiveness is decisive for both the creation and securing of values. The portfolio’s mature fields have the greatest value potential and wells are identified as the most important area for increasing revenue moving forward.
Strategic prioritisations are chosen based on the greatest value potential and Petoro’s opportunity to exert influence. The following prioritisations have been selected across the portfolio: Well maturation and drilling efficiency, Optimising the recovery strategy, Field development and further development, as well as Efficient operations. A decision has also been made to particularly emphasise the opportunities inherent in digitalisation within these four areas.
Petoro recognises that climate challenges make it necessary to restrict man-made climate impact. The company wants to contribute to ensuring that the oil and gas industry on the Norwegian Shelf leads the way in addressing climate challenges. Climate is an integrated part of Petoro’s governance.
Petoro is the licensee for the state’s portfolio on the NCS, with the same rights and obligations as other licensees. The scope of the SDFI portfolio gives Petoro the overview and insight to be a driving force on the Norwegian Shelf. Through focused follow-up, supported by in-depth professional commitment, Petoro works to reinforce value creation opportunities with emphasis on long-term business development. Petoro’s follow-up of activities in fields/licences is differentiated on the basis of its capacity and the commitment required to perform its role. The company endeavours to achieve good governance in the joint ventures, and cooperates with other operators and partners on further development of good performance-management processes in selected licences.
Pursuant to the agreements for petroleum activities, the commercial information Petoro receives is subject to confidentiality. The company has internal instructions for dealing with inside information received by Petoro. These apply to the company’s directors, employees, auditor, advisers or others in a relationship with the company who receive information that is not publicly known and/or expressly defined as “inside information” within the meaning of the Norwegian Securities Trading Act. Information that may have an impact on the stock market must be treated as “inside information”.
A dedicated system has also been established for approving external directorships held by employees. Employees must ensure that their ownership of shares does not create any conflict between their personal interests and management of the state’s participating interests or the interests of Petoro AS. Senior employees (President and CEO and employees who report directly to the President and CEO) are prohibited from owning shares in licensee companies.
Petoro presents separate accounts for SDFI portfolio transactions, which form part of the government’s accounts. Cash flows generated from the portfolio are transferred to the state’s own accounts with Norges Bank.