1. Background
Norway’s oil and gas resources belong to the Norwegian society as a whole and shall be managed to the benefit of present and future generations. Accordingly, securing the largest possible share of the value creation from the oil and gas activities to society represents a main objective of the Government’s oil and gas policy.

Changes in the market conditions and the conditions relating to competition of the oil and gas industry necessitate adjustments to achieve the goal and to continue safeguarding employment, a high value creation and a strong Norwegian oil and gas industry. It is important that this industry is able to solve its tasks on the Norwegian Continental Shelf (NCS) while at the same time being competitive internationally.

Consequently, the Government is proposing an improved organisation of the State’s ownership to the oil and gas resources.

2. Opening up for new owners in Statoil
The Government proposes to open up for an increased number of owners in Statoil by floating the company on the stock market. Expansion of the ownership will supply new expertise, new partners and new capital. Statoil will remain a Norwegian-based company. Its head office and top management, its decision-making authority and strategy functions will be located in Norway. The State will retain at least two thirds of the shares in the company.

Initially, new owners corresponding to 10-25 per cent of the value of the company will be brought in through the flotation (initial public offering — IPO). This will primarily be achieved by issuing new shares in the parent company, Den norske stats oljeselskap a.s, in combination with the sale of parts of the State’s shareholdings, with placements both in the Norwegian and international capital markets.

Statoil will be given the opportunity to enter into equity-based strategic alliances with other companies. This can only take place after the company has been floated.

3. Restructuring of the SDFI
The Government proposes that SDFI assets corresponding to 20 per cent of the asset value of the SDFI be included in a restructuring of the State's engagement in the petroleum activities, provided this can be achieved on terms satisfactory to the State. The State will retain SDFI assets corresponding to 80 per cent of the SDFI asset value. The assets which the Government intends to sell to Statoil will account for about 15 per cent of the value, while those intended to be sold to Norsk Hydro and other companies will account for about five per cent.

As part of the restructuring, the Government also proposes a swap between the State and Statoil, implying a reduction in the State’s ownership interests in Europipe II and selected fields, and an increase in its ownership interests in Norpipe and Statpipe.

Furthermore, as part of the restructuring the Government proposes a change in the ownership structure of the crude oil terminal at Mongstad, so as to give the State an ownership share.

4. All transactions to be carried out at market value
The Government proposes that Statoil should partly pay for SDFI assets in cash, and partly SDFI assets may be transferred to Statoil as equity capital. The most suitable form of payment will be finally decided in light of what is considered the best capital structure of the company.

Other companies will pay for SDFI assets in cash.

5. The SDFI in future licence awards
The Government intends for the State to continue to reserve assets for the SDFI in future licensing rounds.

6. A new company to manage the SDFI
The Government proposes that a new state-owned limited company will be established to manage the SDFI portfolio of assets retained by the State in production licences, pipelines and land-based plants.

This new company will fulfill its purpose without possessing the same expertise as traditional oil companies. New SDFI assets will be managed by the company. The company will not itself apply for new licences. It will not be given operatorships. Activities in which the company is involved will be functionally related to petroleum activities on the NCS. The SDFI assets will be managed by the company, at the account and risk of the State. Costs and revenues relating to the SDFI assets will continue to be channelled through the State Budget.

The Government proposes that the location of the company should be Stavanger.

A separate Proposal to the Odelsting will be presented in the near future, to provide statutory regulation of this company.

7. A new transport company for natural gas
The Government proposes that an independent company for transportation of natural gas on the NCS will be established. It is proposed to that this company be organised as a limited company.

The intention is that all technical operations shall continue to be carried out by the organisations performing these tasks today, according to a separate agreement with the newly established transportation company. This implies that the new company will concentrate its activities on system operation, licence administration and overall supervision of the transportation infrastructure on the NCS.

For the time being, the company shall be wholly owned by the State until a lasting ownership structure in the pipeline system on the NCS has been established.

The intention is that all companies with responsibility for gas pipelines and transport-related facilities be treated in the manner described.

8. Safeguarding asset values in a flotation
The Government will work towards a flotation which safeguards the financial interests in the best possible manner.

During the spring of 2001, the Government will determine the date of the flotation. For planning purposes, work is being carried out with the aim of floating Statoil during 2001. The sale of SDFI assets to Statoil will be carried out before the flotation. Establishment of the management company for the SDFI and the transport company for natural gas will also take place before the flotation. Sales of SDFI assets to companies other than Statoil could take place in parallel with - or with a time lag as compred to the sales process for Statoil.

9. Statoil to market oil and gas
The Government does not intend to make any significant changes in the present organisation of the marketing of State oil and gas. Accordingly, Statoil will continue to handle this.