Financial statements 2002 - Statoil

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Financial statements 2002 - Statoil

Financial statements 2002

Norwegian accounting principles


Contents

The Statoil group – NGAAP 1

Notes 6

Statoil ASA – NGAAP 29

Notes 33

Recommendation

of the corporate assembly 46

Report of

independent auditors 46

The front-cover picture was

taken by photographer Guri

Dahl. She met Statoil personnel

in their working environment on

the Sleipner field.


Statoil group – NGAAP

Statoil group – NGAAP notes Statoil ASA – NGAAP Statoil ASA – NGAAP notes

Statoil group – NGAAP

CONSOLIDATED STATEMENTS OF INCOME – NGAAP

To the Annual

General Meeting

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) NOTE 2002 2001 2000

Sales 3 242,507 223,132 208,118

Equity in net income of affiliates 8 366 439 487

Other income 4 1,270 4,810 70

Total revenues 244,143 228,381 208,675

Cost of goods sold (147,867) (130,300) (126,405)

Operating expenses (28,603) (27,334) (23,593)

Selling, general and administrative expenses (5,514) (4,292) (3,924)

Depreciation, depletion and amortization 5, 10 (16,860) (16,292) (11,395)

Exploration expenses 10 (2,195) (2,584) (2,007)

Total expenses before financial items (201,039) (180,802) (167,324)

Income before financial items, income taxes and minority interest 43,104 47,579 41,351

Net financial items 12 8,672 (105) (3,280)

Income before income taxes and minority interest 51,776 47,474 38,071

Income taxes 13 (35,246) (32,159) (26,196)

Minority interest (153) (488) (540)

Net income 16,377 14,827 11,335

Net income per common share 7.56 7.14 5.74

Diluted net income per common share 7.56 7.14 5.74

Weighted average number of ordinary shares outstanding 2,165,422,239 2,076,180,942 1,975,885,600

STATOIL 2002 1


Statoil group – NGAAP

2

STATOIL 2002

Statoil group – NGAAP notes Statoil ASA – NGAAP Statoil ASA – NGAAP notes

CONSOLIDATED BALANCE SHEET – NGAAP

To the Annual

General Meeting

AT DECEMBER 31,

(IN NOK MILLION) NOTE 2002 2001

ASSETS

Net property, plant and equipment 10 123,261 126,296

Long-term receivables 17, 22 7,138 7,166

Long-term investments 9 6,216 6,543

Investments in affiliates 8 9,507 9,829

Total non-current assets 146,122 149,834

Inventories 7 6,257 6,079

Accounts receivable 11 32,057 26,208

Accounts receivable - related parties 22 1,893 1,531

Prepaid expenses and other current assets 2,630 6,794

Total inventories and accounts receivables 42,837 40,612

Short-term investments 9 5,267 2,063

Cash and cash equivalents 6,702 4,395

Cash, cash equivalents and short-term investments 11,969 6,458

Total current assets 54,806 47,070

TOTAL ASSETS 200,928 196,904


Statoil group – NGAAP

Statoil group – NGAAP notes Statoil ASA – NGAAP Statoil ASA – NGAAP notes

CONSOLIDATED BALANCE SHEET – NGAAP

To the Annual

General Meeting

AT DECEMBER 31,

(IN NOK MILLION) NOTE 2002 2001

EQUITY AND LIABILITIES

Common stock (NOK 2.50 nominal value), 2,189,585,600

shares authorized and issued 5,474 5,474

Treasury shares, 23,441,974 and 25,000,000 shares (59) (63)

Additional paid-in capital 12,418 12,418

Paid-in capital 17,833 17,829

Retained earnings 33,200 28,360

Minority interest in subsidiaries 1,550 1,496

Total equity 23 52,583 47,685

Deferred income taxes 13 43,126 41,210

Other liabilities 17, 18 11,282 10,547

Long-term debt 15 30,523 36,183

Total long-term liabilities 84,931 87,940

Short-term debt 14 4,323 6,613

Accounts payable 19,603 10,970

Accounts payable - related party 22 5,649 10,164

Withheld, excise and other taxes 3,591 3,052

Income taxes payable 13 18,358 16,618

Accrued liabilities 5,608 7,693

Dividend payable 6,282 6,169

Total current liabilities 63,414 61,279

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 200,928 196,904

STATOIL 2002 3


Statoil group – NGAAP

4

STATOIL 2002

Statoil group – NGAAP notes Statoil ASA – NGAAP Statoil ASA – NGAAP notes

CONSOLIDATED STATEMENTS OF CASH FLOW – NGAAP

To the Annual

General Meeting

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) 2002 2001

OPERATING ACTIVITIES

Consolidated net income

Adjustments to reconcile net income to net cash flows provided by operating activities:

16,377 14,827

Minority interest in income 153 488

Depreciation, depletion and amortization 16,860 16,292

Exploration cost written off 554 935

(Gains) losses on foreign currency transactions (8,771) 180

Deferred taxes 1,538 474

(Gains) losses on sales of assets and other items

Changes in working capital (other than cash):

(1,589) (4,982)

• (Increase) decrease in inventories (178) (137)

• (Increase) decrease in short-term investments (6,211) 1,794

• (Increase) decrease in accounts receivables 4,684 4,516

• (Increase) decrease in other receivables (3,204) 245

• Increase (decrease) in accounts payable 4,118 (6,173)

• Increase (decrease) in other payables (955) (720)

Increase (decrease) in other non-current obligations 647 2,065

Cash flows provided by operating activities 24,023 29,804

INVESTING ACTIVITIES

Additions to property, plant and equipment (17,907) (16,577)

Exploration expenditures capitalized (652) (576)

Change in long-term loans granted and other long-term items (1,495) (261)

Proceeds from sale of assets 3,298 5,115

Cash flows used in investing activities (16,756) (12,299)


Statoil group – NGAAP

Statoil group – NGAAP notes Statoil ASA – NGAAP Statoil ASA – NGAAP notes

CONSOLIDATED STATEMENTS OF CASH FLOW – NGAAP

To the Annual

General Meeting

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) 2002 2001

FINANCING ACTIVITIES

New long-term borrowings 5,396 9,609

Repayment of long-term borrowings (4,831) (4,677)

Amounts paid to minority shareholders (173) (1,878)

Ordinary dividend paid (6,169) (5,668)

Amounts paid to shareholder, related to SDFI properities 0 (40,788)

Capital contribution related to SDFI properties 0 8,460

Net proceeds from issuance of new shares 0 12,890

Net short-term borrowings, bank overdrafts and other 1,146 (588)

Cash flows used in financing activities (4,631) (22,640)

Net increase (decrease) in cash and cash equivalents 2,636 (5,135)

Effect of exchange rate changes on cash and cash equivalents (329) (215)

Cash and cash equivalents at beginning of year 4,395 9,745

Cash and cash equivalents at end of year 6,702 4,395

Interest paid 1,782 3,793

Taxes paid 31,634 33,320

In the cash flow statement the cash settlement for the transferred SDFI assets is classified as dividend under financing activities, and not as investing

activity. See note 1 for more details on the SDFI transaction.

STATOIL 2002 5


Statoil group – NGAAP

6

1. Organization and Basis of Presentation

Statoil ASA was founded in 1972, as a 100% Norwegian State-owned company. Statoil’s business consists principally of the exploration,

production, transportation, refining and marketing of petroleum and petroleum-derived products. In 1985, the Norwegian State transferred

certain properties from Statoil to the State’s direct financial interest (SDFI), which were also 100% owned by the Norwegian State.

In conjunction with a partial privatization of Statoil in June 2001, the Norwegian State restructured its holdings in oil and gas properties on the

Norwegian Continental Shelf. In this restructuring, the Norwegian State transferred to Statoil certain SDFI properties with a book value of

approximately NOK 30 billion, in consideration for which NOK 38.6 billion in cash plus interest and currency fluctuation from the valuation date

of NOK 2.2 billion (NOK 0.7 billion after tax), and certain pipeline and other assets with a net book value of NOK 1.5 billion were transferred to

the Norwegian State. The transaction was completed June 1, 2001 with a valuation date of January 1, 2001 with the exception of the sale of an

interest in the Mongstad terminal which had a valuation date of June 1, 2001.

The total amount paid to the Norwegian State was financed through a public offering of shares for NOK 12.9 billion, issuance of new debt of

NOK 9 billion and the remainder from existing cash and short term borrowings.

The transfers of properties from the SDFI have been accounted for as transactions among entities under common control and, accordingly, these

properties have been combined with those of Statoil at their historical book value with effect from June 1, 2001. However, certain adjustments

have been made to the carrying value of the properties transferred. These adjustments primarily relate to imputing of capitalized interest in the

same manner as if the properties transferred to Statoil had been Statoil's from inception. The cash payment and net book value of properties

transferred to the Norwegian State in excess of the net book value of the properties transferred to Statoil, is shown as a dividend. The final cash

payment is contingent upon review by the Norwegian State, which is expected to be completed in the first half of 2003. The adjustment to the

cash payment, if any, will be recorded as a capital contribution or dividend as applicable.

From June 2001, Statoil no longer acts as an agent to sell SDFI oil production to third parties. As such all purchases and sales of SDFI oil

production are recorded as Cost of goods sold and Sales, respectively, whereas before, the net result of any trading activity was included in Sales.

Certain reclassifications have been made to prior periods’ figures to be consistent with current period’s presentation.

2. Summary of Significant Accounting Policies

The consolidated financial statements of Statoil ASA and its subsidiaries (the Company or the group) are prepared in accordance with Norwegian

generally accepted accounting principles (NGAAP). For a reconciliation to United States generally accepted accounting principles (USGAAP) see

note 25.

Consolidation

The consolidated financial statements include the accounts of Statoil ASA and subsidiary companies owned directly or indirectly more than 50%.

Inter-company transactions and balances have been eliminated. Investments in companies in which Statoil does not have control, but has the

ability to exercise significant influence over operating and financial policies (generally 20 to 50% ownership), are accounted for by the equity

method. Undivided interests in joint ventures in the oil and gas business, including pipeline transportation, are consolidated on a pro rata basis.

Foreign currency translation

Each foreign entity’s financial statements are prepared in the currency in which that entity primarily conducts its business (the functional

currency). For most of Statoil’s foreign subsidiaries the local currency is the functional currency, with the exception of certain upstream

subsidiaries, where the US dollar is the functional currency.

When translating foreign functional currency financial statements to Norwegian kroner, year-end rates are applied to asset and liability accounts,

whereas average annual rates are applied to income statement accounts. Adjustments resulting from this process are included in shareholders’

equity, and do not affect net income.

Transactions denominated in currencies other than the entity’s functional currency are remeasured into the functional currency using current

exchange rates. Gains or losses from this remeasurement are included in net income.

Revenue recognition

Revenues associated with sales and transportation of crude oil, natural gas, petroleum and chemical products and other merchandise are

recorded when title passes to the customer at the point of delivery of the goods based on the contractual terms of the agreements. Revenue is

recorded net of customs, excise taxes and royalties paid in kind on petroleum products. Revenues from the production of oil and gas properties

in which Statoil has interests with other companies are recorded on the basis of sales to customers. There are no significant differences between

these sales and Statoil’s share of production.

STATOIL 2002

Statoil group – NGAAP notes

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

To the Annual

General Meeting


Statoil group – NGAAP

Statoil group – NGAAP notes

Cash and cash equivalents

Cash and cash equivalents include cash, bank deposits and all other monetary instruments with original maturities of three months or less.

Short-term investments

Short-term investments include bank deposits and all other monetary instruments and marketable equity and debt securities with a maturity of

between three and twelve months at the date of purchase. The portfolios of securities are considered trading securities and are valued at fair

value (market). The resulting unrealized holding gains and losses are included in financial income and expense. Investment income is recorded

when earned.

Inventories

Inventories are valued at the lower of cost or market, using the first-in, first-out (FIFO) method.

Use of estimates

Preparation of the financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets,

liabilities, revenues and expenses as well as disclosures of contingencies. Actual results may ultimately differ from the estimates and assumptions

used.

The nature of Statoil’s operations, and the many countries in which it operates, are subject to changing economic, regulatory and political

conditions. Statoil does not believe it is vulnerable to the risk of a near-term severe impact as a result of any concentration of its activities.

Property, plant and equipment

Property, plant and equipment are carried at historical cost less accumulated depreciation, depletion and amortization. Expenditures for

significant renewals and improvements are capitalized. Ordinary maintenance and repairs are charged against income when performed.

Provisions are made for costs related to periodic maintenance programs.

Depreciation of production installations and field-dedicated transport systems for oil and gas is calculated using the unit of production method

based on proved reserves expected to be recovered during the concession period. Ordinary depreciation of transport systems used by several

fields and of other assets is calculated on the basis of their economic life expectancy, using the straight-line method. The economic life of such

transport systems is normally the production period of the related fields, limited by the concession period. Straight-line depreciation of other

assets is based on the following estimated useful lives:

Machinery and equipment 5 — 10 years

Production plants onshore 15 — 20 years

Buildings 20 — 25 years

Vessels 20 — 25 years

Goodwill 5 — 20 years

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

Oil and gas accounting

Statoil uses the successful efforts method of accounting for oil and gas producing activities. Costs to acquire mineral interests in oil and gas

properties, to drill and equip exploratory wells that find proved reserves, and to drill and equip development wells are capitalized. Costs to drill

exploratory wells that do not find proved reserves, and geological and geophysical and other exploration costs are expensed. Pre-production

costs are expensed as incurred.

Unproved oil and gas properties are periodically assessed on a property-by-property basis, and a loss is recognized to the extent, if any, that the

cost of the property has been impaired. Capitalized costs of producing oil and gas properties are depreciated and depleted by the unit of

production method.

Impairment of long-lived assets

Long-lived assets, identifiable intangible assets and goodwill, are written down when events or a change in circumstances during the year

indicate that their carrying amount may not be recoverable.

Impairment is determined for each autonomous group of assets (oil and gas fields or licenses, or independent operating units) by comparing

their carrying value with the undiscounted cash flows they are expected to generate based upon management’s expectations of future economic

and operating conditions.

Should the above comparison indicate that an asset is impaired, the asset is written down to fair value, generally determined based on

discounted cash flows.

To the Annual

General Meeting

STATOIL 2002 7


Statoil group – NGAAP

8

Decommissioning and removal liabilities

The estimated costs of decommissioning and removal of major producing facilities are accrued using the unit-of-production method based on

proved reserves expected to be recovered over the concession period. These costs represent the estimated future undiscounted costs of

decommissioning and removal based on existing regulations and technology.

Leased assets

Material capital leases, which provide Statoil with substantially all the rights and obligations of ownership, are classified as assets under Property,

plant and equipment and as liabilities under Long-term debt valued at the present value of minimum lease payments. The assets are

subsequently depreciated and the liability is reduced for lease payments less the effective interest expense.

Statoil accrues for expected losses between fixed-price drilling rig contract rates and estimated sub-contract rates for excess rig capacity.

Research and development

Research and development costs are expensed when incurred.

Transactions with the Norwegian State

Statoil markets and sells the Norwegian State’s share of oil and gas production from the Norwegian continental shelf (NCS). From June 2001,

Statoil no longer acts as an agent to sell SDFI oil production to third parties. As such all purchases and sales of SDFI oil production are recorded

as Cost of goods sold and Sales, respectively, whereas before, the net result of any trading activity was included in Sales.

All oil received by the Norwegian State as royalty in kind from fields on the NCS is purchased by Statoil. Statoil includes the costs of purchase

and proceeds from the sale of this royalty oil in its Cost of goods sold and Sales respectively.

Income taxes

Deferred income tax expense is calculated using the liability method. Under this method, deferred tax assets and liabilities are determined by

applying the enacted statutory tax rates applicable to future years to the temporary differences between the carrying values of assets and

liabilities for financial reporting and their tax basis. Deferred income tax expense is the change during the year in the deferred tax assets and

liabilities relating to the operations during the year. Effects of changes in tax laws and tax rates are recognized at the date the tax law changes.

Derivative financial instruments and hedging activities

The following accounting policies are applied for the principal financial instruments:

• Currency swap agreements

For long-term debt exchanged from the original foreign currency to another (open) currency at an agreed rate of exchange, the open

currency position is applied when translating the debt to NOK.

• Forward currency contracts

Unrealized gains or losses on hedging contracts are offset against losses or gains on the items hedged. The interest element is accrued and

amortized over the contract period. Unrealized gains or losses on trading contracts are recorded in the income statement as incurred.

• Interest swap agreements

The net effect of income and expenses related to interest swap agreements is allocated over the contract period.

STATOIL 2002

Statoil group – NGAAP notes

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

To the Annual

General Meeting


Statoil group – NGAAP

Statoil group – NGAAP notes

3. Segment and geographic information

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

Statoil operates in four segments - Exploration and Production Norway, International Exploration and Production, Natural Gas and Manufacturing

and Marketing.

Operating segments are determined based on differences in the nature of their operations, geographic location and internal management reporting.

The composition of segments and measure of segment profit are consistent with that used by management in making strategic decisions. The

accounting policies of the reportable segments are the same as those described in the Summary of Significant Accounting Policies. Statoil

evaluates performance and allocates resources based on segment net income, which is, net income before financial items and minority interest.

Segment data as of and for the years ended December 31, 2002, 2001 and 2000 is presented below:

To the Annual

General Meeting

EXPLORATION INTERNATIONAL

AND EXPLORATION MANUFACTURING

PRODUCTION AND NATURAL AND OTHER AND

(IN NOK MILLION) NORWAY PRODUCTION GAS MARKETING ELIMINATIONS TOTAL

Year ended December 31, 2002

Revenues third party 1,818 5,749 24,351 210,757 1,102 243,777

Revenues inter-segment 54,585 1,020 168 194 (55,967) 0

Income (loss) from equity investments (1) 0 132 305 (70) 366

Total revenues 56,402 6,769 24,651 211,256 (54,935) 244,143

Depreciation, depletion and amortization 11,901 2,355 592 1,646 366 16,860

Income before financial items,

income taxes and minority interest 31,535 1,086 9,033 1,787 (337) 43,104

Segment income taxes (23,355) (381) (6,539) (359) (110) (30,744)

Segment net income 8,180 705 2,494 1,428 (447) 12,360

Year ended December 31, 2001

Revenues third party 3,516 5,881 20,081 197,047 1,417 227,942

Revenues inter-segment 51,724 1,767 32 936 (54,459) 0

Income (loss) from equity investments 120 0 135 187 (3) 439

Total revenues 55,360 7,648 20,248 198,170 (53,045) 228,381

Depreciation, depletion and amortization 10,111 3,371 630 1,818 362 16,292

Income before financial items,

income taxes and minority interest 33,854 1,246 8,525 3,917 37 47,579

Segment income taxes (24,426) (372) (6,059) (1,136) (13) (32,006)

Segment net income 9,428 874 2,466 2,781 24 15,573

STATOIL 2002 9


Statoil group – NGAAP

10

EXPLORATION INTERNATIONAL

AND EXPLORATION MANUFACTURING

PRODUCTION AND NATURAL AND OTHER AND

(IN NOK MILLION) NORWAY PRODUCTION GAS MARKETING ELIMINATIONS TOTAL

Year ended December 31, 2000

Revenues third party 1,419 6,353 14,047 185,467 902 208,188

Revenues inter-segment 43,656 2,752 8 413 (46,829) 0

Income (loss) from equity investments 106 (33) 77 286 51 487

Total revenues 45,181 9,072 14,132 186,166 (45,876) 208,675

Depreciation, depletion and amortization 6,993 1,704 663 1,709 326 11,395

Income before financial items,

income taxes and minority interest 29,411 818 6,096 4,998 28 41,351

Segment income taxes (22,307) (227) (4,230) (1,403) 6 (28,161)

Segment net income 7,104 591 1,866 3,595 34 13,190

Borrowings are managed at a corporate level and interest expense is not allocated to segments. Income tax is calculated on income before

financial items and minority interest. Additionally, income tax benefit on segments with net losses is not recorded. As such, segment income tax

and net income can be reconciled to income taxes and net income per the Consolidated Statements of Income as follows:

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) 2002 2001 2000

Segment net income 12,360 15,573 13,190

Net financial items 8,672 (105) (3,280)

Tax on financial items and other tax adjustments (4,502) (153) 1,965

Minority interest (153) (488) (540)

Net income 16,377 14,827 11,335

Segment income taxes 30,744 32,006 28,161

Tax on financial items and other tax adjustments 4,502 153 (1,965)

Income taxes 35,246 32,159 26,196

The Exploration and Production Norway and International Exploration and Production segments explore for, develop and produce crude oil and

natural gas, and extract natural gas liquids, sulfur and carbon dioxide. The Natural Gas segment transports and markets natural gas and natural

gas products. Manufacturing and Marketing is responsible for petroleum refining operations and the marketing of all refined petroleum products

except gas.

Inter-segment revenues are sales to other business segments within Statoil and are at estimated market prices. These inter-company transactions are

eliminated for consolidation purposes. Segment income taxes are calculated on the basis of income before financial items and minority interest.

STATOIL 2002

Statoil group – NGAAP notes

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

To the Annual

General Meeting


Statoil group – NGAAP

Non-current assets by segment

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001 2000

Exploration and Production Norway 77,041 77,630 51,278

International Exploration and Production 20,868 20,229 19,465

Natural Gas 10,812 10,500 12,252

Manufacturing and Marketing 27,194 29,633 32,830

Other 10,207 11,842 12,888

Total non-current assets 146,122 149,834 128,713

Revenues by geographic areas

Statoil group – NGAAP notes

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) 2002 2001 2000

Norway 216,870 197,446 156,795

Europe (excluding Norway) 30,274 30,798 36,201

United States 27,654 27,163 38,243

Other areas 10,638 8,880 13,784

Eliminations (41,659) (36,345) (36,835)

Total revenues (excluding equity in net income of affiliates) 243,777 227,942 208,188

Non-current assets by geographic areas

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001 2000

Norway 113,382 113,693 97,010

Europe (excluding Norway) 23,399 29,772 25,538

United States 25 70 20

Other areas 15,894 18,016 15,315

Corporate and eliminations (6,578) (11,717) (9,170)

Total non-current assets 146,122 149,834 128,713

4. Significant Acquisitions and Dispositions

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

In 2001, Statoil sold specific interests in Norwegian oil and gas licenses, its 4.76% interest in the Kashagan oil field in Kazahkstan and its activity

in Vietnam which resulted in total gains of NOK 4.3 billion before tax charges of NOK 0.8 billion.

In 2002, Statoil sold its interests in the Siri and Lulita oil fields on the Danish continental shelf. The sale resulted in a gain included in the

International Exploration and Production segment of NOK 1.0 billion before tax and NOK 0.7 billion after tax.

On December 15, 2002, Statoil signed a contract to sell 100% of the shares in Navion ASA to Norsk Teekay AS, a wholly-owned subsidiary

of Teekay Shipping Corporation. The operations of Navion are shuttle tanking and conventional shipping. The sales price for the fixed assets

of Navion, excluding Navion Odin and Navion’s 50% share in the West Navion drill ship which are not included in the sale, is approximately

US$ 800 million. The effective date of the transaction is January 1, 2003, and the sale will be booked at closing, which is expected to take

place in the second quarter of 2003. Based on the exchange rate at December 31, 2002, and the book value of the assets sold, the effect

on net income from the transaction is immaterial.

To the Annual

General Meeting

STATOIL 2002 11


Statoil group – NGAAP

12

5. Asset Impairments

In 2001, a charge of NOK 2 billion before tax (NOK 1.4 billion after tax) was recorded in depreciation, depletion and amortization in the

International Exploration and Production segment to write down the Company’s 27% interest in the LL652 oil-field in Venezuela to fair value. In

2002, an additional impairment charge of NOK 0.8 billion before tax (NOK 0.6 billion after tax) was recorded related to the Company’s interest in

LL652. The write-downs are mainly due to reductions in the projected volumes of oil recoverable during the remaining contract period of

operation. Fair value is calculated based on estimated future cash flows.

6. Restructuring and Other Charges

In 1999, Statoil made the decision to restructure its US upstream, natural gas trading, and electric power generation operations. In conjunction

with this, Statoil established a restructuring provision of NOK 1,400 million primarily for asset write-downs, future lease costs, facilities

closure costs and separation costs for approximately 180 employees. The provision at December 31, 2001 amounted to NOK 144 million.

At December 31, 2002 only immaterial accruals remain in the provision. The provision is recorded in the International Exploration and

Production segment of Statoil.

During the period 1995-1998, based on estimated future needs for exploration and production drilling services on Statoil-operated licenses in

the North Sea, Statoil, on a sole risk basis, entered into several long-term fixed-price drilling rig contracts. A decline in worldwide oil prices

resulted in reduced work programs for the licenses, and Statoil was left with significant excess drilling rig capacity in a depressed market for

drilling rig services. In 1998 and 1999 Statoil recorded as Operating expenses a total of NOK 1.6 billion for expected losses on these purchased

drilling rig service contracts. In 2001, NOK 150 million of the provision was reversed due to a reduction in the estimated losses on the contracts.

In 2002 the provision was increased by NOK 231 million due to higher estimated losses on the contracts due to changes in the estimated

sub-contract marked rates. Estimated sub-contract market rates were based on rates quoted by rig brokers, new drilling rig contracts entered

into by other oil companies and Statoil’s evaluation of drilling needs and drilling rig availability through the contract period. The remaining

contracts periods for the rigs last from one to four years. The accrual is Statoil’s best estimate of the loss between fixed-price drilling rig

contracts and the estimated sub-contract market rates.

At December 31, 2001 and December 31, 2002 the remaining provision for drilling service contracts was NOK 734 million and NOK 960 million,

respectively. During 2000, 2001 and 2002, NOK 172 million, NOK 76 million and NOK 5 million, respectively, of contract payments were charged

against the provision. These charges impact the Exploration and Production Norway segment.

7. Inventories

The lower of cost or market test is measured, and the results are recognized separately, on a country-by-country basis, and any resulting writedowns

to market, if required, are recorded as adjustments to the cost of inventories.

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Crude oil 2,766 2,919

Petroleum products 2,647 2,567

Other 844 593

Total - inventories valued on a FIFO basis 6,257 6,079

STATOIL 2002

Statoil group – NGAAP notes

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

To the Annual

General Meeting


Statoil group – NGAAP

Statoil group – NGAAP notes

8. Summary Financial Information of Unconsolidated Equity Affiliates

Statoil’s investments in affiliates include a 50% interest in Borealis, a petrochemical production company, and a 50% interest in Statoil

Detaljhandel Skandinavia AS (SDS), a group of retail petroleum service stations.

Summary financial information for affiliated companies accounted for by the equity method is shown below. Statoil’s investment in these

companies is included in Investments in affiliates. Accounts receivable - related parties in the Consolidated Balance Sheets relate to amounts due

from equity affiliates.

Equity method affiliates - gross amounts

BOREALIS SDS

(IN NOK MILLION) 2002 2001 2000 2002 2001 2000

At December 31,

Current assets 5,909 7,694 10,753 2,798 3,189 3,014

Non-current assets 17,432 19,710 18,121 6,029 6,105 6,333

Current liabilities 6,063 6,108 9,740 3,288 2,894 3,277

Long-term debt 5,787 8,787 5,870 2,488 3,382 3,242

Other liabilities 2,187 2,201 2,570 0 0 0

Net assets

Year ended December 31,

9,304 10,310 10,694 3,051 3,018 2,828

Gross revenues 25,617 29,819 30,465 23,112 24,563 26,069

Income before taxes 215 (193) 686 423 411 328

Net income 43 (330) 488 302 290 233

Capital expenditures 978 1,182 2,117 721 552 592

Dividends received from Borealis amounted to NOK 0, 16 and 187 million for 2002, 2001 and 2000, respectively. No dividends have been

received from SDS.

Equity method affiliates - detailed information

(AMOUNTS IN MILLIONS) CURRENCY PAR VALUE SHARE CAPITAL OWNERSHIP BOOK VALUE PROFIT SHARE

Statoil Detaljhandel Skandinavia AS NOK 1,300 2,600 50% 1,152 221

Borealis A/S DKK 2,000 4,000 50% 4,653 53

P/R West Navion DA NOK - - 50% 1,115 (56)

Other companies - - - - 2,587 148

Total 9,507 366

Ownership corresponds to voting rights.

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

To the Annual

General Meeting

The difference between the book value and equity interest of the investment in SDS represents the difference between the book value and the fair

value on the sale of Statoil’s 50% interest in SDS in 1999 which is being amortized. P/R West Navion DA owns the drillship West Navion, and its

only activity pertains to this drillship.

STATOIL 2002 13


Statoil group – NGAAP

14

9. Investments

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Short-term deposits 51 189

Certificates 5,073 1,692

Bonds 50 180

Other 93 2

Total short-term investments 5,267 2,063

The cost price of short-term investments for the years ended December 31, 2002 and 2001 was NOK 5,261 and 2,053 million, respectively.

All short-term investments are considered to be trading securities and are recorded at fair value with unrealized gains and losses included in income.

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Shares in other companies 1,166 943

Certificates 1,031 680

Bonds 2,749 3,324

Marketable equity securities 1,270 1,596

Total long-term investments 6,216 6,543

Investments in bonds

The market value of the groups investments in bonds by debtor category and foreign currency is shown in the following tables:

(IN NOK MILLION) MARKET VALUE AT DECEMBER 31, 2002

By debtor type:

Government outside Norway 1,394

Central and local government administration 1,038

Central and local government commercial operations 177

Banks and credit institutions, Norway 190

Total market value 2,799

By currency:

Canadian dollar (CAD) 70

Great British pounds (GBP) 130

US dollar (US$) 270

Euro (EUR) 876

Norwegian kroner (NOK) 1,453

Total market value 2,799

The cost price of the investments in bonds amounts to NOK 2,836 million.

STATOIL 2002

Statoil group – NGAAP notes

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

To the Annual

General Meeting


Statoil group – NGAAP

10. Property, plant and equipment

MACHINERY, PRODUCTION

EQUIPMENT AND PLANTS OIL PRODUCTION CONSTRUCTION CAPITALIZED

TRANSPORTATION AND GAS, INCL PLANTS BUILDINGS IN EXPLORATION

(IN NOK MILLION) EQUIPMENT PIPELINES ONSHORE AND LAND VESSELS PROGRESS COST TOTAL

Cost at January 1, 2002

Accumulated depreciation, depletion and

10,891 206,042 26,651 6,521 7,781 11,941 4,281 274,108

amortization at January 1, 2002 (8,253) (120,099) (15,664) (1,811) (2,204) 64 0 (147,967)

Additions and transfers 1,131 11,275 5,094 292 0 673 98 18,563

Disposals at book value (26) (136) (7) (20) 0 (222) (7) (418)

Expensed expl cost capitalized prior years

Depreciation, depletion and amortization

0 0 0 0 0 0 (552) (552)

for the year (584) (14,516) (1,234) (200) (246) 0 0 (16,780)

Foregn currency translation (168) (2,001) (1,697) (416) (84) (239) (330) (4,935)

Book value at December 31, 2002 2,991 80,565 13,143 4,366 5,247 12,217 3,490 122,019

Intangible assets 1,242

Net property, plant and equipment at December 31, 2002 123,261

Estimated useful life (years) 5-10 * 15-20 20-25 20-25

*Unit of production, see note 1.

In 2002, 2001 and 2000, NOK 382, 650 and 1,321 millon, respectively, of interests were capitalized.

In addition to depreciation, depletion and amortization specified above intangible assets have been amortized by NOK 80 million in 2002.

Exploration expenditures

(IN NOK MILLION) 2002 2001 2000

Incurred during the year 2,294 2,225 2,688

Capitalized share of current year's explortion activity (651) (576) (895)

Expensed, previously capitalized exploration costs 552 935 214

Expensed during the year 2,195 2,584 2,007

11. Provisions

Statoil group – NGAAP notes

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

Provisions against assets (other than property, plant and equipment and intangible assets) recorded during the past three years are as follows:

(IN NOK MILLION) AT JANUARY 1, EXPENSE RECOVERY WRITE-OFF OTHER AT DECEMBER 31,

To the Annual

General Meeting

Year 2002

Provisions for other long-term assets 16 0 (16) 0 0 0

Provisions for accounts receivables 212 47 (59) (33) (14) 153

Year 2001

Provisions for other long-term assets 90 0 0 0 (74) 16

Provisions for accounts receivables 224 44 0 (12) (44) 212

Year 2000

Provisions for other long-term assets 90 0 0 0 0 90

Provisions for accounts receivables 174 33 43 (23) (3) 224

STATOIL 2002 15


Statoil group – NGAAP

16

12. Financial Items

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) 2002 2001 2000

Dividends received 457 15 82

Gain (loss) on sale of securities (228) (97) 371

Interest and other financial income 1,311 2,116 2,428

Currency exchange adjustments, short-term items 1,318 958 (374)

Currency exchange adjustments, long-term items 7,691 (45) (3,013)

Interest and other financial expenses (1,895) (3,540) (3,742)

Unrealised gain (loss) on securities (364) (162) (353)

Capitalized interest 382 650 1,321

Net financial items 8,672 (105) (3,280)

13. Income Taxes

The income tax expense consists of

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) 2002 2001 2000

Current taxes payable 33,708 31,685 25,125

Change in deferred tax 1,538 474 1,071

Income tax expense 35,246 32,159 26,196

Uplift benefit for the year 3,564 2,811 2,366

Foreign portion of the tax expense 2,723 979 730

Reconciliation of Norwegian nominal statutory tax rate of 28% to effective tax rate

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) 2002 2001 2000

Income before tax 51,776 47,474 38,071

Calculated income taxes at statutory rate 14,497 13,293 10,660

Petroleum surtax 20,538 20,304 16,846

Uplift benefits (1,782) (1,406) (1,183)

Other, net 1,993 (32) (127)

Income tax expense 35,246 32,159 26,196

Revenue from oil and gas activities on the NCS is taxed according to the Petroleum tax law. This stipulates a surtax of 50% after deducting

uplift, a special investment tax credit, in addition to normal corporate taxation. Uplift credits are deducted as they arise, 5% each year for six

years, as from initial year of investment. Uplift credits not utilized of NOK 8.9 billion can be carried forward indefinitely.

At the end of 2002, Statoil had tax loss carry-forwards of NOK 3.3 billion, primarily in the US and in Ireland. Only a minor part of the

carry-forward amounts expires before 2006.

STATOIL 2002

Statoil group – NGAAP notes

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

To the Annual

General Meeting


Statoil group – NGAAP

Statoil group – NGAAP notes

Significant components of deferred income tax liability

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Net operating loss carry-forwards 1,157 2,120

Impairment 1,058 1,365

Decommissioning 4,733 4,277

Other 2,877 4,678

Valuation allowance (2,140) (2,135)

Total deferred tax assets 7,685 10,305

Property, plant and equipment 35,518 35,144

Capitalized exploration expenditures and interest 8,914 8,668

Other 6,379 7,703

Total deferred tax liabilities 50,811 51,515

Net deferred income tax 43,126 41,210

A valuation allowance has been provided as Statoil believes that available evidence creates sufficient uncertainty as to the realizability of certain

deferred tax assets. Statoil will continue to assess the valuation allowance and to the extent it is determined that such allowance is no longer

required, the tax benefit of the remaining net deferred tax assets will be recognized in the future.

Income taxes payable in the balance sheet consists of the following

(IN NOK MILLION) AT DECEMBER 31, 2002

Current taxes payable 33,708

Taxes paid in instalments (15,536)

Other 186

Income taxes payable 18,358

The movement in deferred income tax liability can be specified as follows

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

(IN NOK MILLION) 2002

Deferred income tax at begining of year 41,210

Charged to the income statement 1,538

Other and translation adjustment 378

Deferred income tax at end of year 43,126

To the Annual

General Meeting

STATOIL 2002 17


Statoil group – NGAAP

18

14. Short-term Debt

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Bank loans and overdraft facilities 2,258 948

Current portion of long-term debt 2,018 5,364

Other 47 301

Total 4,323 6,613

Weighted average interest rate (%) 5.28 4.62

15. Long-term Debt

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Unsecured debentures bonds

US dollar (US$) 25,987 32,360

Norwegian kroner (NOK) 20 32

Euro (EUR) 621 1,388

Other currencies 22 540

Total 26,650 34,320

Unsecured bank loans

US dollar (US$) 2,193 3,510

Secured bank loans

US dollar (US$) 2,902 2,879

Other debt 796 838

Grand total debt outstanding 32,541 41,547

Less current portion (2,018) (5,364)

Total long-term debt 30,523 36,183

Weighted average interest rate (%) 4.42 6.23

Statoil has an unsecured debenture bond agreement for US$ 500 million with a fixed interest rate of 6.5%, maturing in 2028, callable at

par upon change in tax law. At December 31, 2002 and 2001, NOK 3,435 million and NOK 4,441 million were outstanding, respectively.

The interest rate of the bond has been swapped to a LIBOR-based floating interest rate.

Statoil has also an unsecured debenture bond agreement for EUR 500 million, with a fixed interest rate of 5.125%, maturing in 2011.

At December 31, 2002 and 2001, NOK 3,601 million and NOK 3,933 million were outstanding, respectively. EUR 200 million of the bond

has been swapped through an interest rate swap agreement to a LIBOR-based floating interest rate.

Statoil has also an unsecured debenture bond agreement for US$ 375 million, with a fixed interest rate of 5.75%, maturing in 2009.

At December 31, 2002 and 2001, NOK 2,591 million and NOK 3,347 million were outstanding, respectively.

Statoil utilizes currency swaps to manage foreign exchange risk on its long-term debt. The swaps are reflected in the table above.

The stated interest rate on the majority of the long-term debt is fixed. Interest rate swaps are utilized to manage interest rate exposure.

STATOIL 2002

Statoil group – NGAAP notes

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

To the Annual

General Meeting


Statoil group – NGAAP

Substantially all unsecured debenture bond and unsecured bank loan agreements contain provisions restricting the pledging of assets to secure

future borrowings without granting a similar secured status to the existing bondholders and lenders.

Statoil has 21 debenture bond agreements outstanding, which contain provisions allowing Statoil to call the debt prior to its final redemption at

par if there are changes to the Norwegian tax laws or at certain specified premiums. The agreements are, net after buyback, at the December 31,

2002 closing rate valued at NOK 24,315 million.

Reimbursements of long-term debt fall due as follows:

(IN NOK MILLION)

Statoil group – NGAAP notes

2003 2,018

2004 2,937

2005 1,268

2006 1,699

2007 1,728

Thereafter 22,891

Total 32,541

Statoil has an agreement with an international bank syndicate for committed long-term revolving credit facility totalling US$ 1.0 billion,

all undrawn. Commitment fee is 0.105% per annum.

As of December 31, 2002 and 2001 respectively, Statoil had no committed short-term credit facilities available or drawn.

16. Financial Instruments and Derivatives

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

Statoil uses derivative financial instruments to manage risks resulting from fluctuations in underlying interest rates, foreign currency exchange

rates and commodity (such as oil, natural gas and refined petroleum products) prices. Because Statoil operates in the international oil and gas

markets and has significant financing requirements, it has exposure to these risks, which can affect the cost of operating, investing and

financing. Statoil has used and intends to use financial and commodity-based derivative contracts to reduce the risks in overall earnings and

cash flows. Derivative instruments creating essentially equal and offsetting market exposures are used to help manage certain of these risks.

Management also uses derivatives to establish certain positions based on market movements although this activity is immaterial to the

consolidated financial statements.

Interest and currency risks constitute significant financial risks for the Statoil group. Total exposure is managed at portfolio level in accordance

with the strategies and mandates issued by the Enterprise-Wide Risk Management Program and monitored by the Corporate Risk Committee.

Statoil’s interest rate exposure is mainly associated with the group’s debt obligations and management of the assets in Statoil Forsikring AS.

Statoil mainly employs interest rate swap and currency swap agreements to manage interest rate and currency exposure.

Statoil uses swaps, options, futures, and forwards to manage its exposure to changes in the value of future cash flows from future purchases

and sales of crude oil and refined oil products. The term of the oil and refined oil products derivatives is usually less than one year. Natural gas

and electricity swaps, options, forwards, and futures are likewise utilized to manage Statoil’s exposure to changes in the value of future sales of

natural gas and electricity. These derivatives usually have terms of approximately three years or less. Most of the derivative transactions are made

in the over-the-counter (OTC) market.

Fair Value of Financial Instruments

The following table contains estimated fair values of financial derivative instruments and estimated fair value of long-term debts. Commodity

contracts capable of being settled by delivery of commodities (oil & oil products, natural gas, electricity) are excluded from the summary.

NET FAIR MARKET VALUE DECEMBER 31,

(IN NOK MILLION) 2002 2001

Debt-related instruments 2,003 (916)

Non-debt-related instruments 138 (7)

Long-term fixed interest debt (28,475) (30,730)

Crude oil and Refined products (276) 341

Gas and Electricity 53 21

To the Annual

General Meeting

STATOIL 2002 19


Statoil group – NGAAP

20

Fair values are estimated using quoted market prices, estimates obtained from brokers, prices of comparable instruments, and other appropriate

valuation techniques. The fair value estimates approximate the gain or loss that would have been realized if the contracts had been closed out at

year-end, although actual results could vary due to assumptions utilized.

Credit risk management

Statoil manages credit risk concentration with respect to financial instruments by holding only investment grade securities distributed among a

variety of selected issuers. A list of authorized investment limits by commercial issuer is maintained and reviewed regularly along with guidelines

which include an assessment of the financial position of counter-parties as well as requirements for collateral.

Credit risk related to commodity-based instruments is likewise managed by maintaining, reviewing and updating lists of authorized counterparties

by assessing their financial position and requiring collateral when appropriate.

The credit risk concentration with respect to receivables is limited due to the large number of counter-parties spread worldwide in numerous

industries.

The credit risk from Statoil’s OTC derivative contracts derives from the counter-party to the transaction, typically a major bank or financial

institution, a major oil company or a trading company. Statoil does not anticipate non-performance by any of these counter-parties, and no

material loss would be expected from any such unexpected non-performance. Futures contracts and exchange-traded options have a negligible

credit risk as they are principally traded on the New York Mercantile Exchange or the International Petroleum Exchange of London.

Consequently, Statoil does not consider itself exposed to a significant concentration of credit risk.

Quantitative and Qualitative Disclosure about Market Risk

Statoil has established an Enterprise-Wide Risk Management Program that establishes guidelines for entering into contractual arrangements

(derivatives) to manage its commodity price, foreign currency rate, and interest rate risk. Our Corporate Risk Committee meets on a regular basis

to review the existing policies and implementation of the guidelines. These procedures establish control over the use of derivatives, routine

monitoring and reporting requirements, as well as counter-party credit approval processes.

Commodity Risk

The following table contains the fair market value and related price risk sensitivity of our commodity based derivatives:

(IN NOK MILLION) NET FAIR MARKET VALUE 10% SENSITIVITY

At December 31, 2002

Crude oil and Refined products (227) 427

Gas and Electricity 173 16

At December 31, 2001

Crude oil and Refined products 390 484

Gas and Electricity 446 17

Price risk sensitivities for 2002 and 2001 were calculated by assuming a hypothetical across-the-board 10% adverse change in all commodity

prices regardless of the term or historical relationships between the contractual price of the instrument and the underlying commodity prices.

In the event of an actual 10% change in all underlying prices, the change in the fair value of the derivative portfolio at the two respective year

ends would typically be different from that shown above due to expected correlations between risk categories. In addition, there would be

expected offsetting effects from changes in the fair value of our corresponding physical positions, contracts and anticipated transactions, which

are not required to be recorded at market, and which are not reflected in the above table.

The fair market values of the futures and exchange traded option contracts are based on quoted market prices obtained from the New York

Mercantile Exchange or the International Petroleum Exchange of London. The fair values of swaps and other over-the counter arrangements are

estimated based on quoted market prices, estimates obtained from brokers and other appropriate valuation techniques. The fair value estimates

approximate the gain or loss that would have been realized if the contracts had been closed out at year-end, although actual results could vary

due to certain assumptions used.

Interest and Currency Risk

The estimated loss associated with a 10% adverse change in Norwegian kroner currency rates would result in a loss of fair value of approximately

NOK 4 billion and NOK 5 billion as of December 31, 2002 and 2001 respectively. A hypothetical one percentage point adverse change in interest rates

would result in a loss of NOK 0.9 billion and NOK 1.2 billion related to interest bearing liabilities, investments in debt securities and related financial

instruments as of December 31, 2002 and 2001 respectively. These estimated currency and interest rate sensitivities are based on an uncorrelated loss

scenario and actual results could vary due to assumptions used and offsetting account correlations not reflected within this analysis.

STATOIL 2002

Statoil group – NGAAP notes

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

To the Annual

General Meeting


Statoil group – NGAAP

Statoil’s cash flows are largely in US dollars and euro but also significant amounts in Norwegian kroner, Swedish kroner, Danish kroner and UK

pounds sterling. The currencies in the debt portfolio are managed in connection with our expected future net cash flows per currency. Statoil’s

debt, after considering currency swaps, is mainly in US dollars.

Equity Securities

Equity securities, mainly of the portfolio for Statoil Forsikring AS, are recorded at fair value and have exposure to price risk. The fair value of

equity securities is based on quoted market prices. Risk is estimated as the potential loss in fair value resulting from a hypothetical 10% adverse

change in quoted market prices. Actual results may vary due to assumptions utilized and other risk correlations.

Fair values

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Equity securities 1,270 1,598

10% change in share prices 127 160

17. Employee Retirement Plans

Pension benefits

Statoil and many of its subsidiaries have defined benefit retirement plans, which cover substantially all of their employees. Plan benefits are

generally based on years of service and final salary levels. Some subsidiaries have defined contribution or multi-employer plans.

The most significant part of the retirement plans are covered by Statoil's pension funds. These funds are organized as independent trusts.

The major part of their assets are invested in Norwegian and foreign bonds and shares, as well as real estate in Norway.

Net periodic pension cost

Statoil group – NGAAP notes

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) 2002 2001 2000

Benefit earned during the year 738 690 701

Interest cost on prior period benefit obligation 719 626 559

Expected return on plan assets (856) (793) (761)

Amortization of loss 34 10 (60)

Amortization of prior service cost 37 37 37

Net periodic pension cost defined benefit plans 672 570 476

Defined contribution plans 19 21 21

Multi-employer plans 4 4 4

Total net periodic pension cost 695 595 501

Change in projected benefit obligation (PBO)

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

(IN NOK MILLION) 2002 2001

Projected benefit obligation at beginning of year 12,000 10,632

Benefits earned during the year 738 690

Interest cost on prior period benefit obligation 719 626

Actuarial gain (loss) (13) 471

Benefits paid (401) (391)

Foreign currency translation (18) (28)

Projected benefit obligation at end of year 13,025 12,000

To the Annual

General Meeting

STATOIL 2002 21


Statoil group – NGAAP

22

Change in pension plan assets

(IN NOK MILLION) 2002 2001

Fair value of plan assets at beginning of year 13,068 12,310

Retained earnings in the pension trusts reclassified to plan assets 0 954

Actual return on plan assets (770) (15)

Company contributions 412 8

Benefits paid (183) (170)

Foreign currency translation (47) (19)

Fair value of plan assets at end of year 12,480 13,068

Status of pension plans reconciled to balance sheet

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Funded status of the plans at end of year (545) 1,068

Unrecognized net loss 1,846 769

Unrecognized prior service cost 370 403

Total net prepaid pension recognized 1,671 2,240

Amounts recognized in the balance sheet:

Prepaid pension 3,861 4,078

Accrued pension liabilities (2,190) (1,838)

Net amount recognized 1,671 2,240

Weighted-average assumptions at end of year

Discount rate 6.0% 6.0%

Expected return on plan assets 6.5% 6.5%

Rate of compensation increase 3.0% 3.0%

18. Decommissioning and Removal Liabilities

At December 31, 2002 and 2001, NOK 8,056 million and NOK 7,521 million, respectively, had been accrued for future well closure,

decommissioning and removal of offshore installations and are included in Other liabilities. Statoil’s share of the estimated total future well

closure, decommissioning and removal costs is NOK 10,700 million and NOK 13,300 million at December 31, 2002 and 2001, respectively.

19. Research Expense

Research expenses were NOK 736 million, NOK 633 million and NOK 656 million in 2002, 2001 and 2000, respectively.

STATOIL 2002

Statoil group – NGAAP notes

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

To the Annual

General Meeting


Statoil group – NGAAP

20. Leases

Statoil leases certain assets, notably shipping vessels.

In 2002, rental expense was NOK 5,595 million. In 2001 and 2000 rental expenses were NOK 7,687 and 6,455 million, respectively.

The information below shows future minimum lease payments under non-cancelable leases at December 31, 2002.

(IN NOK MILLION) OPERATING LEASES CAPITAL LEASES

2003 4,070 11

2004 3,087 12

2005 2,782 13

2006 2,350 14

2007 1,638 16

Thereafter 6,617 0

Total future rents 20,544 66

Interest component (10)

Net present value 56

Property, plant and equipment include the following amounts for leases that have been capitalized at December 31, 2002 and 2001.

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Vessels 107 217

Less accumulated depreciation (80) (177)

Net 27 40

21. Other Commitments and Contingencies

Contractual commitments

Statoil group – NGAAP notes

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

(IN NOK MILLION) IN 2003 THEREAFTER TOTAL

Contractual commitments made 8,633 10,665 19,298

These contractual commitments comprise acquisition and construction of tangible fixed assets.

Guarantees

The group has provided guarantees of NOK 0.7 billion for short-term commercial transactions and contractual commitments.

Contingent liabilities and insurance

Like any other licensee, Statoil has unlimited liability for possible compensation claims arising from its offshore operations, including transport

systems. The Company has taken out insurance to cover this liability up to about NOK 5.6 billion for each incident, including liability for claims

arising from pollution damage. Most of the group’s production installations are covered through Statoil Forsikring AS, which reinsures a major

part of the risk in the international insurance market. About 30% is retained.

To the Annual

General Meeting

STATOIL 2002 23


Statoil group – NGAAP

24

Other commitments

As a condition for being awarded oil and gas exploration and production licenses, participants are committed to drill a certain number of wells.

At the end of 2002, Statoil was committed to participating in 15 wells off Norway and 12 wells abroad, with an average ownership interest of

approximately 32%. The cost to drill these wells is estimated to NOK 1.4 billion.

As owner in BTC Co Ltd Statoil in committed to, directly or indirectly, to finance, or to provide guarantees for financing of a development of the

BTC pipeline system of approximately US$ 425 million in total. As a participant in the Transportation Agreement between BTC Co Ltd and the

owners of the Azeri-Chirag-Gunashli oil field Statoil has entered into a ship and pay arrangement.

In addition, Statoil has entered into agreements for pipeline transportation for most of its prospective gas sale contracts. These agreements

ensure the right to transport the production of gas through the pipelines, but also impose an obligation to cover Statoil’s proportional share of

the transportation costs. On the Norwegian continental shelf, Statoils ownership interest in the pipeline transportation systems exceeds its share

of the transported volumes.

During the normal course of its business Statoil is involved in legal proceedings and a number of unresolved claims are currently outstanding.

The ultimate liability in respect of litigation and claims cannot be determined at this time. Provisions in the accounts for these items are based on

the Company’s best judgment. Statoil is of the opinion that neither the financial position, results of operations nor cash flows will be material

adverse affected by the resolution of these legal proceedings.

22. Related Parties

Total purchases of oil and natural gas liquid (NGL) from the Norwegian State amounted to NOK 72,298 million (374 million barrels oil

equivalents), NOK 56,942 million (281 million barrels oil equivalents) and NOK 46,844 million (194 million barrels oil equivalents), in 2002, 2001

and 2000, respectively. Amounts payable to the Norwegian State for these purchases are included as Accounts payable - related parties in the

Consolidated Balance Sheets. The prices paid by Statoil for the oil purchased from the Norwegian State are estimated market prices. In addition

Statoil sells the Norwegian State’s natural gas, in its own name, but for the account and risk of the Norwegian State.

In addition to Accounts payable - related parties and Accounts receivable - related parties Statoil has a long term receivable of NOK 780 million

against the Norwegian State included in Long-term receivables.

23. Equity and shareholders

Change in equity

(IN NOK MILLION) 2002 2001

Equity at beginning of year 47,685 52,435

Net income 16,377 14,827

Translation adjustement (5,318) (537)

Issuance of shares 0 12,890

SDFI transaction - net 0 (24,461)

Ordinary dividend (6,282) (6,169)

Change in minority interest and other 121 (1,300)

Equity at end of year 52,583 47,685

SDFI transaction - net represents cash payments and net book value of properties transferred to the Norwegian State in excess of the net book

value of the properties transferreed to Statoil. See note 1 for further details. Included in Change in minority interest and other in 2001 is the

differance between book value and the amount paid for Rasmussengruppen’s 20% interest in Navion.

For more information regarding equity and shareholders see note 23 in the parent company Statoil ASA.

24. Auditors’ remuneration

Total remuneration to the external auditors for the fiscal year 2002 amounted to NOK 22,8 million for audit services and NOK 13,7 million for

other services, including NOK 5,2 million for audit related services.

STATOIL 2002

Statoil group – NGAAP notes

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

To the Annual

General Meeting


Statoil group – NGAAP

Statoil group – NGAAP notes

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

25. Reconciliation between USGAAP and NGAAP

The consolidated financial statements of Statoil are prepared in accordance with Norwegian generally accepted accounting principles (NGAAP).

The following tables reconcile the NGAAP accounts to United States generally accepted accounting principles (USGAAP):

(IN NOK MILLION) 2002 2001 2000

Net income for the year per USGAAP 16,846 17,245 16,153

a) Restatement to reflect net income from transferred SDFI-assets, before tax 0 (7,981) (19,359)

b) Inventory adjustment, from LIFO to FIFO, before tax 32 (540) 463

c) Other adjustments, before tax 643 (223) (182)

d) Tax impact of the above adjustments, and other tax adjustments (1,144) 6,326 14,260

Net income for the year per NGAAP 16,377 14,827 11,335

At December 31,

Shareholders’ equity per USGAAP 57,017 51,774 67,826

Minority interests per USGAAP 1,550 1,496 2,480

a) Restatement to reflect equity from transferred SDFI-assets, before tax 0 0 (26,000)

b) Inventory adjustment, from LIFO to FIFO, before tax 835 803 1,343

c) Other adjustments, before tax 251 (653) 238

d) Tax impact of the above adjustments, and other tax adjustments (788) 434 12,216

e) Accrued dividends payable (6,282) (6,169) (5,668)

Shareholders’ equity per NGAAP 52,583 47,685 52,435

a) On April 26, 2001, the Norwegian Parliament decided, as part of a restructuring of the State’s ownership on the Norwegian Continental

Shelf, to transfer certain properties from the State’s direct financial interest (SDFI) to Statoil. As the transaction took place between entities

under common control the carrying value of the properties are calculated as if they have been owned by Statoil since inception (see note 1).

In the USGAAP accounts the transferred properties from SDFI are included as follows for the periods up to June 1, 2001:

(IN NOK MILLION) 2001 2000

Sales 8,509 21,713

Cost of goods sold 3,607 7,402

Operating expenses (2,434) (5,802)

Depreciation, depletion and amortization (1,768) (4,339)

Net financial items 67 384

Income taxes (5,952) (14,108)

Net income 2,029 5,250

Property, plant and equipment 29,927

Net working capital (887)

Long-term provisions (15,548)

Equity 13,492

Net cash flow up until January 1, 2001, is in the USGAAP accounts assumed to have been paid currently as dividend. Long-term provisions

primarily consist of deferred tax and abandonment provisions. Elimination of sales from SDFI to Statoil results in negative cost of goods sold for

the periods.

b) Per NGAAP the inventories are valued using the FIFO principle. In the USGAAP accounts crude oil and products used in the refinery business

are valued at LIFO.

To the Annual

General Meeting

STATOIL 2002 25


Statoil group – NGAAP

26

c) Other adjustments include different treatment of sale and leaseback, sale of individual parts of an offshore property and unrealized gains on

commodity trading. Other adjustments in 2001 also include the excess value over book value pertaining to the acquisition of the minority

interests in Navion. Under USGAAP this excess value is reflected as additions to fixed assets and under NGAAP is recorded to equity. Other

adjustments also include certain unrealized gains and losses on hedge positions subject to special accounting under USGAAP. A net

unrealized loss on such positions of NOK 200 million before tax and NOK 118 million after tax is included as other comprehensive income as

at December 31, 2002, compared to NOK 6 and 2 million respectively at year-end 2001. In 2002 a gain of NOK 67 million after tax due to

remeasurement of the monetary value of gas imbalances related to the transferred SDFI-properties included in the USGAAP accounts has

been eliminated for NGAAP, as the gain relates to activity prior to June 1, 2001.

d) Changes in deferred tax expense and deferred tax liability primarily consist of taxes on the above adjustments. In addition deferred tax

related to income from operations taxable under the Norwegian tax regime for shipping activities is historically recorded at fair value under

NGAAP, while for USGAAP the tax is calculated using nominal amounts. Effective from 2003 Statoil will resign from the special tax regime

for shipping activities and therefore such temporary differences as per December 31, 2002, been recorded at nominal value also in the

NGAAP accounts. Deferred tax related to net unrealized losses booked as other comprehensive income in the USGAAP accounts amounts to

NOK 82 million at December 31, 2002, compared to NOK 4 million at December 31, 2001.

e) Per NGAAP dividends relating to current year’s net income is reflected as a liability as of year-end. Under USGAAP dividends are not accrued

until approved by the shareholders.

STATOIL 2002

Statoil group – NGAAP notes

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

To the Annual

General Meeting


Statoil group – NGAAP

Statoil group – NGAAP notes

26. Oil and gas reserves (unaudited)

RESERVES

OIL AND NGL GAS IN MILLION

(OIL AND NGL IN MILLION BARRELS) OUTSIDE OUTSIDE BARRELS OIL

(GAS IN BILLION CUBIC METRES) NORWAY NORWAY TOTAL NORWAY NORWAY TOTAL EQUIVALENT

Year 2000

Proved reserves at beginning of year 1,101 462 1,562 224.2 3.2 227.4 2,993

Revisions and improved recovery 35 30 65 9.0 (0.3) 8.7 120

Extensions and discoveries 61 18 79 0.8 4.8 5.6 114

Sales of reserves-in-place (2) 0 (2) 0.0 (0.5) (0.5) (5)

Production (166) (21) (187) (7.7) (0.5) (8.2) (239)

Proved reserves at end of year 1,029 488 1,518 226.3 6.6 232.9 2,983

Proved developed reserves 643 187 830 156.4 1.8 158.2 1,825

Year 2001

Proved Reserves at beginning of year 1,029 488 1,518 226.3 6.6 232.9 2,983

Revisions and improved recovery 68 30 98 7.1 (0.2) 6.9 142

Extensions and discoveries 124 69 193 5.3 6.4 11.7 267

Purchase of reserves-in-place 441 0 441 133.7 0.0 133.7 1,282

Sales of reserves-in-place (54) (1) (55) 0.0 (4.8) (4.8) (85)

Production (211) (22) (233) (12.2) (0.4) (12.6) (312)

Proved reserves at end of year 1,398 565 1,963 360.3 7.6 367.9 4,277

Proved developed reserves 948 166 1,113 256.9 1.2 258.1 2,737

Year 2002

Proved Reserves at beginning of year 1,398 565 1,963 360.3 7.6 367.9 4,277

Revisions and improved recovery 108 (25) 83 6.7 0.0 6.7 125

Extensions and discoveries 31 73 104 26.7 0.0 26.7 272

Purchase of reserves-in-place 4 0 4 1.0 0.0 1.0 10

Sales of reserves-in-place (13) (2) (16) (2.1) 0.0 (2.1) (29)

Production (242) (29) (271) (18.3) (0.3) (18.6) (388)

Proved reserves at end of year 1,286 580 1,867 374.4 7.2 381.6 4,267

Proved developed reserves 919 137 1,056 264.1 0.8 264.9 2,722

The totals in the table may not equal the sum of the amounts due to rounding differences.

Purchase of reserves-in-place in 2001 represents reserves acquired in the SDFI-transaction.

Statoil ASA – NGAAP Statoil ASA – NGAAP notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – NGAAP

Statoil's oil and gas reserves have been estimated by the Company's experts in accordance with industry standards under the requirements of

the United States Securities and Exchange Commission (SEC). Reserves are net of royalty oil paid in kind (Norway), and quantities consumed

during production. Proved oil and gas reserves are the estimated volumes of crude oil, natural gas, and natural gas liquids which geological and

engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under prevailing economic and

operating conditions.

Proved developed oil and gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and

operating methods.

The principles for booking of proved gas reserves are limited to include contracted gas sales and gas with access to a market.

New sales on the Norwegian continental shelf are booked as Extensions and discoveries.

In 1997, Statoil entered into a service contract in Venezuela. The group's share of base production is not included in the reserves.

Expected recovery of the field's proved reserves over and above base production is included in the international oil reserves.

In 2002, Statoil entered into a buy-back contract in Iran. Statoil also participates in a number of production sharing agreements (PSA).

Reserves from such agreements are based on the volumes to which Statoil has access (cost oil and profit oil), limited to available market

access.

To the Annual

General Meeting

STATOIL 2002 27


28

STATOIL 2002


Statoil group – NGAAP Statoil group ASA – NGAAP notes – notes

Statoil ASA – NGAAP

STATEMENTS OF INCOME STATOIL ASA – NGAAP

Statoil ASA – NGAAP

Statoil group – NGAAP notes

To the Annual

General Meeting

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) NOTE 2002 2001

Sales 209,305 185,704

Equity in net income (loss) of subsidiaries 8 1,198 2,899

Equity in net income (loss) of affiliates 8 201 235

Other income 4 248 2,678

Total revenues 210,952 191,516

Cost of goods sold (130,294) (110,502)

Operating expenses 3 (22,935) (19,760)

Selling, general and administrative expenses 3 (2,748) (1,606)

Depreciation, depletion and amortization 10 (12,850) (11,113)

Exploration expenses 10 (1,657) (1,841)

Total expenses before financial items (170,484) (144,822)

Income before financial items and income taxes 40,468 46,694

Net financial items 12 8,342 (341)

Income before income taxes 48,810 46,353

Income taxes 13 (32,433) (31,526)

Net income 16,377 14,827

Allocations:

Group contribution 4,807 1,200

Tax on group contribution (1,346) (364)

Dividend 6,282 6,169

STATOIL 2002 29


Statoil group – NGAAP Statoil group – – NGAAP – notes

30

BALANCE SHEETS STATOIL ASA – NGAAP

STATOIL 2002

Statoil ASA – NGAAP

Statoil ASA – NGAAP notes

To the Annual

General Meeting

AT DECEMBER 31,

(IN NOK MILLION) NOTE 2002 2001

ASSETS

Net property, plant and equipment 10 87,388 88,497

Long-term receivables 17, 22 4,498 3,975

Long-term receivables from subsidiaries 1,215 899

Long-term investments 8 342 280

Investments in subsidiaries 8 56,556 56,132

Investments in affiliates 8 2,372 2,095

Total non-current assets 152,371 151,878

Inventories 7 3,243 3,250

Accounts receivable 11 23,486 20,583

Accounts receivable - related parties 22 0 35

Short-term receivables from subsidiaries 14,490 2,913

Prepaid expenses and other current assets 17 1,254 3,577

Total inventories and accounts receivables 42,473 30,358

Short-term investments 9 1,656 1,970

Cash and cash equivalents 224 4

Cash, cash equivalents and short-term investments 1,880 1,974

Total current assets 44,353 32,332

TOTAL ASSETS 196,724 184,210


Statoil group – NGAAP Statoil group ASA – NGAAP notes – notes

BALANCE SHEETS STATOIL ASA – NGAAP

Statoil ASA – NGAAP

Statoil group – NGAAP notes

To the Annual

General Meeting

AT DECEMBER 31,

(IN NOK MILLION) NOTE 2002 2001

EQUITY AND LIABILITIES

Common stock (NOK 2.50 nominal value), 2,189,585,600

shares authorized and issued 5,474 5,474

Treasury shares, 23,441,974 and 25,000,000 shares (59) (63)

Additional paid-in capital 12,418 12,418

Paid-in capital 17,833 17,829

Reserve for valuation variances 0 955

Retained earnings 33,200 27,405

Total equity 23 51,033 46,189

Deferred income taxes 13 36,648 37,530

Other liabilities 17, 18 9,621 8,531

Long-term debt to subsidiaries 4,670 1,172

Long-term debt 15 25,439 32,156

Total long-term liabilities 76,378 79,389

Short-term debt 14 4,182 2,527

Accounts payable 16,040 7,496

Accounts payable - related party 22 5,594 10,164

Short-term payable to subsidiaries 14,452 9,875

Withheld, excise and other taxes 1,461 1,524

Income taxes payable 13 17,917 16,171

Accrued liabilities 3,385 4,706

Dividend payable 6,282 6,169

Total current liabilities 69,313 58,632

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 196,724 184,210

STATOIL 2002 31


Statoil group – NGAAP Statoil group – – NGAAP – notes

32

STATEMENTS OF CASH FLOW STATOIL ASA – NGAAP

STATOIL 2002

Statoil ASA – NGAAP

Statoil ASA – NGAAP notes

To the Annual

General Meeting

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) 2002 2001

OPERATING ACTIVITIES

Net income

Adjustments to reconcile net income to net cash flows provided by operating activities:

16,377 14,827

Depreciation, depletion and amortization 12,850 11,113

Exploration cost written off 551 665

(Gains) losses on foreign currency transactions (7,979) (111)

Deferred taxes (1,139) 150

(Gains) losses on sales of assets and other items

Changes in working capital (other than cash):

(2,456) (3,896)

• (Increase) decrease in inventories 7 (551)

• (Increase) decrease in short-term investments (14,445) 1,759

• (Increase) decrease in accounts receivables 4,832 16,266

• (Increase) decrease in other receivables 314 (1,264)

• Increase (decrease) in accounts payable 3,486 (6,115)

• Increase (decrease) in other payables 4,521 (356)

Increase (decrease) in other non-current obligations 994 (716)

Cash flows provided by operating activities 17,913 31,771

INVESTING ACTIVITIES

Net cash flows used in investing activities (net) (18,064) (13,431)

FINANCING ACTIVITIES

New long-term borrowings 6,619 3,953

Repayment of long-term borrowings (2,197) (1,899)

Ordinary dividend paid (6,169) (5,668)

Amounts paid to shareholder, related to SDFI properities 0 (40,788)

Capital contribution related to SDFI properties 0 8,460

Net proceeds from issuance of new shares 0 12,890

Net short-term borrowings, bank overdrafts and other 2,118 1,549

Cash flows provided by (used in) financing activities 371 (21,503)

Net increase (decrease) in cash and cash equivalents 220 (3,163)

Cash and cash equivalents at beginning of year 4 3,167

Cash and cash equivalents at end of year 224 4

Interest paid 1,550 3,152

Taxes paid 30,234 32,378

In the cash flow statement the cash settlement for the transferred SDFI assets is classified as dividend under financing activities, and not as investing

activity. See note 1 for more details on the SDFI transaction.


Statoil group – NGAAP Statoil group – NGAAP – notes Statoil ASA – NGAAP

1. Organization and Basis of Presentation

Statoil ASA – NGAAP notes

Statoil ASA was founded in 1972, as a 100% Norwegian State-owned company. Statoil’s business consists principally of the exploration,

production, transportation, refining and marketing of petroleum and petroleum-derived products. In 1985, the Norwegian State transferred

certain properties from Statoil to the State’s direct financial interest (SDFI), which were also 100% owned by the Norwegian State.

To the Annual

General Meeting

In conjunction with a partial privatization of Statoil in June 2001, the Norwegian State restructured its holdings in oil and gas properties on the

Norwegian Continental Shelf. In this restructuring, the Norwegian State transferred to Statoil certain SDFI properties with a book value of

approximately NOK 30 billion, in consideration for which NOK 38.6 billion in cash plus interest and currency fluctuation from the valuation date

of NOK 2.2 billion (NOK 0.7 billion after tax), and certain pipeline and other assets with a net book value of NOK 1.5 billion were transferred to

the Norwegian State. The transaction was completed June 1, 2001 with a valuation date of January 1, 2001 with the exception of the sale of an

interest in the Mongstad terminal which had a valuation date of June 1, 2001.

The total amount paid to the Norwegian State was financed through a public offering of shares for NOK 12.9 billion, issuance of new debt of

NOK 9 billion and the remainder from existing cash and short term borrowings.

The transfers of properties from the SDFI have been accounted for as transactions among entities under common control and, accordingly, these

properties have been combined with those of Statoil at their historical book value with effect from June 1, 2001. However, certain adjustments

have been made to the carrying value of the properties transferred. These adjustments primarily relate to imputing of capitalized interest in the

same manner as if the properties transferred to Statoil had been Statoil's from inception. The cash payment and net book value of properties

transferred to the Norwegian State in excess of the net book value of the properties transferred to Statoil, is shown as a dividend. The final cash

payment is contingent upon review by the Norwegian State, which is expected to be completed in the first half of 2003. The adjustment to the

cash payment, if any, will be recorded as a capital contribution or dividend as applicable.

From June 2001, Statoil no longer acts as an agent to sell SDFI oil production to third parties. As such all purchases and sales of SDFI oil

production are recorded as Cost of goods sold and Sales, respectively, whereas before, the net result of any trading activity was included in Sales.

Certain reclassifications have been made to prior periods’ figures to be consistent with current period’s presentation.

2. Summary of Significant Accounting Policies

The parent company (Statoil or the Company) accounts have been prepared in accordance with Norwegian generally accepted accounting

principles (NGAAP). Shareholdings and interests in subsidiaries and affiliates are recorded using the equity method. Such interests were previously

recorded at cost. Prior period’s figures have been adjusted to reflect the new principle, resulting in an effect on equity at December 31, 2001

and on net income for the year 2001 of NOK 7,950 million and NOK 1,221 million, respectiviely. For a description of other accounting policies,

reference is made to note 2 of the NGAAP group accounts.

Oil and gas reserves

An overview of oil and gas reserves is shown in note 26 of the NGAAP group accounts.

3. Payroll costs

Payroll costs are included in operating expenses and selling, general and administrative expenses as follows:

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) 2002 2001

Salaries 6,459 5,822

Payroll taxes 1,044 974

Other social benefits (included pension cost) 1,034 994

Total payroll costs 8,537 7,790

Average number of employees 10,175 9,985

Payroll costs are partly charged to Statoil-operated activities.

NOTES TO FINANCIAL STATEMENTS STATOIL ASA – NGAAP

At December 31, 2002 loans to employees amounted to NOK 445 million. In addition Statoil ASA has issued guarantees for bank loans to

employees up to a maximum amount of NOK 5 million.

Total remuneration of NOK 381,000 was paid to the members of the corporate assembly and NOK 1,625,000 to the board of directors.

STATOIL 2002 33


Statoil group – NGAAP Statoil group – NGAAP – notes Statoil ASA – NGAAP

34

Chief executive officer Olav Fjell received in 2002 a salary and other remuneration of NOK 3,770,000. No bonus was paid to the Chief executive

officer in 2002.

The board of directors will annualy assess a bonus to the chief executive officer. The assessment will be based on achieved performance.

Maximum bonus is 30% of basic salary. A performance pay system has been established for the other members of the executive committee,

senior vice presidents and vice presidents. This entails a variable remuneration based on pre-determined goals. The scheme allows for a bonus of

10% of basic salary on achieving set goals, with a ceiling of 20% for results that clearly exceeds these goals.

If resigning at the request of the board of directors, the chief executive officer is entitled to severance compensation equaling two annual

salaries. This also applies to executive vice presidents Erling Øverland, Inge K. Hansen and Peter Mellbye. The chief executive officer and these

three executive vice presidents are entitled, under specific terms, to a pension after reaching the age of 60. The pension will amount to 66% of

their pensionable salaries.

Executive vice presidents, Henrik Carlsen, Elisabeth Berge and Terje Overvik have interest-free loans of NOK 299,000, 71,000 and 386,000

respectively. These loans have been approved with a repayment period of 10 years.

For information regarding shares owned by corporate executive committee, the board of directors and the corporate assembly refer to note 23.

4. Significant Acquisitions and Dispositions

In 2001, Statoil sold specific interests in Norwegian oil and gas licenses and its activity in Vietnam which resulted in total gains of NOK 2.7 billion

before tax charges of NOK 0.4 billion.

In 2001, the Norwegian state transferred to Statoil some SDFI properties. The transferral is described in note 1.

5. Asset Impairments

Impairment tests of properties owned by Statoil ASA (the parent company) have not resulted in material write-downs in 2002 or 2001.

6. Restructuring and Other Charges

During the period 1995-1998, based on estimated future needs for exploration and production drilling services on Statoil-operated licenses in

the North Sea, Statoil, on a sole risk basis, entered into several long-term fixed-price drilling rig contracts. A decline in worldwide oil prices

resulted in reduced work programs for the licenses, and Statoil was left with significant excess drilling rig capacity in a depressed market for

drilling rig services. In 1998 and 1999 Statoil recorded as Operating expenses a total of NOK 1.6 billion for expected losses on these purchased

drilling rig service contracts. In 2001, NOK 150 million of the provision was reversed due to a reduction in the estimated losses on the contracts.

In 2002 the provision was increased by NOK 231 million due to higher estimated losses on the contracts due to changes in the estimated subcontract

market rates. Estimated sub-contract market rates were based on rates quoted by rig brokers, new drilling rig contracts entered into by

other oil companies and Statoil’s evaluation of drilling needs and drilling rig availability through the contract period. The remaining contracts

periods for the rigs last from one to four years. The accrual is Statoil’s best estimate of the loss between fixed-price drilling rig contracts and the

estimated sub-contract market rates.

At December 31, 2001 and December 31, 2002 the remaining provision for drilling service contracts was NOK 734 million and NOK 960 million,

respectively. During 2001 and 2002, NOK 76 million and NOK 5 million, respectively, of contract payments were charged against the provision.

These charges impact the Exploration and Production Norway segment.

7. Inventories

The lower of cost or market test is measured, and the results are recognized separately, on a country-by-country basis, and any resulting

write-downs to market, if required, are recorded as adjustments to the cost of inventories.

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Crude oil 1,967 2,304

Petroleum products 864 463

Other 412 483

Total - inventories valued on a FIFO basis 3,243 3,250

STATOIL 2002

NOTES TO FINANCIAL STATEMENTS STATOIL ASA – NGAAP

Statoil ASA – NGAAP notes

To the Annual

General Meeting


Statoil group – NGAAP Statoil group – NGAAP – notes Statoil ASA – NGAAP

8. Shares and long-term investments

Subsidiaries and affiliates by equity method

NOTES TO FINANCIAL STATEMENTS STATOIL ASA – NGAAP

Statoil ASA – NGAAP notes

(IN NOK MILLION) SUBSIDIARIES AFFILIATES

Investment at December 31, 2001 56,132 2,095

Net income subsidiaries and affiliates 1,198 201

Translation adjustment (5,318) 0

Change in paid-in equity 1,607 110

Group contribution (after tax) 3,461 0

Ordinary dividend (524) (34)

Investment at December 31, 2002 56,556 2,372

Ownership in certain subsidiaries

AS Eesti Statoil 100% Statoil Exploration Ireland Ltd 100%

Latvija Statoil SIA 100% Statoil Forsikring AS 100%

Navion ASA* 80% Statoil Iran AS 100%

Offshore Technology AS 100% Statoil Ireland Ltd 100%

Offtech Invest AS 100% Statoil Kazakstan AS 100%

P/F Statoil Føroyar 100% Statoil Latin America AS 100%

Statholding AS 100% Statoil Nigeria AS 100%

Statoil AB 100% Statoil Norge AS 100%

Statoil Angola Bl 15 AS 100% Statoil North America Inc. 100%

Statoil Angola Bl 17 AS 100% Statoil Orient Inc 100%

Statoil Angola Block 31 AS 100% Statoil Pernis Invest AS 100%

Statoil Apsheron AS 100% Statoil Russia AS 100%

Statoil Asia Pacific Pte. Ltd. 100% Statoil Sincor AS 100%

Statoil Azerbaijan Alov AS 100% Statoil UK Ltd 100%

Statoil Azerbaijan AS 100% Statoil Venezuela AS 100%

Statoil BTC Finance AS 100% UAB Lietuva Statoil 100%

Statoil Coordination Center N.V.* 88% Statoil Metanol ANS 82%

Statoil Danmark A/S 100% Mongstad Refining DA 79%

Statoil Deutschland GmbH 100% Statoil Mongstad Terminal DA 65%

Statoil Dublin Bay AS 100%

*The remaining shares in Navion ASA and Statoil Coordination Center N.V. are owned through other subsidiaries within the Statoil group.

Voting rights correspond to ownership interests. Purchase price in excess of book value of equity in the subsidiaries at acquisition is immaterial.

Ownership in certain equity method affiliates

Statoil Detaljhandel Skandinavia AS 50%

Nova Naturgas AB 30%

Vestprosess DA 17%

Etanor DA 16%

Tjeldbergodden Luftgassfabrikk DA 51%

Shares in other companies

Included in Long-term investments of NOK 342 million are shares in Verbundnetz Gas AG of NOK 242 million.

To the Annual

General Meeting

STATOIL 2002 35


Statoil group – NGAAP Statoil group – NGAAP – notes Statoil ASA – NGAAP

36

9. Short-term investments

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Short-term deposits 115 115

Certificates 1,491 1,675

Bonds 50 180

Total short-term investments 1,656 1,970

The cost price of short-term investments corresponds to book value as at year-end 2002 and 2001.

All short-term investments are considered held for trading and are recorded at fair value with unrealized gains and losses included in income.

The Company’s bonds are in their entirety issued by Norwegian banks and credit institutions and denominated in NOK.

10. Property, plant and equipment

MACHINERY, PRODUCTION

EQUIPMENT AND PLANTS OIL PRODUCTION CAPITALIZED

TRANSPORTATION AND GAS PLANTS BUILDINGS CONSTRUCTION EXPLORATION

(IN NOK MILLION) EQUIPMENT INCL PIPELINES ONSHORE AND LAND VESSELS IN PROGRESS COST TOTAL

Cost at January 1, 2002 2,245 196,392 4,147 2,311 217 2,476 2,218 210,006

Additions and transfers 435 6,596 29 57 0 4,231 340 11,688

Disposals at cost (603) (879) 0 (3) (110) (208) (7) (1,810)

Expensed expl cost capitalized earlier year

Accumulated depreciation, depletion and

0 0 0 0 0 0 (551) (551)

amortization (1,484) (127,795) (2,631) (825) (80) 0 0 (132,815)

Book value at December 31, 2002 593 74,314 1,545 1,540 27 6,499 2,000 86,518

Other intangible assets 870

Net property, plant and equipment at December 31, 2002 87,388

Depreciation, depletion and

amortization for the year 253 12,358 164 62 13 0 0 12,850

Estimated useful life (years) 5-10 * 15-20 20-25 20-25

*Unit of production, see note 1.

The book value of vessels consist of financial leases.

In 2002 and 2001, NOK 190 and 209 million respectively, of interests were capitalized.

Exploration expenditures

(IN NOK MILLION) 2002 2001

Incurred during the year 1,587 1,664

Capitalized share of current year's explortion activity (481) (488)

Expensed, previously capitalized exploration costs 551 665

Expensed during the year 1,657 1,841

STATOIL 2002

NOTES TO FINANCIAL STATEMENTS STATOIL ASA – NGAAP

Statoil ASA – NGAAP notes

To the Annual

General Meeting


Statoil group – NGAAP Statoil group – NGAAP – notes Statoil ASA – NGAAP

11. Provisions

Provisions against assets (other than property, plant and equipment and intangible assets) recorded during the past two years are as follows:

(IN NOK MILLION) AT JANUARY 1, EXPENSE RECOVERY WRITE-OFF OTHER AT DECEMBER 31,

Year 2002

Provisions for other long-term assets 16 0 (16) 0 0 0

Provisions for accounts receivables 41 3 0 0 0 44

Year 2001

Provisions for other long-term assets 90 0 0 0 (74) 16

Provisions for accounts receivables 45 0 0 0 (4) 41

12. Financial Items

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) 2002 2001

Dividends received 103 30

Loss on sale of securities (26) (1)

Interest and other financial income 954 1,740

Currency exchange adjustments, short-term items 1,604 1,101

Currency exchange adjustments, long-term items 7,283 (200)

Interest and other financial expenses (1,766) (3,220)

Capitalized interest 190 209

Net financial items 8,342 (341)

13. Income Taxes

The tax expense consists of

NOTES TO FINANCIAL STATEMENTS STATOIL ASA – NGAAP

Statoil ASA – NGAAP notes

To the Annual

General Meeting

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) 2002 2001

Current taxes payable 33,572 31,376

Change in deferred tax (1,139) 150

Income taxes 32,433 31,526

Uplift benefit for the year 3,564 2,811

Revenue from oil and gas activities on the Norwegian continental shelf is taxed according to the Petroleum tax law. This stipulates a surtax of 50%

after deducting uplift, a special investment tax credit, in addition to normal corporate taxation. Uplift credits are deducted as they arise, 5% each

year for six years, as from initial year of investment. Uplift credits not utilized of NOK 8.9 billion can be carried forward indefinitely.

STATOIL 2002 37


Statoil group – NGAAP Statoil group – NGAAP – notes Statoil ASA – NGAAP

38

Significant components of deferred income tax liability

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Impairment 363 376

Decommissioning 4,606 4,146

Other 929 2,137

Total deferred tax assets 5,898 6,659

Property, plant and equipment 34,364 33,732

Capitalized exploration expenditures and interests 7,845 7,891

Other 337 2,566

Total deferred tax liabilities 42,546 44,189

Net deferred income tax liability 36,648 37,530

A valuation allowance has been provided as Statoil believes that available evidence creates sufficient uncertainty as to the realizability of certain

deferred tax assets. Statoil will continue to assess the valuation allowance and to the extent it is determined that such allowance is no longer

required, the tax benefit of the remaining net deferred tax assets will be recognized in the future.

Income taxes payable in the balance sheet consists of the following

(IN NOK MILLION) AT DECEMBER 31, 2002

Current tax in the income statement 33,572

Taxes paid in instalments (14,550)

Current tax on group contribution (1,346)

Other 241

Income taxes payable 17,917

The movement in deferred income tax liability can be specified as follows

(IN NOK MILLION) 2002

Deferred income tax liability at beginning of year 37,530

Charged to the income statement (1,139)

Other and translation adjustments 257

Deferred income tax liability at end of year 36,648

STATOIL 2002

NOTES TO FINANCIAL STATEMENTS STATOIL ASA – NGAAP

Statoil ASA – NGAAP notes

To the Annual

General Meeting


Statoil group – NGAAP Statoil group – NGAAP – notes Statoil ASA – NGAAP

14. Short-term Debt

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Bank loans and overdraft facilities 2,238 120

Current portion of long-term debt 1,944 2,407

Total 4,182 2,527

Weighted average interest rate (%) 5.28 4.62

15. Long-term Debt

NOTES TO FINANCIAL STATEMENTS STATOIL ASA – NGAAP

Statoil ASA – NGAAP notes

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Unsecured debentures bonds:

US dollar (US$) 25,975 32,154

Euro (EUR) 621 1,182

Other currencies 22 516

Total 26,618 33,852

Other debt 765 711

Grand total debt outstanding 27,383 34,563

Less current portion (1,944) (2,407)

Total long-term debt 25,439 32,156

Weighted average interest rate (%) 3.98 6.00

Statoil has an unsecured debenture bond agreement for US$ 500 million with a fixed interest rate of 6.5%, maturing in 2028, callable at

par upon change in tax law. At December 31, 2002 and 2001, NOK 3,435 million and NOK 4,441 million were outstanding, respectively.

The interest rate of the bond has been swapped to a LIBOR-based floating interest rate.

Statoil has also an unsecured debenture bond agreement for EUR 500 million, with a fixed interest rate of 5.125%, maturing in 2011.

At December 31, 2002 and 2001, NOK 3,601 million and NOK 3,933 million were outstanding, respectively. EUR 200 million of the bond

has been swapped through an interest rate swap agreement to a LIBOR-based floating interest rate.

Statoil has also an unsecured debenture bond agreement for US$ 375 million, with a fixed interest rate of 5.75%, maturing in 2009.

At December 31, 2002 and 2001, NOK 2,591 million and NOK 3,347 million were outstanding, respectively.

Statoil utilizes currency swaps to manage foreign exchange risk on its long-term debt. The swaps are reflected in the table above.

The stated interest rate on the majority of the long-term debt is fixed. Interest rate swaps are utilized to manage interest rate exposure.

Substantially all unsecured debenture bond and unsecured bank loan agreements contain provisions restricting the pledging of assets to secure

future borrowings without granting a similar secured status to the existing bondholders and lenders.

Statoil has 21 debenture bond agreements outstanding, which contain provisions allowing Statoil to call the debt prior to its final redemption

at par if there are changes to the Norwegian tax laws or at certain specified premiums. The agreements are net after buyback at the

December 31, 2002 closing rate valued at NOK 24,315 million.

To the Annual

General Meeting

STATOIL 2002 39


Statoil group – NGAAP Statoil group – NGAAP – notes Statoil ASA – NGAAP

40

Reimbursements of long-term debt fall due as follows:

STATOIL 2002

(IN NOK MILLION)

2003 1,944

2004 2,728

2005 320

2006 1,500

2007 1,521

Thereafter 19,370

Total 27,383

Statoil has an agreement with an international bank syndicate for committed long-term revolving credit facility totalling US$ 1.0 billion, all

undrawn. Commitment fee is 0.105% per annum.

As of December 31, 2002 and 2001 respectively, Statoil had no committed short-term credit facilities available or drawn.

16. Financial Instruments and Derivatives

Statoil ASA’s exposure to and management of commodity risk, interest and currency risk and market risk for financial investments in equity and

debt securities is akin to the exposure to and management of risks in the Statoil group. The combined use of commodity based derivatives and

financial instruments is an integral part of the risk management process and is common for group entities. Reference is made to note 16 in the

consolidated accounts for a more detailed description of risks and the use of derivatives.

Interest rate and currency risks constitute the most important financial risks for Statoil. Total exposure is managed at portfolio level in accordance

with the strategies and mandates adopted. Interest rate risk, currency risk and share risk are assessed against mandates and based on a scenario

of 10% currency devaluation, one percentage point change in interest rates and 10% change in share prices. The table below illustrates an

uncorrelated loss scenario.

Risk exposure in the areas of currency, market risk on equity security investments and interest are estimated as follows:

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Currency risk 3,752 4,326

Share risk 0 0

Interest rate risk 1,060 1,131

17. Employee Retirement Plans

Pension benefits

The company has defined benefit retirement plans. Plan benefits are generally based on years of service and final salary levels. The retirement

plans are covered by Statoil's pension funds. These funds are organized as independent trusts. The major part of their assets are invested in

Norwegian and foreign bonds and shares, as well as real estate in Norway.

Net periodic pension cost

NOTES TO FINANCIAL STATEMENTS STATOIL ASA – NGAAP

Statoil ASA – NGAAP notes

YEAR ENDED DECEMBER 31,

(IN NOK MILLION) 2002 2001

Benefit earned during the year 663 615

Interest cost on prior period benefit obligation 610 523

Expected return on plan assets (746) (693)

Amortization of loss / prior service cost 58 44

Total net periodic pension cost 585 489

To the Annual

General Meeting


Statoil group – NGAAP Statoil group – NGAAP – notes Statoil ASA – NGAAP

Change in projected benefit obligation (PBO)

(IN NOK MILLION) 2002 2001

Projected benefit obligation at beginning of year 10,159 8,778

Benefits earned during the year 663 615

Interest cost on prior period benefit obligation 610 523

Actuarial gain (loss) (148) 437

Benefits paid (288) (194)

Projected benefit obligation at end of year 10,996 10,159

Change in pension plan assets

(IN NOK MILLION) 2002 2001

Fair value of plan assets at beginning of year 11,471 10,693

Retained earnings in the pension trusts reclassified to plan assets 0 861

Actual return on plan assets (609) 39

Company contributions 135 0

Benefits paid (126) (122)

Fair value of plan assets at end of year 10,871 11,471

Status of pension plans reconciled to balance sheet

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Funded status of the plans at end of year (125) 1,312

Unrecognized net loss 1,409 662

Unrecognized prior service cost 332 366

Total net prepaid pension recognized 1,616 2,340

Amounts recognized in the balance sheet:

Prepaid pension 3,724 3,812

Accrued pension liabilities (2,108) (1,472)

Net amount recognized 1,616 2,340

Weighted average assumptions at end of year

NOTES TO FINANCIAL STATEMENTS STATOIL ASA – NGAAP

Statoil ASA – NGAAP notes

Discount rate 6.0% 6.0%

Expected return on plan assets 6.5% 6.5%

Rate of compensation increase 3.0% 3.0%

To the Annual

General Meeting

STATOIL 2002 41


Statoil group – NGAAP Statoil group – NGAAP – notes Statoil ASA – NGAAP

42

18. Decommissioning and Removal Liabilities

At December 31, 2002 and 2001, NOK 7,507 million and NOK 7,041 million, respectively, had been accrued for future well closure,

decommissioning and removal of offshore installations and are included in Other liabilities. Statoil’s share of the estimated total future well

closure, decommissioning and removal costs is NOK 9,400 million and NOK 11,800 million at December 31, 2002 and 2001, respectively.

19. Research Expense

Research expenses were NOK 729 million and NOK 627 million in 2002 and 2001, respectively.

20. Leases

Statoil leases certain assets, notably shipping vessels.

Rental expense is NOK 1,717 million and NOK 2,518 million in 2002 and 2001, respectively.

The information below shows future minimum lease payments under non-cancelable leases at December 31, 2002.

OPERATING CAPITAL

(IN NOK MILLION) LEASES LEASES

2003 1,706 11

2004 1,051 12

2005 871 13

2006 516 14

2007 67 16

Thereafter 209 0

Total future rents 4,420 66

Interest component (10)

Net present value 56

Property, plant and equipment include the following amounts for leases that have been capitalized at December 31, 2002 and 2001.

AT DECEMBER 31,

(IN NOK MILLION) 2002 2001

Vessels 107 217

Less accumulated depreciation (80) (177)

Net 27 40

21. Other Commitments and Contingencies

Contractual commitments

(IN NOK MILLION) IN 2003 THEREAFTER TOTAL

Contractual commitments made . 4,527 6,430 10,957

These contractual commitments comprise acquisition and construction of tangible fixed assets.

Guarantees

The company has provided parent company guarantees for subsidiaries in Angola, Brazil, Nigeria, Venezuela, Great Britain, Azerbaijan and

Ireland. In addition, the parent company has provided guarantees of NOK 0.4 billion related to the wholly-owned insurance subsidiary Statoil

Forsikring AS’s exposure through its affiliate sEnergy.

STATOIL 2002

NOTES TO FINANCIAL STATEMENTS STATOIL ASA – NGAAP

Statoil ASA – NGAAP notes

To the Annual

General Meeting


Statoil group – NGAAP Statoil group – NGAAP – notes Statoil ASA – NGAAP

Contingent liabilities and insurance

Like any other licensee, Statoil has unlimited liability for possible compensation claims arising from its offshore operations, including

transport systems. The company has taken out insurance to cover this liability up to about NOK 5.6 billion for each incident, including liability

for claims arising from pollution damage. Most of the group’s production installations are covered through the wholly owned subsidiary

Statoil Forsikring AS, which reinsures a major part of the risk in the international insurance market. About 30% is retained.

Other commitments

As a condition for being awarded oil and gas exploration and production licenses, participants are committed to drill a certain number of wells.

At the end of 2002, Statoil was committed to participating in 15 wells off Norway, with an average ownership interest of approximately 35%.

The cost to drill these wells is estimated to NOK 1.0 billion.

In addition, Statoil has entered into agreements for pipeline transportation for most of its prospective gas sale contracts. These agreements

ensure the right to transport the production of gas through the pipelines, but also impose an obligation to cover Statoil’s proportional share of

the transportation costs. On the Norwegian continental shelf, Statoils ownership interest in the pipeline transportation systems exceeds its share

of the transported volumes.

During the normal course of its business Statoil is involved in legal proceedings and a number of unresolved claims are currently outstanding.

The ultimate liability in respect of litigation and claims cannot be determined at this time. Provisions in the accounts for these items are based on

the Company’s best judgment. Statoil is of the opinion that neither the financial position, results of operations nor cash flows will be material

adverse affected by the resolution of these legal proceedings.

22. Related Parties

Total purchases of oil and natural gas liquid from the Norwegian State amounted to NOK 72,298 million (374 million barrels oil equivalents) and

NOK 56,942 million (281 million barrels oil equivalents) in 2002 and 2001, respectively. Amounts payable to the Norwegian State for these

purchases are included as Accounts payable - related parties in the Balance Sheets. The prices paid by Statoil for the oil purchased from the

Norwegian State are estimated market prices. In addition Statoil sells the Norwegian State’s natural gas, in its own name, but for the account

and risk of the Norwegian State.

In addition to Accounts payable - related parties and Accounts receivable - related parties Statoil has a long term receivable of NOK 629 million

against the Norwegian State included in Long-term receivables.

23. Equity and shareholders

Change in equity

NOTES TO FINANCIAL STATEMENTS STATOIL ASA – NGAAP

Statoil ASA – NGAAP notes

(IN NOK MILLION) 2002 2001

Equity at beginning of year 46,189 49,943

Net income 16,377 14,827

Translation adjustment (5,318) (537)

Issuance of shares 0 12,890

SDFI transaction - net 0 (24,461)

Ordinary dividend (6,282) (6,169)

Other 67 (304)

Equity at end of year 51,033 46,189

SDFI transaction - net represents cash payments and net book value of properties transferred to the Norwegian State in excess of the net book

value of the properties transferreed to Statoil. See note 1 for further details.

To the Annual

General Meeting

STATOIL 2002 43


Statoil group – NGAAP Statoil group – NGAAP notes Statoil ASA – NGAAP

44

Common stock

STATOIL 2002

NUMBER OF SHARES PAR VALUE COMMON STOCK

Authorized and issued 2,189,585,600 2.50 5,473,964,000

Treasury shares (23,441,974) 2.50 (58,604,935)

Total shares outstanding 2,166,143,626 2.50 5,415,359,065

There exists only one class of shares and all have voting rights.

188,700,000 new shares were provided in a public offering. Investors in the retail offer were entitled to receive one additional ordinary share for

every 10 ordinary shares which they purchased and continued to hold in the same VPS account through June 17, 2002. The entitlement to

bonus shares was limited to an aggregate purchase amount of NOK 25,000 (NOK 75,000 for Statoil employees).

The 25,000,000 treasury shares was issued through a transfer from retained earnings to common stock. The treasury shares is used to grant

additional bonus shares, and may not be used for any other purpose without the consent of the general meeting. In 2002 1,558,026 of the

treasury shares were distributed as bonus shares.

Shareholders

The following shareholders as per December 31, 2002 owned 1% or more of the Company's 2,166,143,626 shares outstanding:

SHAREHOLDERS NUMBER OF SHARES

Ministry of Petroleum and Energy on behalf of the Norwegian State 1,770,168,598

State Street Bank 1) 58,148,692

JP Morgan Chase Bank, Great Britain 1) 35,770,127

1) Client account and similar

Members of the board of directors, corporate executive committee and corporate assembly holding shares as of December 31, 2002:

Board of Directors

Leif Terje Løddesøl (Chairman) 242

Marit Bakke 165

Stein Bredal 165

Bjørn Erik Egeland 1,243

Kaci Kullman Five 1,242

Finn A Hvistendahl 2,947

Grace Skaugen 0

Eli Sætersmoen 0

Knut Åm 14,594

24. Auditors’ remuneration

NOTES TO FINANCIAL STATEMENTS STATOIL ASA – NGAAP

Statoil ASA – NGAAP notes

Total remuneration to the external auditors for the fiscal year 2002 amounted to NOK 4,3 million for audit services and NOK 4,9 million for

other services, including NOK 3,8 million for audit related services.

To the Annual

General Meeting

Corporate Executive Comittee

Olav Fjell (President and Chief executive officer) 11,003

Elisabeth Berge 1,603

Henrik Carlsen 1,243

Inge K Hansen 12,403

Richard John Hubbard 1,243

Peter Mellby 1,243

Terje Overvik 825

Erling Øverland 2,464

Corporate Assembly (in total) 1,738


Statoil group – NGAAP Statoil group – NGAAP notes Statoil ASA – NGAAP

NOTES TO FINANCIAL STATEMENTS STATOIL ASA – NGAAP

STAVANGER, 17 FEBRUARY 2003

THE BOARD OF DIRECTORS OF STATOIL ASA

LEIF TERJE LØDDESØL

CHAIR

Statoil ASA – NGAAP notes

STEIN BREDAL MARIT BAKKE BJØRN ERIK EGELAND

KACI KULLMANN FIVE FINN A HVISTENDAHL GRACE SKAUGEN

ELI SÆTERSMOEN KNUT ÅM

OLAV FJELL

PRESIDENT AND CEO

To the Annual

General Meeting

STATOIL 2002 45


Statoil group – NGAAP Statoil group – NGAAP notes Statoil ASA – NGAAP Statoil ASA – NGAAP notes To the Annual

General Meeting

46

To the Annual General Meeting of Statoil ASA

Report of independent auditors - Norwegian GAAP accounts

We have audited the annual financial statements of Statoil ASA for the year ended December 31, 2002, showing a net income of NOK 16,377

million for the parent company and a net income of NOK 16,377 million for the Group. We have also audited the information in the Directors' report

concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit. The financial statements

comprise the balance sheet, the statements of income and cash flows, the accompanying notes and the consolidated accounts. These financial

statements are the responsibility of the Company’s Board of Directors and the President and chief excecutive officer. Our responsibility is to express an

opinion on these financial statements and on other information according to the requirements of the Norwegian Act on Auditing and Auditors.

We conducted our audit in accordance with the Norwegian Act on Auditing and Auditors and auditing standards and practices generally accepted in

Norway. Those standards and practices require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as

evaluating the overall financial statement presentation. To the extent required by law and auditing standards, an audit also comprises a review of the

management of the Company's financial affairs and its accounting and internal control systems. We believe that our audit provides a reasonable

basis for our opinion.

In our opinion,

• the financial statements have been prepared in accordance with law and regulations and present the financial position of the Company and of

the Group as of December 31, 2002, and the results of its operations and its cash flows for the year then ended, in accordance with accounting

standards, principles and practices generally accepted in Norway

• the Company's management has fulfilled its duty to properly register and document the accounting information as required by law and

accounting standards, principles and practices generally accepted in Norway

• the information in the Directors' report concerning the financial statements, the going concern assumption, and the proposal for the allocation

of the profit is consistent with the financial statements and comply with law and regulations.

STATOIL 2002

Stavanger, February 17, 2003

ERNST & YOUNG AS

Gustav Eriksen Jostein Johannessen

State Authorised Public Accountant State Authorised Public Accountant

(Norway) (Norway)

RECOMMENDATION OF THE CORPORATE ASSEMBLY

Resolution:

At its meeting of 6 March 2003, Statoil’s corporate assembly discussed the 2002 annual accounts of

Statoil ASA and the Statoil group, and the board of directors’ proposal for the allocation of net income.

The corporate assembly recommends that the general meeting adopts the annual accounts and the

allocation of net income, in accordance with the proposals presented by the board of directors.

Stavanger, 6 March 2003

Anne Kathrine Slungård

Chair of the corporate assembly

Corporate assembly

Anne Kathrine Slungård, Wenche Meldahl, Kjell Bjørndalen, Kirsti Høegh Bjørneset,

Erlend Grimstad, Gunnar Mathisen, Anita Roarsen, Asbjørn Rolstadås, Arvid Færaas,

Hans M Saltveit, Einar Arne Iversen, Åse Karin Staupe


STATOIL 2002 47


48

General information

Annual general meeting

The annual general meeting in Statoil ASA will be held at Stavanger Forum, Gunnar Warebergs gate 13, Stavanger, Norway on

Thursday 8 May 2003 at 5pm.

Shareholders who would like to attend the annual general meeting are asked to give notification of this by 12 noon on Monday 5 May to:

Den Norske Bank ASA

c/o DnB Registrars, Stranden 21, N-0021 Oslo, Norway

Telephone: +47 22 48 35 84

Telefax: +47 22 48 11 71

Shareholders who wish to attend the general meeting by proxy must give notice of this in writing. Notice of the annual general meeting

will be published in the Norwegian newspapers Stavanger Aftenblad, Aftenposten, Dagens Næringsliv and Finansavisen.

Dividend

The board’s proposal for the distribution of dividend will be resolved at the annual general meeting, with 23 May 2003 as the planned

date for payments. Dividend payments will be made to persons listed in the register of shareholders in the Norwegian Central Securities

Depository (VPS) on 8 May 2003.

Reporting of results

The following dates have been set for the quarterly reports in 2003:

1st quarter 28 April

2nd quarter 4 August

3rd quarter 27 October

The results will be published at 8.30am. Statoil reserves the right to change the dates.

Information from Statoil

The annual report is available in printed and electronic versions, in Norwegian and English. Quarterly reports in both languages are

available electronically. The group also prepares a report in English once a year, Form 20-F, and quarterly reports, Form 6-K, as required

by the Securities and Exchange Commission in the USA. These reports, together with further information about the group’s operations,

can be obtained by contacting investor relations or public affairs in Statoil.

Addresses

Statoil’s head office has the following address:

Statoil ASA, 4035 Stavanger, Norway.

Telephone: +47 51 99 00 00

Telefax: +47 51 99 00 50

E-mail: statoil@statoil.com

Investor relations : ir@statoil.com

Internet: www.statoil.com

A complete list of addresses and

telephone numbers is available at

www.statoil.com/addresses

STATOIL 2002

Statoil qualified for inclusion in

the Dow Jones sustainability

index in 2002. This puts Statoil

among the top 10 per cent of

oil companies in the world for

sustainable development.


Design:

Melvær&Lien Idé-entreprenør and Statoil.

Layout and graphs: Statoil

Reprography and printing:

Bryne Offset, Norprint Rotasjon AS

Photos:

Guri Dahl


STATOIL ASA

N-4035 STAVANGER

NORWAY

TELEPHONE: + 47 51 99 00 00

www.statoil.com

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