Progressive reporting:

Statoil and transparency

Oslo 31 May 2016

2016-04-15

2016-04-15 2

Agenda and participants

Name and

Surname

Organization

Larysa

Melnychenko

Ministry of Finance of Ukraine

Dina Narezhneva National EITI Ukrainian Secretariat

Oleksandr

Shumskyi

State Fiscal Service of Ukraine

Olena Dyachenko Ministry of Economic Development and Trade of

Ukraine

Vadym Altukhov NGO All-Ukrainian Narodnyi Control (Civil Control)

Vladyslav

Deineko

NGO Analytical Center for Regional Cooperation

Mariia Sushkova Ministry of Energy and Coal Industry of Ukraine

Mariia Melnyk NGO Dixi Group

Maryna Shapoval NGO IBSER

Viacheslav

Zubenko

NGO IBSER

Andrii Chubyk NGO Centre for Global Studies “Strategy XXI”

Olga Belkova Verkhovna Rada of Ukraine

1. Opening – introductions

2. Revenue transparency in

Statoil

3. The EITI experience

4. Experience so far in Ukraine

5. Discussion around the table

6. Closing Name and

Surname

Organization

Bente Hovland VP Sustainability. Reporting and Monitoring, Statoil

Siri Farstad Sustainability expert, Statoil

2016-04-15 3

Background

As part of this year’s sustainability

reporting, Statoil published its second

annual Payment to Governments report.

This sets out all Statoil's payments to

governments around the world in 2015 on

a project-by-project basis.

Statoil has been a pioneering company

within revenue transparency, publishing

voluntarily on a country-by-country basis

for more than ten years before it became a

requirement.

2016-04-15 4

2016-04-15 5

2016-04-15 6

Our values embody the spirit and energy of

Statoil. They are at the core of our

management system.

Our values drive our performance and

guide us in how we do business, and in

how we work together and towards

external stakeholders.

Our values

Courageous

Open

Hands-on

Caring

Statoil works in partnerships to

advance it safety and sustainability

objectives:

To be recognised as the most

carbon efficient oil and gas

producer

Committed to creating lasting

value for communities

Industry leader in safety and

security

Engagement is part of how we work

2016-04-15 7

Payments to

governments

From voluntary to mandatory disclosure

8

Disclosing payments to governments is important to prevent corruption and tax

evasion – it enables communities to hold governments accountable and

contributes to a level playing field

2011 US Securities and

Exchange Commission

(SEC) approved rules for

oil and gas producers on

project level disclosure of

payments to governments.

The rules were vacated in

July 2013

July 2013 EU directive, which to a

large extent is aligned

with the original

requirements in the

SEC rule, was

approved

December 2013 Norwegian Parliament

passed requirements

aligned with the EU, but

also requiring

disclosures and

2016 SEC is to propose new

rules on reporting of

payments to

governments

December 2014 UK adopted the EU

transparency rules

2016-04-15

Scope of reporting and payment types

Key terms

• Project: operational activities that are governed

by a single or substantially interconnected

contracts, licenses, leases, concessions or

similar legal agreements and form the basis for

payment liabilities with a government.

• Government: any national, regional or local

authority of a country. It includes a department,

agency or undertaking (i.e. corporation)

controlled by that authority.

Validity

• Extractive activities (upstream); subsidiaries

consolidated into the group’s accounts

Principles

• Payments made directly by Statoil, or on behalf

of partners, are disclosed (100%)

Payments in scope

9

Companies in extractive and logging industries, i.e. Statoil

Subsidiaries that are consolidated into the group’s accounts

Upstream activities (exploration, prospection, discovery,

development and extraction)

Certain types of payments e.g. Tax on income and

production

Payments to governments

Payments made by Statoil, individually or on

behalf of partners – ‘publish what you pay’

Materiality treshold of 800 000 NOK

on cash basis

2016-04-15

Report layout: Consolidated overview

2016-04-15 10

Report layout: Project and receipient

2016-04-15 11

Feedback loop

2016-04-15 12

Engagement is part of how we work

2016-04-15 13

2016-04-15 14

EITI

The EITI experience of Norway

15 2016-04-15

• 2014: For the seventh

consecutive year, Norway’s

report has no discrepancies

• Over 98% of revenue streams

made up of two payment types

• The petroleum sector is the

dominant sector in Norway

Norwegian government’s petroleum revenue

2016-04-15 16

NOK billion

Governance of the EITI in Norway

• The reporting requirements for the

companies and government agencies were

passed into law under regulation effective

1 July 2009.

• The Norwegian EITI office is hosted by the

Ministry of Oil and Energy.

• Members of the multi stakeholder group is

appointed for two years at a time by the

King-in-Councel.

• There are meetings of the multi

stakeholder group two to three times per

year.

• The EITI report complements other

important reports and discussion papers

that are publicy awailable and discussed

by a wide range of stakeholders in Norway.

17 2016-04-15

Experience from actual reporting

Statoil reports within three areas

1. Corporation tax/special tax.

2. Indirect taxes and area fees.

− Indirect taxes in scope are CO2 and NOx.

− Area fee, paid by operator on behalf of

joint venture.

3. Payments in conjunction with Statoil’s role of

marketing and selling the Norwegian State’s

share of petroleum production.

This is experienced as a very smooth process,

not requiring much effort (max. ten days)

− Very few people involved

− Everyone knows what to do

− Forms are found on the NEITI web page.

Important to avoid frequent changes

Main success criteria: management buy-in and

well-working systems

The Norwegian form

18 2016-04-15

EITI and Statoil outside Norway

Statoil has supported the EITI since its

inception

• Annual financial contribution

• Staff secondment

• Board membership

• Committee work

• Participating in round tables

• Hosted events

• Active on several local MSGs

19 2016-04-15

EITI - what’s in it for Statoil?

• Be at forefront and influence shape of future development on transparency.

• The multi stakeholder set-up allows good dialogue with stakeholders.

• Be informed about country issues in Statoil countries

− e.g. Azerbaijan, Columbia, Indonesia, Mosambique, Myanmar, Nigeria,

Norway, Tanzania, UK, USA

• Work on improved governance in important countries.

• Share experience on how to report efficiently.

2014-11-05 20 Classification: Internal

Other Statoil reports you might find useful

2016-04-15 21

Presentation title

www.statoil.com

2016-04-15 22