1. NTNU, 16 Nov 2001 Norwegian gas pricing & sales organisation

2. Troll Gas On stream:October 1996 Total investment : NOK 35,5 bn (97-NOK) The wellstream is transported through pipelines from the Troll A platform to the treatment plant at Kollsnes, where the gas is dried and sent on to Europe. The platform and the treatment plant is operated with power from the Norwegian electricity grid, therefore the CO2 emissions are reduced to a minimum. Gas reserves:about 1 300 bn Sm3 Processing capacity:Gas 100 mill Sm3/day Condensate 3 500 Sm3/day 28 KONPR 24.11.98

3. Norwegian gas transportation system Gullfaks Statfjord Troll Kollsnes Kårstø Frigg Draupner Sleipner St. Fergus Ekofisk Etzel Europipe I Norpipe Zeepipe Zeebrügge Heidrun Åsgard Tjeldbergodden Midgard Draugen Heimdal Emden Dunkerque Franpipe Europipe II Åsgard Transport Oseberg

4. French natural gas transportation network

5. Risk sharing in classic gas sales contracts Seller: Price risk Buyer: Volume risk Long term Take or Pay contract Price indexation to best alternative fuels

6. Natural gas pricing The Market Value approach Best alternative solution Natural gas solution Øre/kWh Capital cost Operation cost Fuel cost Diff. in cap. cost Diff. in op.cost Gas price = 1+2+3 1 2 3

7. Market value - Natural gas Illustrative, simplified Average market value Residential sector Commercial sector Industrial processes Industrial boilers Distribution costs Storage costs Transmission costs Netback value Billion m³ Price/m³ Value Volume

8. Historical Norwegian Gas Organization Ministry of Petroleum and Energy (MPE) Market GFU; Gas Negotiation Committee Licences GSC; Gas Supply Committee e.g.; Troll,Sleipner, Åsgard, Statfjord Gullfaks, Oseberg

9. New Norwegian Gas organisation 1 June 2001: GFU (Gas Negotiation Committee) dismantled –Gas sellers negotiate individually with buyers Plans for dismantling of FU (Supply Committee) Partial privatisation of Statoil in June 2001 New 100% state owned company (Petoro) administrating the Norwegian State's gas reserves Statoil still the caretaker and marketer of the State's gas

10. Gas marketing in the future Best alternative solution Natural gas solution Øre/kWh Diff. in cap. cost Diff. in op.cost Gas price = 1+2+3 1 2 3 Spot gas markets P Q More competition => Reduced prices? Increased risk => Reduced offer? Concern in Europe: Security of supplies