Mandate and Core Responsibilities
Petoro's mandate
Petoro’s mandate is, on behalf of the State and at the State’s expense and risk, to be responsible for safeguarding the commercial interests related to the State’s Direct Financial Interest (SDFI) in petroleum activities on the Norwegian continental shelf and associated activities.
The objective of the company is to create the greatest possible value for the State from the SDFI interests, while also ensuring efficient operations and holistic development of the gas infrastructure.
Petoro has four main responsibilities
managing the State’s direct ownership interests in licenses where the State at any time holds such interests
managing the State's ownership in central gas infrastructure
monitoring Equinor’s marketing of petroleum produced from the State’s direct ownership interests in accordance with the Marketing Instruction
License Follow-up
A key part of creating and securing value for the State is to achieve optimal recovery of resources within each production license, increase value creation, and ensure that the State receives its rightful share of production, revenues, and costs. Petoro achieves this through active participation in production licenses, in all phases from exploration to development and operation.
Photo: Equinor
Governance
Operations within each production license are governed through a fixed committee structure. The highest level is the Management Committee, where all license partners are represented. Below the Management Committee are technical and commercial committees. These subcommittees thoroughly assess professional, technical, and commercial matters. Their recommendations are then submitted to the Management Committee, which makes the overarching decisions.
Framework
Work within a production license takes place within the framework of a formal Joint Operating Agreement between the licensees. The agreement regulates how the parties shall cooperate. Joint Operating Agreements on the Norwegian continental shelf are standardised and contain clear rules governing roles, responsibilities, and decision-making processes.
The operator is responsible for day-to-day operations and for implementing the decisions that are made. The relationship between the Management Committee and the operator can be compared to that between a board of directors and executive management in a company. At the same time, partners in a license participate far more actively in technical and commercial assessments than is normally the case for board members in a company.
Gas infrastructure
Norwegian gas infrastructure is an integrated pipeline system that transports natural gas from the Norwegian continental shelf to customers in Europe. Petoro manage the State’s ownership interests in this infrastructure, and our task is to ensure the lowest possible user tariffs, efficient operations, and a holistic development of the system.
Petoro cooperates with Gassco, the operator of the transport system, as well as with infrastructure users and the authorities. Together, we work to ensure that the system functions efficiently today and is adapted to future needs. The system is the world’s largest offshore gas transmission system and delivers energy volumes to Europe equivalent to approximately nine times Norway’s hydropower production.
Overall, Norway supplies around 30 percent of Europe’s gas demand. The gas infrastructure has very high regularity and has developed over more than fifty years in line with field developments on the Norwegian continental shelf, changing market conditions, and applicable regulatory frameworks.
Marketing Follow-up
The State, through the Ministry of Trade, Industry and Fisheries, exercises a joint ownership strategy as the majority shareholder in Equinor and sole owner of Petoro/SDFI through the Marketing Instruction. The Marketing Instruction is issued to Equinor, and pursuant to the instruction, Equinor shall market the State’s petroleum together with its own. The objective of the Marketing Instruction is to achieve the highest possible total value for Equinor’s and the State’s petroleum and to ensure a fair distribution of revenues.
Petoro shall monitor that Equinor markets the State’s petroleum together with its own in accordance with the Marketing Instruction, including contributing to a fair allocation of revenues and costs. In this work, Petoro focuses on marketing strategy and risk management, in addition to assessing individual matters of significant value and matters of a principled and incentive-related nature.
Financial management
The SDFI interests are managed by Petoro on behalf of the State and at the State’s expense and risk. Petoro’s responsibility relates to the financial management of the SDFI portfolio, which comprises the State’s ownership interests. This includes preparing accounts for the SDFI, follow-up of budgets and forecasts, and monitoring audit activities.
The SDFI accounts are prepared in accordance with Norwegian accounting legislation and the State’s cash-based accounting principle. Petoro’s management of the portfolio is subject to the regulations governing financial management in the central government.
