Statoil ASA - Shareholder/Analyst Call

May.14.13 | About: Statoil ASA (STO)

Statoil ASA (NYSE:STO)

May 14, 2013 10:30 am ET


Olaug Svarva - Chairperson of Corporate Assembly and Chairperson of Nomination Committee

Svein Rennemo - Chairman and Member of Compensation Committee

Helge Lund - Chief Executive Officer and President

Hilde Merete Nafstad - Head of Investor Relations

Olaug Svarva

[Norwegian] Welcome, also, to the non-Norwegian participants. For those present in this room, headsets with English translation are available. For participants at the webcast, the meeting will be simultaneously translated to English. We, therefore, continue in Norwegian.

[Norwegian] Before we start, I would like to ask everyone to please be so kind as to turn your phones completely off. This is actually necessary so that we don't have an impact on the electronic equipment in the room here. All of those who are qualified voters here have received their ballots today when they registered. The balance slips should be used for any written ballots that we have. It's also been possible to vote electronically in advance during a period of time prior to the AGM. Those who are attending the AGM here and have already voted, please don't vote again. In the event of any written ballots, the counts will take place in an adjacent room under the supervision of representatives of the independent auditor, KPMG. If there's anyone who would like the floor during the general meeting, please give us some sort of a sign and then, introduce yourself by name. Shareholders have the right to grab their right to speak on their behalf to an advisor. Those who would like the floor will be asked please to go forward to the rostrum. This is necessary for technical reasons because of the fact that we have a direct webcast of the general meeting. Those who take the floor will have a time limit of 3 minutes to state their case, and this is kind of a limit is necessary in order to ensure that all the shareholders who would like to participate have an opportunity to be heard.

To facilitate practical implementation of the meeting, we will try to organize our comments and questions on an issue by issue basis, and I'm going to come back to this as we proceed.

That brings us to Point 2 on the agenda, registration of attending shareholders and proxies. The Secretariat is the process of creating a list of shareholders in attendance and their proxies, and the list will be accounted for as soon as it's completed and presented to the moderator.

That brings us, then, to Point 3, the election of a moderator for the meeting. The board moves that the general meeting elects the Chair of the Corporate Assembly, myself, as moderator of the meeting. Are there any comments to this? If not, then, the Chair of the Corporate Assembly is elected. Thank you for your vote of confidence.

That brings us to Item 4, the approval of the notice and the agenda. Section 5-10 of the Public Limited Liability Companies Act stipulates that the general meeting shall be convened by written notice to all shareholders with a known address. Pursuant to Section 5-10, second subsection of the -- and 5-11(b) for subsection, the notice should be sent at least 3 weeks prior to the meeting. In addition, the Notice of the Meeting must be published -- announced publicly. The notice accompanied by the financial statements and the director's report were sent to all the shareholders registered in the Norwegian Registry of Securities, and this was pursuant to the deadline. The notice, financial statements and director's report have been made public on the company's website in compliance with Section 5-11(a) of the Public Limited Liability Companies Act and the company's articles of association. This notification is taking place in accordance with the Norwegian Public Limited Liability Companies Act and the provisions of the Articles of Association. Are there any comments to the notification or to the agenda? If not, then, this general meeting is declared to be legally convened and the agenda is adopted.

That brings us to Item 5, this is the election of 2 persons to co-sign the minutes of the meeting together with the moderator. The proposal is Johan Alstad, who is the estate's representative from the Ministry of Petroleum and Energy and Astrid Bakke Olaussen. Are there any comments to these nominations? If not, then, Alstad and Olaussen are elected and will be signing -- co-signing the minutes.

Item 6, the approval of the annual report and accounts for Statoil ASA and the Statoil group. And we are now going to deal with -- be dealing with this along with the dividend. And the moderator suggests that discussions related to the next 2 items, 7 and 8, these are proposals from the shareholders for about -- regarding Statoil's activities in Canada and the Arctic. We would suggest that these be discussed together with Item 6. The reason that we want to deal with these together is to have the most coherent discussion. And the voting will take place as indicated in the notification. We want to do it this way so that we can have -- this is the same way that we've done -- the same procedure that we've used previously. The director's report and financial statements with the auditor's report and the statement of the corporate assembly have been made available on the company's website so that we don't have to read them aloud at this point.

Then, I will give the floor to Svein Rennemo, the Chairman of the Board of Directors, and he'll be giving an account of the board's view of operations and make a motion for the dividends. And then, just for your information, the Chair of the Board again later, under Item 9 on the agenda, will have a special report on the Board of Directors' proposed statement regarding remuneration of senior executives, so we'll take that afterwards. Then, I will give the floor to Svein Rennemo.

Svein Rennemo

Thank you, my dear co-shareholders, and welcome to this meeting. 2012 was another strong year for Statoil. Good safety performance, considerable growth in production, new discoveries and strong financial results. The start of 2013 had been demanding. The terrorist attack in In Amenas have marked us and continue to mark us. Our thoughts are with the survivors and those whose -- and their families. Many -- people from many nations fell innocent victims. We -- highly esteemed Statoil colleagues lost their lives in the attack and 12 of our employees managed to escape to safety. Statoil's response was marked by caring and trust from everyone in the organization. We also saw how they dealt with the people involved. Even though we have identified the terrorism as a threat, this attack represents a new threat scenario. We need to learn as a company, as an industry and Statoil and its board has appointed an independent investigation team, and this is in order to learn and they will also investigate the facilities and the people and we expect that they will present the report by 15 September this year. The company's second environment and is characterized by great uncertainty, geopolitical instability in several areas, particularly in Asia, North Africa and in the Middle East, weak economic growth in the OECD area. The world's economy has far from recovered and the short-term outlook is, especially in Europe, highly uncertain. Several countries must be prepared for a long period of moderate growth. On the other hand, economic growth in emerging economies, especially driven by China, helps increase the demand for energy and high prices for oil and other commodities. Competition in the industry is intensifying. Cost challenges are increasing and the framework conditions and capital intensity is also increasing, and this increases the pressure on margins too. At the same time, there is increased focus on the relationship between companies and society. Energy companies are subject to increasingly higher expectations. For Statoil, sustainable operations, transparency and trust are an integral part of our business. We will meet the world's increasing needs for energy in a financially, environmentally and socially responsible manner.

Secure operations and improved safety and security has had, and will continue to have, the highest priority in Statoil in 2012. We continued and maintained the strong safety performance and we will -- have also improved it. The board places important resolve to the continued improvement work that we do in Statoil.

A few words about financial results and the strategic improvement. In 2011, Statoil presented an updated strategy with a clearer profile as an upstream technology-focused on oil and gas company, and we produced -- the target remains firm. We have also seen a strong performance. We have a broader portfolio, stronger balance sheet and also, the ability to handle risks have been greater. And our exploration results are among the best in the industry, 1.5 billion barrels were added to our resource base in 2012. We delivered on our production target and our growth ambitions and the total equity production increased by 8% last year. On the -- the Norwegian continental shelf is being revitalized and still forms the core activity and core area. In 2010, many people believed that the greatest discoveries have been made and that the good days were over, but you have [indiscernible], you have Statoil, amongst others, creating a new history.

Internationally, we have also won operatorships in many of the most attractive petroleum regions in the world. Brazil, Angola, Tanzania and North America are among the most important ones. Statoil's project portfolio is large and growing, and it underpins our production targets for 2020. Among other things, it's been very motivating for the board during the past year to see the good deliveries on the first 5 so-called fast-track projects on the Norwegian continental shelf. These projects gave Statoil a considerable value creation. The opening of Harwyn Park[ph] here, the sharing of the shale park[ph] offshore, the U.K. also marked a very important milestone for Statoil.

The adjustment of the portfolio is a strategic part of our growth and strategy portfolio and also, the divestment of all the shares in the Statoil Fuel & Retail ASA and also, the agreement with Centrica regarding sale of assets on the Norwegian shores, were among the important ones. The board is satisfied with the company's strategic development and the position that the company has taken, and continue to build in -- under demanding conditions. The NOK 69.5 billion was the net profit; cash flow from operations, 128 million and strong results and a financially solid position form the basis for increased dividends in line with our dividend policy. And thus, we could recommend to the general meeting to increase dividends to NOK 6.75 for 2012.

Corporate governance and -- is another item on our agenda, and we will -- but let me say now that the corporate governance is based on equal treatment and transparency. Our mandate is to create a long-term value for our shareholders, and we will be looking after all the -- all our stakeholders' interest and also, the various group of shareholders' interests. In fact, all the way, the manner in which we create the results are as important as the results themselves that we create. The Statoil Book, which applies to all employees, such -- as a standard for conduct, deliveries and management. Our values provide an integral part of our governance and principles. The board places great emphasis on the -- also complying with standards internationally and Norwegians one, is given to the fact to continuously develop and also increase the efficiency of the strategies that we have decided. The nomination committee is also working very hard overtime to strengthen the composition of the board, the competencies and the experience. At all times, they also continuously manage the systems, the control routines in order to ensure that we run our operations in an efficient manner, both for the shareholders, the employees, the company and the society at large and they had a number of meetings in 2012. 94% were in attendance, several of the members of the board have visited the various facilities in the North Dakota and also the Harwyn[ph] and other, including the Goodwyn project. These visits helped increase insight into our knowledge about Statoil's commercial activity and local organizations.

At the general assembly, we've also received proposals from shareholders and other stakeholders that we should withdraw from our activities in Canada. In connection with the proposal received, we have issued a separate statement regarding the company's view and we've also made it available, prior to the general meeting, on our website. Growing population and also growing standard of living around the world has increased the demand for oil and the IEA expects that the demand for unconventional oil sources will increase to 10 million barrels a day, and even in a pathway way that has a 2% target, we still need energy. The question is not to -- whether the oil sand resources will be utilized but to which extent they will be. We have been involved in the oil sands operations since 2006. We increased the production to 16%. Statoil has clear and ambitious targets for more environmentally friendly and economically sound operations. The targets to reduce the emissions by 40% by 2020 is -- we're leading the further engagements so we'll be considered and we will make our decision based on financial and environmental criteria. It is also the board's opinion that our operation, oil sands operations are within the framework and parameters that we have set and, therefore, we recommend that shareholders vote against the proposal.

We've also received another proposal that Statoil should not run any operations in ice-laden waters. We have a long experience since that and we set up our operation in 1976. Today, our northern operations is led and run by [indiscernible]. Since 1980, Statoil has drilled more than 100 wells in Arctic areas and gradually, the company has built up experience and expertise about what operations in the Arctic areas mean. We have also experience from Snøhvit's LNG facilities and also, offshore in Newfoundland in Canada, we have ongoing development project in the Bering Sea, Skrugard/Havis and the partner-operated Goliat field. The ocean areas north of the Arctic Circle are expected to contain 1/5 of the world's undiscovered reserves. Access to new acreage and new resources are essential in order to secure production after 2020.

All our activities in the Arctic areas were done in accordance with the framework and legal parameters set by host nations. The board trusts that Statoil will take the necessary measures and develop the technology needed in order to run sustainable and safe operations in the Arctic areas. They will adopt a step-by-step approach and not until they have the technology and expertise necessary to deal with the challenges in Arctic areas, they will move ahead and therefore, the board recommends that shareholders vote against the proposal.

Recently, we've also had a more general debate about hydrocarbons that cannot be used if we are to satisfy the international climate targets. So Statoil is a responsible company that works in order to get in place climate agreements. At the same time as recognizing that the demand for oil and gas can be -- can decrease as a result of future agreements. We want to be in a position where our climactic and environmental footprints are so small that we can use it as a competitive edge. The main portion of proven reserves are constituted by coal. The first part of the shift towards more environmentally friendly directions is, therefore, the production in the world's coal consumption. If that this possible, we need more oil and gas and also more renewable energy sources.

By way of conclusion, I would like to thank the company's employees for the strong performance in 2012. Statoil is a highly competent and professional organization, deeply rooted in a common set of values. This gives us strength in our implementation and also, a sense of cohesion in difficult days. We will face more complex and increasingly challenging projects both in Norway and outside. We will need our whole organization's strength in order to deliver on our targets. And I will now give the floor to our CEO, Helge Lund.

Helge Lund

Dear co-shareholders, good afternoon. Statoil operates in an industry that is characterized by huge investments and very long lead times, and the decisions that we take today will often not bring results for 5, 10 or perhaps, even 15 years. At the same time, as a listed company, we are subject to the equity markets' expectations regarding performance, at least, in the short term. This requires that we need to stake out a strategy in a direction that the shareholders understand and that you can endorse.

As a company, Statoil is also dependent on having the trust and confidence of our shareholders and also of society at large. Trust allows freedom of action and gives us opportunities to further develop the company. Industrial development is almost impossible if not based on trust. The company will also set demanding goals and we are going to deliver on them, and this helps us to ensure long-term value creation for our owners. And I believe that throughout 2012, the company has made good on this.

But first, allow me to give you a brief description of the single incident that has impacted the company most strongly, recently, and which the Chair also mentioned. As you know, in January, we suffered a terrorist attack, and we lost 5 of our very valued coworkers in this attack. It was a very demanding and is an extremely demanding situation and I would, therefore, like to express my gratitude for all the support and assistance the company received from Norwegian and foreign authorities and partners at this very difficult time. The incident demonstrated that the content of our safety concept must be continuously considered and adjusted. Fighting terrorism is primarily the responsibility of the authorities and it is a global challenge. There are no absolute guarantees against terrorism for any company, anywhere. But as a company, we are responsible for the safety of our colleagues. We're responsible for understanding a dynamic -- the dynamic trust in assessing the security situation and for implementing any measures we feel are needed. The Chair of the Board of Directors reported on the ongoing investigation into this incident and the follow-up of the investigative report that is expected. This is what we're doing in 2013, and we are also working independently, of this investigation, we're also looking at the organization, our expertise and so on, so that we will be even better able to deal with the security situation in the company. We are also working together, very closely, with our partners in Algeria, Sonatrach and BP, on security issues as operations in In Amenas are gradually being brought back to ordinary operations. And one line has been producing for some time, a production train. We started Train 2 now in Q2 and the third train is going to be taking longer because the damage is more comprehensive. So it will take a little more time before it can be started. This product start that I mentioned has been taking place without us having any permanent staffing from BP and Statoil in Algeria at this point.

The incident in In Amenas in Algeria shows very clearly that security is not, and safety is not a question of just statistics. It's a question of the safety of our colleagues and our coworkers. But statistics, nonetheless, gives some information about the work that we do and, at least, the overall safety and security work that we do. Our safety and security was good in 2012. The serious incident frequency is 1, just about on par with 2011. And for several years, we have been working with a framework, a good framework throughout Statoil, which has 4 main priorities, and that is to continuously look at simplifications and improvements of government systems in the company, and this is important because we work in high-risk areas. Compliance is very important with these governance systems and constant improvement of these systems, ensuring that our facilities are continuously in good shape. And these are -- the technical integrity is what we call this. And then, the main focus of our work is naturally to prevent serious accidents and to strengthen Statoil's safety culture every single day, and this work will never be finished. And compared with our plans, we had an 8% increase from 2011 to 2012 and we produced, on average, about 2 million barrels per day throughout 2012. We also had very strong financial performance. We had a noninterest income pinned to more than NOK 206 billion in addition to generating NOK 26 billion in cash flow for dividends -- after dividends, and that has allowed us to reduce the net gearing ratio substantially.

During the year, we're very gratified to see that we managed to mature new resources and strengthen our resource base. We obtained an organic reserve replacement ratio of 110%, and this is important because it shows how many resources we're adding into our portfolio compared to how many we take out through production during the course of the year. And we believe that we can keep our reserve replacement ratio at -- in excess of 100% up until 2020. In addition to that, in 2012 -- it was yet another good year of exploration. In fact, even better than what we had in 2011, and we have added about 1.5 billion barrels that were added to our resource base, this is through the finds in the Norwegian shelf, Havis, and King Lear, these are the 2 largest. But we also have finds in Tanzania that in 2001, can hardly be compared at all to the company that we see today. We have gone from being almost exclusively Norwegian to being an international energy company, with large-scale positions in promising petroleum provinces, different places in the world. Through the merger with Hydro's oil and gas segment, we've become even larger and that has put us in a position where we can compete with the best in the world. We have better competence. We have also a better capacity to take risk. We've also tightened up our strategy, focusing on what we think we're best at, that being: finding, developing and producing oil and gas resources and then, selling them on the market for the highest possible price. So that we've gone out of and we've gone out of some areas where we feel others are better qualified to operate so that we can use our capital better at what we're best at. And we have strengthened our resource base significantly, as I mentioned. Just in 2011, we have actually added more than 3 billion barrels of resources to our resource base, and this gives us more flexibility for the development of our portfolio than what we had previously. And through these 10 years and perhaps in particular, since the financial crisis in 2007, '08 and '09, we've strengthened the financial balance that the company has.

Despite these changes, the same foundation exists -- or has existed throughout this period. Safe, efficient operations are the very backbone of our activities, expertise, technology, innovation. The running of our hydrocarbon facilities, energy facilities and the development of projects. The Chair of the Board mentioned that we operate in very dynamic and rapidly changing environments, with political unrest and turbulence. Several places in the world where we operate, significant financial challenges in all corners of the world. And the global GDP growth is largely driven from Asia, in fact, in the Middle East and we have -- they have helped keep the prices of oil and other raw materials buoyant. This is what we've said in recent years. And the pressure to develop even more resources to meet the demand also means that we see a lot more complex projects and the investments is costing more to develop projects and we see stronger pressures on our profit margins. And if this weren't enough, the expectations of major companies, perhaps especially energy companies, the expectations of society has become even larger. We have a new broad discussion of the interaction between markets and society, growing differences in income, global poverty, climate threats -- are perceived as an expression that capitalism in its current form is not sustainable. And there are growing expectations that companies are going to be providing more than just financial performance and results, and these expectations go along many axes, the social ramifications, the development of democracy, reducing poverty, and in addition with these things, perhaps one of the greatest challenges that we have ever faced and that is how are we going to both ensure that the world gets the energy that it needs, at the same time as we can contribute to reducing CO2 emissions. In the past decades, many -- hundreds of millions of people have gotten the opportunity to improve their lives through access to energy but there's still a lot of people who live in poverty and their desire for a higher level living standard is legitimate and access energy is one of the requirements for that. And in order to meet this growing need, oil and gas will be an important part of the energy mix for several decades and also within the global climate goals that we've set. We have to make new finds also in new areas. We have to get more out of the existing fields. At the same time, emissions have to be reduced. This means that we had to operate better and more efficiently and we have to continue to develop technology that can help us to reduce the adverse impact on climate, also in a broader sense. Strategically, we update our plan on 2011, our ambition is to produce 2.5 million barrels per day in 2020 and we've had a good development here in 2012 for bringing these ambitions to fruition. We've talked about the revitalization of the Norwegian shelf. We have made significant finds, Johan Sverdrup, [indiscernible] and King Lear, It's good that we've changed these names so often because international investors might think we're making even more fun when we changed these names. And as if this weren't enough, we also just a few weeks ago, we made a significant find on Gullfaks and it can, in fact, be 40 million to 150 million barrels of oil equivalent with a significant further upside potential, and I think it's really exciting that we're making such big finds on one of our largest facilities that's been a lot of the backbone for the development of Statoil. The way the company has developed and this bears witness to the fact that there are still great opportunities in Horten [ph] mature fields on the Norwegian continental shelf. And the first wave of these 5 fast-track projects was recently completed, it's been wonderful. It's an initiative that's been very highly successful. I think also those who are outside of the company, our suppliers, we have an average breakeven that's about $40 per barrel, and some projects in our portfolio are now as far down as $30 per barrel and there may be as many as 270 million barrels of oil equivalents here, so this is really an exciting development of our portfolio.

And also, internationally, we have strengthened the company through having operatorships, the Peregrino field and Brazil -- a formidable find off the coast of Brazil and Tanzania. We have also received -- we've been allocated stakes in 26 new licenses in the Gulf of Mexico and we signed a collaboration agreement with Rosneft, the Russian company, for a joint exploration in about 100,000 square meters of new area in the Arctic. Last year, we produced roughly 670,000 barrels per day from our international upstream operations, and that's an increase of about 25% from the preceding year and our net non-interest income from our international operations has increased by 70% since 2010, and that's up to NOK 21.5 billion in 2012. We're also very well-positioned in unconventionals in the U.S. We have good core areas in unconventionals in Bakken, Marcellus and Eagle Ford, and we've also become an operator in all 3 of these facilities and we can bring in our operator expertise and get even more out of these resources. I think also it's very gratifying and exciting that we have made our first big step into renewable energy in the opening of Sheringham Shoal in collaboration with Statkraft and this is an offshore wind park that will cover about -- produce an affinity for about 220,000 homes from this wind park. And we are now going to take the expertise that we have gained there. We've bought 70% of a project called Dogger and this is another offshore windmill project, north of Sheringham Shoal. We're going to use our expertise there and invest in the next project. So that I would say that overall, Statoil has a very large and very exciting project portfolio, so that the big challenge for the company in the years ahead is going to be implementation of these projects. We are getting better. We're getting more efficient so that the profitability is becoming better all the time. Our mandate from the shareholders is to create long-term value and that means we can't stand still. And even though we've had many years of progress in our industry, we have to continuously work at improvement, and we work on the basis of a very clear set of values. And this is based on safe, secure operation, and we feel that we have the financial situation to take both ups and downs in the oil and gas market into our stride. And we expect that we will manage to do that, and I think that we are well positioned to further develop the company in the years ahead. Thank you for your attention.

Hilde Merete Nafstad

All right, thank you very much to the Chair of the Board of Directors and the CEO for their reports. Before we move on, we have now received the short amount of shareholders, a total of 119 qualified voters here today, representing a total of 76.55% of the share capital. 70.59% of these people represent the voting [ph] shares, while 5.96% represent proxies. Advance votes representing 0.04% of the share capital have been cast, and I'm saying these numbers very clearly so that they can come across. So that was the registration of shareholders. Now we move to Item #7, the way we have planned the agenda which is a proposal from a shareholder. I would also like to remind you that later, you would have the opportunities to ask questions and comments to the Chair of the Board of Directors and the CEO's reports. The proposal on the Item 7 have been distributed in the notice [indiscernible] of the meeting. We will share with -- on the screen and it will not be read out aloud but I will now give the floor to the person who has submitted a proposal and we have agreed of a speaking time, 5 minutes.

Arild Skedsmo

Thank you. Dear general meeting Board of Directors, my name is Arild Skedsmo. I am the Technical Director of WWF Norway. I am standing here with the Greenpeace for the fourth time. It's the fourth time that we presented this proposal, that is not because we are very concerned and we feel that it's very important to attend the general meeting. We don't even eat your canapes. But this is because we believe that this is the most important issue that we address. We and Greenpeace have a high focus and I'm personally also very focused on this issue. Since we have been through this matter several times, we will not go into details about the effects of climate changes. We will just simply refer to the report from the World Bank last year on the consequences in case we have a full -- a degree target. We are now going in the direction of achieving a 6% increase in world temperature. We would also like to say that in line with what Rennemo presented, the IAE have been very explicit and clear. They have stated that if we're going to have a reasonable chance in order to achieve the 2-degree target of global warming, then a high number of percent of the world's -- 2/3 of the world's resources need to be left in the ground. The consequences of fossil companies who have all of these resources that exceed by far of what we can consume if we are to achieve the 2-degree target, well, underlying and underpinning this debate is that an increasing number of people take this 2-degree scenario seriously. It has been around for a while but people are coming around to saying that this is not just empty words. It is actually serious. And if we exceed the 2-degree target, it's not possible to live in this world and also, to our proposal, we've heard that the -- it is a prerequisite that the oil sands operations will be profitable for the next 30 or 40 years to come. We have that in previous reports. If someone, I'm sorry to say, make money from 30% of oil sands resources, then we will be going in the direction of a 4-degree global warming scenario. What we would like to question regarding -- and clearly regarding the board's report is that through the letter that they presented as a statement to our letter, well, by far they gave -- to a certain extent, they gave us a right. Of course, developing countries will increase their global demand for energy. We agree with them. We would also like to congratulate Statoil with the opening of the Sheringham Shoal, this is also an example how you can handle future sources but also want you to say that you will have a production of 10 million barrels a day in 2020 will also steer ahead the 3% -- 3.6 degree global warming. We believe that oil sand operations is against the global climate target. We would like the board to view that they based their profitability assessments and strategy on a 3.6-degree target. We do not expect that Statoil will fully deliver on its climate policy but the Norwegian state is such a major owner that the Norwegian people are entitled to an answer. They would like also a clarification if this is a basis and a precondition for Statoil's operation going forward. By way of conclusion, I would also like to say that we and Greenpeace disagree with the last assessment that the board makes whether this is a matter for the general meeting or not. We do believe, and also legal experts on company law that we have contacted, believe that this is not only a right but it's also a duty of a general meeting to state clearly if they feel that a company is actually stretching the ethical principles and also that they are going in the wrong direction. Thank you.

Unknown Shareholder

Co-owners of Statoil, for me this is also the fourth year that I'm standing here. Stavanger is a nice city but I would like that I would be here for a different reason. I do not have much to add apart from what Arild said but there are a couple of matters. One, the thing is completely about what you called a sustainable energy project in the forest of Alberta, that is not possible. The energy consumption in order to boil this and steam it out of the sands, that it will never be sustainable. The second thing is that we highly appreciate that Statoil is spending a lot of time on producing the figures and compiling data of what their performance in Canada. Unfortunately, the data is creatively formulated, and I would have liked to see that they have been presented by someone else than the information department. Time and again, we have to, not arrest that [indiscernible], actually, sort of presenting the wrong data but present rather creative data. We would actually have liked them to have a clearer position on what this actually means. This is our encouragement to the board, and we are also here to say that we would be at the Statoil's disposal to go through the data if they would want to before the next general meeting. I would also like to say Helge Lund and of the chair of the Board of Directors that clearly, there are legal proceedings initiated in Canada. The [indiscernible] and [indiscernible] people have initiated proceedings, not against that about Canadian governments and it will start at the beginning of 2015. Therefore, it is fully unacceptable that Statoil continues to expand of the operations, the oil sands operations in Canada until the trial is over.

Unknown Executive

All right. Thank you. We will now open to the floor for questions and comments to this Item 7, concerning Statoil's activities in Canada. Any questions regarding the report of CEO and the Chairman of the Board will be taken later. We'd also like that anyone who wants to ask for the floor, walk up to the rostrum and I will actually write down the list of speakers. I have to remind you that you have 3 minutes at your disposal. Please.

Unknown Attendee

I'd like to thank you for giving me this opportunity. I'm here today as a grassroots member of the Beaver Lake Cree Nation to highlight the damage being done to our traditional lands in Alberta, Canada. By tar sands development, including Statoil's Kai Kos Dehseh project and to make you aware of the risks involved with your large expansion plans for this project. Statoil's Kai Kos Dehseh project currently produces 16,000 barrels of oil per day and is both within our traditional territories and a herd range of the endangered woodland caribou. The seismic exploration lines, well pads, gas, steam and bitumen pipelines and access roads associated with your operations are already fragmenting the forest, including the air and water, disturbing wildlife and threatening the Beaver Lake Creek's traditional way of life. If your plans to expand production fifteenfold to 240,000 barrels a day, go ahead, it will totally destroy a huge area of our traditional lands and vital habitat for the culturally important and legally protected caribou. You may not be aware that our ancestors signed a treaty with the government in 1876 agreeing to share our land and in return for guaranteed rights to hunt fish, trap and gather plants and medicines on these lands forever. Alberta in Canada have breached this solemn commitment by allowing oil companies to destroy our lands. The Beaver Lake Cree Nation has refused to stand by and allowed this to happen and is suing the governments to protect our environment and treaty rights. The case has been running for about 5 years and despite repeated government attempts to have it thrown out, it has failed and the case is proceeding to trial. If we win and the law and constitution are on our side, it will have a huge implication for your expansion plans. My question to you is this, is that oil even aware that your operations and plans breach our treaty rights and that the Beaver Lake Cree Nation's suing Alberta and Canada to stop the rampant and unsustainable expansion plan for our territories? And have you given serious consideration to the riskiness of your investment given the implications of our legal challenge? If not, I recommend you rethink your plans, not at least because they are immoral but also because we're going to win. Thank you.

Unknown Attendee

Thank you. I'm happy to be back here the third time. I like Statoil but I have a concern about you still being in my part of the world. I come from Treaty 8. I want to say that my mother who's in her 80s asked me where am I going now? I said I'm going back to Norway to talk to the people of Norway and Statoil. And my mother says to me, she says, "Isn't this -- you spoke twice over there already?" I said, "Yes." "Why are these people not listening?" And she says, "Traditionally because when you speak twice, that's it. The third time there's something wrong." So I said, "My mother, these people need to be educated. They may have a small mind, so I go back there." And she just -- her final comment was, "Stop oil." That's how she said Statoil, stop oil. I want to also say that they'll see 45 in Canada. This prime minister of Canada I just recently dismantle all of the environmental protections of the environment, of the water, the rivers in Canada, making it easier for industry and companies -- oil companies to come in, do more harm to our land. But why is that -- the people from Norway are continuing to put up with this, that Statoil is in our territory and enabling the Prime Minister to continue his total destruction of our territory in the Arctic.

Unknown Executive

Okay. I think have to remind you about the time.

Unknown Attendee

Thank you. One more, I just want to say that Enbridge pipeline, Keystone XL Pipeline from what I hear is that Keystone will probably not happen because it's going to be producing more green gas emissions, and I want to thank the people who have brought me here. I have a letter with me. That's for you, people. It's an invitation by the Dene nation to attend our national assembly in July. I also have been asked by semi parliament to -- once again, they've sent you a letter by computer, you haven't answered the last one. So they're expecting an answer. So thank you so much.

Unknown Executive

Thank you very much. And there [Norwegian]. Okay. Thank you very much.

Olaug Svarva

[Norwegian] To Chief François Paulette for being so patient and coming back to Norway for the third time despite the fact that ordinary intelligent people have understood his message after twice. My name is [indiscernible]. I was the environmental policy spokesperson for the conservative party in the '80s and now I am a grandmother and a Green politician, and this is because I'm worried about our dependence on fossil fuels. It can lead us, it can lead to our children and grandchildren risking -- inheriting a world that has been stripped of its assets and I asked why are we so greedy? We know that the climate changes are here now and they're striking ever more people and areas with extreme weather, droughts, the loss of farmland, harvest, food, homes. And we hear what [indiscernible] and Helge Lund and [indiscernible] Say that the world needs Norwegian oil and gas to bring people out of poverty, but what we're seeing now is that the production and the combustion of oil and gas are bringing more people into poverty because of the climate changes. And in addition, that we allow the Norwegian state's oil company to take part in destroying the living conditions for the indigenous population in Alberta, Canada because of oil sand, these tar sands. It's so dirty. It's so unconventional. These operations should be absolutely prohibited. I am ashamed of being Norwegian because of this. And why can't we offer poor people local renewable energy? I would ask has the government, the leadership of Statoil, the board and the shareholders, "Do you have the conscience to allow this to continue?" It this the board that decides that Statoil is going to continue it's dirty activity in Canada. And I wondered then whether this board that is, in fact, comprised of some of Norway's most powerful people, you are more powerful than the Prime Minister. He can't say anything. Think about that, take that on board because we don't see much of this board in the public eye. So I knew then the more I've almost not heard say anything publicly about Statoil's activities, and I think that that's a problem with a view to democracy. So I would urge the shareholders to support the motion for Statoil to withdraw from Canadian tar sands.

Unknown Executive

Moderator, thank you. Then could we have the next speaker. I would ask for your understanding that we have to have a time limit because on the speakers because there are so many that would like to speak and we'd like to have time for everyone to state their case.

Unknown Shareholder

Dear AGM, my name is [indiscernible] and I'm here as a shareholder. I'm part of the Green Party and in May 2012, NRK Rogaland made a television program about Statoil and the tar sand, and Statoil didn't like this and they complained about it because there were pictures from facilities other than the ones that Statoil was involved to in the risk that went to PFU from the lawyers at Thomason [ph], it said the use of picture in Statoil's opinion was worthy of criticism because it gives a misleading impression of Statoil being involved in mining operations, which have entirely different environmental problems. Statoil has said that they're working with a cleaner type of oil sands production and here, we're using injection and 4 more other. On the surface, they can give the impression of being a better solution than having large-scale mines. The oil sand has a lot of carcinogens, benzenes, arsenic, phenols and other chemicals. Statoil heats up this mass in order to make it be a liquid and then can be brought up to the surface in pipes and the heating then releases these toxic chemicals. In 2013, there is no known technique that can prevent these compounds from mixing into the groundwater. Begin at the groundwater and poison it. Another problem is that the water that's produced, the water that comes up with the liquid bitumen, is they produced water and this water can be used several times but it gets more and more toxic every time so that Statoil ends up having to have these big lakes of special hazardous waste that can't be put in to the wells like we do in the continental shelf. We have to just keep putting more and more water injection as more and more is brought up and the danger of toxicity is also increasing and the poisoning of the water is increasing, and this is -- can be a sad chapter in the history of oil. The other reason that tar sands should not be touched is a climate question. On Friday, we passed 400 parts per million of CO2 in the atmosphere and the arrows are still pointing upwards. If we can manage to keep the emissions at this year's levels, we can let this amount out for 17 years, and after that, the emissions have to be 0. This has to be done in order to keep the global heating down to 2 degrees. So the time is very short for this when we know that CO2 based on oil that comes from tar sand is much higher than traditional oil. It's important to get rid of the first, first and about 80% of these fossil fuels are found have to stay in the ground and tar sand certainly has to be part of this 80%. The world's leading climate researchers say that focusing on tar sands is not -- cannot be reconciled with saving the climate and further efforts in tar sands will put Statoil even more deeply into a question of denying the climate crisis, be in denial. Those who own Statoil do not want to own an oil company that places kind of a role during a decisive period of time. We would therefore urge all shareholders to vote for the motion that Statoil leave -- withdraw from tar sand.

Unknown Executive

All right, then there's another speaker ready.

Unknown Shareholder

All right, my name is [indiscernible] and I'm a member of the Climate Action of Grandparents. As a shareholder, I am satisfied with the fact that Statoil is making good money and pay dividend. I'm also satisfied with the fact that Statoil through paying taxes, contribute to funds to the National Insurance, the civil wealth fund and the public treasury. However, as a grandfather, I'm also concerned about the negative and adverse impact on the environment that will affect our grandchildren. I'm not only thinking about the gas and oil production that can replace polluting coal sources around the world but also that Statoil is investing so much resources in shale gas production in the United States but also that they are investing in the operations in the tar sands operations Alberta, Canada. They invest heavily in cleaning the emissions that are far more polluting than in the North Sea. I'm surprised that the incumbent Board of Directors can sit there and defend this clearly erroneous investment that the company has made especially in view of the board's reports and the statements that the Board of Directors say that we work in order to meet the world's increasing energy needs, why not at the same time consider the environmental needs and also try to combat climate change? But this is not right. However, Statoil does work hard to meet the increasing need for energy from fossil fuels, but the polluting production in tar sands, it does not contribute to lower emissions nor the climate change. To the contrary, climate emissions from polluting sources help reinforce the adverse effects of oil production around the world and also go against and in conflict with the broad parliamentary settlement here in Norway. And our grandchildren and their successors will not thank Statoil for this. However, they will be voicing very harsh criticism that Statoil go against and in conflict with the broad parliamentary settlement here in Norway. And our branch here and the successes will not affect Statoil for this. However, they will be voicing very harsh criticism that Statoil did not invest in renewable sources in time. Statoil is in very bad company with Exxon, BP and Shell, and if it's in order to deplete the world's polluting oil and gas resources, despite the big events, climate targets and I therefore, coach everyone to vote against -- sorry, to vote for the proposal for Statoil to withdraw from Canada.

Unknown Executive

All right. Are there any other who would like to take the floor?

Unknown Shareholder

All right. I'm coming back. My name is [indiscernible]. I would like to put it like this. Dear sisters, brothers, grandparents. We -- the world population is growing, and we need more energy. I think it's very sad to sit here and hear that someone is ashamed to be Norwegian, because we help actually to provide the world with sorely needed energy. It's not that the oil production from fossil sources are problematic or pose problems. Four years ago, I was standing here on this rostrum. I was the first shareholder that actually supported the board under the strict precondition that they delivered on the targets, namely that they would reduce the CO2 emissions, and I'm satisfied with the developments, and I will continue to show up at annual general meetings to ensure that this is the development the company is going in. I would also like to say that I was at the OTC in Houston last week, the world's largest oil exhibition and conference. What has struck me over the past 4, 5 years in the United States is how the unconventional energy sources are actually being focused on by the -- in the energy industry. And well, it doesn't really make a big -- it's not that important what Statoil -- what Norway will do. I think that the energy scenario will be that in the United States, the world's biggest energy market, there will be less need for importing energy. If I refer to ExxonMobil's strategy up until 2040, then the unconventional energy sources by 2040 account for 55% of the fossil or the access to fossil sources. And of course, you make contest this estimate, but it is neither that we need to approach it from a technological vantage point like anyone [indiscernible] in order to reduce the adverse effects to its minimum. I believe that as shareholders, we also should expect that the annual general meeting focus more on oil, sand and the Arctic, because less discoveries are actually -- while we make discoveries in the North Sea, if have not had oil sands on the agenda, then we wouldn't have had to say that. Of course, we need to check on board that what the world need energy. The world population totals 7 billion people, and those who are ashamed of being Norwegians? I would like to respond by saying that unfortunately, what the outline that you propose is totally unrealistic and a big babble. Thank you.

Unknown Executive

All right. We have time for one more shareholder.

Unknown Shareholder

I'm here again on behalf of my father's estate. He had quite a few shares. I think he would have supported, [indiscernible] and I would congratulate the board on the results that they've achieved in reducing CO2 emissions in Canada. I think that the shareholders should focus on that. But I would like to mention something that came up from Alberta in English. A few weeks ago, I was asked to appear in the Parliament in Canada to witness -- as a witness, and what was at the committee and the Canadian Parliament was focused on much too little of the values that are being produced, not least from the tar sands are left in Alberta and Canada. They want to increase the taxes, including -- so that administration and governance is important. People say that they're even left -- some people said there was not much profit today and can be even smaller. Technology has to work against this. Some people in the economy, in the parliament wanted to have more environment -- higher environmental standards and taxes on that, and then there were some people that were focused on upgrading more of the bitumen in Canada, refining there, building refineries and upgrading facilities. This is another way to do this, the same way that Statoil got into refineries and petrol stations. And I lived in Alberta in the '70s, and then there was a premier in Alberta that was called Lockheed, and they had a fund that they had that was almost like our fund, the pension fund. And today, Alberta is on the way to becoming a dysfunctional province, a province that had better health care schools and educations than Norway had. When I was there between '73 and '75, the framework conditions there, where these companies are operating in Alberta, and the people are reacting. It's not just the first nations, but also others are reacting. And the most recent thing that they were focusing on was the pipelines out of the country. It doesn't help much to increase production in Alberta, when Alberta, as a landlocked province, then Ottawa is the one that then approves the pipelines to the states. And in the U.S., there's also a fight against the Keystone pipelines to get to the market, to go to Asia. They have to go through British Columbia. This isn't easy. British Columbia doesn't get enough of the value creation, and there's resistance there, the same as the shale gas is going out of the system. And if you look at the refineries that are found on the East Coast, then they have to go through all of the provinces. And this committee was really focused on that. And I hope that Statoil is following on with what's taking place in the hearings in Canada, where people from the oil and gas industry were present and they will testify, but the cases are going in the direction of it -- the possibility that it will be more difficult to bring a profit there. And previously, you sold a share of this, and I congratulated you then. Perhaps today, their owners, not least the Chinese, that are buying a lot of assets in the U.S. now, and perhaps then we could get rid of this focus at the AGM. I think that would be an advantage for everyone. But don't forget what we said last time that it is better that we do it and do it correctly than some of the companies that have been there and done everything other than right continue there. Thank you for your attention.

Unknown Executive

Moderator, are there more speakers related to this point? Because I would point out then that we would set a -- cut off the questions and comments for point 7, and the Chair of the board and the CEO will give their comments after the next item on the agenda. Then that brings us to the discussion on Item 8, and this is a motion from a shareholder. The motion has also -- this motion has also been distributed with the notice of the meeting. We have it up on the screen here. It will not be read aloud, but I will give the floor then to the person who has sent in the motion. Then you have 5 minutes.

Truls Gulowsen

Thank you, and thank you for a very good debate. Dear AGM, My name is Truls Gulowsen. I'm the head of Greenpeace in Norway. I have 4 shares in Statoil, and this is the fifth year I'm standing at this rostrum to ask for better strategic choices in Statoil. We thought that we would only have to deal with tar sand and that we would win that case easy and quickly for all the good reasons that have been mentioned previously. But again, this year, we have had to put this matter forward, and I hope that we can put this behind us. As the previous speaker mentioned, Statoil's new strategic focus on difficult and environmentally risky and expensive resources around the Arctic Sea has forced us to make another motion, to submit another motion that Statoil should at least not be engaged in oil production in ice-laden waters because that's what Statoil is starting to get engaged in without a debate. And it strikes me that the efforts with tar sand and the new efforts in the Arctic Sea are really part of this misplaced strategy that doesn't take the climate seriously enough, but just looks at the bottom line. This strategy is wrong, because it's really a bet against responsible climate goals. The world has already has more oil and gas -- coal and gas than they can burn, and we've already passed 400 parts per million of CO2 that was this weekend. It's a terrible milestone. It's immoral to continue exploring for more in a situation like this. And these efforts are also wrong, because these extreme resources that Statoil is focusing on now are extremely expensive to find and to produce. So that Statoil is just throwing more bad money after bad money in these risky areas. This is not a smart strategy, at least if they're serious about a 2 degree global warming goal. This is really making a bet against responsible environmental policy. And some have said that expensive Arctic production like tar sand is not going to be profitable in the world with the situation now. These resources need to be kept in the ground. As an owner of Statoil, or as owners of Statoil, we have to ask Statoil to do this in a responsible manner and not to make mistake, not least when Statoil is largely state-owned, and we have the Norway -- the government of Norway have said that they want to keep the global warming to less than 2 degrees. And these Arctic areas are new for Statoil. I don't remember that this has been discussed before the AGM today, but I can remember that we have discussed that Statoil is going to be focusing on new renewable energy and we have talked about that before, and other types of energy as what it says in the goal, the objective, and we haven't heard very much about that. Today, Statoil is the only oil company that has licenses all around the Arctic sea, and they're putting a lot of resources into this extreme area. This is despite the fact that oil activities in ice-laden waters are not allowed in Norway. Nonetheless, Statoil has licenses in the other Arctic countries in wholly or partially ice-laden waters. This is irresponsible is what we say. There's a dangerous double moral here -- double standard, because the state and Statoil, they have a lot of reasons that this is not a good idea. We saw ice out in the Oslo fjord, and if we look at -- it's difficult to get rid of -- if we think about this in the far north, how they're going to deal with it. But unless you had a main office in Harstad way in the far north of Norway would be easier. And the Russian company Rosneft also has a world record in oil spills, about 10,000 spills every year. They had no offshore experience despite the fact that they had these licenses, so that we have put forward a very moderate proposal that Statoil not engage in oil activities, petroleum activities in ice-laden waters, and that would be following Norwegian rules in the Arctic Sea. It's not really radical. We're not talking about closing down the offices in Harstad, not drilling in ice-laden waters, but it's just a question of not drilling in ice-laden waters because we don't know how to deal with them. And in the company's rejection of this, there was nothing said about ice. I didn't hear Mr. [indiscernible] say anything about the problems with ice. This is a conservative motion and it's conservative interpretation of the climate challenge. And if you think about trying to clean up an oil spill in ice, well, the whole thing is smart because you save money and it's smart because Statoil is not going to be a pioneer in the worst areas, but because be one of the most careful companies, and we can continue to be proud of it, and I am proud of it. So just small steps. So that I would like also here that there be written ballot, so that we can see exactly who is for and against and who would abstain and we hope that we don't have to deal with either tar sand or oil drilling in the Arctic at next year's AGM.

Unknown Executive

Thank you. Then we would open for discussion here, this Point 8. And then please be brief because of your shareholders so that everyone who wants to speak gets the chance.

Unknown Shareholder

Hello, general meeting. My name is Hannah A. Masterson, and I'm sharing along with someone else the environmental political party -- party presidents, the European Greece party, and we discussed the German energy than the -- heavily investing in renewable energy. Germany has created 380,000 new environmentally friendly jobs. The sector is becoming a spearhead in the fight against climate change, and it's impressive that one of Germany's largest country have adopted that they will try to convert the whole company to a renewable energy source country. I would like us to follow suit. Let's try to steer our resources away from high-risk investments in fossil fuels, because we know that the world will be needing renewable energy in the years ahead. Let's face after the consequences that an ambitious, sufficiently ambitious climate agreement internationally will -- by the struggle of -- when the investments in tar sands, not profitable at all and also, that we will be looking at a growth market. Statoil that will invest heavily in ocean wind. In spite of Arctic, tar sands will be Statoil that will make me proud. It's high time that the government uses its stake to make the right choices for the future so that all Norwegians can look the government in the eyes and tell them that we did the right thing. Let us make some more defensible choices as adults and create a sustainable future for our children and grandchildren. Today, unfortunately, Statoil is part of the problem. Statoil could be part of the solution. Therefore, I hope that as many shareholders as possible vote in favor of the motions presented by Greenpeace and the AUF.

Unknown Executive

Does anyone else want to take the floor?

Unknown Shareholder

Yes, dear shareholders. I would like to read about -- read a bit about how Statoil argues for the way that they would like to produce oil from the Arctic. They state that the world's growing population and need for living conditions actually need more energy. But why can't it not be local and renewable? They also say that the areas north of the polar -- of the Arctic Circle reflects 1/5 of the world's undiscovered, technically recoverable oil and gas resources. Yes, but don't we know that 2/3 of the known resources should be left in the ground, if we are to achieve the climate targets? They also say that access to new exploration acreage, including areas in the Arctic, is fundamental to the company's ambition beyond 2020, all right? But what about our ambition? We, who live here on planet Earth who wants a livable planet, because we only have one planet, and Statoil and all the other oil companies need to hone up to that view. I also feel that I would have liked to see other members of the Statoil's board to be present. I've only seen Mr. [indiscernible], and he's not very known publicly. Someone says that -- I mean he's not even visible. But we have [indiscernible] where are they? They used to belong to the same party as me and he was known to be an advocate for the environment. What has he said? I hope that he has voted against the responses that the Board of Directors have issued in advance of the general meeting. What will it take to smoke him out? I would certainly hope that he would be running force on the board to invest more in renewable energy. The Harbin project is great. We would like to see more of it. And Statoil has excellent expertise and professionals and resources that can actually be pioneers in investments and focus on renewable energy and not only Harbin project, but more. And I would simply like to wish the company the best of luck in such projects.

Unknown Executive

Are there any other questions linked to item number 8 on the agenda? Yes, we have one more. Please?

Unknown Shareholder

Hello. My name is Jane Coven. I'm Arctic project coordinator for Greenpeace Russia. And today, I'm here to raise a concern about the plans of Statoil to drill in the icy waters, together with our dirtiest company in the world, which is state Russian company, Rosneft. My concern is supported by more than 60,000 people, which were sending their letters to Prime Minister of Norway last month and more than 6,000 postcards with their letters we just delivered to Chair of the Board of Statoil just before the AGM started. And we all know that Statoil is not allowed to drill in the icy waters in Norway, but the company is going to start the joint project with Rosneft in Russian Arctic to drill in the northest ever license towards Barents Sea in the ice. And we all know that there is no existing technology of effectively cleaning the oil spill in the sea in the ice conditions. The best practice allow us to clean only -- collect only 10% of spilled oil in the ice. And you need to know that Rosneft is responsible for more than 10,000 oil spills here on their onshore drilling areas. And irresponsible practice of this company don't give us a chance to believe that their offshore projects will be more responsible. And we think that Statoil should not go for these dangerous joint projects, and we call you all to keep the reputation of the company as responsible for people and for the environment. Because this joint project of Rosneft and Statoil will allow Rosneft to start aggressively explore the resources of the Arctic region, our common Arctic, which is worth much more than oil. We believe that you will make the right decision for the future and for the planet and for the Arctic. Thank you very much.

Unknown Executive

Okay, thank you. So we'd like to speak to Item 8. It does not appear to be the case. I would remind you that the CEO and the chair will have the opportunity to respond to the speakers a little bit later. Before that, we're going to have one more round of questions, and that is questions for the reports that the CEO and the chair of the board gave. Are there any questions to the reports that they made? If so, the floor is available at this point.

Unknown Shareholder

My name is [indiscernible]. I'm a minimum shareholder. I have a question to Helge Lund. You had a very interesting overview of the serious accident frequency -- serious incident frequency. And this question was -- the poster was 2010, '11 and '12 with this terrorist attack in Algeria had been there, what would the frequency have been there then? It was at 1.0 in 2012. If we have had this kind of a catastrophe in 2012, how would that have impacted this? I just want to understand better what this concept is a serious incidents frequency and if there had been a serious oil spill, for example during drilling operation in the Arctic Sea that led to a couple of days of uncontrolled oil spills would that be then considered to be a serious incident? And the same as the work with the tar sands. If that had led to detectable water, if the ground water there had been poisoned, would that be considered to be a serious incident? What would the impact be on these figures or these columns? What is it that's included in this? It was a nice overview, but I'd like to know what is included in these figures.

Unknown Executive

Moderator, thank you. Are there more questions from the floor? Another gentleman?

Unknown Shareholder

It's a question to the chair of the board. You contend that you're satisfied with the developments in Canadian tar sand when it comes to CO2 emissions. As far as I know, it has always been said that they assume that in the long term, it's going to be 60 kilos of CO2 per barrel. And so you are following this -- this plan that was set up almost before you got into it. Are you satisfied with it? Haven't you managed to improve it?

Unknown Executive

Moderator, are there any more questions? That does not seem to be the case. And so, then, I will give the CEO and the chair of the board the opportunity to comment.

Helge Lund

All right. I'll go first. We are at a general meeting an energy company, if -- whose main emphasis is on oil and gas, we have a growing operations in ocean wind, but we are chiefly an oil and gas company, but also an oil and gas company which has a reputation for being at the forefront for operating as an environmentally responsible company and as a company, which focus on the social responsibility and social practice to a high extent. That is the image that we present internationally. And as the chair of the board, I believe that this is also a correct and real reputation. We operate in a line of industry, the energy industry, that is an important part of the world's global development and an important part to support the increase in living point of life that is in demand by people, and it is also part of the wealth development that millions of people seek outside our own country. Both as the chair of the board and as a grandfather, I believe that this is an ethical imperative that is pivotal, and that I place great emphasis on. But I also give weight to the fact that we, as a company, shoulder the responsibility that I mentioned, namely to operate our activity in an increasingly responsible manner vis-à-vis environmental and societal requirements and demands. We should also make the company better positioned to meet new requirements, especially when it comes to carbon pricing. And this company is one of the companies that pioneer the view that increased carbon prices and significantly higher carbon prices are part of the new solutions that we'll need. And for me, that is an important part of the backdrop. If we look specifically at Statoil's oil sand projects in Canada, and we are now discussing a project as operations that produce about 16,000 barrels a day and a company that overall have a production of 2 million barrels a day, the approach that the company and Board of Directors have taken vis-à-vis oil sand production is chiefly based on a step-by-step development. We will learn as we move forward. Secondly, we're also based on the fact that we should meet strict environmental targets. We are on the right track, but we cannot say that we are happy about where we are today. We need to move forward. And if we don't move forward against the targets, then we will have to -- we view that we also need to improve profitability. We have a journey to make in that aspect too. This is how the board sees these operations. We believe that we operate responsibly both from an environmental and societal point of view in the communities that we operate. As for the Arctic region, there's a lot of the same philosophy that Statoil offers. We develop our operations step-by-step when we move into new areas, and that will also be a guiding principle for us going forward. So that is part of the backdrop for why the board believes that it would be correct for the shareholders to vote against both the proposals and motions presented. Thank you.

Helge Lund

So I'll just comment briefly, the question about the serious incident frequency. This is a measurement parameter that measures the actual serious incidents, but also incidents with the potential to be a serious incident per million working hours. The incident and accident that happened in Algeria will be included in the figure that we have for 2013. I can't tell you at the moment what that will be, but there will certainly be included in the statistics. And it's important for me to underscore that it's dangerous to show statistics because it's not a question of statistics. It's a question about the expertise that we've developed. It's the safety and security culture where we avoid serious incidents and we have high quality agency. And I showed you this because it's just an indication that we're on the right way, we're moving in the right direction, but we also measure a lot of other things like the number of serious well incidents, and some of the most important work we do is to drill good, safe wells, and we've made great progress. We measure oil and gas leaks. We have complete control over all the small and large emissions and spills, so they're looking at our progress, we look in many different areas. Overall, I would say that in my opinion, we're moving in the right direction. On most of these parameters, I think the organization is working well, but we can never celebrate our progress because each and every single day, you're starting from scratch again and you have to do the work again to make further improvements. As regards the oil sands and unconventionals, I believe in the discussion about the demand side that we've heard here, the future situation of the world that this demand is driven by a growing number of people in the world and a higher standard of living, but we haven't had enough focus on the supply side. It's been the demand side, and where we often make a mistake is by underestimating the decline in all the existing fields in the world. And just to shore up and to compensate for the decline in conventionals, over the next 20 or 30 years, we have to make many times the amount of oil produced more than 10 million barrels a day that we have in Saudi Arabia, for example, and that, in itself, this compensation question, replacement question and in all kinds of energies, every type of energy, there's positive things, but there are also challenges. There are challenges with gas, there are challenges with oil, challenges with nuclear, challenge with oil sands, challenges with different kinds of renewables. And so the challenge for society has to be to strike a balance between the demand for new energy and the balance in the supply. There hasn't been very much focus point as of this point on the fact that USA now had lower CO2 emissions last year than the year before precisely because they're using more gas. I'm not surprised about the WWF and Greenpeace becoming against oil sands and against the activities in the North. But I am surprised that they don't have much more focus on problems related, for example, to coal, which today, is absolutely the biggest challenge that we face when it comes to finding a balance between energy and CO2 emissions. We have a tremendous focus on working together well with the various surroundings -- the local surroundings in Alberta, Canada and the local communities. I touched on this before today, we are completely dependent on earning the trust of those around us, but we have to accept that both in Norway and other places, there are different views of the business that we are engaged in. Today, we have received a letter from the chief of the Beaver Lake Cree Nation, and I can read from the letter, "I truly believe that Statoil is one of the select few companies that operate their activities but in our traditional territories that understand and respect our culture, values and way of life. This is why it is and remains in the best interest of our community to work hand-in-hand on development." And having read that out, I'm not saying that everything is good, but it's very important that we maintain a good dialogue with the community around us, that we have agreements with them that were signed between -- bucket for the head of the oil sands activities in 2012 and the chief of this group. It's important that we cooperate with them smoothly in the future as well. Just a couple words about the Arctic areas. The Arctic areas and just the Arctic, in our opinion, it's many different kinds of Arctic areas. The ones that we can deal with today, where there is not -- the waters are not filled with ice, for example, Snøhvit and other places. And we have areas that have more ice that require other solutions, icebergs, for example, in the East Coast of Canada. And then there are areas where there's permanent ice, and those areas have completely different challenges from what the industry can deal with today. So it's important that in this area, as we've done in Norway, that we take a gradual approach to this and that we develop expertise and technology that will allow us to have operations safe. And our whole focus in the Arctic is that we are a company that has experience in the Arctic areas. We feel that we are one of the companies that is best qualified over time to produce these resources, but that doesn't mean that we're going to be doing this as quickly as possible. We can't go any faster than what we feel we can deal with in order to comply with all the regulations and requirements that we have in Norway and other places.

Unknown Executive

Thank you then to the CEO and the chair for the comments and answers, and then we will go further to dealing with point #6. I'm sorry, we're not opening the floor to comments now.

[Norwegian] I suggest that you deal with this. This is Statoil's AGM. This is Statoil's AGM, so please do that afterwards. We have rules here that we have to play by and they have to be respected by the shareholders.

You have to deal with that afterwards. We will now move on to item #6. You will certainly get all the shareholders who've had an ample opportunity to speak today. And I would also point out that we are now dealing with -- we will be dealing with items 7 and 8 after we're finished with item 6, then I will give the floor to the state authorized auditor, Anna Grohnert [ph], who will now will be reading the auditor's report for 2012, and then we will look at the auditing. This is the first year that you are the auditors. You were elected last year.

Unknown Attendee

All right. This is the auditor report 2012. My name is Anna Grohnert [ph] and I am the lead partner in KPMG with responsibility for auditing Statoil ASA. As Statoil's selected auditor, we have submitted our auditor's report. The auditor's report has 2 parts: Part 1 is the opinion regarding the financial statements; Part 2 is about the opinion regarding other matters. I will now review the main features of these 2 parts.

Part 1, the statements regarding the financial statements consist of the following components: The Board of Directors and Chief Executive Officer's responsibility for the financial statements, the auditor's responsibility and the opinion on the separate financial statements where we confirm that the power and company's annual accounts are in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway and also consist of an opinion on the consolidated financial statements, where we confirm that the consolidated annual accounts are compliant with international financing reporting standards as adopted by the EU.

Part 2 then concerns the report on other legal and regulatory requirements consisting of the following components. We have an opinion on the opinion on the Board of Director's report and the statements corporate governance, which are in our opinion, consistent with the financial statements and in compliance with legislation and regulations. Now we have the opinion on accounting registration, documentation where we state that the management has fulfilled his duty to produce a proper and clearly set-up registration and documentation of the company's accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway and that the so-called clean report was signed by -- and global lead partner dated the 11th of March.

[indiscernible] for the assembly, I will now read aloud the corporate assembly's statements on the Board of Directors's proposal. At this meeting on 21st of March, 2013, the corporate assembly reviewed the financial statements for 2012 for Statoil ASA and the Statoil Group and the board's proposal for the allocation of the profit for the year. The corporate assembly supports the board's proposal for the annual accounts and the allocation of the profit. The general meeting is encouraged to adopt the board's proposal for the annual accounts for 2012 for Statoil ASA and for the Statoil group, as well as the director's report and the allocation of the proposed dividends. The dividend will accrue to the company's shareholders as a 14th of May, 2013, and the expected disbursement date is 29th of May, 2013.

Are there any comments to the motion regarding item 6? If not, the motion is carried.

Unknown Executive

All right. We'll next move to the item 17, and someone has requested a written vote or written ballot, and we will therefore carry it out.

First, we have the motion regarding item 7, which we now show. And you have received ballot slips, and shareholders are requested to use ballot slip A, using ballot slip A, and we will then collect it. But before that, we will also carry out a vote on item -- regarding item 8. But this is a vote for item 7. Both will be written ballots. And those who have made advance votes do not -- electronically do not need to vote again, as I said earlier.

A simple majority is required, and please note that blank ballot slips, ballot slips marked as extensions and ballot slips with several answers crossed off incorrectly filled in will not be counted and will not be counted as votes cast. The counting of the ballots will take place in a separate room under the scrutiny of an independent auditor. And in addition, the electronic absentee ballots will of course be included in the final results. I'd also like to point out that if you want to vote in favor of the motion made by a shareholder, you vote for the motion. If you wrote against the motion, then you follow the board's recommendation. Is that clear?

[Norwegian] And we'll also address item 8 here. You see on the screen the motion regarding Statoil's activities in the Arctic. Once again, a written ballot has been requested, and you need to take off on ballot slip B for item 8. And if you would like to support the shareholders' motion, you vote for the motion. If you vote against the motion, then you indicate that you follow the board's recommendations. So we will, in a minute, collect the ballot slip A and B, and it will be collected by representatives from DNB Bank. We will have [indiscernible] a process here. If you just remain in your chairs, your ballot slips will be collected.

Continue with the meeting, where they are starting to count the ballots, collect them.


[Norwegian] Have all the votes been collected at this point? Am I getting a sign from D&P back there that the votes were all collected? Has everyone who wanted to vote now have the chance to do so? It does look to be the case, so we will continue working while they are counting work. And then, we will get the results as time passes.

Then, let's move on to item 9, the board's statement on corporate governance. And in compliance with Section 564 of the Public Limited Liability Companies Act, the AGA [indiscernible] shall review and consider the board's statement on corporate governance submitted in compliance with the Norwegian Accounting Act. This statement has been made available on Statoil's website in advance of the AGM.

So and the Chair of the Board also talked about this under item 6. So the plan is for the AGM to take an advisory vote on the statement on corporate governance, and the board recommends that the AGM accepts and endorses the statement.

Are there any comments to this report that the chair had under this particular point? That does not seem to be the case, so we have seen this motion is carried that the AGM supports and accepts them.

The board's statement item 10, the declaration of stipulation of salary and other remuneration for Executive Management. And in accordance with the Public Limited Liabilities Companies Act, the Board of Directors is to draw up a declaration regarding salaries and other remuneration to Executive Management, and this is included in note 6 in Statoil's annual report and accounts for 2012, and this is made in accordance with the accounting principles generally accepted in Norway, the MGAAP. And I will give the floor to Chair of the Board, Svein Rennemo, who will be making a brief statement.

Svein Rennemo

Yes. Well, remuneration is one area that we focus on both in Norway and internationally. As you will know, this is one of the areas where the Chair of the Board may appear to be more visible, and of course, that's excellent. We have presented a declaration on the stipulation of salary and other remuneration for Statoil's Executive Management, and that is part of the annual report under the notice convening the meeting, and it lays out the formal decision-making process and the overall remuneration system and remuneration policy. The board sees it as very important that the shareholders get the best possible basis for making up their opinion about the remuneration policy and the company. The brief version is that the established remuneration policies and systems are continued in the same format the general meeting of shareholders have previously endorsed. At previous general meetings, I have reported about deviations of trauma, the states and the government guidelines applicable to the company's 2 Executive Vice Presidents employed outside of Norway. They are remunerated according to a multiple variable pay adjusted to the to the respective local markets without the company being market leader for positions at this level. And the Board of Directors still maintains that this is a correct and necessary solution.

The expensive work to evaluate changes in the company's overall pension system continues in 2013. The evaluation comprises on assessment of whether the present defined benefit scheme is to be replaced by a different contribution scheme or a hybrid scheme. This work also includes an assessment or the pension plan for salaries which exceeds 12G, that is 12x the base amount of the national assurance scheme. Based on the evaluation so far, it is the Board of Directors' opinion that the general state guidelines' requirement of funding pension contributions exceeding 12x the base amount in a separate legal entity will not be an appropriate solution for the company. We have given an account to this earlier annual general meetings. And once the backing -- Act commission's recommendations related to the revised framework for company pensions has been approved by the Norwegian parliament. The company will conclude the necessary amendments to its pension scheme and ensure the implementation. The company's standard early retirement scheme for Executive Vice President have now been terminated and will no longer apply to new EVPs. Formerly signed agreements will be maintained in line with the main principles of the state's guidelines. Now briefly, on the CEO's remuneration, CEO Helge Lund's base salary has from January 2012 been 6,834,118. Effective from 1st of January 2013, the base salary was adjusted by 3%, in line with the framework set for paid increases for Statoil's other executives. His annual average salary adjustment has thus been 2.35% during the past 5-year periods. The CEO has a variable performance-based salary with the potential on maximum 50% of the total fixed salary too. His performance base or his performance of the company since 2011 and 2012 were good. His performance base salary paid in 2013 conditional on the accomplishment of predefined targets for 2012, total of 37.5% of the fixed remuneration unchanged from previously. As a result of the company's solid performance and that the payment was higher than average for the past 5-year period, which was 27.5% of the fixed remuneration, and this average is impacted by the fact that bonus potential for the corporate executive committee was halved -- the CFO also has a long-term incentive scheme with a fixed pay element, which includes a long-term investment requirement in Statoil here.

The Board of Directors, also feels it important that the company is rooted in Norwegian reality and the guiding principles laid down by our biggest stakeholders, and this is a demanding balancing act. And the board's opinion, the remuneration systems and the application on transparency are in compliance with the Principle for Good Corporate Element. Statoil is increasingly acting as a global power with the size and complexity that is unique by Norwegian standards. International growth ambitions and the future will probably result in a desire to recruit more leaders in the international labor market. This may pose more challenges in terms of implementing a consistent and overall executive remuneration policy.

Thank you for your attention.

Unknown Executive

All right. This report will also be posted to the vote -- by the general meeting. Do you have any comments to the statement?

That does not seem to be the case. And it is hereby adopted that the general meeting supports the Board's report.

Next is item #11, namely approval of remuneration for the company's independent auditor for 2012. And the general meeting is urged to approve the auditing fees for Statoil ASA for 2012. It is proposed that the auditor's fee for auditing services in 2012 of NOK 6.5 million will be adopted by the general meeting. Are there any comments about the fee?

That is not the case, and the motion is hereby carried.

That brings us to item 12, which is the amendment to the articles of association. The board has put forward a motion to amend Article 11 of the articles of association regarding the company's nomination committee. And it is proposed to allow the election of personal deputy members for these nomination committee's members so that the relevant deputy member will join the nomination committee if the regular members must terminate before the term of office has expired.

The background for the motion is a desire to promote flexibility for the nomination committee in the event that one if the nomination committee's members, for whatever reason, must terminate during this term of office.

The proposal has been distributed with the notice of the meeting, and it's on this screen, and it is -- you see the amendment, it's underlined there, so I'm not going to read out the text. You can see the suggested amendments underlined on the screen.

Are there any comments to this motion? That does not seem to be the case. And if not, then the Board of Directors' proposed resolution is carried. Then, item #13, the determination of remuneration for the corporate assembly. And this has also been handed out or distributed with the notification of the meeting. We see it on the screen here. This is the motion for the new remuneration. It's up to a 4% increase, which is the motion, and you see the new figures on the screen here. Are there any comments to this recommendation? If not, then the motion is carried.

That brings us to item 14, which is the election of members to the nomination committee.

[Norwegian] Ingrid Rasmussen is leaving the nomination committee for Statoil ASA and Elisabeth Berge, the Secretary-General of the Ministry of Petroleum and Energy has been nominated as a new member of the nomination committee up until next year's Annual General Meeting. The background for this is that Ingrid [ph] Rasmussen has stated that she wishes to withdraw from the committee because she has left her position as a Director General in the Department for Economic and Administrative Affairs in the Ministry, and there is a CV, a resume for Elisabeth Berge. And as we've mentioned, the state is the largest owner. There's also a deputy member that is nominated for 'Elisabeth Berge, and that would be Johan A. Alstad. He is the Deputy Director General in the ownership section of the Norwegian Ministry of Petroleum and Energy, and he will then be the personal deputy for Elisabeth Berge during the same period, and this would be as a result of the amendment to the articles of association that we made under item 12. The other members of the nomination committee, I am the leader. And then we have the other members are the members Tom Rathke and [indiscernible] have been elected until the AGM in 2014.

Are there any comments to the motion? Then Elisabeth Berge is elected as a new member of the nomination committee, and Johan Alstad is then the new deputy member.

That brings us to item 15, the determination of remuneration for the nomination committee. And here, there is a proposal for a new fee schedule, and we see this on the screen. It entails up to a 4% increase. Are there any comments to this recommendation, this motion? No? If not, then the motion is carried.

That brings us to item 16, which is the authorization to acquire Statoil ASA shares in order to continue operation of the share saving plan for employees.

Since 2004, the company has offered a share saving plan for employees of the group. And the purpose of this scheme is to enhance a good business culture and encourage loyalty through employees becoming part owners of the company or co-owners. In Norway, in fact, more than 80% of the employees participate in the share saving plan. At the AGM last year, it was decided to authorize the board to acquire shares in the market for this purpose. This authorization expires today, and it is proposed then that the AGM renews the Board of Directors authorization to acquire shares in the market in order to continue the company's shares saving plan.

And this motion has also been distributed previously, so we won't be reading it out loud.

Are there any comments to the motion? That does not seem to be case, so that the board's motion is then carried.

That brings us to point 17, the authorization to acquire Statoil's shares in the market for subsequent enrollment. And here, the Board of Directors ask the AGM for the authorization to repurchase up to 75 million owned shares, the treasury shares, in the market in accordance with the Public Limited Liability Companies Act, and such authorization is common in many listed companies. The repurchase of own shares benefit shareholders because the remaining shares represent an increased ownership interest in the company.

For a detailed explanation of the background for the motion, I would refer your attention to the notice. And the motion has also been distributed with the Notice of the Meeting and it's shown here on the screen, so that we won't be reading this out loud either.

Are there any comments to this motion? If not, then this motion is carried.

Then we have gone through all of the items on the agenda. All we are waiting for at this point then is the result of the -- results of the votes for items 7 and 8. I would suggest that we take a very brief break, and we'll see how much time it takes.

Do we have someone here from D&B who can give us an idea of how long it will take? Let's just take a very brief break here, but stay close, and we will then come back when we are ready to conclude the AGM.


Unknown Executive

[Norwegian] All right. We'll address item 7 first, and I will read the numbers of votes cast. I just have to also be reading it likely slowly.

Of 2,431,693,752 votes cast on item 7, then 11,281,567 voted for the motion, accounting for 0.4% of the votes cast -- I apologize, 0.46% of the votes cast.

And as to item 8 2,432,561,669 votes were cast, and there are 12,214,276 votes were for the motion accounting for 0.5% of the votes cast.

So then, the 2 motions regarding item 7 and item 8 were defeated, were not carried.

All right. We have now addressed all items on the agenda. Would anyone like to ask for the floor in conclusion? I would also like to point out that shortly, the minutes of the General Meeting will be posted on the company's website in the near future.

All that remains is to thank all of you, shareholders, for attending and wish you a safe journey back. The meeting's adjourned.

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