0001140625 ifrs-full:BottomOfRangeMember ifrs-full:TradingEquitySecuritiesMember 2023-12-31
Equinor 2023 Annual Report on Form 20-F 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
20-F
(Mark One)
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF
1934
OR
☒
For the fiscal year ended
December 31, 2023
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
OR
☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file number
1-15200
Equinor ASA
(Exact Name of Registrant as Specified in Its Charter)
N/A
(Translation of Registrant’s Name Into English)
Norway
(Jurisdiction of Incorporation or Organization)
Forusbeen 50
,
N-4035
,
Stavanger
,
Norway
(Address of Principal Executive Offices)
Torgrim Reitan
Chief Financial Officer
Equinor ASA
Forusbeen 50
,
N-4035
Stavanger
,
Norway
Telephone No.: 011-
47
-
5199-0000
Fax No.: 011-47-
5199-0050
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange On Which
Registered
American Depositary Shares
EQNR
New York Stock Exchange
Ordinary shares, nominal value of NOK
2.50
EQNR
New York Stock Exchange
*
*Listed, not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the
requirements of the Securities and Exchange Commission
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Equinor 2023 Annual Report on Form 20-F 2
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the
period covered by the annual report.
Ordinary shares of NOK 2.50 each
2,944,733,144
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☒
☐
No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐
☒
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 from their obligations under those Sections.
☒
Yes
☐
No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files)
☒
Yes
☐
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company”
in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Emerging growth company
☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if
the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards† provided pursuant to Section 13(a) of the Exchange Act
☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 762(b))
by the registered public accounting firm that prepared or issued its audit report.
☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements.
☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b).
☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing:
U.S. GAAP
☐
International Financial Reporting Standards
by the International Accounting Standards Board
☒
☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the
registrant has elected to follow.
Item 17
☐
Item 18
☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).
☐
Yes
☒
Equinor 2023 Annual Report on Form 20-F 3
TABLE OF CONTENTS
INTRODUCTION
USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FORWARD-LOOKING STATEMENTS
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
A. Directors and Senior Management
B. Advisers
C. Auditors
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
A. Offer Statistics
B. Method and Expected Timetable
ITEM 3. KEY INFORMATION
A. [Reserved]
B. Capitalization and Indebtedness
C. Reason for the Offer and Use of Proceeds
D. Risk Factors
ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
B. Business Overview
C. Organizational Structure
D. Property, Plant and Equipment
ITEM 4A. UNRESOLVED STAFF COMMENTS
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
A. Operating Results
B. Liquidity and capital resources
C. Research and development, Patents and Licences, etc.
D. Trend information
E. Critical Accounting Estimates
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
B. Compensation
C. Board Practices
D. Employees
E. Share Ownership
F.
Disclosure of a registrant’s action to recover erroneously awarded compensation.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major shareholders
B. Related Party Transactions
C. Interests of Experts and Counsel
ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
B. Significant Changes
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
B. Plan of Distribution
C. Markets
D. Selling Shareholders
E. Dilution
F.
Expenses of the Issue
ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
B. Memorandum and Articles of Association
C. Material Contracts
D. Exchange controls
Equinor 2023 Annual Report on Form 20-F 4
E. Taxation
F.
Dividends and Paying Agents
G. Statement by Experts
H. Documents on Display
I. Subsidiary Information
J. Annual Report to Security Holders.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. Debt Securities
B. Warrants and Rights
C. Other Securities
D. American Depositary Shares
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
ITEM 15. CONTROLS AND PROCEDURES
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
ITEM 16B. CODE OF ETHICS
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
ITEM 16G. CORPORATE GOVERNANCE
ITEM 16H. MINE SAFETY DISCLOSURE
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
ITEM 16J. INSIDER TRADING POLICIES
ITEM 16K. CYBERSECURITY
PART III
ITEM 17. FINANCIAL STATEMENTS
ITEM 18. FINANCIAL STATEMENTS
ITEM 19. EXHIBITS
CONSOLIDATED FINANCIAL STATEMENTS
Equinor 2023 Annual Report on Form 20-F 5
INTRODUCTION
Unless otherwise indicated, all references herein to “we”, “our”, the “company”, the “group” or “Equinor” are references to Equinor ASA
and its consolidated subsidiaries.
This document is our annual report on Form 20-F for the year ended 31 December 2023 (“
2023 Form 20-F
”). Reference is made to
our Norwegian Integrated Annual Report for 2023 which is attached hereto as Exhibit 15.4 (the “
2023 Annual Report
”), our 2023 Oil
and Gas Reserves Report which is attached hereto as exhibit 15.5 (the “
2023 Oil and Gas Reserves Report
”), our 2023
Remuneration Report which is attached hereto as exhibit 15.6 (the
“2023 Remuneration Report
”), and our 2023 Board of
Governance Report which is attached hereto as exhibit 15.7 (the “
2023 Corporate Governance Report
”). Only (i) the information
included in this 2023 Form 20-F, (ii) the information in the 2023 Annual Report, the 2023 Oil and Gas Reserves Report, the 2023
Remuneration Report and the 2023 Corporate Governance Report that is incorporated by reference in this 2023 Form 20-F (excluding
any page references incorporated in the incorporated material unless specifically noted otherwise), and (iii) the other exhibits to this
2023 Form 20-F shall be deemed to be filed with the Securities and Exchange Commission (“
SEC
”) for any purpose, including
incorporation by reference into the Registration Statement on Form F-3 filed on May 4, 2023 (File No. 333-271647), and Registration
Statement on Form S-8 filed on February 9, 2022 (File No. 333-262601) and any other documents filed by us pursuant to the
Securities Act of 1933, as amended, which purport to incorporate by reference the 2023 Form 20-F. Unless otherwise indicated,
references to major headings include all information under such major headings, including subheadings, unless such reference is a
reference to a subheading, in which case such reference includes only the information contained under such subheading. Any other
information shall not be deemed to be so incorporated by reference.
In addition to the information set out below, the information set forth under the heading “Other definitions and abbreviations” in Section
5.7 of Chapter 5 on pages 306 – 309 of the 2023 Annual Report is incorporated herein by reference.
The 2023 Annual Report contains references to our website (https://www
.
equinor.com). Information on our website or any other
website referenced in the 2023 Annual Report is not incorporated into this document and should not be considered part of this
document.
The SEC maintains an Internet website that contains reports and other information regarding issuers that file electronically with the
SEC. Our filings with the SEC are available to the public through the SEC’s website at http://www.sec.gov.
The information about Equinor’s competitive position in this 2023 Form 20-F (including the information in the 2023 Annual Report that
is incorporated by reference herein) is based on several sources such as investment analyst reports, independent market studies, and
internal assessments of market share based on publicly available information about the financial results and performance of market
players.
Equinor 2023 Annual Report on Form 20-F 6
USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Since 2007, Equinor has been preparing its audited consolidated financial statements in accordance with International Financial
Reporting Standards (IFRS® Accounting Standards) as adopted by the European Union (EU) and as issued by the International
Accounting Standards Board. IFRS Accounting Standards have been applied consistently to all periods in our audited consolidated
financial statements as of 31 December 2023 and 2022, and for the three years ended 31 December 2023 included in this 2023 Form
20-F (the “Consolidated financial statements”).
Non-GAAP financial measures are defined as numerical measures that either exclude or include amounts that are not excluded or
included in the comparable measures calculated and presented in accordance with generally accepted accounting principles: (i.e,
IFRS Accounting Standards in the case of Equinor). The following financial measures included in this 2023 Form 20-F may be
considered non-GAAP financial measures:
a)
employed ratio adjusted
b)
c)
d)
e)
f)
g)
For more information on the calculation and reconciliation of these non-GAAP financial measures, see “Item 5. Operating and
Financial Review and Prospects—B. Liquidity and capital resources—Use and reconciliation of non-GAAP financial measures.”
Equinor 2023 Annual Report on Form 20-F 7
FORWARD-LOOKING STATEMENTS
This 2023 Form 20-F F (including information incorporated herein from the 2023 Integrated Annual Report) contains certain forward-looking
statements that involve risks and uncertainties, in particular in the sections incorporated by reference in Item 4 of this 2023 Form 20-F. In
some cases, we use words such as "aim", "ambition", "anticipate", "believe", "continue", “commit”, "could", "estimate", "expect", "intend",
"likely", "objective", "outlook", "may", "plan", "schedule", "seek", "should", "strategy", "target", "will", "goal" and similar expressions to identify
forward-looking statements. All statements other than statements of historical fact, including: the commitment to develop as a broad energy
company and diversify our energy mix; the ambition to be a leading company in the energy transition; ambition to reach net zero by 2050 and
expectations regarding progress on our energy transition plan; our ambitions regarding reduction in operated emissions and net carbon
intensity and allocation of gross capex* to renewables and low carbon solutions; our ambitions and expectations regarding decarbonisation;
our ambition to maintain value in oil and gas, focus on high value growth in renewables and contribute to maturing CCS and hydrogen
markets; ambition to attain a leadership position in the European CCS market and expectations regarding market share for storage and
hydrogen; aims, expectations and plans for renewables production capacity and power generation, investments in renewables and low-carbon
solutions and the balance between oil and gas and renewables production; our expectations with respect to net carbon intensity, operated
emissions, carbon and methane intensity and flaring reductions; our internal carbon price and other financial metrics for investment decisions;
break-even considerations and targets; robustness of our portfolio; aims and expectations regarding Equinor’s resilience across different
climate scenarios; future levels of, and expected value creation from, oil and gas production, scale and composition of the oil and gas portfolio,
and development of CCS and hydrogen businesses; plans to develop fields; our intention to optimise and mature our portfolio; future
worldwide economic trends, market outlook and future economic projections and assumptions, including commodity price assumptions;
expectations and plans regarding capital expenditures; future financial performance, including earnings, cash flow, liquidity and return on
average capital employed (ROACE)*; the ambition to grow cash flow and returns; expectations regarding cash flow and returns from our oil
and gas portfolio and renewables and low carbon solutions portfolio; organic capital expenditures for 2024; expectations and estimates
regarding production and execution of projects; the ambition to keep unit of production cost in the top quartile of our peer group; scheduled
maintenance activity and the effects thereof on equity production; business strategy and competitive position; sales, trading and market
strategies; research and development initiatives and strategy, including ambitions regarding allocation of research and development capital
towards renewables and low carbon-solutions; expectations related to production levels, unit production cost, investments, exploration
activities, discoveries and development in connection with our ongoing transactions and projects; our ambitions, expectations and plans
regarding diversity and inclusion, employee training and supporting a just energy transition; plans and expectations regarding completion and
results of acquisitions, disposals and other contractual arrangements and delivery commitments; plans, ambitions and expectations regarding
recovery factors and levels, future margins and future levels or development of capacity, reserves or resources; planned turnarounds and
other maintenance activity; expectations regarding growth in oil and gas, , including for volumes lifted and sold to equal entitlement production,
and renewable power production; estimates related to production and development, forecasts, reporting levels and dates; operational
expectations, estimates, schedules and costs; expectations relating to licences and leases; oil, gas, alternative fuel and energy prices,
volatility, supply and demand; plans and expectations regarding processes related to human rights laws, corporate structure and
organizational policies; digitization, technological innovation, implementation, position and expectations; expectations regarding role and
composition of the board and our remuneration policies; our goal of safe and efficient operations; effectiveness of our internal policies and
plans; our ability to manage our risk exposure, our liquidity levels and management of liquidity reserves; future credit ratings; estimated or
future liabilities, obligations or expenses; expected impact of currency and interest rate fluctuations; projected outcome, impact or timing of
HSE regulations; HSE goals and objectives of management for future operations; our ambitions and plans regarding biodiversity (including our
aim to develop a net-positive impact approach for projects) and value creation for society; expectations related to regulatory trends; impact of
PSA effects; projected impact or timing of administrative or governmental rules, standards, decisions, standards or laws (including taxation
laws); projected impact of legal claims against us; plans for capital distribution, share buy-backs and amounts and timing of dividends are
forward-looking statements.
You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in
the forward-looking statements for many reasons, including the risks factors incorporated in Item 3.D of this 2023 Form 20-
F.
Forward-looking statements are not guarantees of future performance. They reflect current views about future events, are based on
management’s current expectations and assumptions and are, by their nature, subject to significant risks and uncertainties because they
relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied by these forward-looking statements, including levels of industry product
supply, demand and pricing, in particular in light of significant oil price volatility; unfavourable macroeconomic conditions and inflationary
pressures; exchange rate and interest rate fluctuations; levels and calculations of reserves and material differences from reserves estimates;
regulatory stability and access to resources, including attractive low carbon opportunities; the effects of climate change and changes in
stakeholder sentiment and regulatory requirements regarding climate change; changes in market demand and supply for renewables; inability
to meet strategic objectives; the development and use of new technology; social and/or political instability, including as a result of Russia’s
invasion of Ukraine and the conflict in the Middle East; failure to prevent or manage digital and cyber disruptions to our information and
operational technology systems and those of third parties on which we rely; operational problems, including cost inflation in capital and
operational expenditures; unsuccessful drilling; availability of adequate infrastructure at commercially viable prices; the actions of field partners
and other third-parties; reputational damage; the actions of competitors; the actions of the Norwegian state as majority shareholder and
exercise of ownership by the Norwegian state; changes or uncertainty in or non-compliance with laws and governmental regulations; adverse
changes in tax regimes; the political and economic policies of Norway and other oil-producing countries; regulations on hydraulic fracturing
Equinor 2023 Annual Report on Form 20-F 8
and low-carbon value chains; liquidity, interest rate, equity and credit risks; risk of losses relating to trading and commercial supply activities;
an inability to attract and retain personnel; ineffectiveness of crisis management systems; inadequate insurance coverage; health, safety and
environmental risks; physical security risks to personnel, assets, infrastructure and operations from hostile or malicious acts; failure to meet
our ethical and social standards; non-compliance with international trade sanctions; and other factors discussed elsewhere in this 2023 Form
20-F.
The achievement of Equinor’s climate ambitions depends, in part, on broader societal shifts in consumer demands and technological
advancements, each of which are beyond Equinor’s control. Should society’s demands and technological innovation not shift in parallel with
Equinor’s pursuit of its energy transition plan, Equinor’s ability to meet its climate ambitions will be impaired. The calculation of Equinor’s net
carbon intensity presented in this report includes an estimate of emissions from the use of sold products (GHG protocol category 11) as a
means to more accurately evaluate the emission lifecycle of what we produce to respond to the energy transition and potential business
opportunities arising from shifting consumer demands. Including these emissions in the calculations should in no way be construed as an
acceptance by Equinor of responsibility for the emissions caused by such use.
The reference to any scenario in this report, including any potential net-zero scenarios, does not imply Equinor views any particular scenario
as likely to occur. Third-party scenarios discussed in this report reflect the modeling assumptions and outputs of their respective authors, not
Equinor, and their use by Equinor is not an endorsement by Equinor of their underlying assumptions, likelihood or probability. Investment
decisions are made on the basis of Equinor’s separate planning process. Any use of the modeling of a third-party organization within this
report does not constitute or imply an endorsement by Equinor of any or all of the positions or activities of such organization.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that our future
results, level of activity, performance or achievements will meet these expectations. Moreover, neither we nor any other person assumes
responsibility for the accuracy and completeness of the forward-looking statements. Any forward-looking statement speaks only as of the date
on which such statement is made, and, except as required by applicable law, we undertake no obligation to update any of these statements
after the date of this 2023 Form 20-F, either to make them conform to actual results or changes in our expectations.
Equinor 2023 Annual Report on Form 20-F 9
Part I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
A. Directors and Senior Management
Not applicable.
B. Advisers
Not applicable.
C. Auditors
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
A. Offer statistics
Not applicable.
B. Method and Expected Timetable
Not applicable.
ITEM 3. KEY INFORMATION
A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reason for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
The information set forth under the heading “
Risk Factors
” in section 5.2 of chapter 5 on pages 264– 270 of the 2023 Annual
Report is incorporated herein by reference.
ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
Equinor ASA was incorporated on 18 September 1972, is a public limited liability company organised under the laws of Norway
and is subject to the provisions of the Norwegian Public Limited Liability Companies Act. Equinor’s head office is located at Forusbeen
50, 4035 Stavanger, Norway. The telephone number of its principal place of business is +47-5199-00 00.
The information set forth under the following headings of the 2023 Annual Report is incorporated herein by reference:
Equinor 2023 Annual Report on Form 20-F 10
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Chapter 3 on page 125;
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& Production International in Section 3.2 of Chapter 3 on page 130;
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The information set forth in the third and fourth paragraphs of the section entitled “
Introduction
” of this 2023 Form 20-F is also
incorporated herein by reference. See also notes 5 Segments and 6 Acquisitions and disposals to the Consolidated financial
statements.
B. Business Overview
The information set forth under the following headings of the 2023 Annual Report is incorporated herein by reference:
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See also notes 5 Segments and 7 Total revenues and other income to the Consolidated financial statements.
The information about Equinor’s competitive position in the sections of the 2023 Annual Report that are incorporated by
reference herein is based on several sources such as investment analyst reports, independent market studies, and internal
assessments of market share based on publicly available information about the financial results and performance of market players.
Applicable laws and regulations
Equinor operates in around 30 countries and is exposed and committed to compliance with numerous laws and regulations
globally. The first graphic in Section 1.3 (‘Our Business’) on page 12 in Chapter 1 and the risks set forth under the heading ‘Policies
and legislation’ in Section 5.2 on page 267 of Chapter 5 of the 2023 Annual Report are also incorporated herein by reference.
Equinor 2023 Annual Report on Form 20-F 11
This section gives a general description on the legal and regulatory framework in the various jurisdictions where Equinor operates and
in particular in the countries of Equinor’s core activities.
Regulatory framework for upstream oil and gas operations
Currently, Equinor is subject to two main regimes applicable to petroleum activities worldwide:
●
●
Equinor is also subject to a wide variety of laws and regulations concerning its products, operations and activities, including
without limitations laws and regulations relating to health, safety and environmental (HSE). Relevant laws and regulations include inter
alia jurisdiction specific laws and regulations, international regulations, conventions or treaties, as well as EU directives and
regulations.
Concession regimes
Under a concession regime, companies are granted licences by the government to extract petroleum. This is similar to the
Norwegian system described below. Typically, the licences are offered to pre-qualified companies following bidding rounds. The
criteria for the evaluation of bidding offers under these regimes can be the level of offered signature bonus (bid amount), minimum
exploration programme, and local content. In exchange for those commitments, the successful bidder(s) receive a right to explore,
develop and produce petroleum within a specified geographical area for a limited period of time. The terms of the licences are usually
not negotiable. The fiscal regime may entitle the relevant jurisdiction to royalties, profit tax or special petroleum tax.
PSA regimes
PSAs are normally awarded to the contractor parties after bidding rounds announced by the government. Main bid parameters
are a minimum exploration programme and signature bonuses, allocation of profit oil and, in some cases, tax.
Under a PSA, the host government typically retains the right to the hydrocarbons in place. The contractor receives a share of the
production for services performed. Normally, the contractor carries the exploration and development costs and risk prior to a
commercial discovery and is then entitled to recover those costs during the production phase. The remaining share of the production -
the profit share, is split between the government and the contractor according to a mechanism set out in the PSA. The contractor is
usually subject to income tax on its own share of the profit oil. Fiscal provisions in a PSA are to a large extent negotiable and are
unique to each PSA.
Norway
Norway is not a member of the European Union (EU) but is a member of the European Free Trade Association (EFTA). The EU
and the EFTA Member States have entered into the Agreement on the European Economic Area, referred to as the EEA Agreement,
which provides for the inclusion of EU legislation in the national law of the EFTA Member States (except Switzerland). Equinor’s
business activities are subject to both the EFTA Convention and EU laws and regulations adopted pursuant to the EEA Agreement.
The principal laws governing Equinor’s petroleum activities in Norway and on the NCS are the Norwegian Petroleum Act of 29
November 1996 (the Petroleum Act) and the regulations issued thereunder, and the Norwegian Petroleum Taxation Act of 13 June
1975 (the Petroleum Taxation Act).
Under the Petroleum Act, the Norwegian Ministry of Petroleum and Energy (“MPE”) is responsible for resource management and
for administering petroleum activities on the NCS. The main task of the MPE is to ensure that petroleum activities are conducted in
accordance with the applicable legislation, the policies adopted by the Norwegian Parliament and relevant decisions of the Norwegian
State.
The State’s role in relation to major policy issues in the petroleum sector can affect Equinor in two ways: first, when the
Norwegian State acts in its capacity as majority owner of Equinor shares and, second, when the Norwegian State acts in its capacity
as regulator:
●
normally decide how the Norwegian State will vote on proposals submitted to general meetings of the shareholders. However, in
certain exceptional cases, it may be necessary for the Norwegian State to seek approval from the Storting before voting on a
certain proposal. This will normally be the case if Equinor issues additional shares and such issuance would significantly dilute
the Norwegian State’s holding, or if such issuance would require a capital contribution from the Norwegian State in excess of
government mandates. A vote by the Norwegian State against an Equinor proposal to issue additional shares would prevent
Equinor from raising additional capital in this manner and could adversely affect Equinor’s ability to pursue business
opportunities. The information regarding the Norwegian State’s ownership in the information set forth under the heading “Major
Equinor 2023 Annual Report on Form 20-F 12
Shareholders” in Section 5.
1 of Chapter 5 and the risks set forth in “Ownership and action by the Norwegian State” in Section 5.2
of Chapter 5 of the 2023 Annual Report are also incorporated herein by reference.
●
the NCS. As part of its business, Equinor or the partnerships to which Equinor is a party, frequently need to apply for licences
and other approvals from the Norwegian State. Although Equinor is majority-owned by the Norwegian State, it does not receive
preferential treatment with respect to licences granted by or under any other regulatory rules enforced by the Norwegian State.
The Petroleum Act sets out the principle that the Norwegian State is the owner of all subsea petroleum on the NCS, that the
exclusive right to resource management is vested in the Norwegian State and that the Norwegian State alone is authorised to award
licences for petroleum activities as well as determine their terms. Licensees are required to submit a plan for development and
operation (PDO) to the MPE for approval. For fields of a certain size, the Storting has to accept the PDO before it is formally approved
by the MPE. Equinor is dependent on the Norwegian State for approval of its NCS exploration and development projects and its
applications for production rates for individual fields.
Production licences are the most important type of licence awarded under the Petroleum Act. A production licence grants the
holder an exclusive right to explore for and produce petroleum within a specified geographical area. The licensees become the
owners of the petroleum produced from the field covered by the licence. Production licences are normally awarded for an initial
exploration period, which is typically six years, but which can be shorter. The maximum period is ten years. During this exploration
period, the licensees must meet a specified work obligation set out in the licence. If the licensees fulfil the obligations set out in the
initial licence period, they are entitled to require that the licence be extended for a period specified at the time when the licence is
awarded, typically 30 years.
The terms of the production licences are decided by the MPE. Production licences are awarded to groups of companies forming a
joint venture at the MPE’s discretion. The members of the joint venture are jointly and severally liable to the Norwegian State for
obligations arising from petroleum operations carried out under the licence. The MPE decides the form of the joint operating
agreements and accounting agreements. The MPE uses the same standard form of joint operating agreement and accounting
agreement for all licenses.
The governing body of the joint venture is the management committee. In licences awarded since 1996 where the State’s direct
financial interest (SDFI) holds an interest, the Norwegian State, acting through Petoro AS, may veto decisions made by the joint
venture management committee, which, in the opinion of the Norwegian State, would not be in compliance with the obligations set
forth in the licence with respect to the Norwegian State’s exploitation policies or financial interests. This power of veto has never been
used.
Interests in production licences may be transferred directly or indirectly subject to the consent of the MPE and the approval of the
tax treatment by the Ministry of Finance. In most licences, there are no pre-emption rights in favour of the other licensees. However,
the SDFI, or the Norwegian State, as appropriate, still hold pre-emption rights in all licences.
The day-to-day management of a field is the responsibility of an operator appointed by the MPE. The operator is in practice
always a member of the joint venture holding the production licence, although this is not legally required. The terms of engagement of
the operator are set out in the joint operating agreement.
If important public interests are at stake, the Norwegian State may instruct the operators on the NCS to reduce the production of
petroleum. An example of this occurred in May 2020, when the Norwegian State imposed a reduction in oil production for the rest of
the year, due to the Covid-19 pandemic that led to a lower demand for oil and gas. The reduction in production was distributed
between all fields on a pro rata basis.
A licence from the MPE is also required in order to establish facilities for the transportation and utilisation of petroleum.
Ownership of most facilities for the transportation and utilisation of petroleum in Norway and on the NCS is organised in the form of
joint ventures. The participants’ agreements are similar to joint operating agreements for production.
Licensees are required to prepare a decommissioning plan before a production licence or a licence to establish and use facilities
for the transportation and utilisation of petroleum expires or is relinquished, or the use of a facility ceases. On the basis of the
decommissioning plan, the MPE makes a decision as to the disposal of the facilities.
The information regarding Equinor’s activities and shares in Equinor’s production licences on the NCS, set forth under the
heading ‘Exploration & Production Norway’ in Section 3.1 of Chapter 3 of the 2023 Annual Report is incorporated herein by reference.
On 1 July 2022, the MPE decided that parts of the Norwegian Security Act would apply to Equinor. This enables Equinor to
receive and handle classified information from the authorities. In 2023, the MTIF and the MPE notified that the Security Act will apply
in its entirety to Equinor as an undertaking controlling infrastructure and engaging in activities which are of vital importance to
fundamental national functions. The Security Act entered into force 1 January 2019 and is designed to protect national security
interests. The National Security Authority supervises undertakings which are covered by the act.
Equinor 2023 Annual Report on Form 20-F 13
Gas sales and transportation from the NCS
Equinor markets gas from the NCS on its own behalf and on the Norwegian State’s behalf. Dry gas is mainly transported through
the Norwegian gas transport system (Gassled) to customers in the UK and mainland Europe, while liquified natural gas is transported
by vessels to worldwide destinations.
The Norwegian gas transport system, consisting of the pipelines and terminals through which licensees on the NCS transport
their gas, is owned by a joint venture called Gassled. The Norwegian Petroleum Act of 29 November 1996 and the pertaining
Petroleum Regulation establish the basis for non- discriminatory third-party access to the Gassled transport system.
The tariffs for the use of capacity in the transport system are determined by applying a formula set out in separate tariff
regulations stipulated by the MPE. The tariffs are paid for booked capacity rather than the volumes actually transported.
The information set forth under the heading ‘
Marketing, Midstream & Processing
’ in Section 3.4 of Chapter 3 of the 2023 Annual
Report is also incorporated herein by reference.
The Norwegian State's participation
In 1985, the Norwegian State established the State’s direct financial interest (SDFI) through which the Norwegian State has direct
participating interests in licences and petroleum facilities on the NCS. As a result, the Norwegian State holds interests in a number of
licences and petroleum facilities in which Equinor also holds interests. Petoro AS, a company wholly owned by the Norwegian State,
was formed in 2001 to manage the SDFI assets.
The Norwegian State has a coordinated ownership strategy aimed at maximising the aggregate value of its ownership interests in
Equinor and the Norwegian State’s oil and gas. This is reflected in the Owner’s Instruction described below, which contains a general
requirement that, Equinor, in its activities on the NCS, take account of these ownership interests in decisions that may affect the
execution of this marketing arrangement.
SDFI oil and gas marketing and sale
Equinor markets and sells the Norwegian State’s oil and gas together with Equinor’s own production. The arrangement has been
implemented by the Norwegian State through a separate instruction (the Owner’s Instruction) adopted by an extraordinary
shareholder meeting in 2001, with the Norwegian State as sole shareholder at the time. The Owner’s Instruction sets out the specific
terms for the marketing and sale of the Norwegian State’s oil and gas.
Equinor is obliged under the Owner’s Instruction to jointly market and sell the Norwegian State’s oil and gas as well as Equinor’s
own oil and gas. The overall objective of the marketing arrangement is to obtain the highest possible total value for Equinor’s oil and
gas and the Norwegian State’s oil and gas, and to ensure an equitable distribution of the total value creation between the Norwegian
State and Equinor.
The Norwegian State may at any time utilise its position as majority shareholder of Equinor to withdraw or amend the Owner’s
Instruction.
US
Petroleum activities in the US are extensively regulated by multiple agencies in the US federal government, and by tribal, state
and local regulation. The US government directly regulates development of hydrocarbons on federal lands, in the US Gulf of Mexico,
and in other offshore areas. Different federal agencies directly regulate portions of the industry, and other general regulations related
to environmental, safety, and physical controls apply to all aspects of the industry. In addition to regulation by the US federal
government, any activities on US tribal lands (indigenous persons’ semi-sovereign territory) are regulated by governments and
agencies in those areas. Significantly for Equinor’s US onshore interests, each individual state has its own regulations of all aspects of
hydrocarbon development within its borders. A recent trend also includes local municipalities adopting their own hydrocarbon
regulations.
In the US, hydrocarbon interests are considered a private property right. In areas owned by the US government, that means that
the government owns the minerals in its capacity as landowner. The federal government, and each tribal and state government,
establishes the terms of its own leases, including the length of time of the lease, the royalty rate, and other terms.
The vast majority of onshore minerals, including hydrocarbons, in every US state in which Equinor has onshore interests, belong
to private individuals.
In order to explore for or develop hydrocarbons, a company must enter into a lease agreement with the applicable governmental
agency for federal, state or tribal land, and for private lands, with each owner of the minerals the company wishes to develop. In each
lease, the lessor retains a royalty interest in the production (if any) from the leased area. The lessee owns a working interest and has
Equinor 2023 Annual Report on Form 20-F 14
the right to explore and produce oil and gas. The lessee incurs all the costs and liabilities but will share only the portion of the revenue
that is net of costs and expenses and not reserved to the lessor through its royalty interest.
Leases typically have a primary term for a specified number of years (from one to ten years) and a conditional secondary term
that is tied to the production life of the properties. If oil and gas is being produced in paying quantities at the end of the primary term,
or the operator satisfies other obligations specified in the agreement, the lease typically continues beyond the primary term (Held by
Production). Leases typically involve paying the lessor both a signing bonus based on the number of leased acres and a royalty
payment based on the production.
Each US state has its own agencies that regulate the development, exploration, and production of oil and gas activities. These
state agencies issue drilling permits and control pipeline transportation within state boundaries. The state agencies particularly
relevant to Equinor’s US onshore activities include: (a) Pennsylvania Department of Environmental Protection’s Office of Oil and Gas
Management, (b) Ohio Department of Natural Resources, Division of Oil and Gas, and (c) West Virginia Department of Environmental
Protection. In addition, some state utility departments handle pipeline transportation within state boundaries, and each state also has
its own department regulating environmental, health, and safety issues arising from oil and gas operations.
Brazil
In Brazil, licences are mainly awarded according to a concession regime or a production sharing regime (the latter specifically for
areas within the pre-salt polygon area or strategic areas) by the Federal Government. All state-owned and private oil companies may
participate in the bidding rounds provided they follow the bidding rules and meet the qualification criteria. The tender protocol issued
for each bidding round contains the draft of the concession agreement or the production sharing agreement that the winners must
adhere to without the possibility of negotiating its terms, i.e., all the agreements signed under a certain bidding round contain the
same general provisions and only differ in the particular items presented in the offers. There is no restriction on foreign participation,
provided that the foreign investor incorporates a company under the Brazilian law for signing the agreement and complies with the
requirements established by the Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP).
The current criteria for the evaluation of bidding offers under the concession regime are: (a) signature bonus; and (b) minimum
exploration program. However, in past bidding rounds the participants also had to offer a local content percentage as a firm
commitment. Companies can bid individually or in consortium always observing the qualification criteria for operator and non-
operators.
The concession agreements are signed by ANP on behalf of the Federal Government. Generally, concessions are granted for a
total period of 35 years and typically the exploration phase lasts from two to eight years, while the production phase may last 27 years
from the declaration of commerciality. Concessionaires are entitled to request the extension of each of these phases, subject to ANP
approval.
In bidding rounds involving the production sharing regime, the law grants to the Brazilian government-controlled company
Petroleo Brasileiro S.A. – Petrobras, a right of preference to be the sole operator in the pre-salt fields, with a minimum 30% of
participating interest. If this right is exercised, Petrobras may still participate in the bidding round and present offers for the remaining
70% under the same conditions applicable to other participants. Likewise, in the concession bidding rounds, companies may bid
individually or together with other companies. The winners are required to form a consortium with Pre-Sal Petroleo S.A. (PPSA), a
Brazilian state-owned company, which is responsible for managing the production sharing agreement and selling the production
allocated to the Government under the profit oil. PPSA appoints 50% of the members of the operating committee, including the
chairperson, in addition to certain veto rights and casting vote.
The current criteria for the evaluation of bidding offers under the production sharing regime is the offered percentage of profit oil.
The winner will be the company which offers the highest percentage to the government in accordance with the technical and
economic parameters established for each block in the tender documents under a certain bidding round.
Production sharing contracts are signed by the Ministry of Mines and Energy on behalf of the Federal Government. Generally, the
contracts are valid for a period of 35 years which, by law, cannot be extended. Of the two phases of the contract – exploration and
production – the exploration phase may be extended provided that the total period of the contract remains as 35 years.
In order to perform the exploration and exploitation of oil and gas reserves, companies must obtain an environmental license
granted by the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA), which, together with ANP, is
responsible for the safety and environmental regulations regarding upstream activities.
HSE regulation relevant for the Norwegian upstream oil and gas activities in Norway
Equinor’s oil and gas operations in Norway must be conducted in compliance with a reasonable standard of care, taking into
consideration the safety of workers, the environment and the economic values of installations and vessels. The Petroleum Act
specifically requires that petroleum operations are carried out in such a manner that a high level of safety is maintained and
developed in step with technological developments. Equinor is also required at all times to have a plan to deal with emergency
Equinor 2023 Annual Report on Form 20-F 15
situations in Equinor’s petroleum operations. During an emergency, the Norwegian Ministry of Labour and Social Inclusion/Norwegian
Ministry of Transport/Norwegian Coastal Administration may decide that other parties should provide the necessary resources, or
otherwise adopt measures to obtain the necessary resources, to deal with the emergency for the licensees’ account.
Liability for pollution damage
The Norwegian Petroleum Act imposes strict liability for pollution damage regardless of fault. Accordingly, as a holder of licences
on the NCS, Equinor is subject to statutory strict liability under the Petroleum Act as a result of pollution caused by spills or discharges
of petroleum from petroleum facilities in any of Equinor’s licences.
A claim against the license holders for compensation relating to pollution damage shall initially be directed to the operator, which
in accordance with the terms of the joint operating agreement, will distribute the claim to the other licensees in accordance with their
participating interest in the licences.
Discharge permits
Emissions and discharges from Norwegian petroleum activities are regulated through several acts, including the Petroleum Act,
the CO
2
chemicals in relation to exploration, development and production of oil and natural gas are regulated under the Pollution Control Act.
In accordance with the provisions of this Act, an operator must apply for a discharge permit from relevant authorities on behalf of the
licence group in order to discharge any pollutants into water. Further, the Petroleum Act states that burning of gas in flares beyond
what is necessary for safety reasons to ensure normal operations is not permitted without approval from the MPE. All operators on the
NCS have an obligation to, and are responsible, for establishing sufficient procedures for the monitoring and reporting of any
discharge into the sea. The Norwegian Environment Agency, the Norwegian Petroleum Directorate and the Norwegian Oil Industry
Association have established a joint database for reporting emissions to air and discharges to sea from the petroleum activities, the
Environmental Web (EW). All operators on the NCS report emission and discharge data directly into the database.
Regulations on reduction of carbon emissions and CO
2
Equinor’s operations in Norway are subject to emissions taxes as well as emissions allowances granted for Equinor’s larger
European operations under the emissions trading scheme. The agreed strengthening of the EU’s emission trading scheme is
expected to affect energy and industry installations, which include Equinor’s installations at the NCS. The price of emissions
allowances has increased significantly since the reforms to the EU Emission Trading Scheme in 2018 and is expected to increase
further towards 2030.
The Norwegian Climate Act promotes the implementation of Norway's climate targets as part of the transition to a low-emission
society in Norway in 2050. This act may influence our activities through plans and actions implemented by the state to achieve these
targets. Norway has presented a Climate Plan 2021-2030 with an updated target of 55% reduction in GHG emissions in 2030
compared to 1990- levels. The Climate Plan states that the carbon cost for offshore oil and gas production in Norway is expected to
increase to 2000 NOK/t CO2 towards 2030.
EU directive 2009/31/EC on the geological storage of CO2 is implemented in the Pollution Control regulations, the regulations
related to the Petroleum Act and in a separate Storage regulation adopted under the 1963 Act relating to scientific research and
exploration for and exploitation of subsea natural resources other than petroleum resources. The CO2 capture and storage at
Equinor’s Sleipner and Snøhvit fields are governed by the Petroleum Act and the Pollution Control regulations, and the CO2 storage
at Northern Lights JV DA and Smeaheia projects are governed by the Storage regulations and the Pollution Control regulations.
HSE regulation of upstream oil and gas activities in the US
Equinor’s upstream activities in the US are heavily regulated at multiple levels, including federal, state, and local municipal
regulation. Equinor is subject to those regulations as a part of its activities in the US onshore (including Equinor’s assets in Ohio,
Pennsylvania and West Virginia), and in the US Gulf of Mexico.
The National Environmental Policy Act of 1969 is an umbrella procedural statute that requires federal agencies to consider the
environmental impacts of their actions. Several substantive US federal statutes specifically cover certain potential environmental
effects of hydrocarbon extraction activities. Those include: the Clean Air Act, which regulates air quality and emissions; the Federal
Water Pollution Control Act (commonly known as the Clean Water Act), which regulates water quality and discharges; the Safe
Drinking Water Act, which establishes drinking water standards for tap water and underground injection rules; the Resource
Conservation and Recovery Act of 1976, which regulates hazardous and solid waste management; the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, which addresses remediation of legacy disposal sites and release reporting; and
the Oil Pollution Act, which provides for oil spill prevention and response.
Other US federal statutes are resource-specific. The Endangered Species Act of 1973 protects listed endangered and threatened
species and critical habitat. Other statutes protect certain species, including the Migratory Bird Treaty Act, the Bald and Golden Eagle
Equinor 2023 Annual Report on Form 20-F 16
Protection Act and the Marine Mammal Protection Act of 1972. Other statutes govern natural resource planning and development on
federal lands onshore and on the Outer Continental Shelf (OCS), including: the Mineral Leasing Act; the Outer Continental Shelf
Lands Act; the Federal Land Policy and Management Act of 1976; the Mining Law of 1872; the National Forest Management Act of
1976; the National Park Service Organic Act; the Wild and Scenic Rivers Act; the National Wildlife Refuge System Administration Act
of 1966; the Rivers and Harbors Appropriation Act; and the Coastal Zone Management Act of 1972.
The federal government regulates offshore exploration and production for the OCS, which extends from the edge of state waters
(either 3 or 9 nautical miles from the coast, depending on the state) out to the edge of national jurisdiction, 200 nautical miles from
shore. The Bureau of Ocean Energy Management (BOEM) manages federal OCS leasing programs, conducts resource assessments,
and licences seismic surveys. The Bureau of Safety and Environmental Enforcement (BSEE) regulates all OCS oil and gas drilling
and production. The Office of Natural Resources Revenue (ONRR) collects and disburses rents and royalties from offshore and
onshore federal and Native American lands.
Additional federal statutes cover certain products or wastes, and focus on human health and safety: the Toxic Substances
Control Act regulates new and existing chemicals and products that contain these chemicals; the Hazardous Materials Transportation
Act regulates transportation of hazardous materials; the Occupational Safety and Health Act of 1970 regulates hazards in the
workplace; the Emergency Planning and Community Right-to-Know Act of 1986 provides emergency planning and notification for
hazardous and toxic chemicals.
The federal and state governments share authority to administer some federal environmental programs (e.g., the Clean Air Act
and Clean Water Act). States also have their own, sometimes more stringent, environmental laws. Counties, cities and other local
government entities may have their own requirements as well.
Equinor continually monitors regulatory and legislative changes at all levels and engages in the stakeholder process through
trade associations and direct comments to suggested regulatory and legislative regimes, to ensure that its operations remain in
compliance with all applicable laws and regulations. In particular, BSEE drilling and production regulations were extensively revised in
response to the 2010 Deepwater Horizon blowout and oil spill. The revised regulatory regime includes requirements for enhanced well
design, improved blowout preventer design, testing and maintenance, and an increased number of trained inspectors. The Biden
Administration continues to review and revise these regulations, and Equinor is engaged with relevant governmental and industry
stakeholders to ensure that Equinor’s operations remain in compliance.
HSE regulation of upstream oil and gas activities in Brazil
Equinor’s oil and gas operations in Brazil must be conducted in compliance with a reasonable standard of care, taking into
consideration the safety and health of workers and the environment. The Brazilian Petroleum Law (Law No. 9,478/97) describes the
government’s policy objectives for the rational use of the country’s energy resources, including the protection of the environment. In
addition to the Brazilian Petroleum Law, Equinor is also subject to many other laws and regulations issued by different authorities,
including ANP, IBAMA, Federal Environmental Council (CONAMA) and Brazilian Navy. All those authorities have the power to impose
fines in case of non-compliance with the respective rules. The concession and production sharing contracts also impose obligations
on operators and consortium members, who are jointly and severally liable. They must, at their own account and risk, assume and
fully respond to all losses and damages caused directly or indirectly by the applicable consortium’s operations and their performance,
irrespective of fault, to the ANP, the Federal Government and third parties, without prejudice to any recourse rights which may have
been agreed separately among the consortium members (such as in a joint operating agreement).
The exploration, drilling and production of oil and gas depend on environmental licences which define the conditions for the
implementation of the project and compliance measures to mitigate and control environment impact. Equinor is subject to fines and
even licence suspension and/or cancellation in case of non-compliance with such conditions.
In Brazil, Equinor is also required to have an emergency response system as per ANP Resolution No. 882/2022 to deal with
emergency situations in its petroleum operations, as well as an oil spill response plan in accordance to CONAMA Resolution No.
398/2008, for each asset to minimise the environmental impact of any environmental unexpected situation that may generate spill of
oil or chemical to sea.
Discharge permits
Discharges from Brazilian petroleum activities are regulated through several acts, including the CONAMA Resolution No.
393/2007 for produced water, CONAMA Resolution No. 357/2005 and CONAMA Resolution No. 430/2011 for effluents (sewage, etc)
and IBAMA technical instructions for drilling waste. According to Environmental Ministry Ordinance No. 422/2011, the discharge of
chemicals in connection with exploration, development and production of oil and natural gas is assessed as part of the environmental
permitting process and the operator must apply for any discharge permit from relevant authorities on behalf of the license group in
order to discharge any pollutants into the water.
Regulations on reduction of carbon emissions
Equinor 2023 Annual Report on Form 20-F 17
Although Equinor’s operations in Brazil are not subject to emissions taxes (CO
2
congress for the establishment of a carbon market. At this point it is unclear if and when these initiatives will be turned into law.
The CONAMA Regulation No. 382/06 regulates air emissions limits for pollutant gases (e.g. NOx) from all fixed sources that have
total power consumption higher than 100MW.
Gas flares must be authorised by the ANP under ANP Resolution No. 806/2020, which also sets out cases in which ANP
authorisation is not necessary.
The Brazilian government signed the Paris Agreement in 2015. During COP26, Brazil updated its ambition to reduce its
greenhouse gas emissions by 37% until 2025 and 50% until 2030, compared to 2005 levels. Because of the desire to boost the
economy and an expected growing energy demand, the focus on emissions reduction is on improved control of forests and land use
and for that Brazil continue to adhere to the Forest for Deal agreement, committing to take actions to reduce illegal deforestation until
2030. The country also adheres to the Global Methane Pledge.
Regulatory framework for renewable energy operations
Equinor’s renewables positions currently mainly consist of offshore wind farms in operation and development in the UK, the state
of New York and Poland. In these jurisdictions the legislation is structured around a lease where permission to develop is granted
following a series of approvals relating largely to environmental and social impact assessments. The government separately auctions
a subsidized power purchase price either through renewable offtake certificates or contracts for difference. In both cases, Equinor and
its partners take the risk for developing, constructing and operating the wind farms within a fixed timeframe.
Other
Equinor entered into agreements with the National Iranian Oil Company (NIOC), namely, a Development Service Contract for
South Pars Gas Phases 6, 7 & 8 (offshore part), an Exploration Service Contract for the Anaran Block and an Exploration Service
Contract for the Khorramabad Block, which are located in Iran. Equinor’s operational obligations under these agreements have
terminated and the licences have been abandoned. The cost recovery programme for these contracts was completed in 2012, except
for the recovery of tax and obligations to the Social Security Organization (SSO). From 2013 to November 2018, after closing
Equinor’s office in Iran, Equinor’s activity was focused on a final settlement with the Iranian tax and SSO authorities relating to the
above-mentioned agreements.
In a letter from the US State Department of 1 November 2010, Equinor was informed that it was not considered to be a company
of concern based on its previous Iran-related activities.
Equinor has an intention to settle historic obligations in Iran while remaining compliant with applicable sanctions and trade
restrictions against Iran. Since November 2018 Equinor has not conducted any activity in Iran, nor has it been able to resolve tax
claims from the Iranian authorities.
No payments were made to Iranian authorities during 2023.
Taxation of Equinor
Norway
Equinor’s profits, both from offshore oil and natural gas activities and from onshore activities, are subject to Norwegian corporate
income tax. In addition, a special petroleum tax is levied on profits from petroleum production and pipeline transportation on the NCS.
In June 2022 the parliament enacted a cash-flow based tax system for the special petroleum tax with effect from 1 January 2022.
After the reform, the Norwegian petroleum income is taxable at a tax rate of 71.8% after deducting a calculated 22% corporate tax.
The corporate tax is deductible in the basis for the special petroleum tax, resulting in a 78% marginal tax rate. For further information,
see note 11 Income taxes to the Consolidated financial statements.
Investment costs in the ordinary tax base (22%) will continue to be depreciated over six years. In the special tax base,
investments are written off immediately in line with the cash-flow based tax system. Projects covered by the temporary rules
introduced in 2020 have had a tax uplift of 12.4% in 2023. The temporary rules apply to investments covered by field or infrastructure
plans (PDOs and PIOs) submitted to the MPE after 12 May 2020 and before 1 January 2023 and approved before 1 January 2024.
The temporary rules will continue to apply until (and including) the year of planned production or project start-up according to the
approved plans.
Equinor’s international petroleum activities are subject to tax pursuant to local legislation.
US
Equinor 2023 Annual Report on Form 20-F 18
Equinor’s operations in the US are subject generally to corporate income, severance and production, ad valorem and transaction
taxes levied by the federal, state and local tax authorities, and to royalties payable to federal, state and local authorities and, in some
cases, private landowners. The federal corporate income tax rate in the US is 21%, and there is an alternative 15% minimum tax on
corporate book income for corporations with profits over USD 1 billion. US companies are also subject to the Base Anti-abuse Tax
(“BEAT”) which imposes tax at 10% until 2026 and 12.5% thereafter on payments to foreign affiliates of US companies if those
payments exceed a given threshold of total tax-deductible expenditures.
Brazil
Corporate income tax and social contribution are levied on taxable net income at a combined rate of 34%. A simplified tax regime
with a lower effective tax rate is available for legal entities with gross revenues below a threshold of 78 million Brazilian reais per year.
In addition, there are several indirect taxes, but indirect tax rate on exports is set to zero.
The concessionary tax regime in Brazil usually includes government takes such as a 10% royalty, and special participation tax
that varies based on time, location and production between 10% and 40%, using a reference price that is established by the Brazilian
petroleum regulator (ANP). The Production Sharing Regime in Brazil usually includes a 15% royalty, an annual 80% cost recovery
ceiling, and a biddable government profit share.
In December 2023, the Brazilian Congress approved wide-ranging tax legislation which aims to simplify the indirect tax system
through the introduction of a multi-tiered value added tax (VAT) system, whereby VAT would be levied with a federal rate and a state
and/or municipality rate. The states or municipalities would individually set their respective rates and administer the tax for the local
element of the VAT. The VAT will be phased into effect over the next seven years. The new law also includes an excise tax on the
extraction, sale or commercialization of goods and services with a “harmful effect on health or environment” of up to 1% of the market
value of extracted production. The specific rate of the excise tax will be set with a complimentary law which must be passed within six
months of the enactment, and so is expected by the end of June 2024. This excise tax would increase operating costs for Equinor in
Brazil.
The new tax law in Brazil also seeks to preserve suspensions or exemptions from certain indirect taxes for importation of capital
goods into Brazil. The details of these tax incentives will be contained in the Complimentary Law described above.
Finally, there is a proposal package for direct taxes as well, which would reduce the corporate tax rate, while also introducing a
withholding tax on dividends paid by Brazilian incorporated entities. The direct tax legislation is expected to be considered by the
Brazilian Congress later in 2024.
UK
The UK government introduced a 25% Energy Profits Levy (EPL) in May 2022, which was increased to 35% from January 2023.
The levy is charged on profits from oil and gas operations in the UK or on the UK Continental Shelf and is in addition to existing profit-
based taxes on the sector. The EPL increased the rate of tax on oil and gas company profits to 75% from January 2023.
In addition, the UK government also introduced the Electricity Generator Levy (EGL) which took effect from 1 January 2023. The
EGL imposes a tax of 45% on exceptional receipts generated from the production of wholesale electricity which is sold at an average
price in excess of £75 per MWh.
Both the EPL and EGL are scheduled to expire on 31 March 2028.
Disclosures regarding oil and gas operations
The 2023 Oil and Gas Reserves Report is incorporated herein by reference. See also notes 5 Segments and 7 Total revenues
and other income to the Consolidated financial statements.
The information set forth under the headings “Operational data”, “Sales prices” and “Sales volumes” in Section 2.1 of Chapter 2
on pages 47 – 49 and “Proved oil and gas reserves” in Section 2.1 of Chapter 2 on pages 50 – 54 of the 2023 Annual Report is also
incorporated herein by reference.
Supplementary oil and gas information pursuant to FASB Topic 932
The following information is reported pursuant to FASB Topic 932.
Equinor 2023 Annual Report on Form 20-F 19
Capitalised cost related to oil and gas producing activities
Consolidated companies
At 31 December
(in USD million)
2023
2022
2021
Unproved properties
5,022
5,917
7,077
Proved properties, wells, plants and other equipment
183,316
181,189
193,918
Total capitalised cost
188,338
187,106
200,994
Accumulated depreciation, impairment and amortisation
(132,902)
(133,584)
(139,890)
Net capitalised cost
55,436
53,523
61,104
Net capitalised cost related to equity accounted investments as of 31 December 2023 was USD 0 million, USD 463 million in 2022
and USD 900 million in 2021. The reported figures are based on capitalised costs within the upstream segments in Equinor, in line
with the description below for result of operations for oil and gas producing activities.
Expenditures incurred in oil and gas property acquisition, exploration and development activities
These expenditures include both amounts capitalised and expensed.
Consolidated companies
(in USD million)
Norway
Eurasia
excluding
Norway
Africa
USA
Americas
excluding
USA
Total
Full year 2023
Exploration expenditures
662
16
35
310
253
1,276
Development costs
4,864
470
509
1,084
1,279
8,206
Acquired proved properties
0
1,271
0
0
0
1,271
Acquired unproved properties
352
5
0
6
18
381
Total
5,878
1,762
544
1,400
1,550
11,134
Full year 2022
Exploration expenditures
494
27
57
150
360
1,088
Development costs
4,483
320
379
712
965
6,859
Acquired proved properties
110
226
38
0
0
374
Acquired unproved properties
6
0
0
0
0
6
Total
5,093
573
474
862
1,325
8,327
Full year 2021
Exploration expenditures
522
61
5
139
299
1,026
Development costs
4,732
322
256
605
977
6,892
Acquired proved properties
3
5
0
0
0
8
Acquired unproved properties
6
9
1
24
(3)
37
Total
5,263
397
262
768
1,273
7,963
Equinor 2023 Annual Report on Form 20-F 20
Expenditures incurred in exploration and development activities related to equity accounted investments was USD 0 million in 2023,
USD 155 million in 2022 and USD 233 million in 2021.
Results of operation for oil and gas producing activities
As required by Topic 932, the revenues and expenses included in the following table reflect only those relating to the oil and gas
producing operations of Equinor.
The results of operations for oil and gas producing activities are included in the three upstream reporting segments Exploration &
Production Norway (E&P Norway), Exploration & Production International (E&P International) and Exploration & Production USA (E&P
USA) as presented in note 5 Segments
to the Consolidated financial statements. Production cost is based on operating expenses
related to production of oil and gas. From the operating expenses certain expenses such as; transportation costs, accruals for
over/underlift position and royalty payments costs are excluded. These expenses and mainly upstream business administration are
included as other expenses in the tables below. Other revenues mainly consist of gains and losses from sales of oil and gas interests
and gains and losses from commodity-based derivatives within the upstream segments.
Income tax expense is calculated on the basis of statutory tax rates adjusted for uplift and tax credits. No deductions are made for
interest or other elements not included in the table below.
Consolidated companies
(in USD million)
Norway
Eurasia
excluding
Norway
Africa
USA
Americas
excluding
USA
Total
Full year 2023
Sales
62
107
533
127
92
921
Transfers
37,892
1,121
2,242
3,954
2,646
47,855
Other revenues
387
129
57
238
76
887
Total revenues
38,341
1,357
2,832
4,319
2,814
49,663
Exploration expenses
(476)
(20)
(37)
(322)
30
(825)
Production costs
(2,898)
(250)
(482)
(494)
(593)
(4,717)
Depreciation, amortisation and net impairment losses
(5,017)
(840)
(567)
(1,489)
(1,026)
(8,939)
Other expenses
(862)
(456)
19
(691)
(446)
(2,436)
Total costs
(9,253)
(1,566)
(1,067)
(2,996)
(2,035)
(16,917)
Results of operations before tax
29,088
(209)
1,765
1,323
779
32,746
Tax expense
(22,543)
34
(961)
(358)
(106)
(23,934)
Results of operations
6,545
(175)
804
965
673
8,812
Net income/(loss) from equity accounted investments
0
(13)
0
0
41
28
Equinor 2023 Annual Report on Form 20-F 21
Consolidated companies
(in USD million)
Norway
Eurasia
excluding
Norway
Africa
USA
Americas
excluding
USA
Total
Full year 2022
Sales
155
554
615
166
88
1,578
Transfers
74,468
1,252
3,019
5,168
1,853
85,760
Other revenues
1,308
(203)
(1)
213
57
1,374
Total revenues
75,931
1,603
3,633
5,547
1,998
88,712
Exploration expenses
(366)
(249)
(69)
(220)
(320)
(1,224)
Production costs
(2,916)
(202)
(470)
(399)
(518)
(4,505)
Depreciation, amortisation and net impairment losses
(4,167)
(623)
(530)
(361)
(579)
(6,260)
Other expenses
(866)
(201)
3
(533)
(413)
(2,010)
Total costs
(8,315)
(1,275)
(1,066)
(1,513)
(1,830)
(13,999)
Results of operations before tax
67,616
328
2,567
4,034
168
74,713
Tax expense
(52,070)
(152)
(1,043)
2,458
361
(50,447)
Results of operations
15,546
176
1,524
6,492
529
24,266
Net income/(loss) from equity accounted investments
0
52
0
0
120
172
Equinor 2023 Annual Report on Form 20-F 22
Consolidated companies
(in USD million)
Norway
Eurasia
excluding
Norway
Africa
USA
Americas
excluding
USA
Total
Full year 2021
Sales
97
476
638
207
16
1,434
Transfers
38,578
960
2,021
3,712
1,249
46,520
Other revenues
711
(14)
0
221
14
932
Total revenues
39,386
1,422
2,659
4,140
1,279
48,886
Exploration expenses
(363)
(108)
23
(211)
(362)
(1,021)
Production costs
(2,600)
(196)
(497)
(397)
(378)
(4,068)
Depreciation, amortisation and net impairment losses
(4,900)
(2,462)
(444)
(1,734)
(416)
(9,956)
Other expenses
(1,052)
(140)
53
(674)
(292)
(2,105)
Total costs
(8,915)
(2,906)
(865)
(3,016)
(1,448)
(17,150)
Results of operations before tax
30,471
(1,484)
1,794
1,124
(169)
31,736
Tax expense
(22,887)
835
(652)
(14)
(201)
(22,919)
Results of operations
7,585
(649)
1,142
1,110
(370)
8,817
Net income/(loss) from equity accounted investments
0
176
0
0
39
215
Average production cost in USD per boe based on entitlement
volumes (consolidated)
Norway
Eurasia
excluding
Norway
Africa
USA
Americas
excluding
USA
Total
2023
6
16
12
4
15
7
2022
6
13
12
4
21
7
2021
5
11
12
3
19
6
Production cost per boe is calculated as the production costs in the result of operations table, divided by the produced entitlement
volumes (mboe) for the corresponding period.
Equinor 2023 Annual Report on Form 20-F 23
C. Organizational Structure
Exhibit 8 to this 2023 Form 20-F is incorporated herein by reference. The table within Exhibit 8 shows significant subsidiaries and
significant equity accounted companies within the Equinor group as of 31 December 2023.
D. Property, Plant and Equipment
Equinor has interests in real estate in many countries throughout the world, including as part of certain developments and
projects of Equinor or in which Equinor participates.
Equinor’s three largest office buildings are (i) its head office located at Forusbeen 50, Stavanger, Norway which comprises
approximately 135,000 square meters of office space, (ii) its office building in Sandslivegen 90, Bergen, Norway which comprises
approximately 99,488 square meters of office space, and (iii) its office building located at Fornebu on the outskirts of Oslo which
comprises approximately 65,500 square meters. All three office buildings are leased by Equinor. Under a new lease agreement
entered into in 2022 for the office building at Fornebu, Equinor has reduced its area to 44,500 square meters with effect from around
the start of year 2024. The office building in Bergen is owned by Sandsliveien 90 AS, a subsidiary of Equinor Pensjon.
The information set forth under the following headings of the 2023 Annual Report is incorporated herein by reference:
●
●
●
●
●
●
See also notes 12 Property, plant and equipment and 25 Leases to the Consolidated financial statements.
Production per field
The following tables show the regional production by field.
Equinor 2023 Annual Report on Form 20-F 24
E&P Norway - Equinor operated fields, average daily entitlement production
Geographical area
Equinor's equity
interest in %
On
stream
Licence expiry
date
Average
production in
2023 mboe/day
Field
Johan Sverdrup
The North Sea
42.63
2019
2036-2037
319
Troll Phase 1 (Gas)
The North Sea
30.58
1996
2030
198
Oseberg
The North Sea
49.30
1988
2031
94
Gullfaks
The North Sea
51.00
1986
2036
76
Visund
The North Sea
53.20
1999
2034
66
Aasta Hansteen
The Norwegian Sea
51.00
2018
2041
59
Åsgard
The Norwegian Sea
35.01
1)
1999
2027
44
Snøhvit
The Barents Sea
36.79
2007
2035
44
Tyrihans
The Norwegian Sea
58.84
2009
2029
43
Snorre
The North Sea
33.28
1992
2040
32
Gina Krog
The North Sea
58.70
2017
2032
31
Martin Linge
The North Sea
51.00
2021
2027
29
Kvitebjørn
The North Sea
39.55
2004
2031
23
Statfjord Unit
The North Sea
64.10
2)
1979
2026
21
Sleipner West
The North Sea
58.35
1996
2028
20
Fram
The North Sea
45.00
2003
2040
16
Grane
The North Sea
36.61
2003
2030
16
Gudrun
The North Sea
36.00
2014
2032
15
Troll Phase 2 (Oil)
The North Sea
30.58
1995
2030
13
Mikkel
The Norwegian Sea
43.97
2003
2028
11
Heidrun
The Norwegian Sea
13.04
1995
2024-2025
10
Tordis
The North Sea
41.50
1994
2040
8
Alve
The Norwegian Sea
53.00
2009
2029
8
Trestakk
The Norwegian Sea
59.10
2019
2029
8
Vigdis
The North Sea
41.50
1997
2040
7
Norne
The Norwegian Sea
39.10
1997
2026
7
Kristin
The Norwegian Sea
54.82
2005
2027-2033
7
Hyme
The Norwegian Sea
42.50
2013
2029
6
Valemon
The North Sea
66.78
2015
2031
6
Njord
The Norwegian Sea
27.50
1997
2034
4
Sleipner East
The North Sea
59.60
1993
2028
4
Statfjord North
The North Sea
45.00
2)
1995
2026
4
Morvin
The Norwegian Sea
64.00
2010
2027
3
Breidablikk
The North Sea
39.00
2023
2030
2
Gungne
The North Sea
62.00
1996
2028
2
Utgard
The North Sea
38.44
2)
2019
2028
2
Statfjord East
The North Sea
43.25
2)
1994
2026-2040
2
Urd
The Norwegian Sea
63.95
2005
2026
1
Sigyn
The North Sea
60.00
2002
2035
1
Sindre
The North Sea
74.66
2017
2026-2034
0
Fram H Nord
The North Sea
49.20
2014
2024-2035
0
Sygna
The North Sea
43.43
2)
2000
2026-2040
0
Gimle
The North Sea
74.66
2006
2026-2034
0
Heimdal
The North Sea
29.44
1985
2023
0
Byrding
The North Sea
70.00
2017
2024-2035
0
Tune
The North Sea
50.00
2002
2025-2032
0
Total Equinor operated fields
1,261
Equinor 2023 Annual Report on Form 20-F 25
1) Åsgard changed ownership January 1st, 2023 from 34,57% to 35,01%
2) The Statfjord and Utgard fields in the North Sea span the boundary between the Norwegian and UK continental shelves. The volumes
pertain to Equinor’s operating interest in Statfjord and Utgard on the NCS. For the volumes pertaining to Equinor’s operating interest in
Statfjord and Utgard on the UKCS, please see Exploration & Production International in Section 3.1.2 of Chapter 3.
E&P Norway - Partner operated fields, average daily entitlement production
Geographical area
Equinor's equity
interest in %
Operator
On
stream
Licence expiry
date
Average
production in
2023 mboe/day
Field
Skarv
The Norwegian Sea
36.17
Aker BP ASA
2013
2029-2036
54
Ormen Lange
The Norwegian Sea
25.35
A/S Norske Shell
2007
2040-2041
30
Ivar Aasen
The North Sea
41.47
Aker BP ASA
2016
2029-2036
14
Goliat
The Barents Sea
35.00
Vår Energi ASA
2016
2042
9
Ærfugl Nord
The Norwegian Sea
30.00
Aker BP ASA
2021
2033
4
Marulk
The Norwegian Sea
33.00
Vår Energi ASA
2012
2030
2
Enoch
The North Sea
11.78
Repsol Sinopec North Sea Ltd.
2007
2024
0
Total partner operated fields
114
Total E&P Norway including share of equity accounted production
0
Equinor 2023 Annual Report on Form 20-F 26
E&P International - Average daily equity production
Field
Country
Equinor's
equity
interest in %
Operator
On
stream
Licence
expiry date
Average daily
equity
production in
2023 mboe/day
Americas (excluding US)
115
Peregrino
Brazil
60.00
2011
2040
53
Roncador
Brazil
25.00
1999
2052
33
Bandurria Sur
Argentina
30.00
Yacimientos Petrolíferos Fiscales S.A.
2015
2050
13
Hebron
Canada
9.01
2017
HPB
1)
11
Hibernia/Hibernia Southern
Extension
2)
Canada
Varies
Company Ltd.
1997
HPB
1)
4
Bajo del Toro
Argentina
50.00
Yacimientos Petrolíferos Fiscales S.A.
2022
2055
1
Africa
175
Block 17
Angola
22.16
TotalEnergies E&P Angola S.A.
2001
2045
76
In Salah
Algeria
31.85
Sonatrach
3)
2004
2027
30
Eni In Salah Limited
Equinor In Salah AS
Agbami
7)
Nigeria
20.21
Star Deep Water Petroleum Limited
(an affiliate of Chevron in Nigeria)
2008
2042
20
Block 15
Angola
12.00
Esso Exploration Angola Block 15 Limited
2004
2032
17
In Amenas
Algeria
45.90
Sonatrach
3)
2006
2027
14
Eni In Amenas Limited
Equinor In Amenas AS
Block 31
Angola
13.33
BP Exploration (Angola) Ltd
2012
2031
9
Murzuq
Libya
10.00
Akakus Oil Operations
2003
2037
8
Eurasia
55
ACG
8)
Azerbaijan
7.27
BP Exploration (Caspian Sea) Limited
1997
2049
26
Mariner
UK
65.11
2019
HBP
1)
13
Buzzard
9)
UK
29.89
CNOOC Petroleum Europe Limited
2007
2046
7
Corrib
4)
Ireland
37.50
Ireland Limited
2015
2031
2
Utgard
5)
UK
38.00
2019
HBP
1)
2
Statfjord Unit
5)
UK
14.53
1979
HBP
1)
4
Barnacle
6)
UK
100.00
2019
HBP
1)
0
Total E&P International
345
1)
Held by Production (HBP): A leasehold interest that is perpetuated beyond its primary term as long as there is production in paying
quantities from well(s) on the lease or lease(s) pooled therewith.
2)
Equinor's equity interests are 5.0% in Hibernia and 9.26% in Hibernia Southern Extension.
3)
The complete name for Sonatrach is Société nationale de transport et de commercialisation d’hydrocarbures.
4)
In March 2023, the transaction to sell the company’s non-operated equity position in the Corrib gas project in Ireland closed after receiving
the necessary regulatory approvals. For more information, see note 6 Acquistions and disposals to the Consolidated financial statements.
5)
The Utgard and Statfjord Unit fields span the boundary between the Norwegian and UK continental shelves. In this table we report only
volumes pertaining to the Equinor share in UKCS.
6)
Actual production for Barnacle was 0.4 mboe/day.
7)
In November 2023, Equinor announced its intention to exit its business activities in Nigeria.
8)
In December 2023, Equinor and SOCAR signed an agreement whereby Equinor will divest and transfer all its remaining assets in
Azerbaijan to SOCAR.
9)
Production started in July 2023 following Equinor’s acquisition of Suncor Energy UK Limited.
Equinor 2023 Annual Report on Form 20-F 27
E&P USD - Average daily equity production
Field
Country
Equinor's equity
interest in %
Operator
On
stream
Licence
expiry date
Average daily
equity
production in
2023 mboe/day
Appalachian (APB)
1)
US
Varies
2)
Equinor/others
3)
2008
HBP
5)
Caesar Tonga
US
46.00
2012
HBP
5)
Tahiti
US
25.00
2009
HBP
5)
Vito
US
36.89
Shell Offshore Inc.
2023
HBP
5)
Julia
US
50.00
2016
HBP
5)
St. Malo
US
21.50
2014
HBP
5)
Jack
US
25.00
2014
HBP
5)
Big Foot
US
27.50
2018
HBP
5)
Stampede
US
25.00
2018
HBP
5)
Titan
US
100.00
2018
HBP
5)
Heidelberg
4)
US
12.00
2016
HBP
5)
Total E&P USA
1)
Appalachian basin contains Marcellus and Utica formations.
2)
Equinor’s actual equity interest varies depending on wells and area.
3)
Operators are Equinor USA Onshore Properties Inc, Chesapeake Operating LLC, Southwestern Production Company, Chief Oil &
Gas LLC, and several other operators.
4)
Actual production for Heidelberg was 0.4 mboe/day.
5)
Held by Production (HBP): A leasehold interest that is perpetuated beyond its primary term as long as there is production in paying
quantities from well(s) on the lease(s) pooled therewith.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The discussion does not address certain items in respect of 2021. A discussion of such items may be found in the Annual Report
on Form 20-F for the year ended 31 December 2022, filed with the SEC 23 March 2023.
A. Operating Results
The information set forth under the following headings of the 2023 Annual Report is incorporated herein by reference:
●
●
●
91 – 98;
●
2.2. of Chapter 2 on page 99;
●
●
See also the information set forth under the heading “Applicable Laws and Regulations” in “Item 4―Information on the
Company―B. Business Overview” of this 2023 Form 20-F, and note 3 Consequences of initiatives to limit climate changes to the
Consolidated financial statements.
Financial Review
The following tables show the financial performance by reporting segment.
Equinor 2023 Annual Report on Form 20-F 28
E&P Norway - Financial information
For the year ended 31 December
(in USD million)
2023
2022
Change
Total revenues and other income
38,340
75,930
(50%)
Operating, selling, general and administrative expenses
(3,759)
(3,782)
(1%)
Depreciation, amortisation and net impairment losses
(5,017)
(4,167)
20%
Exploration expenses
(476)
(366)
30%
Net operating income/(loss)
29,087
67,614
(57%)
For the year ended 31 December
Operational information
2023
2022
Change
E&P Norway entitlement liquid and gas production (mboe/day)
1,374
1,387
(1%)
E&P Norway entitlement liquids production (mboe/day)
645
605
7%
E&P Norway entitlement gas production (mboe/day)
729
782
(7%)
Average liquids price (USD/bbl)
78.6
97.5
(19%)
Average internal gas price (USD/MMBtu)
12.20
31.22
(61%)
Financial Performance
Equinor revenues continued to remain strong for 2023 with production on par with 2022, even though lower prices for gas and liquids
during the year led to a decrease in net operating income and revenues compared to 2022. Other income was impacted by gain from
sale of ownership shares, with USD 222 million in 2023 for the Statfjord area compared to USD 730 million for Martin Linge and
Ekofisk in 2022. In addition, other income in 2022 included a significant positive effect on embedded derivatives from higher short
term gas prices.
Increased operation and maintenance costs, as well as environmental expenses led to increased operating, selling, general and
administrative expenses from 2022 to 2023. The development in interest rates and increased cost estimates impacted the Gassled
removal cost negatively, when comparing 2023 to 2022. In contrast, falling energy prices, led to decreased transportation and
electricity cost partially offsetting the increases. Exchange rate development in the NOK/USD during the year 2023 offset the cost
increases and their visibility in the reported numbers.
The NOK/USD exchange rate development in the year and the sale of ownership shares in Martin Linge and Ekofisk in 2022 reduced
depreciation, amortisation and net impairment losses in 2023. However, depreciation, amortisation and net impairment losses were
negatively impacted by a USD 588 million impairment of a North Sea asset in 2023 as opposed to net impairment reversals of USD
814 million in 2022 driving an overall increase year-on-year.
Increased exploration drilling activity levels (28 wells this year compared to 21 wells last year) and increased seismic and field
development led to an increase in exploration expenses in 2023 compared to 2022. An increased capitalisation rate partially offset the
increase.
Additions to PP&E, intangibles and equity accounted investments increased mainly due to increased activity in the sanctioned projects
portfolio both for Equinor- and partner operated projects. Decreased investments on the Johan Sverdrup field following completion of
phase 2 partially offset this.
Equinor 2023 Annual Report on Form 20-F 29
E&P International - Financial information
For the year ended 31 December
(in USD million)
2023
2022
23-22 change
Total revenues and other income
7,032
7,431
(5%)
Purchases [net of inventory]
(70)
(116)
(40%)
Operating, selling, general and administrative expenses
(2,176)
(1,698)
28%
Depreciation, amortisation and net impairment losses
(2,433)
(1,731)
41%
Exploration expenses
(20)
(638)
(97%)
Net operating income/(loss)
2,332
3,248
(28%)
For the year ended 31 December
Operational Information
2023
2022
23-22 change
E&P International equity liquid and gas production (mboe/day)
345
328
5%
E&P International entitlement liquid and gas production (mboe/day)
266
235
13%
Production sharing agreements (PSA) effects (mboe/day)
79
94
(15%)
Average liquids price (USD/bbl)
72.6
92.0
(21%)
Financial Performance
The growth in entitlement production across E&P international contributed to strong financial results, despite the impact of lower prices
in 2023. The decrease in operating income and revenues was mainly due to the reduction in liquid commodity prices, as liquids
constitute 90% of E&P International’s entitlement production. The sharp decline in gas prices further contributed to the decrease in
revenues.
Increased operation and maintenance expenses associated with turnarounds across various fields led to increased operating
expenses from 2022 to 2023. Increased royalties and production fees linked to increased production at the Peregrino field also
contributed to the overall rise in costs. This was partially offset by decreased royalties at Roncador due to lower prices in 2023.
The inclusion of Buzzard following the Suncor Energy UK Limited acquisition, increased production from Peregrino in Brazil and
Bandurria Sur in Argentina, in addition to several new investments in producing fields resulted in an overall increase in depreciation
from 2022 to 2023.
Net impairment related to property, plant, and equipment increased from USD 286 million in 2022 to USD 310 million in 2023. In 2023,
the impairment was mainly related to the planned exit from Azerbaijan. In 2022, the main contributors were impairments related to
Equinor’s exit from Russia, partially offset by an impairment reversal of an asset in the Europe and Asia area, supported by a slight
increase in reserves estimates.
Well costs related to Karabagh in Azerbaijan, and drilling costs in Canada expensed in 2022 were the main drivers for the reduction in
exploration expenses from 2022 to 2023. The capitalisation of previously expensed exploration wells in Brazil also positively impacted
the 2023 numbers.
The Suncor UK acquisition in 2023 further influenced the movement in the additions to PP&E, intangibles and equity accounted
investments.
Equinor 2023 Annual Report on Form 20-F 30
E&P USA - Financial information
For the year ended 31 December
(in USD million)
2023
2022
23-22 change
Total revenues and other income
4,319
5,523
(22%)
Operating, selling, general and administrative expenses
(1,178)
(938)
26%
Depreciation, amortisation and net impairment losses
(1,489)
(361)
>100%
Exploration expenses
(299)
(201)
49%
Net operating income/(loss)
1,353
4,022
(66%)
For the year ended 31 December
Operational information
2023
2022
23-22 change
E&P USA equity liquids and gas production (mboe/day)
363
324
12%
E&P USA entitlement liquid and gas production (mboe/day)
314
279
12%
Royalties
49
44
10%
Average liquids price (USD/bbl)
64.4
81.0
(20%)
Average internal gas price (USD/mmbtu)
1.77
5.55
(68%)
Financial Performance
Increased entitlement production due to Vito field start-up, Caesar Tonga flowline installation, and increased well count partially offset
the impact of lower realised liquids and gas prices which were the main drivers for the decrease in revenues in 2023 compared to
2022.
Operating expenses increased due the start-up of the Vito platform, combined with increased maintenance activity in the Appalachian
basin contributing to increased operations and maintenance expenditure.
Depreciation increased in 2023 due to additional production, decreased impairment reversals, and additional capital expenditures both
offshore and onshore. This increase was partially offset by improved reserves.
Impairment reversals related to property, plant, and equipment amounted to USD 290 million in 2023 which were primarily driven by
improved expected reserves due to additional well opportunities. In 2022, net impairments reversals amounted to USD 1,071 million
mainly driven by increased short-term prices.
Increased exploration expenses were driven by drilling activity for four exploration prospects in the Gulf of Mexico. The four prospects
were dry or non-commercial and were expensed accordingly, resulting in a significant increase in exploration cost.
Investments in 2023 in the recently sanctioned Sparta project, St. Malo Water Injection, and Appalachian Basin Partner Operated
assets drove the increase in additions to PPE, intangibles and equity accounted investments from 2022.
Equinor 2023 Annual Report on Form 20-F 31
MMP - Financial information
For the year ended 31 December
(in USD million)
2023
2022
Change
Total revenues and other income
105,908
148,105
(28%)
Purchases [net of inventory]
(95,769)
(139,916)
(32%)
Operating, selling, general and administrative expenses
(4,916)
(4,591)
7%
Depreciation, amortisation and net impairment losses
(1,239)
14
N/A
Net operating income/(loss)
3,984
3,612
10%
For the year ended 31 December
Operational information
2023
2022
Change
Liquid sales volume (mmbbl)
1)
956.3
815.9
17%
Natural gas sales Equinor (bcm)
58.9
63.3
(7%)
Natural gas entitlement sales Equinor (bcm)
53.2
56.1
(5%)
Power generation (GWh) Equinor share
2,298
1,012
N/A
Realised piped gas price Europe (USD/MMBtu)
1)
13.86
32.84
(58%)
Realise piped gas price US (USD/MMBtu)
2.09
5.89
(65%)
1) Restated. Restatement due to a change in definition of the price marker for realised gas price and improved methodology for calculating
liquids sales volumes. For more information, see below.
Liquid sales volume restatement (mmbl)
Full year
2022
Liquid sales volume (old)
740.1
Liquid sales volume (new)
815.9
Average invoiced gas price restatement (mmbtu)
Full year
2022
Average invoice gas price - Europe (old)
32.46
Realised piped gas price Europe (new)
32.84
Financial performance
Net operating income includes net effects from changes in fair value related to storage and commodity derivatives utilised to manage
price risk exposure. During 2023, the net operating income included impairments of USD 342 million, in contrast to USD 895 million of
net impairment reversals in the prior year.
Total revenues and other income decreased from 2023 to 2022 due to lower gas and oil sales prices in both Europe and North
America and decreased gas volumes. This was partially offset by increased liquid sales.
Purchases [net of inventory] decreased from 2022 to 2023 due to lower prices for both gas and liquids.
The increase in Operating expenses and selling, general and administrative
expenses from 2022 to 2023 was mainly due to
significant increased transportation costs for liquids and increased selling, general and administrative expenses mainly due to
increased activity within Low Carbon Solutions.
Equinor 2023 Annual Report on Form 20-F 32
Depreciation, amortisation and net impairment increased from 2022 to 2023 driven by the impairment of refinery assets in 2023 and
an impairment reversal in 2022.
The main driver for the decrease in additions to PP&E, intangibles and equity accounted investments from 2022 to 2023 are lower
investments in projects related to onshore plants.
REN - Financial information
For the year ended 31 December
(in USD million)
2023
2022
Change
Revenues third party, other revenue and other income
50
127
(61%)
Net income/(loss) from equity accounted investments
(33)
58
N/A
Total revenues and other income
17
185
(91%)
Operating, selling, general and administrative expenses
(462)
(265)
74%
Depreciation, amortisation and net impairment losses
(312)
(4)
>100%
Net operating income/(loss)
(757)
(84)
>(100%)
For the year ended 31 December
Operational information
2023
2022
Change
Renewables power generation (GWh) Equinor share
1,859
1,641
13%
Financial Performance
European offshore wind assets in operation within the equity accounted investment portfolio decreased in revenue contribution by
26% within net income/(loss) from equity accounted investments in 2023. This decline was due to lower prices experienced in 2023,
increased maintenance costs and increased expenditure associated with early phase projects.
Added revenue from the newly acquired onshore wind farm in Brazil and the start-up of production at solar plants in Poland
contributed positively to total revenues in 2023. Combined with the decreased results from equity accounted investments in 2023, total
revenues and other income decreased relative to 2022. Favourable effects of divestments early in 2022 significantly impacted the
decline.
The notable decrease in net operating income for 2023 compared to the prior year was primarily due to the recognition of a USD 300
million impairment in the third quarter for offshore wind projects in the US Northeast following the rejection of petitions related to
offtake agreements. In addition, increased business development expenditures and increased operating activity levels contributed to
an upward trend in operating and administrative expenses in 2023. The increased costs associated with maturing projects, which
predominantly originated from offshore wind activities in the UK and Asia, contributed to the reduction in adjusted earnings* in 2023
compared to 2022.
The acquisitions of BeGreen and Rio Energy in the year drove the increase in additions to PP&E, intangibles and equity accounted
investments compared to 2022.
Equinor 2023 Annual Report on Form 20-F 33
B. Liquidity and capital resources
The information set forth under the following headings of the 2023 Annual Report is incorporated herein by reference:
●
second and sixth paragraphs under the sub-heading “Debt and Credit Rating”;
●
●
●
●
●
Any credit rating referred to in this 2023 Form 20-F is not a recommendation to buy, hold or sell any of our or our subsidiaries’
securities. Credit ratings may be changed, suspended or withdrawn at any time, and each rating should be evaluated independently of
any other rating.
Following Equinor’s transition from London Inter-bank Offered Rates (LIBOR) to the new official alternative reference rates,
Equinor generally follows guidelines from ISDA and ICMA (International Capital Markets Association).
See also notes 18 Trade and other receivables, 19 Cash and cash equivalents, 21 Finance debt, 23 Provisions and other
liabilities, 24 Trade and other payables and provisions, 25 Leases, and 26 Other commitments, contingent liabilities and contingent
assets to the Consolidated financial statements.
Principal contractual obligations
The following table summarises principal contractual obligations, excluding derivatives and other hedging instruments, as well as
asset retirement obligations which for the most part are expected to lead to cash disbursements more than five years into the future.
See note 23 Provisions and other liabilities
to the Consolidated financial statements
and other provisions.
Non-current finance debt in the following table represents principal payment obligations, including interest obligations. Obligations
payable by Equinor to entities accounted for in the Equinor group using the equity method are included in the table below with
Equinor’s full proportionate share. For assets that are included in the Equinor accounts through joint operations or similar
arrangements, the amounts in the table include the net commitment payable by Equinor (i.e., Equinor’s proportionate share of the
commitment less Equinor's ownership share in the applicable entity).
Principal contractual obligations
As at 31 December 2023
Payment due by period
1)
(in USD million)
Less than 1
year
1-3 years
3-5 years
More than 5
years
Total
Undiscounted non-current finance debt- principal and interest
2)
2,948
6,035
5,601
17,597
32,181
Undiscounted leases
3)
1,369
1,434
496
477
3,775
Nominal minimum other long-term commitments
4)
2,659
3,587
2,197
6,775
15,218
Total contractual obligations
6,975
11,056
8,294
24,850
51,175
1)
''Less than 1 year'' represents 2024; ''1-3 years'' represents 2025 and 2026, ''3-5 years'' represents 2027 and 2028, while ''More than 5
years'' includes amounts for later periods.
2)
See note 21 Finance debt to the Consolidated financial statements. The main differences between the table and the note relate to
interest.
3)
See note 4 Financial risk management to the Consolidated financial statements.
4)
See note 26 Other commitments and contingencies to the Consolidated financial statements.
Equinor had contractual commitments of USD 11,259 million at 31 December 2023. The contractual commitments reflect Equinor's
share and mainly comprise construction and acquisition of property, plant and equipmentas well as committed investments/funding or
resources in equity accounted entities.
Equinor 2023 Annual Report on Form 20-F 34
Equinor’s projected pension benefit obligation was USD 8,328 million, and the fair value of plan assets amounted to USD 5,664 million
as of 31 December 2023. The company’s payments regarding these benefit plans are mainly related to employees in Norway. See
note 22 Pensions to the Consolidated financial statements for more information.
Off balance sheet arrangements
Equinor is party to various agreements such as transportation and processing capacity contracts, that are not recognised in the
balance sheet. Furthermore, Equinor is lessee in a range of lease contracts, whereas all leases shall be recognised in the balance
sheet. Commitments regarding the non-lease components of lease contracts as well as leases that have not yet commenced are not
recognised in the balance sheet and represent off balance sheet commitments. Equinor is also party to certain guarantees,
commitments and contingencies that, pursuant to IFRS Accounting Standards, are not necessarily recognised in the balance sheet as
liabilities. See note 26 Other commitments and contingencies
to the Consolidated financial statements for more information.
Equinor 2023 Annual Report on Form 20-F 35
Summarised financial information related to guaranteed debt securities
The following summarised financial information provides financial information of Equinor Energy AS as co-obligor and guarantor
as required by SEC Rule 3-10 and 13-01 of Regulation S-X.
Equinor Energy AS is a 100% owned subsidiary of Equinor ASA. Equinor Energy AS is the co-obligor of certain existing debt
securities of Equinor ASA and has guaranteed certain existing debt securities of Equinor ASA, including in each case debt securities
that are registered under the US Securities Act of 1933 ("US registered debt securities").
As co-obligor, Equinor Energy AS fully, unconditionally and irrevocably assumes and agrees to perform, jointly and severally with
Equinor ASA, the payment and covenant obligations for certain debt held by Equinor ASA. As a guarantor, Equinor Energy AS fully
and unconditionally guarantees the payment obligations for certain debt held by Equinor ASA. Total debt at 31 December 2023 is
USD 24,442 million, all of which is either guaranteed by Equinor Energy AS (USD 22,611 million), or for which Equinor Energy AS is
co-obligor (USD 1,831 million). In the future, Equinor ASA may from time to time issue debt for which Equinor Energy AS will be the
co-obligor or guarantor.
The applicable US registered debt securities and related guarantees of Equinor Energy AS are unsecured and rank equally with all
other unsecured and unsubordinated indebtedness of Equinor ASA and Equinor Energy AS. The guarantees of Equinor Energy AS
are subject to release in limited circumstances upon the occurrence of certain customary conditions. With respect to US registered
debt securities (and certain other debt securities) issued on or after 18 November 2019, Equinor Energy AS will automatically and
unconditionally be released from all obligations under its guarantee and the guarantee shall thereupon terminate and be discharged of
no further force or effect, in the event that at substantially the same time as its guarantee of such debt securities is terminated, the
aggregate amount of indebtedness for borrowed money for which Equinor Energy AS is an obligor (as a guarantor, co-issuer or
borrower) does not exceed 10% of the aggregate principal amount of indebtedness for borrowed money of Equinor ASA and its
subsidiaries, on a consolidated basis, as of such time.
Internal dividends, group contributions and repayment of capital from Equinor Energy AS to Equinor ASA are regulated in the
Norwegian Public Limited Liabilities Act §§ 3-1 - 3-5.
The following summarised financial information for the year ended 31 December 2023 provides financial information about Equinor
ASA, as issuer, and Equinor Energy AS, as co-obligor and guarantor on a combined basis after elimination of transactions between
Equinor ASA and Equinor Energy AS. Investments in non-guarantor subsidiaries are eliminated. Currency gain on transactions
between Equinor ASA and Equinor Energy AS of USD 1,939 million is included in financial items in accordance with the IFRS
Accounting Standards group principles and are included in external items in the Condensed profit and loss statement.
Intercompany balances and transactions between the obligor group and the non-guarantor subsidiaries are presented on separate
lines. Transactions with related parties are also presented on a separate line item and include transactions with the Norwegian State's
and the Norwegian State’s share of dividend declared but not paid.
The combined summarized financial information is prepared in accordance with Equinor's IFRS Accounting Standards policies as
described in note 2 Significant accounting policies to the Consolidated financial statements.
Equinor 2023 Annual Report on Form 20-F 36
COMBINED PROFIT AND LOSS STATEMENT FOR EQUINOR ASA AND EQUINOR ENERGY AS
Full year 2023
(unaudited, in USD million)
Revenues and other income
External
Non-guarantor subsidiaries
Related parties
Operating expenses
External (incl depreciation)
Non-guarantor subsidiaries
Related parties
Net operating income
Net financial items
External
Non-guarantor subsidiaries
Related parties
Income before tax
Income tax
Net income
COMBINED BALANCE SHEET FOR EQUINOR ASA AND EQUINOR ENERGY AS
At 31 December
2023
Non-current assets
External
Non-guarantor subsidiaries
Related parties
Current assets
External
Non-guarantor subsidiaries
Related parties
Non-current liabilities
External
Non-guarantor subsidiaries
Related parties
Current liabilities
External
Non-guarantor subsidiaries
Related parties
Use and reconciliation of non-GAAP financial measures
Equinor 2023 Annual Report on Form 20-F 37
Since 2007, Equinor has been preparing its audited consolidated financial statements in accordance with International Financial
Reporting Standards (IFRS Accounting Standards) as adopted by the European Union (EU) and as issued by the International
Accounting Standards Board. IFRS Accounting Standards have been applied consistently to all periods in our audited consolidated
financial statements as of 31 December 2023 and 2022, and for the three years ended 31 December 2023 included in this 2023 Form
20-F (the “Consolidated financial statements”).
Non-GAAP financial measures are defined as numerical measures that either exclude or include amounts that are not excluded or
included in the comparable measures calculated and presented in accordance with generally accepted accounting principles: (i.e,
IFRS Accounting Standards in the case of Equinor). The following financial measures included in this 2023 Form 20-F may be
considered non-GAAP financial measures:
a)
employed ratio adjusted
b)
c)
d)
e)
f)
g)
a) Net debt to capital employed ratio
In Equinor’s view, net debt ratios provide a more informative picture of Equinor’s financial strength than gross interest-bearing financial
debt.
Three different net debt to capital ratios are provided below: 1) net debt to capital employed, 2) net debt to capital employed ratio
adjusted, including lease liabilities, and 3) net debt to capital employed ratio adjusted.
These calculations are all based on Equinor’s gross interest-bearing financial liabilities as recorded in the Consolidated balance sheet
and exclude cash, cash equivalents and current financial investments.
The following adjustments are made in calculating the net debt to capital employed ratio adjusted, including lease liabilities and the
net debt to capital employed ratio adjusted: collateral deposits (classified as Cash and cash equivalents in the Consolidated balance
sheet), and financial investments held in Equinor Insurance AS (classified as Current financial investments in the Consolidated
balance sheet) are treated as non-cash and excluded from the calculation of these non-GAAP measures. Collateral deposits are
excluded since they relate to certain requirements of exchanges where Equinor’s securities are trading and therefore are presented as
restricted cash and cash equivalents. Financial investments in Equinor Insurance are excluded as these investments are not readily
available for the group to meet short term commitments. These adjustments result in a higher net debt figure and in Equinor’s view
provides a more prudent measure of the net debt to capital employed ratio than would be the case without such exclusions.
Additionally, lease liabilities are further excluded in calculating the net debt to capital employed ratio adjusted.
The accompanying table details the calculations for these non-GAAP measures and reconciles them with the most directly
comparable IFRS Accounting Standards financial measure or measures.
Forward-looking net debt to capital employed ratio adjusted, including lease liabilities included in this 2023 Form 20-F is not
reconcilable to its most directly comparable IFRS Accounting Standards measure without unreasonable efforts, because the amounts
excluded from IFRS Accounting Standards measures used to determine net debt to capital employed ratio adjusted, including lease
liabilities cannot be predicted with reasonable certainty.
Calculation of capital employed and net debt to capital employed ratio
For the year ended 31
December
(in USD million)
2023
2022
Shareholders' equity
48,490
53,988
Non-controlling interests
10
1
Total equity
A
48,500
53,989
Current finance debt and lease liabilities
7,275
5,617
Non-current finance debt and lease liabilities
24,521
26,551
Equinor 2023 Annual Report on Form 20-F 38
Gross interest-bearing debt
B
31,796
32,168
Cash and cash equivalents
9,641
15,579
Current financial investments
29,224
29,876
Cash and cash equivalents and current financial investment
C
38,865
45,455
Net interest-bearing debt before adjustments
B1 = B-C
(7,069)
(13,288)
Other interest-bearing elements
2,030
6,538
Net interest-bearing debt adjusted, including lease liabilities
B2
(5,040)
(6,750)
Lease liabilities
3,570
3,668
Net interest-bearing debt adjusted
B3
(8,610)
(10,418)
Calculation of capital employed:
Capital employed
A+B1
41,431
40,701
Capital employed adjusted, including lease liabilities
A+B2
43,460
47,239
Capital employed adjusted
A+B3
39,890
43,571
Calculated net debt to capital employed
Net debt to capital employed
(B1)/(A+B1)
(17.1%)
(32.6%)
Net debt to capital employed ratio adjusted, including lease liabilities
(B2)/(A+B2)
(11.6%)
(14.3%)
Net debt to capital employed ratio adjusted
(B3)/(A+B3)
(21.6%)
(23.9%)
1)
The following adjustments are made in calculating the net debt to capital employed adjusted, including lease liabilities ratio and the net
debt to capital employed adjusted ratio: collateral deposits (classified as Cash and cash equivalents in the Consolidated balance sheet),
and financial investments held in Equinor Insurance AS (classified as Current financial investments in the Consolidated balance sheet) are
treated as non-cash and excluded from the calculation of these non-GAAP measures. Collateral deposits are excluded since they relate to
certain requirements of exchanges where Equinor is trading and presented as restricted cash and cash equivalents. Financial investments
in Equinor Insurance are excluded as these investments are not readily available for the group to meet short term commitments. These
adjustments result in a higher net debt figure and in Equinor’s view provides a more prudent measure of the net debt to capital employed
ratio than would be the case without such exclusions.
Equinor 2023 Annual Report on Form 20-F 39
b) Return on average capital employed (ROACE)
Return on average capital employed (ROACE) is the ratio of adjusted earnings after tax to the average capital employed adjusted.
The reconciliation for adjusted earnings after tax is presented in section g). Average capital employed adjusted refers to the average
of the capital employed adjusted values as of 31 December for both the current and the preceding year, as presented under the
heading Calculation of capital employed in section a).
Equinor uses ROACE to evaluate performance by measuring how effectively the company employs its capital, whether financed
through equity or debt.
An IFRS Accounting Standards measure most directly comparable to ROACE would be calculated as the ratio of net income/(loss) to
average capital employed that is based on Equinor’s gross interest-bearing financial liabilities as recorded in the Consolidated balance
sheet, excluding cash, cash equivalents and current financial investments.
ROACE is used as a supplementary measure and should not be viewed in isolation or as an alternative to measures calculated in
accordance with IFRS Accounting Standards including income before financial items, income taxes and minority interest, or net
income, or ratios based on these figures.
Calculated ROACE based on IFRS Accounting Standards
31 December
(in USD million, except percentages)
2023
2022
Net income/(loss)
A
11,904
28,744
Average total equity
1
51,244
46,506
Average current finance debt and lease liabilities
6,446
6,001
Average non-current finance debt and lease liabilities
25,536
28,202
- Average cash and cash equivalents
(12,610)
(14,853)
- Average current financial investments
(29,550)
(25,561)
Average net-interest bearing debt
2
(10,178)
(6,210)
Average capital employed
B = 1+2
41,066
40,296
Calculated ROACE based on Net income/loss and capital employed
A/B
29.0%
71.3%
Calculated ROACE based on Adjusted earnings after tax and capital employed adjusted
31 December
(in USD million, except percentages)
2023
2022
Adjusted earnings after tax
A
10,371
22,680
Average capital employed adjusted
B
41,731
41,134
Calculated ROACE based on Adjusted earnings after tax and capital employed adjusted
A/B
24.9%
55.1%
Forward-looking ROACE included in this 2023 Form 20-F is not reconcilable to its most directly comparable IFRS Accounting
Standards measure without unreasonable efforts, because the amounts included or excluded from IFRS Accounting Standards
measures used to determine ROACE cannot be predicted with reasonable certainty.
Equinor 2023 Annual Report on Form 20-F 40
c) Organic capital expenditures
Organic capital expenditures represent additions to PP&E, intangibles and equity accounted investments, excluding expenditures
related to acquisitions, leased assets, and other investments with significantly different cash flow patterns. Equinor believes this
measure gives stakeholders relevant information to understand the company’s investments in maintaining and developing its existing
business operations.
Calculation of organic capital expenditures
For the year ended 31
December
(in USD billion)
2023
2022
Additions to PP&E, intangibles and equity accounted investments
14.5
Acquisition-related additions
Right of use asset additions
Other additions (with unique cash flow patterns)
Organic capital expenditures
Forward-looking organic capital expenditures included in this 2023 Form 20-F are not reconcilable to the most directly comparable
IFRS Accounting Standards measure without unreasonable efforts, because the amounts excluded from such IFRS Accounting
Standards measure to determine organic capital expenditures cannot be predicted with reasonable certainty.
d) Gross capital expenditures (Gross capex)
Gross capital expenditures represent capital expenditures, defined as Additions to PP&E, intangibles and equity accounted
investments as presented in the financial statements, excluding additions to right of use assets related to leases and capital
expenditures financed through government grants. Equinor adds the proportionate share of capital expenditures in equity accounted
investments not included in Additions to PP&E, intangibles and equity accounted investments. Equinor believes that by excluding
additions to right of use assets related to leases, this measure better reflects the company's investments in the business to drive
growth.
Calculation of gross capital expenditures
For the year ended 31
December
(in USD billion)
2023
2022
Additions to Property, plant and equipment, Intangibles and Equity accounted companies
14.5
10.0
Less adjustments
0.4
0.4
Gross capital expenditures
14.1
9.6
Forward-looking gross capital expenditures included in this 2023 Form 20-F are not reconcilable to the most directly comparable IFRS
Accounting Standards measure without unreasonable efforts, because the amounts included or excluded from such IFRS Accounting
Standards measure to determine gross capital expenditures cannot be predicted with reasonable certainty.
Equinor 2023 Annual Report on Form 20-F 41
e) Cash flows from operations after taxes paid (CFFO after taxes paid)
Cash flows from operations after taxes paid represents, and is used by management to evaluate, cash generated from operating
activities after taxes paid, which is available for investing activities, for debt servicing and for distribution to shareholders. Cash flows
from operations after taxes paid is not a measure of our liquidity under IFRS Accounting Standards and should not be considered in
isolation or as a substitute for an analysis of our results as reported in this 2023 Form 20-F. Our definition of Cash flows from
operations after taxes paid is limited and does not represent residual cash flows available for discretionary expenditures.
The table below provides a reconciliation of Cash flows from operations after taxes paid to its most directly comparable IFRS
Accounting Standards measure, Cash flows provided by operating activities before taxes paid and working capital items, as of the
specified dates:
Cash flow from operations after taxes paid (CFFO after taxes paid)
(in USD million)
2023
2022
Cash flows provided by operating activities before taxes paid and working capital items
Taxes paid
Cash flow from operations after taxes paid (CFFO after taxes paid)
Forward-looking cash flows from operations after taxes paid included in this 2023 Form 20-F is not reconcilable to its most directly
comparable IFRS Accounting Standards measure without unreasonable efforts, because the amounts included or excluded from IFRS
Accounting Standards measures used to determine cash flows from operations after taxes paid cannot be predicted with reasonable
certainty.
f) Net cash flow (previously named Free cash flow)
Net cash flow represents, and is used by management to evaluate, cash generated from operational and investing activities available
for debt servicing and distribution to shareholders. The measure underwent a name change in 2023; however, all other aspects of the
measure remain unchanged. Net cash flow is not a measure of our liquidity under IFRS Accounting Standards and should not be
considered in isolation or as a substitute for an analysis of our results as reported in this 2023 Form 20-F. Our definition of Net cash
flow is limited and does not represent residual cash flows available for discretionary expenditures.
The table below reconciles Net cash flow with its most directly comparable IFRS Accounting Standards measure, Cash flows provided
by operating activities before taxes paid and working capital items, as of the specified dates:
Net cash flow
(in USD billion)
2023
2022
Cash flows provided by operating activities before taxes paid and working capital items
Taxes paid
Cash used/received in business combinations
Capital expenditures and investments
(Increase)/decrease in other interest-bearing items
Proceeds from sale of assets and businesses
Net cash flow before capital distribution
Dividends paid
Share buy-back
Net cash flow
Equinor 2023 Annual Report on Form 20-F 42
g) Adjusted earnings and adjusted earnings after tax
Adjusted earnings
to separate out effects that management considers may not be well correlated to Equinor’s underlying operational performance in the
individual reporting period. Management believes adjusted earnings provides an indication of Equinor’s underlying operational
performance in the period and facilitates comparison of operational trends between periods. The calculation of Adjusted earnings was
changed in 2023, as detailed below.
Adjusted earnings after tax
adjustments to operating income to take the applicable marginal tax into consideration. Adjusted earnings after tax excludes net
financial items and the associated tax effects on net financial items. It is based on adjusted earnings less the tax effects on all
elements included in adjusted earnings (or calculated tax on operating income and on each of the adjusting items using an estimated
marginal tax rate). In addition, tax effects related to tax exposure items not related to the individual reporting period are excluded from
adjusted earnings after tax. Management believes adjusted earnings after tax provides an indication of Equinor’s underlying
operational performance and facilitates comparisons of operational trends between periods as it reflects the tax charge associated
with operational performance excluding the impact of financing. Certain net USD denominated financial positions are held by group
companies that have a USD functional currency that is different from the currency in which the taxable income is measured. As
currency exchange rates change between periods, the basis for measuring net financial items for IFRS Accounting Standards will
change disproportionally with taxable income which includes exchange gains and losses from translating the net USD denominated
financial positions into the currency of the applicable tax return. Therefore, the effective tax rate may be significantly higher or lower
than the statutory tax rate for any given period. Adjusted taxes included in adjusted earnings after tax should not be considered
indicative of the amount of current or total tax expense (or taxes payable) for the period.
Adjusted earnings and adjusted earnings after tax are supplementary measures and should not be viewed in isolation or as
substitutes for net operating income/(loss) and net income/(loss), which are the most directly comparable IFRS Accounting Standards
measures. There are material limitations associated with the use of adjusted earnings and adjusted earnings after tax compared with
the IFRS Accounting Standards measures as these non-GAAP measures do not include all the items of revenues/gains or
expenses/losses of Equinor that are needed to evaluate its profitability on an overall basis. Adjusted earnings and adjusted earnings
after tax are only intended to be indicative of the underlying developments in trends of our ongoing operations for the production,
manufacturing and marketing of our products and exclude pre- and post-tax impacts of net financial items. Equinor reflects such
underlying developments in our operations by eliminating the effects of certain items that may not be directly associated with the
period's operations or financing. However, for that reason, adjusted earnings and adjusted earnings after tax are not complete
measures of profitability and should therefore not be used in isolation.
Amended principles for Adjusted earnings with effect from 2023:
Equinor has made the following changes to the items adjusted for within Adjusted earnings:
●
sale and purchase contracts are excluded from adjusted earnings and deferred until the time of the physical delivery. This
change minimises the effects of timing differences and presents a measure more indicative of underlying economic
performance.
●
expected realisation date. Prior to this amendment, the valuation adjustment was based on short-term forward prices which,
for some storages, did not correspond to the forward price at the expected realisation date. This change brings the valuation
principle in line with how the corresponding derivative contract used to manage price exposure is valued.
These changes have been applied retrospectively to the comparative figures. The majority of the impact is due to the revised
treatment of commodity derivatives. These changes only affect the MMP reporting segment and currently do not have an impact on
other segments. Equinor deems that these changes lead to a better representation of performance in each period by appropriately
reflecting the economic impact of its risk management activities.
For further information on Adjusted earnings, see note 28 Financial instruments and fair value measurement to the Consolidated
financial statements.
Impact of change
Full year of 2022
MMP segment
As reported
Impact
Restated
Change in Fair Value of derivatives
(149)
1,801
1,651
Periodisation of inventory hedging effect
(349)
181
(168)
Adjusted total revenues and other income
147,599
1,981
149,580
Adjusted earnings/(loss)
2,253
1,981
4,234
Equinor 2023 Annual Report on Form 20-F 43
Adjusted earnings/(loss) after tax
2,727
(10)
2,717
Impact of change
Full year of 2022
Equinor group
As reported
Impact
Restated
Change in Fair Value of derivatives
(207)
1,801
1,593
Periodisation of inventory hedging effect
(349)
181
(168)
Adjusted total revenues and other income
149,910
1,981
151,891
Adjusted earnings/(loss)
74,940
1,981
76,921
Adjusted earnings/(loss) after tax
22,691
(10)
22,680
Effective tax rates on adjusted earnings
69.7%
0.8%
70.5%
No other line items or segments were affected by the change.
Adjusted earnings adjust for the following items:
●
Changes in fair value of derivatives
: In the ordinary course of business, Equinor enters into commodity derivative contracts to
manage the price risk exposure relating to future sale and purchase contracts. These commodity derivatives are measured at fair
value at each reporting date, with the movements in fair value recognised in the income statement. By contrast, the sale and
purchase contracts are not recognised until the transaction occurs resulting in timing differences. Therefore, with effect from
2023, the unrealised movements in the fair value of these commodity derivative contracts are excluded from adjusted earnings
and deferred until the time of the physical delivery to minimise the effect of these timing differences. Further, embedded
derivatives within certain gas contracts and contingent consideration related to historical divestments are carried at fair value.
Any accounting impacts resulting from such changes in fair value are also excluded from adjusted earnings, as these fluctuations
are not indicative of the underlying performance of the business.
●
Periodisation of inventory hedging effect:
commercial storage. These derivative contracts are carried at fair value while the inventories are accounted for at the lower of
cost or market price. An adjustment is made to align the valuation principles of inventories with related derivative contracts. With
effect from 2023, the adjusted valuation of inventories is based on the forward price at the expected realisation date. This is so
that the valuation principles between commercial storages and derivative contracts are better aligned.
●
Over/underlift
: Over/underlift is accounted for using the sales method and therefore revenues are reflected in the period the
product is sold rather than in the period it is produced. The over/underlift position depends on a number of factors related to our
lifting programme and the way it corresponds to our entitlement share of production. The effect on income for the period is
therefore adjusted to show estimated revenues and associated costs based upon the production for the period to reflect
operational performance.
●
The
operational storage
FIFO (first-in, first-out) method, and includes realised gains or losses that arise due to changes in market prices. These gains or
losses will fluctuate from one period to another and are not considered part of the underlying operations for the period.
●
Impairment and reversal of impairment
the lifetime of that asset, not only the period in which it is impaired or the impairment is reversed. Impairment and reversal of
impairment can impact both the exploration expenses and the depreciation, amortisation and net impairments line items.
●
Gain or loss from sales of assets
performance or periodic performance; such a gain or loss is related to the cumulative value creation from the time the asset is
acquired until it is sold.
●
Eliminations (internal unrealised profit on inventories):
factors and inventory strategies, i.e. level of crude oil in inventory, equity oil used in the refining process and level of in-transit
cargoes. Internal profit related to volumes sold between entities within the group and still in inventory at period end is eliminated
according to IFRS Accounting Standards (write down to production cost). The proportion of realised versus unrealised gain
fluctuates from one period to another due to inventory strategies and consequently impacts net operating income/(loss). Write
down to production cost is not assessed to be a part of the underlying operational performance, and elimination of internal profit
related to equity volumes is excluded in adjusted earnings.
●
Other items of income and expense
underlying operational performance in the reporting period. Such items may be unusual or infrequent transactions, but they may
also include transactions that are significant which would not necessarily qualify as either unusual or infrequent. However, other
items adjusted do not constitute normal, recurring income and operating expenses for the company. Other items are carefully
assessed and can include transactions such as provisions related to reorganisation, early retirement, etc.
●
Change in accounting policy
reflective of Equinor’s underlying operational performance in the reporting period.
Equinor 2023 Annual Report on Form 20-F 44
Items impacting net operating income/(loss) in the
full year of 2023
Equinor
group
Exploration
&
Production
Norway
Exploration
&
Production
Internationa
l
Exploration
&
Production
USA
Marketing,
Midstream
&
Processing
Rene-
wables
Other
(in USD million)
Total revenues and other income
Adjusting items
Changes in fair value of derivatives
Periodisation of inventory hedging effect
Impairment from associated companies
Over-/underlift
Other adjustments
Gain/loss on sale of assets
Adjusted total revenues and other income
Purchases [net of inventory variation]
Adjusting items
Operational storage effects
Provisions
Eliminations
Adjusted purchases [net of inventory variation]
Operating and administrative expenses
Adjusting items
Over-/underlift
Other adjustments
Gain/loss on sale of assets
Provisions
Adjusted operating and administrative expenses
Depreciation, amortisation and net impairments
Adjusting items
Impairment
Reversal of impairment
Adjusted depreciation, amortisation and net
impairments
Exploration expenses
Adjusting items
Impairment
Adjusted exploration expenses
Net operating income/(loss)
Sum of adjusting items
Adjusted earnings/(loss)
Tax on adjusted earnings
Adjusted earnings/(loss) after tax
Equinor 2023 Annual Report on Form 20-F 45
Items impacting net operating income/(loss) in the
full year of 2022
Equinor group
Exploration
&
Production
Norway
Exploration
&
Production
Internationa
l
Exploration
&
Production
USA
Marketing,
Midstream
&
Processing
Rene-
wables
Other
(in USD million)
Total revenues and other income
Adjusting Items
Changes in fair value of derivatives
1)
1)
Periodisation of inventory hedging effect
1)
1)
Impairment from associated companies
Over-/underlift
Other adjustments
Gain/loss on sale of assets
Adjusted total revenues and other income
1)
1)
Purchases [net of inventory variation]
Adjusting Items
Operational storage effects
Eliminations
Adjusted purchases [net of inventory variation]
Operating and administrative expenses
Adjusting Items
Over-/underlift
Change in accounting policy
Gain/loss on sale of assets
Provisions
Adjusted operating and administrative expenses
Depreciation, amortisation and net impairments
Adjusting Items
Impairment
Reversal of impairment
Adjusted depreciation, amortisation and net impairments
Exploration expenses
Adjusting Items
Impairment
Reversal of impairment
Adjusted exploration expenses
Net operating income/(loss)
Sum of adjusting items
1)
1)
Adjusted earnings/(loss)
1)
1)
Tax on adjusted earnings
1)
1)
Adjusted earnings/(loss) after tax
1)
1)
1) MMP segment and Equinor group are restated due to amended principles for adjusting items; 'changes in fair value of derivatives' and 'periodisation of inventory hedging
effect'.
C. Research and development, Patents and Licences, etc.
The information set forth under the following headings of the 2023 Annual Report is incorporated herein by reference:
Equinor 2023 Annual Report on Form 20-F 46
●
●
See also notes 9 Auditor’s remuneration and Research and development expenditures and 12 Property, plant and equipment to
the Consolidated financial statements.
D. Trend information
The information set forth under the heading “
Our market perspective
” in Section 2.1 of Chapter 2 on pages 37 – 38 of the 2023
Annual Report is incorporated herein by reference. See also “Item 5. Operating and Financial Review―A. Operating Results” of this
2023 Form 20-
F.
E. Critical Accounting Estimates
Not Applicable.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
Members of Equinor’s board of directors as of 31 December 2023:
Jon Erik Reinhardsen
Position:
Chair of the Board and chair of the Compensation and Executive Development Committee
Term of office:
Year of birth:
Independent:
Yes
Other directorships:
Listed companies: Member of the Board of Oceaneering International, Inc.
Non-listed companies: Chair of the Board of Fire Security AS, OPS Solutions AS and Baring Group AS.
Number of shares in Equinor ASA:
Loans from Equinor ASA:
Experience:
Reinhardsen is a part-time senior advisor with BearingPoint Capital. Reinhardsen was the Chief Executive Officer of
Petroleum Geo-Services (PGS) from 2008 - August 2017. PGS delivers global geophysical- and reservoir services. In the period
2005 - 2008 Reinhardsen was President Growth, Primary Products in the international aluminium company Alcoa Inc. with
headquarters in the US, and he was in this period based in New York. From 1983 to 2005, Reinhardsen held various positions in
the Aker Kværner group, including Group Executive Vice President of Aker Kværner ASA, Deputy Chief Executive Officer and
Executive Vice President of Aker Kværner Oil & Gas AS in Houston and Executive Vice President in Aker Maritime ASA.
Education:
Master’s degree in Applied Mathematics and Geophysics from the University of Bergen. He has also attended the
International Executive Program at the Institute for Management Development (IMD) in Lausanne, Switzerland.
Family relations:
Corporate Assembly.
Other matters:
Anne Drinkwater
Position
: Shareholder-elected deputy chair of the board, chair of the board’s audit committee and member of the board’s safety,
sustainability and ethics committee.
Term of office:
election in 2024.
Year of birth:
Independent:
Other directorships:
Listed company: Non-executive member of the board of Balfour Beatty plc.
Number of shares in Equinor ASA:
Loans from Equinor ASA:
Experience:
company. In the period 2009-2012 she was chief executive officer of bp Canada. She has extensive international experience,
including being responsible for operations in the US, Norway, Indonesia, the Middle East and Africa. Through her career
Drinkwater has acquired a deep understanding of the oil and gas sector, holding both operational roles, and more distinct
business responsibilities.
Education:
Equinor 2023 Annual Report on Form 20-F 47
Family relations:
Corporate Assembly.
Other matters:
Rebekka Glasser Herlofsen
Position:
development committee.
Term of office
: Member of the Board of Equinor ASA since 19 March 2015. Up for election in 2024.
Year of birth:
1970
Independent:
Other directorships:
Listed companies: Member of the board of Rockwool International A/S, BW Offshore ASA and Wilh. Wilhelmsen Holding ASA.
Non-listed companies: Chair of the board of Norwegian Hull Club (NHC) and Handelsbanken Norge, board member of Torvald
Klaveness Group and Egmont Foundation and chair of the Council at DNV.
Number of shares in Equinor ASA:
Loans from Equinor ASA:
Experience:
Wallenius Wilhelmsen ASA, an international shipping company. Before joining Wallenius Wilhelmsen, she was the Chief
Financial Officer in the shipping company Torvald Klaveness since 2012. She has broad financial and strategic experience from
several corporations and board directorships. Herlofsen’s professional career began in the Nordic Investment Bank, Enskilda
Securities, where she worked with corporate finance from 1995 to 1999 in Oslo and London. During the next ten years Herlofsen
worked in the Norwegian shipping company Bergesen d.y. ASA (later BW Group). During her period with Bergesen d.y. ASA/BW
Group she held leading positions within M&A, strategy and corporate planning and was part of the group management team.
Education:
Norwegian School of Economics (NHH). Breakthrough Program for Top Executives at IMD business school, Switzerland.
Family relations:
Corporate Assembly.
Other matters:
Jonathan Lewis
Position:
Member of the Board, chair of the Board's Safety, Sustainability and Ethics Committee and member of the Board's
Audit Committee.
Term of office:
Member of the Board of Equinor ASA since 1 July 2018. Up for election in 2024.
Year of birth:
Independent:
Other directorships:
Listed company: Member of the Board of Capita plc.
Number of shares in Equinor ASA:
Loans from Equinor ASA:
Experience:
spent 30 years working for large multi-national companies in technology-enabled industries. Lewis came to Capita plc from Amec
Foster Wheeler plc, a global consulting, engineering and construction company, where he was CEO from 2016-2017. Prior to
this, he held a number of senior leadership positions at Halliburton, where he was employed in the period 1996-2016. Lewis has
previously held several directorships within technology and the oil and gas industry.
Education:
Geology from Kingston University.
Family relations:
Corporate Assembly.
Other matters:
Finn Bjørn Ruyter
Position
: Member of the Board, the Board's Audit Committee and the Board’s Compensation and Executive Development
Committee.
Term of office:
Member of the Board of Equinor ASA since 1 July 2019.
Up for election in 2024.
Year of birth:
1964
Independent:
Yes
Other directorships:
Non-listed companies: Chair of the board of Fornybar Norge AS and board member of Cegal in addition to several companies
fully or partly owned by Hafslund.
Number of shares in Equinor ASA:
620 (as of 31 December 2023)
Loans from Equinor ASA:
None
Equinor 2023 Annual Report on Form 20-F 48
Experience:
Ruyter has since July 2012 been CEO of Hafslund AS. He was CFO in the company 2010-2011. In 2009-2010 he
worked in the Philippine hydro power company SN Aboitiz Power. In the period 1996-2009 he led the power trading entity and
from 1999 also the energy division in Elkem. From 1991-1996 Ruyter worked with energy trading in Norsk Hydro.
Education:
Master’s degree in mechanical engineering from the Norwegian University of Technology (NTNU) and an MBA from
BI Norwegian School of Management.
Family relations:
No family relations to other members of the Board, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters:
Ruyter is a Norwegian citizen, and resident in Norway.
Tove Andersen
Position
: Member of the Board and the Board's Safety, Sustainability and Ethics Committee.
Term of office:
Member of the Board of Equinor ASA since 1 July 2020.
Up for election in 2024.
Year of birth:
1970
Independent:
Yes
Other directorships:
Listed company:
Member of the board of Borregaard ASA
Non-listed company: Member of the board of The Norwegian Opera & Ballet
Number of shares in Equinor ASA:
4,700 (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Andersen is President & CEO of Tomra Systems ASA as of 16 August 2021. Prior to this, she held the position as
Executive Vice President for Europe in Yara International ASA. Andersen was part of the executive management team in Yara
since 2016 where she also held positions as Executive Vice President, Production and Executive Vice President, Supply Chain.
Previously she has had several management roles within Yara and Norsk Hydro/Yara and she started in Norsk Hydro in 1997.
She has extensive international industrial experience, and she has broad board experience.
Education:
Master of Science (Sivilingeniør) from Norwegian Institute of Technology (NTNU) and a Master of Business
Administration from the BI Norwegian Business School.
Family relations:
No family relations to other members of the Board, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters:
Haakon Bruun-Hanssen
Position:
Sustainability and Ethics Committee.
Term of office:
Member of the Board of Equinor ASA since 12 December 2022. Up for election in 2024.
Year of birth:
1960
Independent:
Yes
Other directorships:
Non-listed companies: Member of the Advisory board at Kongsberg Defence & Aerospace (KDA)
Number of shares in Equinor ASA:
None (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Bruun-Hanssen held the position as Chief of Norwegian Defence Forces from 2013-2020, previously having held
the position as Chief Norwegian Joint Operational Headquarters from 2011-2013 and Chief Royal Norwegian Navy from 2009-
2011, Chief of staff Royal Norwegian Navy from 2007-2009 and Chief Naval Operations centre from 2003-2007. Prior to this he
has had an extensive career in the Norwegian Military.
Education:
Bruun-Hanssen has a broad education through the Norwegian Military; Petty Officer training school, Norwegian naval
Academy, Submarine Commanding officer course and Higher command course, Forsvarets Høyskole. He is also educated at
Military Command and Staff college, Instituut Defensie Leergangen in The Netherlands and has participated in work sessions
relating to board roles and tasks at Insead In-Board Nordic Academy.
Family relations:
No family relations to other members of the Board, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters:
Bruun-Hanssen is a Norwegian citizen, and resident in Norway.
Stig Lægreid
Position:
Employee representative member of the Board and member of the Safety, Sustainability and Ethics Committee.
Term of office:
Member of the Board of Equinor ASA since 1 July 2013. Up for election in 2025.
Year of birth:
1963
Independent:
No
Other board directorships:
None
Number of shares in Equinor ASA:
147 (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Lægreid is now a full-time employee representative as the leader of NITO, Equinor. He has been occupied as
weight estimator for platform design from 2005 and prior to this as project engineer and constructor for production of primary
metals. Employed in ÅSV and Norsk Hydro since 1985.
Equinor 2023 Annual Report on Form 20-F 49
Education:
Bachelor's degree, Mechanical Construction from OIH.
Family relations:
No family relationships to other board members, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters:
Lægreid is a Norwegian citizen and resident in Norway.
Per Martin Labråten
Position:
member of the Board's Compensation and Executive Development Committee.
Term of office:
Member of the Board of Equinor ASA since 8 June 2017. Up for election in 2025.
Year of birth:
1961
Independent:
No
Other directorships:
Labråthen is a member of the Executive Committee of the Industry Energy (IE) trade union and holds a
number of offices as a result of this.
Number of shares in Equinor ASA:
Loans from Equinor ASA:
None
Experience:
Labråthen is now a full-time employee representative as the leader of IE Equinor branch. He has previously worked
as a process technician at the petrochemical plant on Oseberg field in the North Sea.
Education:
Labråthen has a craft certificate as a process/chemistry worker.
Family relations:
No family relations to other members of the Board, members of the Corporate Executive Committee or
members of the Corporate Assembly.
Other matters:
Labråthen is a Norwegian citizen, and resident in Norway.
Hilde Møllerstad
Position:
Employee representative member of the Board and member of the Board's Audit Committee.
Term of office:
Member of the Board of Directors of Equinor ASA since 1 July 2019. Up for election in 2025.
Year of birth:
1966
Independent:
No
Other board directorships:
Chair of Tekna’s ethical board.
Number of shares in Equinor ASA:
3,005 (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Møllerstad has been employed by Equinor since 1991 and works within petroleum technology discipline in
Exploration & Production International. Møllerstad has been a member of the Corporate Assembly in Equinor from 2013 - 2019
and was a board member of Tekna Private from 2012 - 2017 and she has had several trust offices in Tekna Equinor since 1993.
Education:
Essential (PME) from BI/NTNU (Norwegian Business School BI/ Norwegian University of Science and Technology).
Family relations:
No family relationships to other board members, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters:
Møllerstad is a Norwegian citizen and resident in Norway
Members of Equinor's corporate executive committee as of 31 December 2023:
Anders Opedal
Position:
President and Chief Executive Officer (CEO) since 2 November 2020
Year of birth:
1968
External offices:
None
Number of shares in Equinor ASA:
56,649 (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Opedal joined Equinor in 1997. From 2018-2020 he held the position as Executive Vice President Technology,
Projects and Drilling. From August to October 2018, he was Executive Vice President for Development, Production Brazil and
prior to this Senior Vice President for Development, Production International Brazil. He also held the position as Equinor’s Chief
Operating Officer. In 2011 he took on the role as Senior Vice President in Technology, Projects and Drilling; where he was
responsible for Equinor’s NOK 300 billion project portfolio. From 2007-2010 he served as Chief Procurement Officer. He has held
a range of technical, operational and leadership positions in the company and started as a petroleum engineer in the Statfjord
operations. Prior to Equinor, Opedal worked for Schlumberger and Baker Hughes.
Education:
MBA from Heriot-Watt University and master's degree in Engineering (sivilingeniør) from the Norwegian Institute of
Technology (NTH) in Trondheim.
Family relations:
No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters:
Opedal is a Norwegian citizen and resident in Norway.
Torgrim Reitan
Position:
Executive Vice President and Chief Financial Officer since 6 October 2022
Equinor 2023 Annual Report on Form 20-F 50
Year of birth:
1969
External offices:
None
Number of shares in Equinor ASA:
15,482 (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Reitan joined Equinor in 1995. He comes from the position of Senior Vice President for Finance and Control in
Equinor’s Renewables business area, which he held since 2020. From 2018 - 2020 he was Executive Vice President for
Development and production international, and from 2015 - 2018 Reitan held the position as Executive Vice President of
Development and Production USA. Prior to this he held the position as Executive Vice President and Chief Financial Officer from
2010 - 2015. He has held several management positions in Equinor prior to this, including Senior Vice President in trading and
operations in the Natural gas business area in 2009 - 2010, Senior Vice President in Performance management and analysis
from 2007 - 2009, and from 2005 - 2007 he was Senior Vice President in Performance Management, Tax and M&A. From 1995 -
2004 Reitan held various positions in the Natural Gas business area and corporate functions.
Education:
Master of science degree from the Norwegian School of Economics and Business administration (NHH).
Family relations:
No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters:
Torgrim Reitan is a Norwegian citizen and resident in Norway.
Jannicke Nilsson
Position:
Executive Vice President, Safety, Security & Sustainability (SSU) since 1 June 2021.
Year of birth:
1965
External offices:
Member of the Board of Odfjell SE and Jotun A/S.
Number of shares in Equinor ASA:
63,106 (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Since joining Equinor in 1999, Nilsson has held a number of central leadership position within operation, projects
and technology. From June 2021, Jannicke Nilsson has led the corporate function which shapes and safeguards Equinor’s efforts
on the areas of safety, security, and sustainability, including Equinor Energy Transition Plan. Prior to this role she was Executive
Vice President and Chief Operating Officer (COO) for five years. As COO she drove Equinor’s digital transformation and
delivered tangible results delivering on the company’s strategy. Nilsson has also been a program leader for a company-wide
efficiency programme running from 2014 – 2016.
Education:
MSc in Cybernetics and Process Automation and a BSc in Automation from the Rogaland Regional
College/University of Stavanger.
Family relations:
No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other:
Nilsson is a Norwegian citizen and resident in Norway.
Kjetil Hove
Position:
Executive Vice President, Exploration & Production Norway (EPN) since 1 January 2021
Year of birth:
1965
External offices:
Member of the Board of Offshore Norge
Number of shares in Equinor ASA:
23,861 (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Hove joined Equinor in 1991. He has held several central management positions in Equinor. He comes from the
position of Senior Vice President Field Life Extension, which he held since January 2020. Prior to this, Hove was Senior Vice
President for Operations Technology in Development & Production Norway. From 2000 - 2012 he worked internationally,
including as Country Manager for Equinor in Brazil for 3.5 years. Hove started his career in 1991 in Norsk Hydro within petroleum
technology holding various positions within exploration, field development and operations in Norway.
Education:
Master’s degree in petroleum engineering from Norwegian University of Science and Technology (NTNU).
Family relations:
No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters:
Hove is a Norwegian citizen and resident in Norway.
Philippe François Mathieu
Position:
Executive Vice President, Exploration & Production International (EPI) since 1 January 2023
Year of birth:
1966
External offices:
None
Number of shares in Equinor ASA:
7,529 (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Mathieu joined Equinor in 1995. He comes from the position of Senior Vice President Corporate Strategy, which he
had since October 2019. Mathieu has also held the Senior Vice President position for Joint Operations Support in Exploration and
Production Norway from 2016 – 2019, Corporate Finance from 2014 – 2016, and Business Development Midstream
Infrastructure from 2011 – 2014. Prior to the roles as Senior Vice President, Mathieu held several senior positions within
marketing and supply in commercializing gas contracts in both North Africa and Europe.
Education:
Civil Engineer degree from Ecole Nationale des Travaux Publics de l’Etat and a Master’s degree in Economics from
Université Lumière Lyon and from University of California, Berkeley.
Family relations:
No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters:
Philippe Mathieu is a French citizen and resident in Norway.
Equinor 2023 Annual Report on Form 20-F 51
Geir Tungesvik
Position:
Executive Vice President, Projects, Drilling and Procurement (PDP) since 1 May 2022
Year of birth:
1961
External offices:
None
Number of shares in Equinor ASA:
20,702 (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Geir Tungesvik joined Equinor in 1985. He comes from the position as Senior Vice President Project Development.
Previously he has held central management positions in the company including the position as Senior Vice President for Drilling
and Well, Vice President for exploration drilling, Vice President for Grane production field and Vice President for health, safety
and environment in Exploration.
Education:
Master of Science degree in petroleum from the University of Stavanger (UIS) and Master module in strategic
management from the Norwegian Business School (BI).
Family relations:
No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters:
Tungesvik is a Norwegian citizen and resident in Norway.
Irene Rummelhoff
Position:
Executive Vice President, Marketing, Midstream & Processing (MMP) since 17 August 2018
Year of birth:
1967
External offices:
Member of the board of Airbus SE
Number of shares in Equinor ASA:
31,872 (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Rummelhoff joined Equinor in 1991. She has held a number of management positions within international business
development, exploration, and the downstream business in Equinor. Her most recent position, which she held from June 2015,
was as Executive Vice President New Energy Solutions (NES).
Education:
Master’s degree in Petroleum geosciences from the Norwegian Institute of Technology (NTH)
Family relations:
No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters:
Rummelhoff is a Norwegian citizen and resident in Norway.
Pål Eitrheim
Position:
Executive Vice President, Renewables (REN) since 17 August 2018
Year of birth:
1971
External offices:
Member of the board of the Confederation of Norwegian Enterprise (NHO) and Veidekke ASA.
Number of shares in Equinor ASA:
21,737 (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Eitrheim joined Equinor in 1998. He has held a range of leadership positions in Equinor in Azerbaijan, Washington
DC, the CEO office, corporate strategy and Brazil. In 2017 - 2018 he was Chief Procurement Officer. Between 2014 - 2017 he led
Equinor’s upstream business in Brazil. In 2013 Eitrheim led the Secretariat for the investigation into the terrorist attack on the In
Amenas gas processing facility in Algeria.
Education:
Master's degree in Comparative Politics from the University of Bergen, Norway and University College Dublin,
Ireland.
Family relations:
No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters:
Eitrheim is a Norwegian citizen and resident in Norway.
Hege Skryseth
Position:
Executive Vice President and Chief Technical Officer since 1 September 2022
Year of birth:
1967
External offices:
Member of the Board of Tomra and AutoStore
Number of shares in Equinor ASA:
5,364 (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Skryseth joined Equinor on 1 September 2022. She comes from the position as Executive Vice President of
Kongsberg, and President of Kongsberg Digital, a position which she held since 2013. Prior to Kongsberg, Skryseth held various
leadership positions in international tech companies such as Microsoft and Geodata (ESRI).
Education:
Executive MBA from NHH and Bachelor from BI, college graduate from NITH.
Family relations:
No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters:
Skryseth is a Norwegian citizen and resident in Norway.
Siv Helen Rygh Torstensen
Position:
Executive Vice President and General Counsel, Legal & Compliance (LEG) since 1 June 2021.
Year of birth:
1970
External offices:
Deputy chair of the Council of Ethics and member of the Government Pension Fund Global
Number of shares in Equinor ASA:
19,136 (as of 31 December 2023)
Loans from Equinor ASA:
None
Equinor 2023 Annual Report on Form 20-F 52
Experience:
Rygh Torstensen joined Equinor in 1998. She comes from the position of Senior Vice President and General
Counsel, which she held since 1 August 2019. Prior to that she held the position as Head of CEO office from July 2016. From
2011 - 2016 she was Vice President Corporate in LEG. From 1998 - 2011 Rygh Torstensen held various positions within LEG,
including as Corporate Compliance Office and Acting General Counsel. Before joining Equinor she worked with the law firm
Cappelen & Krefting DA and as a lawyer for Stavanger municipal council.
Education:
Master of Law from the University of Bergen, Norway, and licensed as an Attorney at Law.
Family relations:
No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters:
Rygh Torstensen is a Norwegian citizen and resident in Norway.
Jannik Lindbæk
Position:
Executive Vice President Communication since 1 March 2022
Year of birth:
1965
External offices:
None
Number of shares in Equinor ASA:
11,592 (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Lindbæk joined Equinor in 2010. He was appointed Senior Vice President Communication 1 January 2021. He was
Vice President Corporate Communications Political & Public Affairs Norway from 2019-2021. Prior to this he was Equinor’s Vice
President for communication in Brussels, before that in the CFO Global Business Services, and as Vice President Media
Relations from 2010-2015. Before joining Equinor, Lindbæk was SVP Corporate Communication in Aker Solutions, PR manager
in Microsoft and PR consultant in BWPR and GCI Monsen.
Education:
Master’s degree in Comparative Politics from the University of Bergen and London School of Economics.
Family relations:
No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters:
Lindbæk is a Norwegian citizen and resident in Norway.
Aksel Stenerud
Position:
Executive Vice President, People & Organisation (PO) since 1 March 2022
Year of birth:
1963
External offices:
None
Number of shares in Equinor ASA:
11,642 (as of 31 December 2023)
Loans from Equinor ASA:
None
Experience:
Stenerud joined Equinor in 2008 and has held various leadership roles across the company. His most recent
position, which he held from November 2021, was Vice President Employee Relations in Corporate PO. From August 2018, he
was Vice President for PO in Exploration and Production International. He has also served as Vice President for Exploration and
Production Norway from 2014-2018. Stenerud has had a long international career within HR and prior to this he served as an
officer in the Norwegian Airforce.
Education:
Graduate from the Air Defense academy. Minor and Intermediate in phsycology with the Norwegian university of
science and technology in Trondheim.
Family relations:
No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters:
Stenerud is a Norwegian citizen and resident in Norway.
The information set forth in the Corporate Governance Report, section 8, under the heading “Corporate assembly” is also
incorporated herein by reference.
Equinor 2023 Annual Report on Form 20-F 53
B. Compensation
The information set forth under the following headings of the 2021 Remuneration Policy included as an appendix to the 2023
Remuneration Report is incorporated herein by reference:
●
●
●
The information set forth under the following headings of the 2023 Remuneration Report is incorporated herein by reference:
●
●
●
●
●
●
●
●
●
●
●
See also note 22 Pensions to the Consolidated financial statements.
C. Board Practices
The information set forth under the following headings of the of the 2023 Annual Report is incorporated herein by reference:
●
●
The information set forth under the following headings of the 2023 Corporate Governance Report is also incorporated herein by
reference:
●
●
See also “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management” of this 2023 Form 20-F
for more information regarding the expiration date of the current term of office of the members of our board of directors and the period
during which our directors have served in such capacity, and the composition of the board of directors’ committees.
D. Employees
The information set forth under the following headings of the 2023 Annual Report is incorporated herein by reference:
●
●
●
The following table show a breakdown of total workforce by region and employment type.
Equinor 2023 Annual Report on Form 20-F 54
Total workforce by region and employment type in the Equinor group in 2023
as of 31 December 2023
Geographic location
Permanent
employees
Consultants
Total
workforce
1)
Consultants (%)
Norway
Rest of Europe
Africa
Asia
North America
South America
Australia
Total
Non - OECD
1) Contractor personnel, defined as third-party service provides who work at our onshore and offshore
operations, are not included.
E. Share Ownership
The information set forth under the following headings of the 2023 Remuneration Report is incorporated herein by reference:
●
●
●
F.
Disclosure of a registrant’s action to recover erroneously awarded compensation
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major shareholders
The information set forth under the heading “
Major shareholders
” in Section 5.1 of Chapter 5 on pages 260 – 261 of the 2023
Annual Report is incorporated herein by reference.
B. Related Party Transactions
As part of its general loan arrangement for Equinor employees, Equinor has granted loans to Equinor-employed spouses of
certain members of the corporate executive committee. Permanent employees in specified employee categories may take out a car
loan from Equinor in accordance with standardised provisions set by the company. The standard maximum car loan is limited to the
cost of the car, including registration fees, but not exceeding NOK 400,000. Employees outside the collective labour area are entitled
to a car loan up to NOK 600,000 (managers) or NOK 700,000 (vice presidents and senior vice presidents). The car loan is interest-
free, but the tax value, "interest advantage", must be reported as salary. Permanent employees of Equinor ASA may also apply for a
consumer loan up to NOK 350,000. The interest rate on consumer loans corresponds to the standard rate in effect at any time for
“reasonable loans” from employer as decided by the Norwegian Ministry of Finance, i.e., the lowest rate an employer may offer
without triggering taxation of the benefit for the employee.
The information set forth under the heading “
Equal treatment of shareholders and transactions with close associates
” in chapter 4
on pages 6-7 of the 2023 Corporate Governance Report is also incorporated herein by reference. See also note 27 Related parties to
the Consolidated financial statements.
C. Interests of Experts and Counsel
Not applicable.
Equinor 2023 Annual Report on Form 20-F 55
ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
See “Item 18. Financial Statements” of this 2023 Form 20-
F.
Dividend policy and dividends
The information set forth under the heading ‘Capital distribution’ in Section 2.1 of Chapter 2 on page 41 of the 2023 Annual
Report is incorporated herein by reference. The information set forth under the heading ‘Equity and dividends’ in Chapter 3 on pages
5 – 6 of the 2023 Corporate Governance Report is also incorporated herein by reference.
See also note 20 Shareholders’ equity and dividends to the Consolidated financial statements.
Legal or arbitration proceedings
Equinor is involved in a number of proceedings globally concerning matters arising in connection with the conduct of its business.
Equinor does not believe such proceedings will, individually or in the aggregate, have a significant effect on Equinor’s financial
position, profitability, results of operations or liquidity. See also note 11 Income taxes and note 26 Other commitments, contingent
liabilities and contingent assets to the Consolidated Financial Statements for a description of certain proceedings, including updated
descriptions of litigation previously reported.
B. Significant Changes
None.
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
Equinor's shares have been listed on the Oslo Børs (ticker: EQNR) and the New York Stock Exchange in the form of American
Depositary Shares (ADS) (ticker: EQNR) since our initial public offering on 18 June 2001. The ADSs traded on the New York Stock Exchange
are evidenced by American Depositary Receipts (ADR), and each ADS represents one ordinary share.
B. Plan of Distribution
Not applicable.
C. Markets
See “Item 9.A
―The Offer and Listing―Offer and Listing Details” of this 2023
F.
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F.
Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
Equinor 2023 Annual Report on Form 20-F 56
B. Memorandum and Articles of Association
Equinor's current articles of association were adopted at the annual general meeting of shareholders on 10 May 2023. The
articles of association are included as exhibit 1 to this 2023 Form 20-
F.
Summary of Equinor’s articles of association:
Name of the company
The registered name is Equinor ASA. Equinor is a Norwegian public limited company.
Registered office
Equinor’s registered office is in Stavanger, Norway, registered with the Norwegian Register of Business Enterprises under
number 923 609 016.
Objective of the company
The objective of Equinor ASA is to develop, produce and market various forms of energy and derived products and services, as
well as other business. The activities may also be carried out through participation in or cooperation with other companies.
Share capital
Equinor’s share capital is NOK 7,507,761,512.50 divided into 3,003,104,605 shares.
Nominal value of shares
The nominal value of each ordinary share is NOK 2.50.
Board of directors
Equinor’s articles of association provide that the board of directors shall consist of 9 - 11 directors. The board, including the chair
and the deputy chair, shall be elected by the corporate assembly for a period of up to two years.
Corporate assembly
Equinor has a corporate assembly comprising 18 members who are normally elected for a term of two years. The general
meeting elects 12 members with four deputy members, and six members with deputy members are elected by and among the
employees.
General meetings of shareholders
Equinor’s annual general meeting is held no later than 30 June each year. The annual general meeting shall address and decide
adoption of the annual report and accounts, including the distribution of any dividend and any other matters required by law or the
articles of association.
Documents related to the general meetings do not need to be sent to all shareholders if they are accessible on Equinor’s website.
A shareholder may request that such documents be sent to him/her.
Shareholders may vote in writing, including through electronic communication, during a specified period before the general
meeting. Equinor's board of directors adopted guidelines for advance voting in March 2012, and these guidelines are described in the
notices of the annual general meetings.
Marketing of petroleum on behalf of the Norwegian State
Equinor’s articles of association provide that Equinor is responsible for marketing and selling petroleum produced under the
State’s direct financial interest’s (SDFI) shares in production licences on the Norwegian continental shelf as well as petroleum
received by the Norwegian State paid as royalty together with its own production. Equinor’s general meeting adopted an instruction in
respect of such marketing on 25 May 2001, as most recently amended by authorisation of the annual general meeting on 15 May
2018.
Nomination committee
The tasks of the nomination committee are to present a recommendation to:
●
The general meeting regarding the election of shareholder-elected members and deputy members of the corporate assembly.
●
The general meeting regarding the election of members of the nomination committee.
●
The general meeting for the remuneration of members of the corporate assembly and the nomination committee.
●
The corporate assembly regarding the election of shareholder-elected members to the board of directors.
●
The corporate assembly for the remuneration for members of the board of directors.
●
The corporate assembly for election of the chair and the deputy chair of the corporate assembly.
The general meeting may adopt instructions for the nomination committee.
Equinor 2023 Annual Report on Form 20-F 57
Exhibit 2.1 to this 2023 Form 20-F is also incorporated herein by reference.
C. Material Contracts
Equinor is the technical service provider (TSP) for the Kårstø and Kollsnes gas processing plants in accordance with the technical service
agreement between Equinor and Gassco AS. Equinor holds an ownership interest in Vestprosess (34%), which transports and processes NGL
and condensate. Vestprosess is also operated by Gassco, with Equinor as TSP. The technical services agreement between Gassco AS and
Equinor is included as Exhibit 4(a)(i), along with the amendments thereto in Exhibit 4(a)(ii), to this 2023 Form 20-
F.
See also note 27 Related parties to the Consolidated financial statements.
D. Exchange controls
Under Norwegian foreign exchange controls currently in effect, transfers of capital to and from Norway are not subject to prior
government approval. An exception applies to the physical transfer of payments in currency exceeding certain thresholds, which must
be declared to the Norwegian custom authorities. This means that non-Norwegian resident shareholders may receive dividend
payments without Norwegian exchange control consent as long as the payment is made through a licensed bank or other licensed
payment institution.
There are no restrictions affecting the rights of non-Norwegian residents or foreign owners who hold our shares to receive
dividends, interest or other similar payments.
E. Taxation
Norwegian tax consequences
This section describes material Norwegian tax consequences for shareholders in connection with the acquisition, ownership
and disposal of shares and American Depositary Shares (“ADS”) in Equinor. The term “shareholders” refers to both holders of
shares and holders of ADSs, unless otherwise explicitly stated.
The outline does not provide a complete description of all Norwegian tax regulations that might be relevant for the individual
shareholder. The outline is based on current law and practice, but these laws and practice are subject to change, possibly also on
a retroactive basis. Thus, the actual tax consequences for a shareholder may differ from the description set out below.
Shareholders should consult their professional tax advisers for advice about the specific tax consequences of owning and
disposing of shares or ADSs in Equinor in their particular situation, in case special regulations may apply.
Taxation of dividends received by Norwegian shareholders
Corporate shareholders (i.e., limited liability companies and similar entities) residing in Norway for tax purposes are generally
subject to tax in Norway on dividends received from Equinor in the year the dividend is declared. For the tax year 2023, only 3% of
the dividends received is subject to tax at the ordinary income tax rate of 22% (the tax rate is 25% for entities subject to the
finance tax). The effective tax rate for dividends received by corporate shareholders is thus 0.66% (3% x 22%) for ordinary
corporations and 0.75% (3% x 25%) for entities subject to the finance tax. As of today, the same tax rates will apply for the tax
year 2024.
Individual shareholders residing in Norway for tax purposes are subject to tax in Norway for dividends received from Equinor
exceeding a tax-free allowance (the tax-free allowance is described below). Dividends exceeding the tax-free allowance are
generally included in the individual’s ordinary taxable income in the year the dividend is declared. For the tax year 2023, dividend
income exceeding the tax-free allowance is grossed up with a factor of 1.72 before being included in the ordinary taxable income,
resulting in an effective tax rate of 37.84% (22% x 1.72). As of today, the same tax rates will apply for the tax year 2024.
The tax-free allowance is computed for each individual share or ADS. The annual tax-free allowance equals the allowance
basis multiplied by a risk-free interest rate set annually by the tax authorities. The allowance basis is equal to the acquisition cost
for such share or ADS, as adjusted with inter alia any repayment of capital and any unused allowance. If the calculated allowance
for one year exceeds the dividend distributed on the share or ADS, the excess (the “unused allowance”) may be carried forward
and set off against future dividends received on the same share or ADS (or gains upon the realisation of the same share or ADS,
see below). Any unused allowance will also be added to the allowance basis for such share or ADS and thus increase the tax-free
allowance in the following year until the unused allowance has been utilised.
Individual shareholders residing in Norway for tax purposes may hold the shares (but not ADS) in Equinor through a stock
savings account. Dividend on shares owned through the stock savings account is only taxable when the dividend is withdrawn
from the account.
Taxation of dividends received by foreign shareholders
Equinor 2023 Annual Report on Form 20-F 58
Non-resident shareholders are as a starting point subject to Norwegian withholding tax in the tax year 2023 at a rate of 25%
on dividends from Norwegian companies. The distributing company is responsible for deducting the withholding tax upon
distribution to non-resident shareholders. As of today, the same withholding tax rate will apply for the tax year 2024.
Corporate shareholders that carry on business activities in Norway, and whose shares or ADSs are effectively connected with
such activities are not subject to withholding tax. For such shareholders, 3% of the received dividends are in the tax year 2023
subject to the standard income tax of 22% (25% for companies subject to the finance tax). As of today, the same tax rate will
apply for the tax year 2024.
Certain other important exceptions and modifications are outlined below.
The withholding tax does not apply to corporate shareholders in the EEA that are comparable to Norwegian limited liability
companies or certain other types of Norwegian entities, and are further able to demonstrate that they are genuinely established
and carry on genuine economic business activity within the EEA.
The withholding rate of 25% is often reduced in tax treaties between Norway and other countries. The reduced withholding
tax rate will generally only apply to dividends paid on shares held by shareholders who are able to properly demonstrate that they
are the beneficial owner and entitled to the benefits of the tax treaty.
Individual shareholders residing for tax purposes in the EEA may apply to the Norwegian tax authorities for a refund if the tax
withheld by the distributing company exceeds the tax that would have been levied on individual shareholders resident in Norway.
Individual shareholders residing for tax purposes in the EEA may hold the listed shares (but not ADS) in Equinor through a
Norwegian stock savings account. Dividend on shares owned through the stock savings account will only be subject to withholding
tax when withdrawn from the account.
Procedure for claiming a reduced withholding tax rate on dividends
A foreign shareholder that is entitled to an exemption from or reduction of withholding tax on dividends, may request that the
exemption or reduction is applied at source by the distributor. Such request must be accompanied by satisfactory documentation
which supports that the foreign shareholder is entitled to a reduced withholding tax rate. Specific documentation requirements
apply.
For holders of shares and ADSs deposited with JPMorgan Chase Bank N.A. (JPMorgan), documentation establishing that the
holder is eligible for the benefits under a tax treaty with Norway, may be provided to JPMorgan. JPMorgan has been granted
permission by the Norwegian tax authorities to receive dividends from us for redistribution to a beneficial owner of shares and
ADSs at the applicable treaty withholding rate.
The statutory 25% withholding tax rate will be levied on dividends paid to shareholders (either directly or through a
depositary) who have not provided the relevant documentation to the relevant party that they are eligible for a reduced rate.
Shareholders that believe they are eligible for a reduced rate will in this case have to apply to Skatteetaten (The Norwegian Tax
Administration) for a refund of the excess amount of tax withheld. Please refer to the tax authorities’ web page for more
information and the requirements of such application: skatteetaten.no (Reduced withholding tax on share dividends for foreign
shareholders – The Norwegian Tax Administration).
Taxation on realisation of shares and ADSs
Corporate shareholders resident in Norway for tax purposes are not subject to tax in Norway on gains derived from the sale,
redemption or other disposal of shares or ADSs in Equinor. On the other hand, corporate shareholders resident in Norway are not
allowed any deduction for losses on shares or ADS in Equinor.
Individual shareholders residing in Norway for tax purposes are subject to tax in Norway on the sale, redemption or other
disposal of shares or ADSs. Taxable gains or losses in connection with such realisation are included in the individual's ordinary
taxable income in the year of disposal. In the tax year 2023, the taxable gain or loss on the realised shares or ADSs is grossed up
with a factor of 1.72 before it is included in the ordinary taxable income, resulting in an effective tax rate of 37.84% (22% x 1.72).
As of today, the same tax rate will apply to gains and losses realised in the tax year 2024.
The taxable gain or deductible loss (before grossing up) is calculated as the sales price adjusted for transaction expenses
minus the taxable basis. A shareholder's tax basis is normally equal to the acquisition cost of the shares or ADSs (as adjusted with
inter alia any repayment of capital). Any unused allowance pertaining to a share or ADS may be deducted from a taxable gain on
the same share or ADS but may not lead to or increase a deductible loss. Furthermore, any unused allowance may not be set off
against gains from the realisation of other shares or ADSs held by the shareholder.
If a shareholder disposes of shares or ADSs acquired at different times, the shares or ADSs that were first acquired will be
deemed to be first sold (the “FIFO” principle) when calculating the gain or loss for tax purposes.
Equinor 2023 Annual Report on Form 20-F 59
Individual shareholders residing in Norway for tax purposes may hold the shares (but not ADS) in Equinor through a stock
savings account. Gain on shares owned through the stock savings account will only be taxable when withdrawn from the account
whereas loss on shares will be deductible when the account is terminated.
A corporate shareholder or an individual shareholder who ceases to be tax resident in Norway due to Norwegian law or tax
treaty provisions may, in certain circumstances, become subject to Norwegian exit taxation on unrealised capital gains related to
shares or ADSs.
Shareholders not residing in Norway are generally not subject to tax in Norway on capital gains, and losses are not deductible
on the sale, redemption or other disposal of shares or ADSs in Equinor, unless the shareholder carries on business activities in
Norway and such shares or ADSs are or have been effectively connected with such activities.
Wealth tax
The shares or ADSs are included in the basis for the computation of wealth tax imposed on individuals residing in Norway for
tax purposes. Norwegian limited liability companies and certain similar entities are not subject to wealth tax.
For the tax year 2023, the net wealth tax is 1.0% for net worth above a minimum threshold of NOK 1,700,000, and 1.1% for
net worth above a minimum threshold of NOK 20,000,000. The assessment value of listed shares (including ADSs) is 80% of the
listed value of such shares or ADSs on 1 January 2024. As of today, the same rates and thresholds will apply for the tax year
2024.
Non-resident shareholders are not subject to wealth tax in Norway for shares and ADSs in Norwegian limited liability
companies unless the shareholder is an individual and the shareholding is effectively connected with the individual's business
activities in Norway.
Inheritance tax and gift tax
No inheritance or gift tax is imposed in Norway.
Transfer tax
No transfer tax is imposed in Norway in connection with the sale or purchase of shares or ADSs.
United States tax matters
This section describes the material United States federal income tax consequences for US holders (as defined below) of the
ownership and disposition of shares or ADSs. It only applies to you if you hold your shares or ADSs as capital assets for United
States federal income tax purposes. This discussion addresses only United States federal income taxation and does not discuss
all of the tax consequences that may be relevant to you in light of your individual circumstances, including foreign, state or local
tax consequences, estate and gift tax consequences, and tax consequences arising under the Medicare contribution tax on net
investment income or the alternative minimum tax. This section does not apply to you if you are a member of a special class of
holders subject to special rules, including dealers in securities, traders in securities that elect to use a mark-to-market method of
accounting for securities holdings, tax-exempt organisations, insurance companies, partnerships or entities or arrangements that
are treated as partnerships for United States federal income tax purposes, persons that actually or constructively own 10% of the
combined voting power of voting stock of Equinor or of the total value of stock of Equinor, persons that hold shares or ADSs as
part of a straddle or a hedging or conversion transaction, persons that purchase or sell shares or ADSs as part of a wash sale for
tax purposes, or persons whose functional currency is not USD.
This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed
regulations, published rulings and court decisions, all as currently in effect, and the Convention between the United States of
America and the Kingdom of Norway for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to
Taxes on Income and Property (the “Treaty”). These laws are subject to change, possibly on a retroactive basis. In addition, this
section is based in part upon the representations of the depositary and the assumption that each obligation in the deposit
agreement and any related agreement will be performed in accordance with its terms. For United States federal income tax
purposes, if you hold ADRs evidencing ADSs, you will generally be treated as the owner of the shares represented by those
ADRs. Exchanges of shares for ADRs and ADRs for shares will not generally be subject to United States federal income tax.
A “US holder” is a beneficial owner of shares or ADSs that is, for United States federal income tax purposes: (i) a citizen or
resident of the United States; (ii) a United States domestic corporation; (iii) an estate whose income is subject to United States
federal income tax regardless of its source; or (iv) a trust if a United States court can exercise primary supervision over the trust's
administration and one or more United States persons are authorised to control all substantial decisions of the trust.
You should consult your own tax adviser regarding the United States federal, state and local and Norwegian and other tax
consequences of owning and disposing of shares and ADSs in your particular circumstances.
Equinor 2023 Annual Report on Form 20-F 60
The tax treatment of the shares or ADSs will depend in part on whether or not we are classified as a passive foreign
investment company, or PFIC, for United States federal income tax purposes. Except as discussed below, under “—PFIC rules”,
this discussion assumes that we are not classified as a PFIC for United States federal income tax purposes.
Taxation of distributions
Under the United States federal income tax laws, the gross amount of any distribution (including any Norwegian tax withheld
from the distribution payment) paid by Equinor out of its current or accumulated earnings and profits (as determined for United
States federal income tax purposes), other than certain pro-rata distributions of its shares, will be treated as a dividend that is
taxable for you when you, in the case of shares, or the depositary, in the case of ADSs, receive the dividend, actually or
constructively. If you are a non-corporate US holder, dividends that constitute qualified dividend income will be eligible to be taxed
at the preferential rates applicable to longterm capital gains as long as, in the year that you receive the dividend, the shares or
ADSs are readily tradable on an established securities market in the United States or Equinor is eligible for benefits under the
Treaty. We believe that Equinor is currently eligible for the benefits of the Treaty and we therefore expect that dividends on the
ordinary shares or ADSs will be qualified dividend income. To qualify for the preferential rates, you must hold the shares or ADSs
for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meet certain other
requirements. The dividend will not be eligible for the dividends-received deduction generally allowed to United States
corporations in respect of dividends received from other United States corporations.
The amount of the dividend distribution that you must include in your income will be the value in USD of the payments made
in NOK determined at the spot NOK/USD rate on the date the dividend is distributed, regardless of whether or not the payment is
in fact converted into USD. Distributions in excess of current and accumulated earnings and profits, as determined for United
States federal income tax purposes, will be treated as a non-taxable return of capital to the extent of your tax basis in the shares
or ADSs and, to the extent in excess of your tax basis, will be treated as capital gain. However, Equinor does not expect to
calculate earnings and profits in accordance with United States federal income tax principles. Accordingly, you should expect to
generally treat distributions we make as dividends.
Subject to certain limitations, the 15% Norwegian tax withheld in accordance with the Treaty and paid to Norway will be
creditable or deductible against your United States federal income tax liability, unless a reduction or refund of the tax withheld is
available to you under Norwegian law. Special rules apply in determining the foreign tax credit limitation with respect to dividends
that are subject to the preferential tax rates.
Dividends will generally be income from sources outside the United States and will generally be “passive” income for
purposes of computing the foreign tax credit allowable to you. Any gain or loss resulting from currency exchange rate fluctuations
during the period from the date you include the dividend payment in income until the date you convert the payment into USD will
generally be treated as US-source ordinary income or loss and will not be eligible for the special tax rate applicable to qualified
dividend income.
Taxation of capital gains
If you sell or otherwise dispose of your shares or ADSs, you will generally recognise a capital gain or loss for United States
federal income tax purposes equal to the difference between the value in USD of the amount that you realise and your tax basis,
determined in USD, in your shares or ADSs. Capital gain of a non-corporate US holder is generally taxed at preferential rates if
the property is held for more than one year. The gain or loss will generally be income or loss from sources within the United States
for foreign tax credit limitation purposes. If you receive any foreign currency on the sale of shares or ADSs, you may recognise
ordinary income or loss from sources within the United States as a result of currency fluctuations between the date of the sale of
the shares or ADSs and the date the sales proceeds are converted into USD. You should consult your own tax adviser regarding
how to account for payments made or received in a currency other than USD.
PFIC rules
We believe that the shares and ADSs should not currently be treated as stock of a PFIC for United States federal income tax
purposes and we do not expect to become a PFIC in the foreseeable future. However, this conclusion is a factual determination
that is made annually and thus may be subject to change. It is therefore possible that we could become a PFIC in a future taxable
year.
In general, we will be a PFIC in a taxable year if:
●
at least 75% of our gross income for the taxable year is passive income or
●
at least 50% of the value, determined on the basis of a quarterly average, of our assets in such taxable year is attributable to
assets that produce or are held for the production of passive income.
“Passive income” generally includes dividends, interest, gains from the sale or exchange of investment property rents and
royalties (other than certain rents and royalties derived in the active conduct of a trade or business) and certain other specified
categories of income. If a foreign corporation owns at least 25% by value of the stock of another corporation, the foreign
corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, and
Equinor 2023 Annual Report on Form 20-F 61
as receiving directly its proportionate share of the other corporation's income.
If we were to be treated as a PFIC, you will generally be subject to special rules with respect to:
●
any gain you realise on the sale or other disposition of your shares or ADSs and
●
any excess distribution that we make to you (generally, any distributions to you during a single taxable year, other than the
taxable year in which your holding period in the shares or ADSs begins, that are greater than 125% of the average annual
distributions received by you in respect of the shares or ADSs during the three preceding taxable years or, if shorter, your
holding period for the shares or ADSs that preceded the taxable year in which you receive the distribution).
Under these rules:
●
the gain or excess distribution will be allocated ratably over your holding period for the shares or ADSs,
●
the amount allocated to the taxable year in which you realized the gain or excess distribution or to prior years before the first
year in which we were a PFIC with respect to you will be taxed as ordinary income,
●
the amount allocated to each other prior year will be taxed at the highest tax rate in effect for that year, and
●
the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each
such year.
Special rules apply for calculating the amount of the foreign tax credit with respect to excess distributions by a PFIC.
Unless you make certain elections, your shares or ADSs will generally be treated as stock in a PFIC if we were a PFIC at any
time during your holding period in your shares or ADSs, even if we are not currently a PFIC.
In addition, notwithstanding any election you make with regard to the shares or ADSs, dividends that you receive from us will
not constitute qualified dividend income to you if we are a PFIC (or are treated as a PFIC with respect to you) either in the taxable
year of the distribution or the preceding taxable year. Dividends that you receive that do not constitute qualified dividend income
are not eligible for taxation at the preferential rates applicable to qualified dividend income. Instead, you must include the gross
amount of any such dividend paid by us out of our accumulated earnings and profits (as determined for United States federal
income tax purposes) in your gross income, and it will be subject to tax at rates applicable to ordinary income.
If you own shares or ADSs during any year that we are a PFIC with respect to you, you may be required to file Internal Revenue
Service (“IRS”) Form 8621.
Foreign Account Tax Compliance Withholding
A 30% withholding tax will be imposed on certain payments to certain non-US financial institutions that fail to comply with
information reporting requirements or certification requirements in respect of their direct and indirect United States shareholders
and/or United States accountholders. To avoid becoming subject to the 30% withholding tax on payments to them, we and other
non-US financial institutions may be required to report information to the IRS regarding the holders of shares or ADSs and to
withhold on a portion of payments under the shares or ADSs to certain holders that fail to comply with the relevant information
reporting requirements (or hold shares or ADSs directly or indirectly through certain non-compliant intermediaries). However,
under proposed Treasury regulations, such withholding will not apply to payments made before the date that is two years after the
date on which final regulations defining the term “foreign passthru payment” are enacted. The rules for the implementation of
these requirements have not yet been fully finalised, so it is impossible to determine at this time what impact, if any, these
requirements will have on holders of the shares and ADSs.
F.
Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
Our filings with the SEC are available to the public through the SEC’s website at http://www.sec.gov. We also make available on
our website, free of charge, our annual reports on Form 20-F, as well as certain other SEC filings, as soon as reasonably practicable
after they are electronically filed with or furnished to the SEC. The information on our website is not incorporated by reference in this
document.
Documents related to us that are available to the public (this 2023 Form 20-F, the 2023 Annual Report, our Articles of
Association, our Code of Conduct, financial statements and our historical financial information for each of the three financial years
preceding the publication of this 2023 Form 20-F) can be consulted on our website and at: Equinor ASA, Forusbeen 50, 4035
Stavanger, Norway. Unless stated otherwise, none of these documents form a part of this 2023 Form 20-
F.
Equinor 2023 Annual Report on Form 20-F 62
I. Subsidiary Information
Not applicable.
J. Annual Report to Security Holders.
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See notes 4 Financial risk and capital management and 28 Financial instruments and fair value measurement to the
Consolidated financial statements.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. Debt Securities
Not applicable.
B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable.
D. American Depositary Shares
Exhibit 2.1 to this 2023 Form 20-F is incorporated herein by reference.
Name of depositary and address of its principal executive office.
JPMorgan Chase Bank N.A. (JPMorgan), serves as the depositary for Equinor’s ADR programme having replaced the Deutsche
Bank Trust Company Americas (Deutsche Bank) pursuant to the Further Amended and Restated Deposit Agreement dated 4
February 2019.
Fees and charges payable by a holder of ADSs
JPMorgan collects its fees for the delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs
for the purpose of withdrawal, or from intermediaries acting for them. The depositary collects other fees from investors by billing ADR
holders, by deducting such fees and charges from the amounts distributed or by deducting such fees from cash dividends or other
cash distributions. The depositary may refuse to provide fee-attracting services until its fees for those services are paid.
The charges of the depositary payable by investors are as follows:
ADR holders, persons depositing or withdrawing shares, and/or persons whom ADSs are
issued, must pay:
For:
USD 5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
Issuance of ADSs, including issuances resulting from a
deposit of shares, a distribution of shares or rights or other
property, and issuances pursuant to stock dividends, stock
splits, mergers, exchanges of securities or any other
transactions or events affecting the ADSs or the deposited
securities.
Cancellation of ADSs for the purpose of withdrawal of
deposited securities, including if the deposit agreement
terminates, or a cancellation or reduction of ADSs for any
other reason
USD 0.05 (or less) per ADS
Any cash distribution made or elective cash/stock dividend
offered pursuant to the Deposit Agreement
USD 0.05 (or less) per ADS, per calendar year (or portion thereof)
For the operation and maintenance costs in administering
the ADR programme
A fee equivalent to the fee that would be payable if securities distributed to you had been shares
and the shares had been deposited for issuance of ADSs
Distribution to registered ADR holders of (i) securities
distributed by the company to holders of deposited
securities or (ii) cash proceeds from the sale of such
securities
Equinor 2023 Annual Report on Form 20-F 63
Registration or transfer fees
Transfer and registration of shares on our share register to
or from the name of the Depositary or its agent when you
deposit or withdraw shares
Expenses of the Depositary
SWIFT, cable, telex, facsimile transmission and delivery
charges (as provided in the deposit agreement).
Fees, expenses and other charges of JPMorgan or its
agent (which may be a division, branch or affiliate) for
converting foreign currency to USD, which shall be
deducted out of such foreign currency.
Taxes and other governmental charges the Depositary or the custodian have to pay, for example,
stock transfer taxes, stamp duty or withholding taxes
As necessary
Any fees, charges and expenses incurred by the Depositary or its agents for the servicing of the
deposited securities, the sale of securities, the delivery of deposited securities or in connection with
the depositary's or its custodian's compliance with applicable law, rule or regulation, including
without limitation expenses incurred on behalf of ADR holders in connection with compliance with
foreign exchange control regulations or any law or regulation relating to foreign investment
As necessary
Direct and indirect payments by the depositary
For the year ended 31 December 2023, J.P. Morgan reimbursed USD 2,000,000 to the company. Other reasonable costs
associated with the administration of the ADR programme are borne by the company. For the year ended 31 December 2023, such
costs, associated with the administration of the ADR programme, paid by the company, added up to USD 272,095. Under certain
circumstances, including the removal of J.P. Morgan as depositary, the company is required to repay to J.P. Morgan certain amounts
paid to the company in prior periods.
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The management of Equinor, with the participation of our chief executive officer and chief financial officer, has evaluated the
effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of
31 December 2023. Based on that evaluation, the chief executive officer and chief financial officer have concluded that these
disclosure controls and procedures are effective at a reasonable level of assurance.
In designing and evaluating our disclosure controls and procedures, our management, with the participation of the chief executive
officer and chief financial officer, recognised that any controls and procedures, no matter how well designed and operated, can only
provide reasonable assurance that the desired control objectives will be achieved, and that the management must necessarily
exercise judgment when evaluating possible controls and procedures. Because of the limitations inherent in all control systems, no
evaluation of controls can provide absolute assurance that all control issues and any instances of fraud in the company have been
detected.
Management’s Annual Report on Internal Control Over Financial Reporting
The management of Equinor is responsible for establishing and maintaining adequate internal control over financial reporting.
Our internal control over financial reporting is a process designed, under the supervision of the chief executive officer and chief
financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Equinor’s
financial statements for external reporting purposes in accordance with IFRS Accounting Standards as adopted by the European
Union (EU). The accounting policies applied by the group also comply with IFRS Accounting Standards as issued by the International
Accounting Standards Board (IASB).
The management of Equinor has assessed the effectiveness of internal control over financial reporting based on the Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on this assessment, management has concluded that Equinor’s internal control over financial reporting as of 31 December
2023 was effective.
Equinor 2023 Annual Report on Form 20-F 64
Equinor’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect transactions and dispositions of assets, provide reasonable assurance that
transactions are recorded in the manner necessary to permit the preparation of financial statements in accordance with IFRS
Accounting Standards, and that receipts and expenditures are only carried out in accordance with the authorisation of the
management and directors of Equinor; and provide reasonable assurance regarding the prevention or timely detection of any
unauthorised acquisition, use or disposition of Equinor’s assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Moreover,
projections of any evaluation of the effectiveness of internal control to future periods are subject to a risk that controls may become
inadequate because of changes in conditions and that the degree of compliance with policies or procedures may deteriorate.
Attestation Report of the Registered Public Accounting Firm
The effectiveness of internal control over financial reporting as of 31 December 2023 has been audited by Ernst & Young AS, an
independent registered accounting firm that also audits Equinor’s Consolidated financial statements. Their audit report on the internal
control over financial reporting is included in the Consolidated financial statements.
Changes in Internal Control Over Financial Reporting
There were no significant changes in our internal control over financial reporting during the year ended 31 December 2023 that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that both Anne Drinkwater and Rebekka Glasser Herlofsen qualify as an “audit committee
financial expert” as defined in Item 16A of Form 20-F under the Exchange Act and each of them is an independent director under Rule
10A-3 under the Exchange Act.
ITEM 16B. CODE OF ETHICS
We have adopted a Code of Conduct, which is approved by our board of directors, and applies to our board members, all of our
employees (including our principal executive, principal financial and principal accounting officers) and hired personnel. Our Code of
Conduct is filed as Exhibit 11 to this 2023 Form 20-
F.
In 2023, our board of directors approved certain amendments to our Code of Conduct, including:
- Updates to sections related to harassment, bullying and discrimination; and
- Updates referencing internal control over financial reporting requirements as an important part of financial reporting.
In 2023, we did not grant any waiver, including any implicit waiver, from any provision of the Code of Conduct to our principal
executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information set forth under the heading “
External auditor
” in chapter 15 on pages 18 – 19 of the 2023 Corporate Governance
Report is incorporated herein by reference. See also note 9 Auditor’s remuneration and Research and development expenditures to
the Consolidated financial statements.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
See “Item 16G. Corporate Governance―Board committees” of this 2023 Form 20-
F.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
The information set forth under the headings “
Equinor’s share incentive plans
”, “
Share buybacks
” and “
Summary of share
buybacks
”
in Section 5.1 of Chapter 5 on pages 261 – 263 of the 2023 Annual Report is also incorporated herein by reference.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Equinor 2023 Annual Report on Form 20-F 65
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
Equinor’s primary listing is on Oslo Børs. The American Depositary Receipts (ADRs) are listed on the New York Stock Exchange
(NYSE). In addition, Equinor is a foreign private issuer subject to the reporting requirements of the SEC. ADRs representing the
company’s ordinary shares are listed on the NYSE. While Equinor’s corporate governance practices follow the requirements of
Norwegian law, Equinor is also subject to the NYSE’s listing rules. As a foreign private issuer, Equinor is exempt from most of the
NYSE corporate governance standards that domestic US companies must comply with. However, Equinor is required to disclose any
significant ways in which its corporate governance practices differ from those applicable to domestic US companies under the NYSE
rules. A statement of differences is set out below:
Corporate governance guidelines
The NYSE rules require domestic US companies to adopt and disclose corporate governance guidelines. Equinor’s corporate
governance principles are developed by the management and the board of directors, in accordance with the Norwegian Code of
Practice for Corporate Governance and applicable law. Oversight of the board of directors and management is exercised by the
corporate assembly.
Director independence
The NYSE rules require domestic US companies to have a majority of “independent directors”. The NYSE definition of an
“independent director” sets out five specific tests of independence and requires an affirmative determination by the board of directors
that the director has no material relationship with the company.
Pursuant to Norwegian company law, Equinor’s board of directors consists of members elected by the corporate assembly both
for shareholder and employee representatives. Equinor’s board of directors has determined that, in its judgment, all shareholder
representatives are independent. In making its determinations of independence, the board focuses, among other things, on there not
being any conflicts of interest between shareholders, the board of directors and the company’s management. It does not strictly make
its determination based on the NYSE’s five specific tests but takes into consideration all relevant circumstances which may in the
board’s view affect the directors’ independence. The directors elected from among Equinor’s employees would not be considered
independent under the NYSE rules as they are employees of Equinor. None of these employee representatives are executive officers
of the company. For further information about the board of directors, see “Item 6. Directors, Senior Management and Employees—A.
Directors and Senior Management” of this 2023 Form 20-
F.
Board committees
Pursuant to Norwegian company law, managing the company is the responsibility of the board of directors. Equinor has an audit
committee, a safety, sustainability and ethics committee and a compensation and executive development committee. The audit
committee and the compensation and executive development committee operate pursuant to instructions that are broadly comparable
to the applicable committee charters required by the NYSE rules. They report on a regular basis to, and are subject to, oversight by
the board of directors.
Equinor complies with the NYSE rule regarding the obligation to have an audit committee that meets the requirements of Rule
10A-3 of the US Securities Exchange Act of 1934. The members of Equinor’s audit committee include an employee representative
director. Equinor relies on the exemption provided in Rule 10A-3(b)(1)(iv)(C) from the independence requirements of the US Securities
Exchange Act of 1934 with respect to the employee representative director. Equinor does not believe that its reliance on this
exemption will materially adversely affect the ability of the audit committee to act independently or to satisfy the other requirements of
Rule 10A-3 relating to audit committees. The other members of the audit committee meet the independence requirements under Rule
10A-3.
Among other things, the audit committee evaluates the qualifications and independence of the company’s external auditor.
However, in accordance with Norwegian law, the auditor is elected by the annual general meeting of the company’s shareholders.
Equinor does not have a nominating/corporate governance committee formed from its board of directors. Instead, the roles prescribed
under the NYSE rules for such committee are principally carried out by the corporate assembly and the nomination committee. The
nomination committee is elected by the general meeting of shareholders, while the corporate assembly is elected partly by the general
meeting of shareholders and partly by and among the employees.
NYSE rules require the compensation committee of US companies to comprise independent directors, recommend senior
management remuneration and determine the independence of advisors when engaging them. Equinor, as a foreign private issuer, is
exempted from complying with these rules and is permitted to follow its home country regulations. The compensation committee
consists of four shareholder representatives and one employee representative. Equinor’s compensation committee makes
recommendations to the board regarding management remuneration, including that of the CEO. Further, the compensation committee
assesses its own performance and has the authority to hire external advisors. The nomination committee, which is elected by the
general meeting of shareholders, recommends to the corporate assembly the candidates and remuneration of the board of directors.
Equinor 2023 Annual Report on Form 20-F 66
The nomination committee also recommends to the general meeting of shareholders the candidates and remuneration for the
nomination committee and the shareholder representative candidates and remuneration for the corporate assembly.
Shareholder approval of equity compensation plans
NYSE rules require that, with limited exemptions, all equity compensation plans must be subject to a shareholder vote.
Under Norwegian company law, although the issuance of shares and authority to buy-back company shares must be approved by
Equinor’s annual general meeting of shareholders, the approval of equity compensation plans is normally reserved for the board of
directors.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
Not applicable.
ITEM 16K. CYBERSECURITY DISCLOSURE
Cyber security Risk Management and Strategy
Our processes for assessing, identifying and managing material risks from cyber security threats are integrated into our enterprise risk
management (ERM) framework, which we use to identify, analyze, evaluate and manage risks. We recognize that risks from cyber
security threats are interconnected and company-wide, so we seek to ensure shared situational awareness and common prioritization
across different business areas. As described further below under “Cyber security Governance”, we have a cross-departmental
approach to addressing cyber security risk, which includes our employees, management and board of directors.
We use a variety of tools and processes to identify, assess and manage material cyber security risks. We identify cyber security risks
based on an evaluation of various cyber security threat scenarios that may cause disruption to our business or operations. These
scenarios are developed to represent incremental levels of severity of the estimated monetary, reputational, safety, security or
sustainability impact of cyber security threats such as social engineering (phishing), malicious software targeting end-users/network,
unauthorized access by insiders, employee/consultant error and/or unintended errors.
We conduct annual company-wide cyber security assessments to assess the threats posed by external actors to our information
technology and operational technology systems and promote awareness internally of the cyber security threats faced by the company.
We also conduct assessments of cyber security incidents experienced by the company and third parties relevant to the company. These
assessments are conducted in collaboration between the technology, digital and innovation business area, the global operations
technology excellence unit and the corporate security and crisis management unit. The business area risk owners, regional security
managers, country office representatives, political analysis teams, shipping security teams, enterprise data and cyber security
professionals and the emergency response-and-support centre are all involved in and contribute to these assessments. The results of
these assessments are shared regularly with the board of directors, including the safety, sustainability and ethics committee.
We engage external assessors to conduct maturity testing to evaluate our processes and procedures within specific areas to ensure
continuous development of barriers against cyber security threats. We also seek information from national security authorities and work
closely with IT vendors, external cyber security advisory services and other companies in the industry with the aim of continuously
improving our capabilities to identify, protect, detect, respond to and recover from cyber security threats. We also use input provided by
external auditors as part of independent reviews to improve our cyber security barriers.
Actual and/or potential vulnerabilities in our information systems are continuously monitored by our Cyber Defence Center. We follow
the ISO27001, IEC62443 and National Institute for Standard and Technology (NIST) cyber security frameworks to build resilience,
focusing on capabilities for reducing both the probability and consequences of cyber security incidents. We utilize multiple tools and
practices to monitor external developments related to cyber security which may be relevant to the company, such as alerts/publications
from national cyber security centres, advice from security risk consulting firms and reports from information technology and cyber
security companies, and assess their implications for Equinor with a focus on external factors, such as the threat actors’ presence,
capability, intent, past targeting and anticipated future targeting, as well as internal factors such as evidence of attacks on our information
systems. All relevant updates and developments are disseminated across the company through the company’s intranet and e-mails to
interested internal stakeholders.
We provide cyber security awareness training to all our employees on an annual basis which is designed to provide guidance for
identifying and avoiding cyber security risks, and require employees in certain roles to complete additional role based, specialized cyber
security trainings.
Equinor 2023 Annual Report on Form 20-F 67
We have company-wide management systems detailing protocols and response governance for emergency response and business
continuity management. Our management systems reflect industry good practices, internal requirements, national laws and regulations
and ISO/IEC standards to identify, protect, detect, respond and recover from cyber security threats. The corporate security and crisis
management unit is responsible for setting strategic direction and maintaining the company’s corporate framework on crisis and business
continuity management. We have adopted business continuity plans and disaster recovery plans which are designed with the goal of
minimizing the consequences of cyber security incidents, and are reviewed on a regular basis. We also have a dedicated global cyber
security incident response team, comprised of specially trained personnel, that provides assistance and support in dealing with any
actual and/or potential cyber security incidents.
In addition to assessing our own cyber security preparedness, we also consider and evaluate cyber security risks associated with our
use of third-party service providers. We have integrated cyber security risk management into our procurement process whereby cyber
security risks are identified and assessed in the early stages of negotiating contracts and addressed accordingly based on the nature
of services provided. Cyber security risks associated with third parties are monitored through the life cycle of the relationships.
In 2023, as in previous years, we experienced several cyber security incidents and other disruptions to our information systems. None
of these incidents and systems disruptions, including those reported to us by our third-party partners, had a material impact on our
business, operations or financial results. See “Item 3D – Risk Factors” for additional information about digital and cyber security risks.
Cyber security Governance
Our board of directors oversees the company’s internal control and overall risk management and assurance, and through its audit
committee, reviews and monitors the effectiveness of the ERM framework, which has identified cyber security as one of the top
enterprise risks. The board and audit committee discuss the company’s ERM framework, and three-lines of control model and learnings
from risk-adjusting actions and assurance activities on a bi-annual basis.
The board of directors’ safety, sustainability and ethics committee (SSEC) is primarily responsible for the oversight of cyber security risk
management, including review of the company’s practices and performance related to cyber security, and updates the board of directors
on any matters of concern that become apparent in the exercise of its duties. The SSEC reviews and assesses at least annually the
developments, implementation, effectiveness and practice of the company’s cyber security policies, programmes and strategies, and
the effectiveness of internal controls for cyber security matters, including applicable management systems, policies, practices,
processes, leadership, and culture, and summarizes its assessments in an annual report to the board of directors. The SSEC also
receives regular briefings and updates from the Executive Vice President for Safety, Security & Sustainability (EVP SSU) relating to
material risks from cyber security threats and management of cyber security-related risks.
We use a three-line model for risk management (including cyber security risk) in which employees and management work together to
contribute to creation and protection of value. As the first line-of-control, cyber security risk is managed in the business areas as an
integral part of employee and manager tasks. Technical experts in each business area are responsible for monitoring the relevant
business area’s cyber security risks and performance, conducting assessments and ensuring a suitable and effective management
system that reflects the relevant business area’s business scope and context, risks and external regulatory requirements. The first line
shares its experiences and findings in a systematic way with the second line. The responsibility for reporting material risks from cyber
security threats, regularly and systematically, follows the accountability of the business areas up to their respective executive vice
presidents. The executive vice presidents of the business areas meet with the EVP SSU bi-annually to review top enterprise risk from
cyber security threats.
The second line-of-control oversees cyber security risks, performance and assurance across the company and provides advice and
support to the first line in identifying and executing assurance activities and monitors, supports and challenges the first line in relation
to performance and management of cyber security risks. The EVP SSU leads the second line-of-control for cyber security-related
matters and oversees cyber security risks across the company and reports to the Corporate Executive Committee (CEC) and the SSEC.
The Chief Security Officer (CSO) and Chief Information Security Officer (CISO) assist the EVP SSU in the day-to-day monitoring of
cyber security risks, which are reported to the CEC. The CEC is responsible for reviewing and approving the strategy and resourcing of
cyber security risk management. Our current EVP SSU holds a Master’s degree in Cybernetics and Process Automation and a
Bachelor’s degree in Automation from the Rogaland Regional College/University of Stavanger. She has held a number of central
leadership positions within operations, projects and technology since she joined Equinor in 1999, including Chief Operating Officer,
where she drove the company’s digital transformation.
Our third line-of-control is the corporate audit unit which performs independent audits across business areas and management roles,
including cyber security audits, and reports to the board of directors on a periodic basis.
ITEM 17. FINANCIAL STATEMENTS
The Company has responded to Item 18 in lieu of this item
.
ITEM 18. FINANCIAL STATEMENTS
The audited consolidated financial statements as required under Item 18 are attached hereto starting on page 74 of this 2023 Form
20-F. The audit report of Ernst & Young AS, an independent registered accounting firm, is included herein preceding the audited
Consolidated Financial Statements.
Equinor 2023 Annual Report on Form 20-F 68
ITEM 19. EXHIBITS
Exhibit no
Description
Exhibit 1
Exhibit 2.1
Exhibit 2.2
Exhibit 2.3
Exhibit 2.4
Exhibit 2.5
Amended and Restated Agency Agreement, dated as of 11 May 2023, by and among Equinor ASA, as Issuer,
Exhibit 2.6
Exhibit 2.7
Exhibit 4(a)(i)
Exhibit 4(a)(ii)
Exhibit 4(c)
Exhibit 8
Exhibit 11
Exhibit 12.1
Exhibit 12.2
Exhibit 13.1
)
Exhibit 13.2
)
Exhibit 15.1
Exhibit 15.2
Exhibit 15.3
Exhibit 15.4
Exhibit 15.5
Exhibit 15.6
Exhibit 15.7
Exhibit 15.8
Exhibit 17
Exhibit 101
Interactive Data Files (formatted in Inline XBRL (Extensible Business Reporting Language)). Submitted electronically
with the 2023 Form 20-
F.
Exhibit 104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
1) Furnished only.
The total amount of long term debt securities of Equinor ASA and its subsidiaries authorised under instruments other than those listed above does not exceed 10%
of the total assets of Equinor ASA and its subsidiaries on a consolidated basis. The company agrees to furnish copies of any such instruments to the Commission
upon request.
Equinor 2023 Annual Report on Form 20-F 69
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and
authorised the undersigned to sign this annual report on its behalf.
EQUINOR ASA
(Registrant)
By: /s/ TORGRIM REITAN
Name: Torgrim Reitan
Title: Executive Vice President and Chief Financial Officer
Dated: 21 March 2024
Equinor 2023 Annual Report on Form 20-F 70
The reports set out below are provided in accordance with standards of the Public Company Accounting Oversight Board (United
States). Ernst & Young AS (PCAOB ID:
1572
) has also issued a report in accordance with law, regulations, and auditing standards
and practices generally accepted in Norway, including International Standards on Auditing (ISAs), which includes opinions on the
Consolidated financial statements and the parent company financial statements of Equinor ASA, and on other required matters. That
report is not included in this 2023 Form 20-F, but only in the 2023 Annual report.
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Equinor ASA
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Equinor ASA and its subsidiaries (Equinor or the Company) as of
31 December 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity and cash
flows for each of the three years in the period ended 31 December 2023, and the related notes (collectively referred to as the
“Consolidated Financial Statements”). In our opinion, the Consolidated Financial Statements present fairly, in all material respects, the
financial position of the Company as of 31 December 2023 and 2022, and the results of its operations and its cash flows for each of
the three years in the period ended 31 December 2023, in conformity with IFRS Accounting Standards as issued by the International
Accounting Standards Board (IASB) and in conformity with IFRS Accounting Standards as adopted by the European Union.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of 31 December 2023, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework),
and our report dated 12 March 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the Consolidated Financial Statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
Consolidated Financial Statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the Consolidated Financial
Statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the Consolidated Financial Statements. We believe that our audits provide a reasonable
basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the Consolidated Financial
Statements that were communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the
Consolidated Financial Statements and (2) involved our especially challenging, subjective or complex judgments. The communication
of critical audit matters does not alter in any way our opinion on the Consolidated Financial Statements, taken as a whole, and we are
not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or
disclosures to which they relate.
Equinor 2023 Annual Report on Form 20-F 71
Recoverable amounts of production plants and oil and gas assets including assets under development
Description of
the Matter
As of 31 December 2023, the Company has recognised production plants and oil and gas assets,
including assets under development, of USD 39,585 million and USD 13,980 million, respectively,
within Property, plant and equipment. Refer to Note 14 to the Consolidated Financial Statements
for the related disclosures. As described in Note 14, determining the recoverable amount of an
asset involves an estimate of future cash flows, which is dependent upon management’s best
estimate of the economic conditions that will exist over the asset’s useful life. The asset’s
operational performance and external factors have a significant impact on the estimated future
cash flows and therefore, the recoverable amount of the asset.
Auditing management’s estimate of the recoverable amount of production plants and oil and gas
assets is complex and involves a high degree of judgement. Significant assumptions used in
forecasting future cash flows are future commodity prices, currency exchange rates, expected
reserves, capital expenditures, and the discount rate.
These significant assumptions are forward-looking and can be affected by future economic and
market conditions, including matters related to climate change and energy transition. As described
in Note 3 to the Consolidated Financial Statements, the effects of the initiatives to limit climate
change and the potential impact of the energy transition are relevant to some of the economic
assumptions in the Company’s estimation of future cash flows. Climate considerations are included
directly in the impairment assessments by estimating the carbon costs in the cash flows, and
indirectly as the expected effects of the climate change are included in the estimated commodity
prices. As also described in Note 3, commodity price assumptions applied in value-in-use
impairment testing are based on management’s best estimate, which differs from the price-set
required to achieve the goals of the Paris Agreement as described in the International Energy
Agency (IEA) World Energy Outlook’s Announced Pledges Scenario, or the Net Zero Emissions by
2050 Scenario. The impact of the energy transition and potential restrictions by regulators, market
and strategic considerations may also have an effect on the estimated production profiles and the
economic lifetime of the Company’s assets and projects.
Additionally, the treatment of tax in the estimation of the recoverable amount is challenging, as the
Company is subject to different tax structures that are inherently complex, particularly in Norway.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of
controls over the Company’s process for evaluating the recoverability of production plants and oil
and gas assets including assets under development. This included testing controls over
management’s review of assumptions and inputs to the assessments of impairment and
impairment reversals.
Our audit procedures performed over the significant assumptions and inputs included, among
others, evaluation of the methods and models used in the calculation of the recoverable amount.
We also evaluated the relevant tax effects based on the local legislation of the relevant
jurisdictions, particularly in Norway, and tested the clerical accuracy of the models through
independently recalculating the value in use. We involved valuation specialists to assist us with
these procedures. In addition, we compared projected capital expenditures to approved operator
budgets or management forecasts. For those assets previously impaired, we compared actual
results to the forecasts used in historical impairment analyses. We also compared expected
reserve volumes with internal production forecasts and external evaluations of expected reserves
and we compared the historical production with management’s previous production forecasts, with
the involvement of our reserves specialists.
To test price assumptions, we evaluated management’s methodology to determine future
commodity prices and compared such assumptions to external benchmarks, among other
procedures. We involved valuation specialists to assist in evaluating the reasonableness of the
Company’s assessment of currency exchange rates and the discount rate, by assessing the
Company’s methodologies and key assumptions used to calculate the rates and by comparing
those rates with external information. We also evaluated management’s methodology to factor
climate-related matters into their determination of future commodity price assumptions.
To test carbon cost assumptions, with the involvement of climate change and sustainability
specialists, we evaluated management’s methodology to determine future carbon costs, including
assessing the impact from climate-related matters, and compared management’s assumptions
with the current legislation in place in the relevant jurisdictions and the jurisdictions’ announced
pledges regarding escalation of carbon costs.
We evaluated management’s sensitivity analyses over its future commodity prices and carbon cost
assumptions by taking into consideration, among other sources, the Net Zero Emissions by 2050
Scenario and Announced Pledges Scenario estimated by the International Energy Agency (IEA).
We have also evaluated management’s disclosures related to the consequences of initiatives to
limit climate change, including the effects of the Company’s climate change strategy on the
Equinor 2023 Annual Report on Form 20-F 72
Consolidated Financial Statements and the energy transition’s effects on estimation uncertainty,
discussed in more detail in Notes 3 and 14.
Estimation of the asset retirement obligations
Description of
the Matter
As of 31 December 2023, the Company has recognised a provision for decommissioning and
removal activities of USD 12,360 million classified within Provisions and other liabilities. Refer to
Note 23 to the Consolidated Financial Statements for the related disclosures. As described in Note
23, the appropriate estimates for such obligations are based on historical knowledge combined
with knowledge of ongoing technological developments, expectations about future regulatory and
technological development and involve the application of judgement and an inherent risk of
significant adjustments. The estimated costs of decommissioning and removal activities require
revisions due to changes in current regulations and technology while considering relevant risks
and uncertainties.
Auditing management’s estimate of the decommissioning and removal of offshore installations at
the end of the production period is complex and involves a high degree of judgement. Determining
the provision for such obligations involves application of considerable judgement related to the
assumptions used in the estimate, the inherent complexity and uncertainty in estimating future
costs, and the limited historical experience against which to benchmark estimates of future costs.
Significant assumptions used in the estimate are the discount rates and the expected future costs,
which include the underlying assumptions norms and rates, and time required to decommission
and can vary considerably depending on the expected removal complexity.
These significant assumptions are forward-looking and can be affected by future economic and
market conditions, including matters related to climate change and energy transition. As described
in Note 3 to the Consolidated Financial Statements, the effects of the initiatives to limit climate
change and the potential impact of the energy transition are relevant to some of the economic
assumptions in the Company’s estimation of future cash flows. The impact of the energy transition
and potential restrictions by regulators, market and strategic considerations may also have an
effect on the estimated economic lifetime of the Company’s assets and projects. If the Company’s
business cases for the oil and gas producing assets in the future should change materially due to
governmental initiatives to limit climate change, it could affect the timing of cessation of the assets
and the asset retirement obligations (ARO).
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of
controls over the Company’s process to calculate the present value of the estimated future
decommissioning and removal expenditures determined in accordance with local conditions and
requirements. This included testing controls over management’s review of assumptions described
above, used in the calculation of the ARO.
To test management’s estimation of the provision for decommissioning and removal activities, our
audit procedures included, among others, evaluating the completeness of the provision by
comparing significant additions to property, plant and equipment to management’s assessment of
new ARO obligations recognized in the period.
To assess the expected future costs, among other procedures, we compared day rates for rigs,
marine operations and heavy lift vessels to external market data or existing contracts. For time
required to decommission, we compared the assumptions against historical data. We compared
discount rates to external market data. With the support of our valuation specialists, we evaluated
the methodology and models used by management to estimate the ARO and performed a
sensitivity analysis on the significant assumptions. In addition, we recalculated the formulas in the
models.
We evaluated management’s sensitivity analyses over the effect of performing removal five years
earlier than currently scheduled due to potential governmental initiatives to limit climate change.
We have also evaluated management’s disclosures related to the consequences of initiatives to
limit climate change, including the effects of the Company’s climate change strategy on the
Consolidated Financial Statements and the energy transition’s effects on estimation uncertainty,
discussed in more detail in Notes 3 and 23.
/s/
Ernst & Young AS
We have served as the Company’s auditor since 2019.
Stavanger, Norway
12 March 2024
Equinor 2023 Annual Report on Form 20-F 73
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Equinor ASA
Opinion on Internal Control over Financial Reporting
We have audited Equinor ASA and subsidiaries’ (the Company) internal control over financial reporting as at 31 December 2023,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as at 31 December 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the 2023 Consolidated Financial Statements of the Company, and our report dated 12 March 2024 expressed an
unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control
over Financial Reporting as set out in Item 15. Controls and Procedures. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young AS
Stavanger, Norway
12 March 2024
Equinor Annual Report on Form 20-F 2023 74
Consolidated financial statements of the Equinor group
CONSOLIDATED STATEMENT OF INCOME
Full year
(in USD million)
Note
2023
2022
2021
Revenues
7
106,848
149,004
88,744
Net income/(loss) from equity accounted investments
15
(1)
620
259
Other income
6
327
1,182
1,921
Total revenues and other income
7
107,174
150,806
90,924
Purchases [net of inventory variation]
(48,175)
(53,806)
(35,160)
Operating expenses
(10,582)
(9,608)
(8,598)
Selling, general and administrative expenses
(1,218)
(986)
(780)
Depreciation, amortisation and net impairment
12, 13,
14
(10,634)
(6,391)
(11,719)
Exploration expenses
13
(795)
(1,205)
(1,004)
Total operating expenses
(71,404)
(71,995)
(57,261)
Net operating income/(loss)
5
35,770
78,811
33,663
Interest income and other financial income
10
2,449
1,222
38
Interest expenses and other financial expenses
10
(1,660)
(1,379)
(1,223)
Other financial items
10
1,325
(50)
(895)
Net financial items
2,114
(207)
(2,080)
Income/(loss) before tax
37,884
78,604
31,583
Income tax
11
(25,980)
(49,861)
(23,007)
Net income/(loss)
11,904
28,744
8,576
Attributable to shareholders of the company
20
11,885
28,746
8,563
Attributable to non-controlling interests
19
(3)
14
Basic earnings per share (in USD)
20
3.93
9.06
2.64
Diluted earnings per share (in USD)
20
3.93
9.03
2.63
Equinor Annual Report on Form 20-F 2023 75
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Full year
(in USD million)
Note
2023
2022
2021
Net income/(loss)
11,904
28,744
8,576
Actuarial gains/(losses) on defined benefit pension plans
(276)
461
147
Income tax effect on income and expenses recognised in OCI
1)
66
(105)
(35)
Items that will not be reclassified to the Consolidated statement of income
22
(211)
356
111
Foreign currency translation effects
(587)
(3,609)
(1,052)
Share of OCI from equity accounted investments
(113)
424
0
Items that may subsequently be reclassified to the Consolidated statement of income
(701)
(3,186)
(1,052)
Other comprehensive income/(loss)
(911)
(2,829)
(940)
Total comprehensive income/(loss)
10,992
25,914
7,636
Attributable to the shareholders of the company
10,974
25,917
7,622
Attributable to non-controlling interests
19
(3)
14
1)
Other Comprehensive Income (OCI).
Equinor Annual Report on Form 20-F 2023 76
CONSOLIDATED BALANCE SHEET
(in USD million)
Note
2023
2022
ASSETS
Property, plant and equipment
12
58,822
56,498
Intangible assets
13
5,709
5,158
Equity accounted investments
15
2,508
2,758
Deferred tax assets
11
7,936
8,732
Pension assets
22
1,260
1,219
Derivative financial instruments
28
559
691
Financial investments
16
3,441
2,733
Prepayments and financial receivables
16
1,291
2,063
Total non-current assets
81,525
79,851
Inventories
17
3,814
5,205
Trade and other receivables
1)
18
16,933
22,452
Derivative financial instruments
28
1,378
4,039
Financial investments
16
29,224
29,876
Cash and cash equivalents
2)
19
9,641
15,579
Total current assets
60,990
77,152
Assets classified as held for sale
6
1,064
1,018
Total assets
143,580
158,021
EQUITY AND LIABILITIES
Shareholders’ equity
48,490
53,988
Non-controlling interests
10
1
Total equity
20
48,500
53,989
Finance debt
21
22,230
24,141
Lease liabilities
25
2,291
2,409
Deferred tax liabilities
11
13,345
11,996
Pension liabilities
22
3,925
3,671
Provisions and other liabilities
23
15,304
15,633
Derivative financial instruments
28
1,795
2,376
Total non-current liabilities
58,890
60,226
Trade, other payables and provisions
24
11,870
13,352
Current tax payable
12,306
17,655
Finance debt
21
5,996
4,359
Lease liabilities
25
1,279
1,258
Dividends payable
20
2,649
2,808
Derivative financial instruments
28
1,619
4,106
Total current liabilities
35,719
43,539
Liabilities directly associated with the assets classified as held for sale
6
471
268
Total liabilities
95,080
104,032
Total equity and liabilities
143,580
158,021
Equinor Annual Report on Form 20-F 2023 77
1)
Of which Trade receivables of USD
13,017
17,334
2)
Includes collateral deposits of USD
1,572
participating. The corresponding figure for 2022 is USD
6,128
Equinor Annual Report on Form 20-F 2023 78
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in USD million)
Share
capital
Additional
paid-in
capital
Retained
earnings
Foreign
currency
translation
reserve
OCI from equity
accounted
investments
1)
Shareholders'
equity
Non-
controlling
interests
Total equity
At 1 January 2021
1,164
6,852
30,050
(4,194)
0
33,873
19
33,892
Net income/(loss)
8,563
8,563
14
8,576
Other comprehensive income/(loss)
111
(1,052)
(940)
(940)
Total comprehensive income/(loss)
7,636
Dividends
(2,041)
(2,041)
(2,041)
Share buy-back
(429)
(429)
(429)
Other equity transactions
(15)
(15)
(18)
(33)
At 31 December 2021
1,164
6,408
36,683
(5,245)
0
39,010
14
39,024
Net income/(loss)
28,746
28,746
(3)
28,744
Other comprehensive income/(loss)
356
(3,609)
424
(2,829)
(2,829)
Total comprehensive income/(loss)
25,914
Dividends
(7,549)
(7,549)
(7,549)
Share buy-back
(22)
(3,358)
(3,380)
(3,380)
Other equity transactions
(10)
(10)
(10)
(20)
At 31 December 2022
1,142
3,041
58,236
(8,855)
424
53,988
1
53,989
Net income/(loss)
11,885
11,885
19
11,904
Other comprehensive income/(loss)
(211)
(587)
(113)
(911)
(911)
Total comprehensive income/(loss)
10,992
Dividends
(10,783)
(10,783)
(10,783)
Share buy-back
(42)
(3,037)
(2,606)
(5,685)
(5,685)
Other equity transactions
(3)
(3)
(10)
(13)
At 31 December 2023
1,101
0
56,521
(9,442)
310
48,490
10
48,500
1) OCI items from equity accounted investments that may subsequently be reclassified to the Consolidated statement of income, are
presented as part of OCI from equity accounted investments. OCI items that will not be reclassified to the Consolidated statements of income
will be included in retained earnings.
Please refer to note 20 Shareholders’ equity, capital distribution and earnings per share for more details.
Equinor Annual Report on Form 20-F 2023 79
CONSOLIDATED STATEMENT OF CASH FLOWS
Full year
(in USD million)
Note
2023
2022
2021
Income/(loss) before tax
37,884
78,604
31,583
Depreciation, amortisation and net impairment
12, 13, 14
10,634
6,391
11,719
Exploration expenditures written off
13
(53)
342
171
(Gains)/losses on foreign currency transactions and balances
(852)
(2,088)
(47)
(Gains)/losses on sale of assets and businesses
6
8
(823)
(1,519)
(Increase)/decrease in other items related to operating activities
1)
(1,313)
468
106
(Increase)/decrease in net derivative financial instruments
28
1,041
1,062
539
Interest received
1,710
399
96
Interest paid
(1,042)
(747)
(698)
Cash flows provided by operating activities before taxes paid and working capital items
48,016
83,608
41,950
Taxes paid
(28,276)
(43,856)
(8,588)
(Increase)/decrease in working capital
4,960
(4,616)
(4,546)
Cash flows provided by operating activities
24,701
35,136
28,816
Cash used in business combinations
6
(1,195)
147
(111)
Capital expenditures and investments
6
(10,575)
(8,758)
(8,040)
(Increase)/decrease in financial investments
443
(10,089)
(9,951)
(Increase)/decrease in derivative financial instruments
(1,266)
1,894
(1)
(Increase)/decrease in other interest-bearing items
(87)
(23)
28
Proceeds from sale of assets and businesses
6
272
966
1,864
Cash flows provided by/(used in) investing activities
(12,409)
(15,863)
(16,211)
Repayment of finance debt
21
(2,818)
(250)
(2,675)
Repayment of lease liabilities
25
(1,422)
(1,366)
(1,238)
Dividends paid
20
(10,906)
(5,380)
(1,797)
Share buy-back
20
(5,589)
(3,315)
(321)
Net current finance debt and other financing activities
2,593
(5,102)
1,195
Cash flows provided by/(used in) financing activities
21
(18,142)
(15,414)
(4,836)
Net increase/(decrease) in cash and cash equivalents
(5,850)
3,860
7,768
Foreign currency translation effects
(87)
(2,268)
(538)
Cash and cash equivalents at the beginning of the period (net of overdraft)
19
15,579
13,987
6,757
Cash and cash equivalents at the end of the period (net of overdraft)
2)
19
9,641
15,579
13,987
1)
The line item mainly consists of provisions, unrealised gains and losses and items of income or expense for which the cash effects are
included in increase/(decrease) in working capital within operating cash flow and investing cash flows. In 2023 the main item is related to
interest income and expense included in the line item interest received and interest paid. In 2022 the line item includes a fair value loss
related to inventory of USD
672
822
) million in redetermination settlement for the Agbami
field.
2)
At 31 December 2023 and 2022 cash and cash equivalents net overdraft was
zero
. At 31 December 2021 cash and cash equivalents
included a net overdraft of USD
140
Interest paid
in cash flows provided by operating activities excludes capitalised interest of USD
468
382
334
million for the years ending 31 December 2023, 2022 and 2021, respectively. Capitalised interest is included in Capital expenditures and
Equinor Annual Report on Form 20-F 2023 80
investments in cash flows used in investing activities. Total interest paid amounts to USD
1,510
1,129
1,032
million for the years 2023, 2022 and 2021, respectively.
Equinor Annual Report on Form 20-F 2023 81
Notes to the Consolidated financial statements
Table of contents for notes to the financial statements
1
Organisation
2
Accounting policies
3
Climate change and energy transition
4
Financial risk and capital management
5
Segments
6
Acquisitions and disposals
7
Total revenues and other income
8
Salaries and personnel expenses
9
Auditor’s remuneration and Research and development expenditures
10
Financial items
11
Income taxes
12
Property, plant and equipment
13
Intangible assets
14
Impairments
15
Joint arrangements and associates
16
Financial investments and financial receivables
17
Inventories
18
Trade and other receivables
19
Cash and cash equivalents
20
Shareholders’ equity, capital distribution and earnings per share
21
Finance debt
22
Pensions
23
Provisions and other liabilities
24
Trade, other payables and provisions
25
Leases
26
Other commitments, contingent liabilities and contingent assets
27
Related parties
28
Financial instruments and fair value measurement
29
Subsequent events
Equinor Annual Report on Form 20-F 2023 82
1 Organisation
The Equinor Group (Equinor) consists of Equinor ASA and its subsidiaries.
Equinor ASA
Norway
listed on the Oslo Børs (
Norway
) and the New York Stock Exchange (USA). The address of its registered office is
Forusbeen 50, N-
4035 Stavanger, Norway
.
Equinor’s objective is to develop, produce and market various forms of energy and derived products and services, as well as other
businesses. The activities may also be carried out through participation in or cooperation with other companies.
100
% owned operating subsidiary of Equinor ASA and owner of all of Equinor's oil and gas activities and net assets on the Norwegian
continental shelf, is co-obligor or guarantor for certain debt obligations of Equinor ASA.
The Consolidated financial statements of Equinor for the full year 2023 were approved for issuance by the board of directors on 12
March 2024 and is subject to approval by the annual general meeting on 14 May 2024.
2 Accounting policies
Statement of compliance
The Consolidated financial statements of Equinor ASA and its subsidiaries (Equinor) have been prepared in accordance with IFRS
Accounting Standards as adopted by the European Union (EU) and with IFRS Accounting Standards as issued by the International
Accounting Standards Board (IASB), IFRIC® Interpretations issued by IASB and the additional requirements of the Norwegian
Accounting Act, effective on 31 December 2023.
Basis of preparation
The Consolidated financial statements are prepared on the historical cost basis with some exceptions where fair value measurement
is applied. These exceptions are specifically disclosed in the accounting policies sections in relevant notes. The material accounting
policies described in these Consolidated financial statements have been applied consistently to all periods presented.
Certain amounts in the comparable years have been restated or reclassified to conform to current year presentation. All amounts in
the Consolidated financial statements are denominated in USD millions, unless otherwise specified. The subtotals and totals in some
of the tables in the notes may not equal the sum of the amounts shown in the primary financial statements due to rounding.
The line items included in Total operating expenses in the Consolidated statement of income are presented as a combination of
function and nature in conformity with industry practice. Purchases [net of inventory variation] and Depreciation, amortisation and net
impairments are presented on separate lines based on their nature, while Operating expenses and Selling, general and administrative
expenses as well as Exploration expenses are presented on a functional basis. Significant expenses such as salaries, pensions, etc.
are presented by their nature in the notes to the Consolidated financial statements.
Basis of consolidation
The Consolidated financial statements include the accounts of Equinor ASA and its subsidiaries as well as Equinor’s interests in jointly
controlled and equity accounted investments. All intercompany balances and transactions, including unrealised profits and losses
arising from Equinor's internal transactions, have been eliminated.
Foreign currency translation
Foreign exchange differences arising on translation of transactions, assets and liabilities to the functional currency of individual
entities in Equinor are recognised in the Consolidated statement of income as foreign exchange gains or losses within Net financial
items. However, foreign exchange differences arising from the translation of estimate-based provisions are generally accounted for as
part of the change in the underlying estimate.
When preparing the Consolidated financial statements, the financial statements of entities with functional currencies other than the
Group’s presentation currency USD are translated into USD, and the foreign exchange differences are recognised separately in the
Consolidated statement of comprehensive income within Other comprehensive income (OCI). The cumulative amount of such
translation differences relating to an entity is reclassified to the Consolidated statement of income and reflected as a part of the gain or
loss on disposal of that entity.
Loans from Equinor ASA to subsidiaries and equity accounted investments with other functional currencies than the parent company,
and for which settlement is neither planned nor likely in the foreseeable future, are considered part of the parent company’s net
investment in the subsidiary. Foreign exchange differences arising on such loans are recognised in OCI in the Consolidated financial
statements.
Statement of cash flows
Equinor Annual Report on Form 20-F 2023 83
In the statement of cash flows, operating activities are presented using the indirect method, where Income/(loss) before tax is adjusted
for changes in inventories and operating receivables and payables, the effects of non-cash items such as depreciations, amortisations
and impairments, provisions, unrealised gains and losses and undistributed profits from associates, and items of income or expense
for which the cash effects are investing or financing cash flows. Increase/decrease in financial investments, derivative financial
instruments, and other interest-bearing items are all presented net as part of Investing activities, either because the transactions are
financial investments and turnover is quick, the amounts are large, and the maturities are short, or due to materiality.
--------------------------------------------------------------------------------------------------------------------------------
Accounting judgement and key sources of estimation uncertainty
The preparation of the Consolidated financial statements requires management to make accounting judgements, estimates and
assumptions.
Information about judgements made in applying the accounting policies that have the most significant effects on the amounts
recognised in the Consolidated financial statements is described in the following notes:
Note 6 – Acquisitions and disposals
Note 7 – Total revenues and other income
Note 25 – Leases
Estimates used in the preparation of these Consolidated financial statements are prepared based on customised models. The
assumptions on which the estimates are based rely on historical experience, external sources of information and various other factors
that management assesses to be reasonable under the current conditions and circumstances. These estimates and assumptions form
the basis of making the judgements about carrying values of assets and liabilities when these are not readily apparent from other
sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an on-going
basis considering the current and expected future set of conditions.
Equinor is exposed to several underlying economic factors affecting the overall results, such as commodity prices, foreign currency
exchange rates, market risk premiums and interest rates as well as financial instruments with fair values derived from changes in
these factors. The effects of the initiatives to limit climate changes and the potential impact of the energy transition are relevant to
several of these economic assumptions. In addition, Equinor's results are influenced by the level of production, which in the short term
may be influenced by, for instance, maintenance programmes. In the long-term, the results are impacted by the success of
exploration, field developments and operating activities.
The most important matters in understanding the key sources of estimation uncertainty are described in each of the following notes:
Note 3 – Climate change and energy transition
Note 11 – Income taxes
Note 12 – Property, plant and equipment
Note 13 – Intangible assets
Note 14 – Impairments
Note 23 – Provisions and other liabilities
Note 26 – Other commitments, contingent liabilities and contingent assets
--------------------------------------------------------------------------------------------------------------------------------
Adoption of new IFRS Accounting Standards, amendments to IFRS Accounting Standards and IFRIC Interpretations
New IFRS Accounting Standards, amendments to IFRS Accounting Standards and IFRIC Interpretations effective and adopted by
Equinor from 1 January 2023 do not have significant impact on Equinor’s Consolidated financial statements upon adoption. This
includes among others IFRS 17 Insurance Contracts and amendments to IAS 12 International Tax Reform – Pillar Two Model Rules
(top-up tax).
IFRS Accounting Standards, amendments to IFRS Accounting Standards, and IFRIC Interpretations issued, but not yet effective, are
either not expected to materially impact Equinor's Consolidated financial statements upon adoption or are not expected to be relevant.
Equinor has not early adopted any IFRS Accounting Standard, amendments to IFRS Accounting Standards, or IFRIC Interpretations
issued, but not yet effective.
3 Climate change and energy transition
Risks arising from climate change and the transition to a lower carbon economy
Policy, legal, regulatory, market and technology developments related to climate change, can affect Equinor’s business plans and
financial performance. Shifts in stakeholder focus between energy security, affordability and sustainability add uncertainty to delivery
and outcomes associated with Equinor’s strategy. In its long-term planning, Equinor analyses how the global energy markets may
develop, such as future changes in demand for Equinor’s products (oil, gas and power in key markets). Commodity price sensitivities
Equinor Annual Report on Form 20-F 2023 84
are presented in a table below, including the World Energy Outlook 2023 (WEO) scenarios presented by International Energy Agency
(IEA), and in note 14 Impairments.
Equinor assesses climate risk from two perspectives: transition risk, which relates to the financial robustness of the company’s
business model and portfolio in various decarbonisation scenarios; and physical climate risk, which relates to the exposure and
potential vulnerability of Equinor’s assets to climate-related perils in different climate change scenarios. Equinor’s net-zero strategy
and climate related ambitions are responses to the challenges and opportunities presented by the energy transition. Below is a
summary of relevant risks and risk adjusting actions:
Risks – upsides and downsides
Risk adjusting actions
Transition risks
●
Stricter climate laws, regulations, and policies as well
as adverse litigation outcomes could adversely impact
Equinor's financial results and outlook, including the
value of its assets. These might be direct impacts, or
indirect impacts through changes in consumer
behaviour or technology developments.
●
Changing demand and more cost-competitive
solutions for renewable energy and low-carbon
solutions represent both threats and opportunities for
Equinor future value creation and the value of
Equinor’s assets.
●
Multiple factors in the energy transition contribute to
uncertainty in future energy price assumptions and
changes in investor and societal sentiment can affect
Equinor’s access to capital markets and financing
costs.
●
policy support, and different commercial/contractual
models may lead to diminishing returns within the
renewable and low carbon industries and hinder
Equinor ambitions. These investments may be
exposed to interest rate risk and inflation risk.
●
energy transition both through optimisation of
Equinor’s oil and gas business and through utilising its
competitive capabilities across new areas of the
energy system. In a decarbonising world with a broad
energy mix, the expectation is that policymakers and
stakeholders will set a premium on oil and gas
produced in a responsible and increasingly carbon
efficient way.
●
Equinor monitors trends in relevant policies and
regulations and addresses regulatory and policy risk
in capital investment processes and through
enterprise risk management in the business line.
●
Equinor has developed its corporate strategy and
Energy transition plan (ETP) to demonstrate
commitment to a low carbon business transformation
that balances investor and societal expectations.
●
Equinor includes actual or default minimum carbon
pricing across investments, applies price robustness
criteria and routinely stress tests the portfolio for
different future price scenarios towards net zero.
Hurdle rates and other financial sensitivity testing are
included in decision making.
●
to reduce absolute emissions and emissions
intensity from its activities.
●
external technology development trends and invests
in research, innovation and technology ventures that
support positive value creation for its portfolio.
Examples of relevant technologies within Equinor’s
portfolio include carbon capture and storage (CCS),
blue/green hydrogen, battery technology, solar and
wind renewable energy, low CO
₂
improvements in methane emissions and application
of renewables in oil and gas production.
Physical
climate
risks
●
Equinor 's operations, resulting in disruption to
operations, increased costs, or incidents. This could
be through extreme weather events or chronic
physical impacts such as rising sea level
accompanied by increased wave heights. As
Equinor’s renewable portfolio grows, unexpected
changes in meteorological parameters, such as
average wind speed or changes in wind patterns and
cloud cover can affect energy production as well as
factors such as maintenance and equipment lifetimes.
●
Physical climate risks are taken into account through
technical and engineering functions in design,
operations, and maintenance, with consideration of
how the external physical environment may be
changing.
●
climate scenario models, Equinor continues to
assess vulnerability of its assets to potential climate-
related changes in the physical environment.
However, there is uncertainty regarding the
magnitude of impact and time horizon for the
occurrence of physical impacts of climate change,
which leads to uncertainty regarding the potential
impact for Equinor.
Impact on Equinor’s financial statements
CO
₂
-cost and EU ETS carbon credits
Equinor’s oil & gas operations in Europe are part of the EU Emission Trading System (EU ETS). Equinor buys EU ETS allowances
(quotas or carbon credits) for the emissions related to its oil & gas production and processing. Currently Equinor receives a share of
free quotas according to the EU ETS regulation, according to which free quotas are to be phased out by 2035.
Equinor Annual Report on Form 20-F 2023 85
Accounting policies - cost of CO
₂
Purchased CO
₂
line with emissions. Accruals for CO
₂
liability within Trade, other payables and provisions. Quotas owned, but exceeding the emissions incurred to date, are carried in the
balance sheet at cost price, classified as Other current receivables, as long as such purchased quotas are acquired in order to cover
own emissions and may be kept to cover subsequent years’ emissions.
Obligations resulting from current year emissions and the corresponding amounts for quotas that have been bought, paid, and
expensed, but which have not yet been surrendered to the relevant authorities, are reflected net in the balance sheet.
Total expensed CO
₂
₂
(Equinor’s share of the operating licences in addition to land-based facilities) amounted to USD
486
510
in 2022 and USD
428
₂
shows, on a 100% operated basis, an analysis of number of quotas utilised and the related monetary amounts recognised in financial
statements by Equinor’s operated licences and land-based facilities subject to the requirements under EU ETS. Allocated free quotas
consist of actual free quotas received in ETS during the year. The closing balance for the number of quotas consists mainly of
purchased quotas for current year and remaining quotas after the settlement of current and previous year(s), including free quotas.
The closing balance in USD consists mainly of the value of the remaining quotas after the preliminary allocation of the current year
quotas.
Number of EU ETS quotas in
thousands
in USD million
2023
2022
2023
2022
Opening balance at 1 January
10,782
11,026
20
59
Allocated free quotas
356
3,697
Purchased quotas on the ETS market
7,822
5,985
708
509
Sold quotas on the ETS market
0
0
Returned excess free quotas
(544)
0
Settled quotas (offset against emissions)
(9,840)
(9,926)
(635)
(548)
Closing balance at 31 December
8,576
10,782
93
20
All numbers in the table are presented gross (100%) for Equinor operated licenses and include both EU ETS and UK ETS quotas.
Investments in renewables and low carbon solutions
Equinor’s ambition is to build a focused, carbon efficient oil and gas portfolio complemented with renewable and low-carbon solutions
to create long-term value while supplying reliable energy with progressively lower emissions. 2023 saw a significant increase in the
power generated from Equinor’s renewable portfolio as well as substantial additions to the portfolio pipelines in renewables. However,
due to inflation and supply chain constraints, Equinor recognised an impairment in the Renewables segment on the US North East
Coast offshore wind projects, see note 14 Impairments for more details.
Equinor’s investments in renewables are included as Additions to PP&E, intangibles and equity accounted investments in the REN-
segment in note 5 Segments. See table below for details. Over the course of 2023, the acquisition of BeGreen, a commercial-scale
offshore wind lease in California, Rio Energy in Brazil and investments related to projects in the US and the UK contributed to the
significant increase in the book value compared to the prior year. See note 6 Acquisitions and disposals for more details.
(in USD million)
2023
2022
Offshore, REN
880
146
Onshore, REN
1,127
152
Total Additions to PP&E, intangibles and equity accounted investments - REN
2,007
298
Low carbon solutions (within MMP)
179
36
Total Additions to PP&E, intangibles and equity accounted investments - REN and
LCS
2,186
334
Equinor Annual Report on Form 20-F 2023 86
Equinor is making significant steps to industrialise CCS and is already involved in the Northern Lights project in Norway providing CO
₂
transport and storage solutions (in partnership with Shell and TotalEnergies). Equinor is also pursuing CCS projects in other regions
that have the necessary frame conditions for low carbon solutions. The acquisition of a
25
% stake in Bayou Bend, positions Equinor to
be one of the largest US carbon capture and storage projects located along the Gulf Coast in Southeast Texas. Acquisition
investments and capital contributions in these projects amounted to USD
179
36
Investments in electrification of oil and gas assets
During 2023, Equinor invested around USD
200
250
projects primarily include full and partly electrification of offshore assets in Norway at key fields and plants, including the Troll,
Oseberg, Sleipner, Njord and the Hammerfest LNG plant, mainly by power from shore. Emissions abatement milestones in 2023
included the start-up of the Hywind Tampen offshore wind supplying carbon-free power to the Gullfaks A field and the electrification of
the Gina Krog field with power from shore.
Research and development activities (R&D)
Equinor is involved in several R&D projects aimed at optimizing oil and gas activities, reducing emissions, and developing new
business opportunities in renewables and low carbon solutions. Equinor’s total R&D activities are presented in note 9 Auditor’s
remuneration and Research and development expenditures (expensed R&D) and in note 12 Property, Plant & Equipment (capitalised
R&D).
Effects on estimation uncertainty
The effects of the initiatives to limit climate changes and the potential impact of the energy transition are relevant to some of Equinor’s
economic assumptions and future cash flow estimations. The resulting effects and Equinor's exposure to them are sources of
uncertainty. Estimating global energy demand and commodity prices towards 2050 is challenging due to various complex factors,
including technology change, taxation and production limits, which may change over time. This could lead to significant changes in
accounting estimates, such as useful life (depreciation period and timing of asset retirement obligations), value-in-use (impairment
assessments), and deferred tax assets (see note 11 Income taxes for expected utilisation period of tax losses carried forward and
recognised as deferred tax assets).
Commodity prices
Equinor’s commodity price assumptions applied in value-in-use impairment testing are based on management’s best estimate of
future market trends. This price-set is currently not equal to the price-set in accordance with achieving net zero emissions by 2050 as
outlined in the WEO Net Zero Emissions by 2050 scenario. Changes in how the world acts with regards to achieving the goals in the
Paris agreement could have a negative impact on the valuation of Equinor’s assets. Calculated possible impairments of upstream
production assets and certain intangible assets using assumed prices for two scenarios estimated by the International Energy Agency
(IEA) are provided in the sensitivity table below. These illustrative impairment sensitivity calculations are based on a simplified model
with limitations as described in note 14 Impairments. A linear bridging was applied between current prices and the first price point in
the price sets disclosed in both scenarios. USD
2
comparability with management’s current best estimate. The IEA scenarios primarily stress oil and gas prices, not reflecting the
potential impact on Equinor’s renewable and low carbon projects or trading and refinery margins. Furthermore, the MMP and REN
segments represent only around
12
% of Equinor’s total book value of non-current segment assets and equity accounted investments,
as disclosed in note 5 Segments.
Cost of CO
2
The EU ETS price has increased significantly from
25
86
in 2023 (
81
80
EUR/tonne for the next couple of years in real 2023 terms. In 2040 the price expected to increase to around
130
109
EUR/tonne projected in 2022), thereafter increasing to around
150
135
terms. As such, Equinor expects greenhouse gas emission costs to increase from current levels and to have a wider geographical
range than today, and a global tax on CO
₂
Currently, Equinor pays CO
₂
2021-2030 (Meld. St 13 (2020-2021)) which assumes a gradually increased CO
₂
₂
Norway to
2,000
Equinor’s responses to this risk include evaluation of carbon intensity on both project and portfolio level in investment and divestment
decisions. Equinor currently uses an internal cost of carbon, set at
82
115
and staying flat thereafter (in countries with higher carbon costs, country specific cost expectations are used). This cost-scenario is
uncertain but serves as a placeholder for possible future CO
₂
Climate-related considerations are included directly in the impairment calculations by estimating the CO
₂
indirectly through estimated commodity prices related to supply and demand. The CO
₂
production profiles and economic cut-off of the projects. To reflect that carbon will have a cost for all Equinor’s assets, the current best
Equinor Annual Report on Form 20-F 2023 87
estimate of CO
2
Equinor has not established specific estimates.
Sensitivity table
The table below presents some relevant prices and variables compared to management’s best estimate, and an illustrative potential
impairment effect given these scenarios. The scenario price-sets were retrieved from IEA’s report, World Energy Outlook 2023. Prices
were adjusted for inflation and presented in Real 2023. See section Profitable portfolio in Chapter 2.2. in the Integrated annual report
for more details about the scenarios:
Management's price assumptions
1)
Net Zero Emissions (NZE) by 2050
Scenario
4)
Announced Pledges Scenario (APS)
5)
Brent blend, 2030
78
USD/bbl
46
USD/bbl
79
USD/bbl
Brent blend, 2040
73
USD/bbl
37
USD/bbl
72
USD/bbl
Brent blend, 2050
68
USD/bbl
28
USD/bbl
65
USD/bbl
TTF, 2030
9.1
USD/MMBtu
4.5
USD/MMBtu
6.8
USD/MMBtu
TTF, 2040
9.5
USD/MMBtu
4.4
USD/MMBtu
6.2
USD/MMBtu
TTF, 2050
9.5
USD/MMBtu
4.3
USD/MMBtu
5.6
USD/MMBtu
EU ETS
2), 3)
, 2030
123
USD/tCO
2
146
USD/tCO
2
141
USD/tCO
2
EU ETS
2), 3)
, 2040
150
USD/tCO
2
214
USD/tCO
2
182
USD/tCO
2
EU ETS
2), 3)
, 2050
176
USD/tCO
2
261
USD/tCO
2
208
USD/tCO
2
Illustrative potential impairment (USD)
~
10.0
billion
~
3.0
billion
1)
Management’s future commodity price assumptions applied when estimating value in use, see note 14 Impairments.
2)
2
2
3)
1,176
.
4)
reach a 1.7ºC increase in the year 2100.
5)
Compared to last year’s results, the illustrative potential impairments associated with the APS scenario have increased from less than
USD
0.5
3
10
4 billion last year. This is significantly impacted by the linear bridging between the current commodity prices and the first price point for
the WEO scenarios, consistent with previous year’s methodology, but with lower current prices this year.
An increase in systematic climate risk may result in a higher discount rate applied for impairment testing purposes. Please see note 14
Impairments for further information on discount rate sensitivity.
Robustness of Equinor’s portfolio, and risk of stranded assets
The transition to renewable energy, technological development, and the expected reduction in global demand for carbon-based
energy, may impact the future profitability of certain upstream oil and gas assets. Equinor uses scenario analysis to outline different
possible energy futures, some of which imply lower oil and natural gas prices and higher CO
2
decrease in the cash flow from oil and gas, and potentially reduce the economic lifetime of some assets. Equinor seeks to mitigate this
risk by improving the resilience of the existing upstream portfolio, maximising the efficiency of the infrastructure on the NCS and
optimising the high-quality international portfolio. The project portfolio is robust to low oil and gas prices and actions are in place to
maintain cost discipline across the company. Equinor will continue to add high value barrels to the portfolio through exploration and
increased recovery, with the expectation to maintain strong oil and gas cash flow from operations until 2035. Equinor aims to maintain
significant capex flexibility in the current portfolio, with only sanctioned projects being committed representing less than
50
% of the
yearly organic capex from 2025. This is expected to allow Equinor to optimise and re-prioritise non-sanctioned projects to ensure
continued generation of high value through cycles. Equinor will continuously assess the current and future exposure of its portfolio and
take preventative measures to manage physical climate risks.
Based on the current production profiles, approximately
65
% of Equinor’s proved oil and gas reserves, as defined by the SEC, are
expected to be produced in the period 2024-2030 and more than
99
% in the period 2024-2050. This indicates a lower risk of early
cessation of production and can provide flexibility in adapting to the changing market conditions or a shift in global energy demand.
Equinor aims to continue to selectively explore for new resources with a focus on mature areas with existing infrastructure to
minimise emissions and maximise value. During the transition, Equinor anticipates allocating a reducing share of its gross
capex to oil and gas in the coming years and the volume of production is likely to decrease over time. Reaching Equinor’s net
50
% reduction ambition for operated scope 1 and 2 emissions will require a company-wide, coordinated effort to execute and
mature the abatement projects, improve energy efficiency, develop new technologies, and strengthen the resilience of the
portfolio. Equinor aims to achieve a
20
% reduction in net carbon intensity by 2030 and a
40
% reduction by 2035, including
Equinor Annual Report on Form 20-F 2023 88
scope 3 emissions. The combination of increased renewables and decarbonised energy, the scale up of low carbon solutions
such as CCS and optimisation of the oil and gas portfolio provides confidence that Equinor can meet its medium-term
ambitions. As such, Equinor’s ambition to become a net-zero company by 2050 have currently not resulted in the identification
of additional assets being triggered for impairment or earlier cessation.
Any future exploration may be restricted by regulations, market, and strategic considerations. Provided that the economic assumptions
would deteriorate to such an extent that undeveloped assets controlled by Equinor should not materialise, assets at risk are mainly
comprised of the intangible assets Oil and Gas prospects, signature bonuses and the capitalised exploration costs, with a total
carrying value of USD
3,205
3,634
Equinor’s intangible assets.
Timing of Asset Retirement Obligations (ARO)
As mentioned above, there are currently no assets triggered for earlier cessation as a result of Equinor’s ambition to become a net-
zero company by 2050. However, if the business cases of Equinor’s producing oil and gas assets should change materially, this could
affect the timing of cessation of the assets. A shorter production period will increase the carrying value of the liability. To illustrate,
performing removal five years earlier than currently scheduled would increase the liability by around USD
1.2
USD
1
timing of cash outflows of recognised asset retirement obligations. The most significant cash outflows are expected within the year
2043.
4 Financial risk and capital management
General information and financial risks
Equinor's business activities naturally expose Equinor to financial risks such as market risk (including commodity price risk, currency
risk, interest rate risk and equity price risk), liquidity risk and credit risk. Equinor’s approach to risk management includes assessing
and managing risk in activities using a holistic risk approach, by considering relevant correlations at portfolio level between the most
important market risks and the natural hedges inherent in Equinor’s portfolio. This approach allows Equinor to reduce the number of
risk management transactions and avoid sub-optimisation.
The corporate risk committee, which is an advisory body in Enterprise Risk Management, is responsible for Equinor’s Enterprise Risk
Management and for proposing appropriate measures to adjust risk at the corporate level. This includes assessing Equinor’s financial
risk policies.
Market risk
Equinor operates in the worldwide crude oil, refined products, natural gas, and electricity markets and is exposed to market risks
including fluctuations in hydrocarbon prices, foreign currency rates, interest rates, and electricity prices that can affect the revenues
and costs of operating, investing, and financing. These risks are managed primarily on a short-term basis with a focus on achieving
the highest risk-adjusted returns for Equinor within the given mandate. Long-term exposures are managed at the corporate level,
while short-term exposures are managed according to trading strategies and mandates. Mandates in the trading organisations within
crude oil, refined products, natural gas, and electricity are relatively restricted compared to the total market risk of Equinor.
Commodity price risk
Equinor’s most important long-term commodity risk (crude oil and natural gas) is related to future market prices as Equinor´s risk
policy is to be exposed to both upside and downside price movements. In the longer term, also power price risk is to a large extent
expected to contribute to Equinor’s commodity price risk portfolio.
To manage short-term commodity risk, Equinor enters into
commodity-based derivative contracts, including futures, options, over-the-counter (OTC) forward contracts, market swaps and
contracts for differences related to crude oil, petroleum products, natural gas, power and emissions. Equinor’s bilateral gas sales
portfolio is exposed to various price indices with a combination of gas price markers.
The term of crude oil and refined oil products derivatives are usually less than one year, and they are traded mainly on the Inter-
Continental Exchange (ICE), the CME group, the OTC Brent market, and crude and refined products swap markets. The term of
natural gas, power, and emission derivatives is usually three years or less, and they are mainly OTC physical forwards and options,
NASDAQ OMX Oslo forwards, and futures traded on the European Energy Exchange (EEX), NYMEX and ICE.
The table below contains the commodity price risk sensitivities of Equinor's commodity-based derivative contracts. Equinor's assets
and liabilities resulting from commodity-based derivative contracts consist of both exchange traded and non-exchange traded
instruments, including embedded derivatives that have been bifurcated and recognised at fair value in the Consolidated balance
sheet.
Price risk sensitivities at the end of 2023 and 2022 at
30
% are assumed to represent a reasonably possible change based on the
duration of the derivatives. Since none of the derivative financial instruments included in the table below are part of hedging
relationships, any changes in the fair value would be recognised in the Consolidated statement of income.
Equinor Annual Report on Form 20-F 2023 89
Commodity price sensitivity
At 31 December
2023
2022
(in USD million)
- 30%
+ 30%
- 30%
+ 30%
Crude oil and refined products net gains/(losses)
442
(442)
666
(666)
Natural gas, electricity and CO2 net gains/(losses)
86
(52)
(3)
140
Currency risk
Equinor’s cash flows from operating activities deriving predominantly from oil and gas sales, operating expenses and capital
expenditures are mainly in USD, but taxes, dividends to shareholders on the Oslo Børs and a share of our operating expenses and
capital expenditures are in NOK. Accordingly, Equinor’s currency management is primarily linked to mitigate currency risk related to
payments in NOK. This means that Equinor regularly purchases NOK, primarily spot, but also on a forward basis using conventional
derivative instruments.
The following currency risk sensitivity for financial instruments has been calculated, by assuming a
11
% reasonable possible change
in the most relevant foreign currency exchange rates that impact Equinor’s financial accounts, based on balances at 31 December
2023. As of 31 December 2022, a change of
12
% in the most relevant foreign currency exchange rates was viewed as a reasonable
possible change. With reference to the table below, a negative figure represents a negative equity impact / loss, while a positive figure
represents a positive equity impact / gain.
Currency risk sensitivity
At 31 December 2023
(in USD million)
NOK
EUR
GBP
Impact from an 11% strengthening of given currency vs USD on:
Shareholders equity through OCI
1,519
406
903
Shareholders equity through P&L
(413)
(418)
(92)
Impact from an 11% weakening of given currency vs USD on:
Shareholders equity through OCI
(1,519)
(406)
(903)
Shareholders equity through P&L
413
418
92
Currency risk sensitivity
At 31 December 2022
(in USD million)
NOK
EUR
GBP
Impact from a 12% strengthening of given currency vs USD on:
Shareholders equity through OCI
3,552
837
750
Shareholders equity through P&L
(889)
(259)
(389)
Impact from a 12% weakening of given currency vs USD on:
Shareholders equity through OCI
(3,552)
(837)
(750)
Shareholders equity through P&L
889
259
389
Interest rate risk
Bonds are normally issued at fixed rates in a variety of currencies (among others USD, EUR and GBP) and some of these bonds are
converted to floating USD bonds by using interest rate and currency swaps. Equinor manages its interest rates exposure on its bond
portfolio based on risk and reward considerations from an enterprise risk management perspective. This means that the fixed/floating
mix on interest rate exposure may vary from time to time. For more detailed information about Equinor’s long-term debt portfolio see
note 21 Finance debt.
The following interest rate risk sensitivity has been calculated by assuming a change of
1.3
possible change in interest rates at the end of 2023. In 2022, a change of
1.2
reasonable possible change. A decrease in interest rates will have an estimated positive impact on net financial items in the
Consolidated statement of income, while an increase in interest rates will have an estimated negative impact on net financial items in
the Consolidated statement of income.
Interest risk sensitivity
At 31 December
2023
2022
Equinor Annual Report on Form 20-F 2023 90
(in USD million)
points
+ 1.3 percentage
points
points
+ 1.2 percentage
points
Positive/(negative) impact on net financial items
336
(333)
369
(366)
Equity price risk
Equinor’s captive insurance company holds listed equity securities as part of its portfolio. In addition, Equinor holds some other listed
and non-listed equities mainly for long-term strategic purposes. By holding these assets, Equinor is exposed to equity price risk,
defined as the risk of declining equity prices, which can result in a decline in the carrying value of certain Equinor’s assets recognised
in the balance sheet. The equity price risk in the portfolio held by Equinor’s captive insurance company is managed, with the aim of
maintaining a moderate risk profile, through geographical diversification and the use of broad benchmark indexes.
The following equity price risk sensitivity has been calculated, by assuming a
35
% reasonable possible change in equity prices that
impact Equinor’s financial accounts, based on balances at 31 December 2023. At 31 December 2022, a change of
35
% in equity
prices was equally viewed as a reasonable possible change. The estimated gains and the estimated losses following from a change in
equity prices would impact the Consolidated statement of income.
Equity price sensitivity
At 31 December
2023
2022
(in USD million)
- 35%
+ 35%
- 35%
+ 35%
Net gains/(losses)
(552)
552
(450)
450
Liquidity risk
Liquidity risk is the risk that Equinor will not be able to meet obligations of financial liabilities when they become due. The purpose of
liquidity management is to ensure that Equinor always has sufficient funds available to cover its financial obligations.
The main cash outflows include the quarterly dividend payments and Norwegian petroleum tax payments made six times per year.
Trading in collateralised commodities and financial contracts also exposes Equinor to liquidity risk related to potential collateral calls
from counterparties.
If the cash flow forecasts indicate that the liquid assets will fall below target levels, new long-term funding will be considered. Equinor
raises debt in all major capital markets (USA, Europe and Asia) for long-term funding purposes. The policy is to have a maturity profile
with repayments not exceeding
5
% of capital employed in any year for the nearest five years. Equinor’s non-current financial liabilities
have a weighted average maturity of approximately nine years. For more information about Equinor’s non-current financial liabilities,
see note 21 Finance debt.
Short-term funding needs will normally be covered by the USD
5.0
a revolving credit facility of USD
6.0
19
maturing in 2026
. The facility supports secure access to
funding, supported by the best available short-term rating. As at 31 December 2023 the facility has not been drawn upon.
The table below shows a maturity profile, based on undiscounted contractual cash flows, for Equinor’s financial liabilities.
At 31 December
2023
2022
(in USD million)
Non-derivative financial
liabilities
Lease
liabilities
Derivative
financial
liabilities
Non-derivative financial
liabilities
Lease
liabilities
Derivative
financial
liabilities
Year 1
20,209
1,369
857
20,172
1,325
1,065
Year 2 and 3
6,035
1,434
636
6,292
1,421
752
Year 4 and 5
5,601
496
404
5,785
504
486
Year 6 to 10
6,846
405
1,016
8,749
465
1,202
After 10 years
10,751
72
340
11,204
120
706
Total specified
49,442
3,776
3,253
52,202
3,835
4,211
Credit risk
Equinor Annual Report on Form 20-F 2023 91
Credit risk is the risk that Equinor’s customers or counterparties will cause Equinor financial loss by failing to honour their obligations.
Credit risk arises from credit exposures with customer accounts receivables as well as from financial investments, derivative financial
instruments and deposits with financial institutions. Equinor uses risk mitigation tools to reduce or control credit risk both on a
counterparty and portfolio level. The main tools include bank and parental guarantees, prepayments, and cash collateral.
Prior to entering into transactions with new counterparties, Equinor’s credit policy requires all counterparties where Equinor has
material credit exposure to be formally identified and assigned internal credit ratings. The internal credit ratings reflect Equinor’s
assessment of the counterparties' credit risk and are based on a quantitative and qualitative analysis of recent financial statements
and other relevant business information. All counterparties are re-assessed regularly.
Equinor has pre-defined limits for the absolute credit risk level allowed at any given time on Equinor’s portfolio as well as maximum
credit exposures for individual counterparties. Equinor monitors the portfolio on a regular basis and individual, material exposures
against limits on a daily basis. Equinor’s total credit exposure is geographically diversified among a number of counterparties within the
oil and energy sector, as well as larger oil and gas consumers and financial counterparties. The majority of Equinor’s credit exposure is
with investment- grade counterparties.
The following table contains the carrying amount of Equinor’s financial receivables and derivative financial instruments split by
Equinor’s assessment of the counterparty's credit risk. Trade and other receivables include
1
% overdue receivables of more than 30
days. A provision has been recognised for expected credit losses of trade and other receivables using the expected credit loss model.
Only non-exchange traded instruments are included in derivative financial instruments.
(in USD million)
Non-current financial
receivables
Trade and other
receivables
Non-current
derivative financial
instruments
Current derivative
financial instruments
At 31 December 2023
Investment grade, rated A or above
193
5,857
305
565
Other investment grade
8
5,132
7
565
Non-investment grade or not rated
140
5,204
247
248
Total financial assets
341
16,193
559
1,378
At 31 December 2022
Investment grade, rated A or above
1,633
6,125
390
1,715
Other investment grade
12
8,725
41
1,393
Non-investment grade or not rated
14
6,761
259
931
Total financial assets
1,659
21,611
690
4,039
For more information about Trade and other receivables, see note 18 Trade and other receivables.
The table below presents the amounts offset under the terms of various offsetting agreements for financial assets and
liabilities. These agreements are mainly entered into to manage the credit risks associated with over-the-counter commodity
trading as well as regular commodity purchases and sales and enable Equinor and their counterparties to set off financial
liabilities against financial assets in the ordinary course of business as well as in case of default. In addition, exchange-traded
commodity derivatives are offset towards collateral receipts/payments as a result of day-to-day cash settlements based on
change in fair value of open derivative positions. Amounts not qualifying for offsetting consists of collateral receipts or
payments which usually is settled on a gross basis. Normally these amounts will offset in a potential default situation. There
exist no restrictions on collaterals received.
Equinor Annual Report on Form 20-F 2023 92
(in USD million)
Gross amounts of
recognised
financial assets/
liabilities
Gross amounts
offset in the
balance sheet
Net amounts
presented in the
balance sheet
Amounts of
remaining rights
to set-off not
qualifying for
offsetting
Net amount
At 31 December 2023
Financial assets
Trade receivables
17,139
3,133
14,006
0
14,006
Collateral receivables
8,713
6,526
2,186
2,186
0
Derivative financial instruments
12,767
10,829
1,937
677
1,260
Total financial assets
38,619
20,488
18,129
2,863
15,266
Financial liabilities
Trade payables
14,184
3,133
11,051
0
11,051
Collateral liabilities
7,791
7,333
458
458
0
Derivative financial instruments
13,437
10,023
3,414
2,405
1,009
Total financial liabilities
35,412
20,488
14,923
2,863
12,060
(in USD million)
Gross amounts of
recognised
financial assets/
liabilities
Gross amounts
offset in the
balance sheet
Net amounts
presented in the
balance sheet
Amounts of
remaining rights
to set-off not
qualifying for
offsetting
Net amount
At 31 December 2022
Financial assets
Trade receivables
25,607
7,464
18,143
0
18,143
Collateral receivables
16,923
13,455
3,468
3,468
0
Derivative financial instruments
28,535
23,806
4,730
1,708
3,022
0
Total financial assets
71,065
44,725
26,341
5,176
21,164
Financial liabilities
Trade payables
19,913
7,464
12,449
0
12,449
Collateral liabilities
13,936
12,365
1,571
1,571
0
Derivative financial instruments
31,377
24,895
6,482
3,605
2,877
Total financial liabilities
65,226
44,725
20,502
5,176
15,326
Capital management
The main objectives of Equinor's capital management policy are to maintain a strong overall financial position and to ensure sufficient
financial flexibility. Equinor’s primary focus is on maintaining its credit rating in the A category on a stand alone basis (excluding uplifts
for Norwegian Government ownership). Equinor’s current long-term ratings are AA- with a stable outlook (including one notch uplift)
and Aa2 with a stable outlook (including two notch uplift) from S&P and Moody’s, respectively. In order to monitor financial robustness,
a key ratio utilised by Equinor is the non-GAAP metric of “Net interest-bearing debt adjusted (ND2) to Capital employed adjusted
(CE2)”.
At 31 December
(in USD million)
2023
2022
Net interest-bearing debt adjusted, including lease liabilities (ND1)
(5,040)
(6,750)
Net interest-bearing debt adjusted (ND2)
(8,610)
(10,417)
Equinor Annual Report on Form 20-F 2023 93
Capital employed adjusted, including lease liabilities (CE1)
43,460
47,239
Capital employed adjusted (CE2)
39,890
43,571
Net debt to capital employed adjusted, including lease liabilities (ND1/CE1)
(11.6%)
(14.3%)
Net debt to capital employed adjusted (ND2/CE2)
(21.6%)
(23.9%)
ND1 is defined as Equinor's interest-bearing financial liabilities less cash and cash equivalents and current financial investments,
adjusted for collateral deposits and balances held by Equinor's captive insurance company (amounting to USD
2,030
6,538
ND2 is defined as ND1 adjusted for lease liabilities (amounting to USD
3,570
3,668
respectively). CE2 is defined as Equinor's total equity (including non-controlling interests) and ND2.
5 Segments
Accounting policies
Equinor’s operations are managed through operating segments identified on the basis of those components of Equinor that are
regularly reviewed by the chief operating decision maker, Equinor's Corporate Executive Officer (CEO). The reportable segments
Exploration & Production Norway (E&P Norway), Exploration & Production International (E&P International), Exploration & Production
USA (E&P USA), Marketing, Midstream & Processing (MMP) and Renewables (REN) correspond to the operating segments. The
operating segments Projects, Drilling & Procurement (PDP), Technology, Digital & Innovation (TDI) and Corporate staff and functions
are aggregated into the reportable segment Other based on materiality. The majority of the costs in PDP and TDI is allocated to the
three Exploration & Production segments, MMP and REN.
The accounting policies of the reporting segments equal those described in these Consolidated financial statements, except for the
line-item Additions to PP&E, intangibles and Equity accounted investments in which movements related to changes in asset
retirement obligations are excluded as well as provisions for onerous contracts which reflect only obligations towards group external
parties. The measurement basis of segment profit is net operating income/(loss). Deferred tax assets, pension assets, non-current
financial assets, total current assets and total liabilities are not allocated to the segments. Transactions between the segments, mainly
from the sale of crude oil, gas, and related products, are performed at defined internal prices which have been derived from market
prices. The transactions are eliminated upon consolidation.
The Exploration & Production operating segments are responsible for the discovery and appraisal of new resources, commercial
development and safe and efficient operation of the oil and gas portfolios within their respective geographical areas: E&P Norway on
the Norwegian continental shelf, E&P USA in USA and E&P International worldwide outside of E&P Norway and E&P USA.
PDP is responsible for global project development, well deliveries, and sourcing across Equinor.
TDI encompasses research, technology development, specialist advisory services, digitalisation, IT, improvement, innovation, and
ventures and future business.
MMP is responsible for the marketing, trading, processing and transportation of crude oil and condensate, natural gas, NGL and
refined products, and includes refinery, terminals, and processing plant operation. MMP is also managing power and emissions trading
and the development of transportation solutions for natural gas, liquids, and crude oil, including pipelines, shipping, trucking and rail. In
addition, MMP is in charge of low carbon solutions in Equinor.
REN is developing, exploring, investing in, and operating areas within renewable energy such as offshore wind, green hydrogen,
storage solutions, and solar power.
Segment information for the years ended 31 December 2023, 2022, and 2021 are presented below. For revenues per geographical
area, please see note 7 Total revenues and other income. For further information on the following items affecting the segments,
please refer to the related notes: note 6 Acquisitions and disposals, note 14 Impairments, and note 26 Other commitments, contingent
liabilities, and contingent assets.
Equinor Annual Report on Form 20-F 2023 94
2023
E&P
Norway
E&P
International
E&P USA
MMP
REN
Other
Eliminations
Total group
(in USD million)
Revenues third party
230
993
277
105,242
20
85
0
106,848
Revenues and other income inter-segment
37,999
6,009
4,009
633
12
33
(48,695)
0
Net income/(loss) from equity accounted
investments
0
28
0
12
(33)
(8)
0
(1)
Other income
111
1
32
23
18
142
0
327
Total revenues and other income
38,340
7,032
4,319
105,908
17
253
(48,695)
107,174
Purchases [net of inventory variation]
0
(70)
0
(95,769)
0
(1)
47,665
(48,175)
Operating, selling, general and
administrative expenses
(3,759)
(2,176)
(1,178)
(4,916)
(462)
(201)
893
(11,800)
Depreciation and amortisation
(4,429)
(2,123)
(1,779)
(897)
(12)
(133)
0
(9,373)
Net impairment (losses)/reversals
(588)
(310)
290
(343)
(300)
(10)
0
(1,260)
Exploration expenses
(476)
(20)
(299)
0
0
0
0
(795)
Total operating expenses
(9,253)
(4,700)
(2,966)
(101,925)
(774)
(345)
48,558
(71,404)
Net operating income/(loss)
29,087
2,332
1,353
3,984
(757)
(92)
(137)
35,770
Additions to PP&E, intangibles and equity
accounted investments
5,939
4,376
1,206
844
2,007
128
0
14,500
Balance sheet information
Equity accounted investments
3
0
0
783
1,665
57
0
2,508
Non-current segment assets
28,915
17,977
11,049
3,997
1,575
1,018
0
64,530
Non-current assets not allocated to
segments
14,487
Total non-current assets
81,525
Assets classified as held for sale
0
1,064
0
0
0
0
0
1,064
Equinor Annual Report on Form 20-F 2023 95
2022
E&P
Norway
E&P
International
E&P
USA
MMP
REN
Other
Eliminations
Total group
(in USD million)
Revenues third party
304
1,099
305
147,164
16
115
0
149,004
Revenues and other income inter-segment
74,631
6,124
5,217
527
0
55
(86,554)
0
Net income/(loss) from equity accounted
investments
0
172
0
406
58
(16)
0
620
Other income
994
35
0
9
111
33
0
1,182
Total revenues and other income
75,930
7,431
5,523
148,105
185
187
(86,554)
150,806
Purchases [net of inventory variation]
0
(116)
0
(139,916)
0
0
86,227
(53,806)
Operating, selling, general and
administrative expenses
(3,782)
(1,698)
(938)
(4,591)
(265)
(223)
904
(10,593)
Depreciation and amortisation
(4,986)
(1,445)
(1,422)
(881)
(4)
(142)
0
(8,878)
Net impairment (losses)/reversals
819
(286)
1,060
895
0
0
0
2,487
Exploration expenses
(366)
(638)
(201)
0
0
0
0
(1,205)
Total operating expenses
(8,315)
(4,183)
(1,501)
(144,493)
(269)
(365)
87,130
(71,995)
Net operating income/(loss)
67,614
3,248
4,022
3,612
(84)
(178)
577
78,811
Additions to PP&E, intangibles and equity
accounted investments
4,922
2,623
764
1,212
298
176
0
9,994
Balance sheet information
Equity accounted investments
3
550
0
688
1,452
65
0
2,758
Non-current segment assets
28,510
15,868
11,311
4,619
316
1,031
0
61,656
Non-current assets not allocated to
segments
15,437
Total non-current assets
79,851
Assets classified as held for sale
0
1,018
0
0
0
0
0
1,018
Equinor Annual Report on Form 20-F 2023 96
2021
E&P
Norway
E&P
International
E&P
USA
MMP
REN
Other
Eliminations
Total group
(in USD million)
Revenues third party
261
1,115
377
86,883
8
99
0
88,744
Revenues and other income inter-segment
38,972
4,230
3,771
321
0
41
(47,335)
0
Net income/(loss) from equity accounted
investments
0
214
0
22
16
7
0
259
Other income
154
5
0
168
1,386
208
0
1,921
Total revenues and other income
39,386
5,565
4,149
87,393
1,411
355
(47,335)
90,924
Purchases [net of inventory variation]
0
(58)
0
(80,873)
0
(1)
45,772
(35,160)
Operating, selling, general and
administrative expenses
(3,653)
(1,405)
(1,074)
(3,753)
(163)
(432)
1,102
(9,378)
Depreciation and amortisation
(6,002)
(1,734)
(1,665)
(869)
(3)
(158)
0
(10,432)
Net impairment (losses)/reversals
1,102
(1,587)
(69)
(735)
0
2
0
(1,287)
Exploration expenses
(363)
(451)
(190)
0
0
0
0
(1,004)
Total operating expenses
(8,915)
(5,237)
(2,998)
(86,230)
(166)
(590)
46,873
(57,261)
Net operating income/(loss)
30,471
329
1,150
1,163
1,245
(234)
(461)
33,663
Additions to PP&E, intangibles and equity
accounted investments
4,943
1,834
690
517
457
64
0
8,506
Balance sheet information
Equity accounted investments
3
1,417
0
113
1,108
45
0
2,686
Non-current segment assets
36,502
15,422
11,406
4,006
157
1,032
0
68,527
Non-current assets not allocated to
segments
13,406
Total non-current assets
84,618
Assets classified as held for sale
0
676
0
0
0
0
0
676
Equinor Annual Report on Form 20-F 2023 97
Non-current assets by country
At 31 December
(in USD million)
2023
2022
Norway
32,977
33,242
USA
12,587
12,343
Brazil
10,871
9,400
UK
5,535
3,688
Canada
1,157
1,171
Angola
1,103
895
Denmark
973
497
Argentina
648
615
Algeria
474
622
Poland
447
270
Other
265
1,672
Total non-current assets
1)
67,038
64,414
1)
Excluding deferred tax assets, pension assets and non-current financial assets.
operations.
Equinor Annual Report on Form 20-F 2023 98
6 Acquisitions and disposals
Accounting policies
Business combinations and divestments
Business combinations, except for transactions between entities under common control, are accounted for using the acquisition
method when control is transferred to the group. The purchase price includes total consideration paid to acquire the entity’s assets
and liabilities, as well as contingent consideration at fair value. The acquired identifiable assets, liabilities and contingent liabilities are
measured at fair value at the date of the acquisition. Acquisition costs incurred are expensed under Selling, general and administrative
expenses. Changes in the fair value of contingent consideration resulting from events after the acquisition date are recognised in the
Consolidated statement of income under Other income.
Equinor recognises a gain or loss on disposal of a subsidiary when control is lost. Any interest retained in the former subsidiary is
measured at fair value at the time of loss of control. However, when partially divesting subsidiaries that do not constitute a business,
and where the retained investment in the former subsidiary is an associate or a jointly controlled investment, Equinor recognises the
gain or loss only on the divested part within Other income or Operating expenses, respectively. The interest retained in the former
subsidiary is initially not remeasured, and subsequently accounted for using the equity method.
On the NCS, all disposals of assets are performed including the tax base (after-tax). Any gain includes the release of tax liabilities
previously recognised related to the assets in question and is recognised in full in Other income in the Consolidated statement of
income.
Assets classified as held for sale
Non-current assets are classified separately as held for sale in the Consolidated balance sheet when a sale is highly probable. This
condition is met when an asset is available for immediate sale in its present condition, Equinor’s management is committed to the
sale, and the sale is expected to be completed within one year from the date of classification. In Equinor, these requirements are
normally met when management has approved a negotiated letter of intent with the counterparties (a ‘DGC’). Liabilities directly
associated with the assets classified as held for sale and expected to be included as part of the sales transaction, are also classified
separately.
Accounting judgement regarding acquisitions
Determining whether an acquisition meets the definition of a business combination requires judgement to be applied on a case-by-
case basis. Acquisitions are assessed to establish whether the transaction represents a business combination or an asset purchase,
and the conclusion may materially affect the financial statements both in the transaction period and subsequent periods. Similar
assessments are performed upon the acquisition of an interest in a joint operation. Depending on the specific facts, acquisitions of oil
and gas exploration and evaluation licences for which a development decision has not yet been made have largely been concluded to
represent asset purchases, while purchases of producing assets have largely been concluded to represent business acquisitions.
Accounting judgement regarding partial divestments
The policy regarding partial divestments of subsidiaries is based on careful consideration of the requirements and scope of IFRS 10
Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures. The assessment requires judgement to
be applied on a case-by-case basis, considering the substance of the transactions. In evaluating the IFRS Accounting Standards’
requirements, Equinor acknowledges pending considerations related to several relevant and similar issues which have been
postponed by the IASB in anticipation of concurrent consideration at a later date. Where assets are transferred into separate legal
entities concurrently with a portion of the entities’ shares being sold to a third party, thereby resulting in Equinor’s loss of control of
those asset-owning subsidiaries, and where investments in joint ventures are established simultaneously, Equinor has concluded to
recognise the gain only on the divested portion.
----------------------------------------------------------------------------------------------------------------------------------------
2023
Acquisitions
Acquisition of Rio Energy
On 3 November 2023, Equinor closed a transaction with Denham Capital to acquire
100
% of the shares in Horus Investimentos S.A.,
the parent company of Rio Energy Participações S.A., a leading onshore renewables company in Brazil. The cash consideration
amounted to USD
82
268
portfolio includes a producing onshore wind farm in the north-eastern state of Bahia, a pre-construction solar photovoltaic (PV) portfolio
and a pipeline of 1.2 GW of onshore wind and solar projects. This transaction resulted in an increase in Equinor’s property, plant and
equipment of USD
350
purchase price and the purchase price allocation are preliminary.
Equinor Annual Report on Form 20-F 2023 99
Acquisition of Suncor Energy UK Limited
On 30 June 2023, Equinor closed a transaction with Suncor Energy UK Holdings Ltd to acquire
100
% of the shares in Suncor Energy
UK Limited for a total consideration of USD
847
operated interest in the producing Buzzard oil field (
29.89
%) and an additional interest in the operated Rosebank development (
40
%).
The transaction has been accounted for within the E&P International segment as a business combination, resulting in an increase in
Equinor’s property, plant and equipment of USD
1,490
672
allocation remains preliminary.
Acquisition of BeGreen
On 26 January 2023, Equinor closed a transaction with the Bregentved Group and members of the executive board of BeGreen Solar
Aps to acquire
100
% of the shares in the Danish solar developer BeGreen Solar Aps. The cash consideration amounted to USD
252
million (EUR
235
megawatt threshold. The transaction has been accounted for within the REN segment as a business combination, resulting in an
increase of Equinor’s intangible assets of USD
423
Disposals
Equinor Energy Ireland Limited
On 31 March 2023, Equinor closed the transaction with Vermilion Energy Inc (Vermillion) to sell Equinor’s non-operated equity position
in the Corrib gas project in Ireland, covering
100
% of the shares in Equinor Energy Ireland Limited (EEIL). Prior to closing, Equinor
received an extraordinary dividend of USD
371
362
settlement of contingent consideration. A loss of USD
258
presented in the line item Operating expenses in the Consolidated statement of income.
Held for sale
Divestment of interest in Azerbaijan
On 22 December 2023, Equinor entered into an agreement with the State Oil Company of the Republic of Azerbaijan (SOCAR) to sell
its interest in its Azerbaijan assets. The assets comprise a
7.27
% non-operated interest in the Azeri Chirag Gunashli (ACG) oil fields in
the Azerbaijan sector of the Caspian Sea,
8.71
% interest in the Baku-Tbilisi-Ceyhan (BTC) pipeline and
50
% in the Karabagh oil
field. Closing is expected during 2024 subject to regulatory and contractual approvals. The assets have been classified as held for sale
resulting in a USD
310
and net impairments in the Consolidated statement of income.
2022
Acquisitions
Acquisition of Triton Power
On 1 September 2022, Equinor and SSE Thermal Generation Holdings Limited (SSE Thermal) closed a transaction to acquire the UK
power company Triton Power Holdings Ltd (Triton Power) from Triton Power Partners LP owned by Energy Capital Partners (ECP).
Equinor’s share of the consideration was USD
141
120
working capital. The key plant included in the purchase of Triton Power is the Saltend Power Station with an installed capacity of 1.2
GW. Equinor and SSE Thermal own
50
% each of Triton Power, and Equinor is accounting for the investment under the equity method
as a joint venture in the MMP segment.
Acquisition of Statfjord
On 31 May 2022, Equinor closed a transaction to acquire all of Spirit Energy’s ownership interests in production licences in the Statfjord
area which covers the Norwegian and UK Continental Shelves ranging from
11.56
% to
48.78
%. All licences are operated by Equinor.
The cash consideration received was USD
168
principles in IFRS 3 Business Combinations. The transaction is reflected in the E&P Norway and E&P International segments. In the
segment E&P Norway, the acquisition resulted in an increase of USD
98
390
298
USD
98
98
equipment, an increase of USD
241
86
Disposals
Ekofisk and Martin Linge on the Norwegian Continental Shelf
On 30 September 2022, Equinor closed a transaction with Sval Energi AS to divest Equinor’s entire ownership share in the Greater
Ekofisk Area including its share in Norpipe Oil AS, and a
19
% ownership share in Martin Linge. The cash consideration at closing
amounted to USD
293
51
% ownership share in Martin Linge and continues as operator of the field. The
Equinor Annual Report on Form 20-F 2023 100
disposal resulted in a decrease in property, plant and equipment of USD
1,493
376
597
686
of USD
655
Exit Russia
Following Russia’s invasion of Ukraine in February 2022, Equinor announced that it had decided to stop new investments in Russia and
start the process of exiting Equinor’s joint arrangements. Based on this decision, Equinor evaluated its assets in Russia and recognised
net impairments of USD
1,083
251
intangible assets and USD
832
contingent consideration from the time of acquiring the assets. The impairments were recognised in the line items Depreciation,
amortisation and net impairment losses and Exploration expenses in the Consolidated statement of income based on the nature of the
impaired assets and reflected in the E&P International segment. During the second quarter, Equinor transferred its participating interests
in four Russian entities to Rosneft and was released from all future commitments and obligations with no material impact on the financial
statements. The ownership interests in Kharyaga were transferred to the operator.
Equinor has stopped trading in Russian oil. This means that Equinor will not enter into any new trades or engage in new transport of oil
and oil products from Russia. Equinor has assessed the accounting impact of certain commitments arising from such contracts entered
into prior to the invasion and deem the impact to be immaterial.
10% of Dogger Bank C
On 10 February 2022, Equinor closed the transaction with Eni to sell a
10
% equity interest in the Dogger Bank C project in the UK for a
total consideration of USD
91
68
87
65
ownership share is
40
%. Equinor continues to equity account for the remaining investment as a joint venture. The gain is presented in
the line item Other income in the Consolidated statement of income in the REN segment.
Equinor Annual Report on Form 20-F 2023 101
7 Total revenues and other income
Accounting policies
Revenue recognition
Equinor presents Revenue from contracts with customers and Other revenue as a single caption, Revenues, in the Consolidated
statement of income.
Revenue from contracts with customers
Revenue from the sale of crude oil, natural gas, petroleum products, power and other merchandise is recognised when a customer
obtains control of those products, which for tangible products normally is when title passes at point of delivery, based on the
contractual terms of the agreements. Each such sale normally represents a single performance obligation. In the case of natural gas
as well as power, which is delivered on a continuous basis through pipelines and grid, sales are completed over time in line with the
delivery of the actual physical quantities.
Sales and purchases of physical commodities are presented on a gross basis as Revenues from contracts with customers and
Purchases [net of inventory variation] respectively in the Consolidated statement of income. When the contracts are deemed financial
instruments or part of Equinor’s trading activities, they are settled and presented on a net basis as Other revenue. Reference is made
to note 28 Financial instruments and fair value measurement for a description of accounting policies regarding derivatives. Sales of
Equinor’s own produced oil and gas volumes are always reflected gross as Revenue from contracts with customers.
Revenues from the production of oil and gas in which Equinor shares an interest with other companies are recognised on the basis of
volumes lifted and sold to customers during the period (the sales method). Where Equinor has lifted and sold more than the
ownership interest, an accrual is recognised for the cost of the overlift. Where Equinor has lifted and sold less than the ownership
interest, costs are deferred for the underlift.
Certain long-term LNG and natural gas sales contracts include clauses which entail price reviews at regular intervals at the discretion
of either party. Where updated prices have not yet been agreed upon for volumes already delivered, it is necessary to estimate the
amount of variable consideration Equinor expects to be entitled to for these volumes. In the frequently volatile markets, there is a
degree of estimation uncertainty and reasoned judgement in establishing the expected variable consideration.
Other revenue
Items representing a form of revenue, or which are related to revenue from contracts with customers, are presented as other revenue
if they do not qualify as revenue from contracts with customers. These other revenue items include taxes paid in-kind under certain
production sharing agreements (PSAs) and the net impact of commodity trading and commodity-based derivative instruments related
to sales contracts or revenue-related risk management.
Transactions with the Norwegian State
Equinor markets and sells the Norwegian State's share of oil and gas production from the Norwegian continental shelf (NCS). The
Norwegian State's participation in petroleum activities is organised through the Norwegian State’s Direct Financial Interests (SDFI). All
purchases and sales of the SDFI's oil and natural gas liquids production are classified as purchases [net of inventory variation] and
revenues from contracts with customers, respectively.
Equinor sells, in its own name, but for the SDFI’s account and risk, the SDFI’s production of natural gas including Liquefied Natural
Gas (LNG). These gas sales and related expenditures refunded by the SDFI are presented net in the Consolidated financial
statements. Natural gas sales made in the name of Equinor’s subsidiaries are also presented net of the SDFI’s share in the
Consolidated statement of income, but this activity is reflected gross in the Consolidated balance sheet.
Accounting judgement related to transactions with the Norwegian State
Whether to account for the transactions gross or net involves the use of significant accounting judgement. In making the judgement,
Equinor has considered whether it controls the State-originated crude oil volumes prior to onwards sales to third party customers.
Equinor directs the use of the volumes, and although certain benefits from the sales subsequently flow to the SDFI, Equinor
purchases the crude oil volumes from the SDFI and obtains substantially all the remaining benefits. On that basis, Equinor has
concluded that it acts as principal in these sales.
Regarding gas sales, Equinor concluded that ownership of the gas had not been transferred from the SDFI to Equinor. Although
Equinor has been granted the ability to direct the use of the volumes, all the benefits from the sales of these volumes flow to the SDFI.
On that basis, Equinor is not considered the principal in the sale of the SDFI’s natural gas volumes.
Reference is made to note 27 Related parties for detailed financial information regarding transactions performed between Equinor and
SDFI.
----------------------------------------------------------------------------------------------------------------------------------------
Equinor Annual Report on Form 20-F 2023 102
Revenues from contracts with customers by geographical areas
Equinor has business operations in around 30 countries.
When attributing the line-item Revenues from contracts with customers for 2023
to the country of the legal entity executing the sale, Norway constitutes
79
% and USA constitutes
18
%. For 2022 the revenues to
Norway and USA constituted
84
% and
13
% respectively, and for 2021
81
% and
13
% respectively.
customers are mainly reflecting such revenues from the reporting segment MMP.
Revenues from contracts with customers and other revenues
(in USD million)
Note
2023
2022
2021
Crude oil
56,861
58,524
38,307
Natural gas
26,386
65,232
28,050
23,174
58,239
24,900
1,111
2,884
1,783
2,102
4,109
1,368
Refined products
10,083
11,093
11,473
Natural gas liquids
8,345
9,240
8,490
Transportation
1,425
1,470
921
Other sales
3,032
4,702
1,006
Total revenues from contracts with customers
106,132
150,262
88,247
Taxes paid in-kind
342
412
345
Physically settled commodity derivatives
1,331
(2,534)
(1,075)
Gain/(loss) on commodity derivatives
(1,041)
739
951
Change in fair value of trading inventory
(334)
(194)
0
Other revenues
418
319
276
Total other revenues
716
(1,258)
497
Revenues
106,848
149,004
88,744
Net income/(loss) from equity accounted investments
15
(1)
620
259
Other income
6
327
1,182
1,921
Total revenues and other income
107,174
150,806
90,924
Equinor Annual Report on Form 20-F 2023 103
8 Salaries and personnel expenses
(in USD million, except average number of employees)
2023
2022
2021
Salaries
1)
2,876
2,875
2,962
Pension costs
2)
441
458
488
Payroll tax
511
433
414
Other compensations and social costs
375
324
288
Total payroll expenses
4,203
4,090
4,152
Average number of employees
3)
22,600
21,500
21,400
1)
Salaries include bonuses and expatriate costs in addition to base pay.
2)
3)
2
% for 2023 and
3
% for 2022 and 2021.
Total payroll expenses are accumulated in cost-pools and partially charged to partners of Equinor operated licences on an hours
incurred basis.
Compensation to the board of directors (BoD) and the corporate executive committee (CEC)
(in USD million)
1)
2023
2022
2021
Current employee benefits
10.7
12.9
12.2
Post-employment benefits
0.3
0.4
0.4
Other non-current benefits
0.0
0.0
0.0
Share-based payment benefits
0.3
0.2
0.1
Total benefits
11.3
13.5
12.7
1) All figures in the table are presented on accrual basis.
At 31 December 2023, 2022, and 2021 there are
no
Share-based compensation
Equinor's share saving plan provides employees with the opportunity to purchase Equinor shares through monthly salary deductions
and a contribution by Equinor. If the shares are kept for two full calendar years of continued employment following the year of
purchase, the employees will be allocated one bonus share for each share they have purchased.
Estimated compensation expense including the contribution by Equinor for purchased shares, amounts vested for bonus shares
granted and related social security tax was USD
78
85
79
programmes, respectively. For the 2024 programme (granted in 2023), the estimated compensation expense is USD
83
December 2023 the amount of compensation cost yet to be expensed throughout the vesting period is USD
176
See note 20 Shareholders’ equity, capital distribution and earnings per share for more information about share-based compensation.
Equinor Annual Report on Form 20-F 2023 104
9 Auditor’s remuneration and Research and development expenditures
Auditor's remuneration
Full year
(in USD million, excluding VAT)
2023
2022
2021
Audit fee
14.9
11.4
14.4
Audit related fee
1.2
1.8
1.1
Tax fee
-
-
-
Other service fee
-
-
-
Total remuneration
16.1
13.2
15.5
In addition to the figures in the table above, the audit fees and audit related fees related to Equinor operated licences amount to USD
0.5
0.6
0.5
Research and development expenditures (R&D)
Equinor has R&D activities within exploration, subsurface, drilling and well, facilities, low carbon and renewables. R&D activities
contribute to maximising and developing long-term value from Equinor’s assets. R&D expenditures are partially financed by partners
of Equinor operated licences.
R&D expenditures including amounts charged to partners were USD
311
308
291
and 2021, respectively. Equinor's share of the expenditures has been recognised within Total operating expenses in the Consolidated
statement of income.
Equinor Annual Report on Form 20-F 2023 105
10 Financial items
Full year
(in USD million)
2023
2022
2021
Foreign currency exchange gains/(losses) derivative financial instruments
(1,476)
797
870
Other foreign currency exchange gains/(losses)
2,328
1,291
(823)
Net foreign currency exchange gains/(losses)
852
2,088
47
Dividends received
218
93
39
Interest income financial investments, including cash and cash equivalents
1,468
398
38
Interest income non-current financial receivables
31
30
26
Interest income other current financial assets and other financial items
732
701
48
Interest income and other financial income
2,449
1,222
151
Gains/(losses) financial investments
123
(394)
(348)
Gains/(losses) other derivative financial instruments
351
(1,745)
(708)
Interest expense bonds and bank loans and net interest on related derivatives
(1,263)
(1,029)
(896)
Interest expense lease liabilities
(132)
(90)
(93)
Capitalised borrowing costs
468
382
334
Accretion expense asset retirement obligations
(538)
(449)
(453)
Interest expense current financial liabilities and other financial expense
(195)
(192)
(114)
Interest expenses and other financial expenses
(1,660)
(1,379)
(1,223)
Net financial items
2,114
(207)
(2,080)
Equinor's main financial items relate to assets and liabilities in the fair value through profit or loss and the amortised cost categories.
For more information about financial instruments by category see note 28 Financial instruments and fair value measurement.
Foreign currency exchange gains/(losses) derivative financial instruments include fair value changes of currency derivatives related to
liquidity and currency risk. Other foreign currency exchange gains/(losses) includes a fair value gain from derivatives related to non-
current debt of USD
315
691
702
Interest income financial investments, including cash and cash equivalents includes interest income related to balances at amortised
cost of USD
1,410
364
12
Gains/(losses) other derivative financial instruments primarily include fair value changes from interest rate related derivatives, with a
gain of USD
332
1,760
724
Interest expense bonds and bank loans and net interest on related derivatives includes interest expenses of USD
857
918
990
interest on related derivatives at fair value through profit or loss, amounting to a net interest expense of USD
405
USD
111
94
Equinor Annual Report on Form 20-F 2023 106
11 Income taxes
Accounting policies
Income tax
Income tax in the Consolidated statement of income comprises current income tax and effects of changes in deferred tax positions.
Income tax is recognised in the Consolidated statement of income except when it relates to items recognised in other comprehensive
income (OCI).
Current tax consists of the expected tax payable for the year and any adjustment to tax payable for previous years. Uncertain tax
positions and potential tax exposures are analysed individually. The outcomes of tax disputes are mostly binary in nature, and in each
case the most likely amount for probable liabilities to be paid (including penalties) or assets to be received (disputed tax positions for
which payment has already been made) is recognised within Current tax or Deferred tax as appropriate.
Deferred tax assets and liabilities are recognised for the future tax consequences attributable to differences between the carrying
amounts of existing assets and liabilities and their respective tax bases, and on unused tax losses and credits carried forward, subject
to the initial recognition exemption. A deferred tax asset is recognised only to the extent that it is probable that future taxable income
will be available against which the asset can be utilised. For a deferred tax asset to be recognised based on future taxable income,
convincing evidence is required, considering the existence of contracts, production of oil or gas in the near future based on volumes of
expected reserves, observable prices in active markets, expected volatility of trading profits, expected foreign currency rate
movements and similar facts and circumstances.
When an asset retirement obligation or a lease contract is initially reflected in the accounts, a deferred tax liability and a corresponding
deferred tax asset are recognised simultaneously and accounted for in line with other deferred tax items.
Equinor has adopted amendments to IAS 12 – International Tax Reform – Pillar Two Model Rules (top-up tax) with effect from 1
January 2023. Equinor has applied the mandatory exception and does not recognise or disclose information about deferred tax assets
and liabilities related to Pillar Two income taxes.
The mandatory exception applies retrospectively. However, since no new legislation to implement the top-up tax was enacted or
substantively enacted on 31 December 2022 in any jurisdiction in which Equinor operates, and no related deferred tax was recognised
at that date, the retrospective application has no impact on the Consolidated financial statements.
Estimation uncertainty regarding income tax
Equinor incurs significant amounts of income taxes payable to various jurisdictions and may recognise significant changes to deferred
tax assets and deferred tax liabilities. There may be uncertainties related to interpretations of applicable tax laws and regulations
regarding amounts in Equinor’s tax returns, which are filed in a number of tax regimes. For cases of uncertain tax treatments, it may
take several years to complete the discussions with relevant tax authorities or to reach resolutions of the appropriate tax positions
through litigation.
The carrying values of income tax related assets and liabilities are based on Equinor's interpretations of applicable laws, regulations
and relevant court decisions. The quality of these estimates, including the most likely outcomes of uncertain tax treatments, is
dependent upon proper application of at times very complex sets of rules, the recognition of changes in applicable rules and, in the
case of deferred tax assets, management's ability to project future earnings from activities that may apply loss carry forward positions
against future income taxes. Climate-related matters and the transition to carbon-neutral energy-consumption globally have increased
the uncertainty in determining key business assumptions used to assess the recoverability of deferred tax assets through sufficient
future taxable income before tax losses expire.
-----------------------------------------------------------------------------------------------------------------------------------
Equinor Annual Report on Form 20-F 2023 107
Significant components of income tax expense
Full year
(in USD million)
2023
2022
2021
Current income tax expense in respect of current year
(24,028)
(52,124)
(21,271)
Prior period adjustments
(121)
(112)
(28)
Current income tax expense
(24,149)
(52,236)
(21,299)
Origination and reversal of temporary differences
(1,529)
(2,136)
(1,778)
Recognition / derecognition of previously (un)recognised deferred tax assets
(137)
4,401
126
Change in tax regulations
4
0
4
Prior period adjustments
(169)
110
(60)
Deferred tax income/(expense)
(1,831)
2,375
(1,708)
Income tax
(25,980)
(49,861)
(23,007)
Changes to tax regimes
Pillar Two
On 24 November 2023 the Norwegian Ministry of Finance published a draft resolution on the implementation of the OECD Pillar Two
Model Rules into Norwegian legislation. The rules are introducing a global minimum tax of
15
%. The proposal was sanctioned in
January 2024 and the Norwegian Top Up Tax Act (No: “Suppleringsskatteloven”) has entered into effect for the income year 2024.
The Pillar Two rules will be applicable to the Equinor group, but Equinor’s preliminary assessment is that we do not expect any
significant economic impact from the rules.
Equinor Annual Report on Form 20-F 2023 108
Reconciliation of statutory tax rate to effective tax rate
Full year
(in USD million)
2023
2022
2021
Income/(loss) before tax
37,884
78,604
31,583
Calculated income tax at statutory rate
1)
(8,833)
(18,168)
(7,053)
Calculated Norwegian Petroleum tax
2)
(17,226)
(36,952)
(17,619)
Tax effect uplift
3)
160
259
914
Tax effect of permanent differences regarding divestments
82
417
90
Tax effect of permanent differences caused by functional currency different from tax currency
5
145
150
Tax effect of other permanent differences
453
403
228
Recognition / derecognition of previously (un)recognised deferred tax assets
4)
(137)
4,401
126
Change in unrecognised deferred tax assets
(29)
(34)
619
Change in tax regulations
4
0
4
Prior period adjustments
(290)
(3)
(88)
Other items including foreign currency effects
(169)
(327)
(378)
Income tax
(25,980)
(49,861)
(23,007)
Effective tax rate
68.6 %
63.4 %
72.8 %
1)
The weighted average of statutory tax rates was
23.3
% in 2023,
23.1
% in 2022 and
22.3
% in 2021. The rates are influenced by
earnings composition between tax regimes with lower statutory tax rates and tax regimes with higher statutory tax rates.
2)
71.8
% after deducting a calculated
22
% corporate tax.
3)
temporary rules enacted under the Covid-19 pandemic. For investments with PUD submitted to the authorities before 31
December 2022 the rules allow a direct deduction of the whole uplift in the year the capital expenditure is incurred. In 2022 the
rate was
17.69
% and this rate was reduced to
12.4
% in 2023.
4)
differences and projections of taxable income and recognises the amount of deferred tax assets that is probable to be realised. In
2023 USD
137
to a recognition of USD
4,401
Equinor Annual Report on Form 20-F 2023 109
Deferred tax assets and liabilities comprise
(in USD million)
Tax losses
carried
forward
Property,
plant and
equipment
and
intangible
assets
Asset
retirement
obligations
Lease
liabilities
Pensions
Derivatives
Other
Total
Deferred tax assets
8,575
514
7,816
1,298
747
446
1,495
20,892
Deferred tax liabilities
(28)
(26,042)
0
(2)
(6)
0
(300)
(26,378)
Net asset/(liability) at 31 December
2023
8,547
(25,528)
7,816
1,296
741
446
1,195
(5,485)
Deferred tax assets
8,105
694
7,356
1,306
694
1,131
1,348
20,634
Deferred tax liabilities
(28)
(23,356)
0
(3)
(12)
(3)
(411)
(23,813)
Net asset/(liability) at 31 December
2022
8,077
(22,662)
7,356
1,303
682
1,128
937
(3,179)
Changes in net deferred tax liability during the year were as follows:
(in USD million)
2023
2022
2021
Net deferred tax liability at 1 January
3,179
7,655
6,250
Charged/(credited) to the Consolidated statement of income
1,831
(2,375)
1,708
Charged/(credited) to Other comprehensive income
(66)
105
35
Acquisitions and disposals
981
(968)
36
Foreign currency translation effects and other effects
(440)
(1,239)
(374)
Net deferred tax liability at 31 December
5,485
3,179
7,655
Equinor Annual Report on Form 20-F 2023 110
Deferred tax assets and liabilities are offset to the extent that the deferred taxes relate to the same fiscal authority, and there is a
legally enforceable right to offset current tax assets against current tax liabilities. After netting deferred tax assets and liabilities by
fiscal entity and reclassification to Assets held for sale, deferred taxes are presented on the Consolidated balance sheet as follows:
At 31 December
(in USD million)
2023
2022
Deferred tax assets
7,936
8,732
Deferred tax liabilities
13,345
11,996
Net deferred tax classified as held for sale
(76)
85
Deferred tax assets are recognised based on the expectation that sufficient taxable income will be available through reversal of
taxable temporary differences or future taxable income. At year-end 2023, the deferred tax assets of USD
7,952
recognised in the US, the UK, Norway, Angola, Canada and Brazil. Of this amount, USD
965
have suffered a tax loss in either the current or the preceding period. The corresponding amounts for 2022, were USD
8,817
and USD
1,953
taxable income, mainly from production of oil and gas. Around
80
% of the tax losses carried forward and recognised as deferred tax
assets are expected to be fully utilised within
10 years
.
Unrecognised deferred tax assets
At 31 December
2023
2022
(in USD million)
Basis
Tax
Basis
Tax
Deductible temporary differences
2,555
1,030
2,558
968
Unused tax credits
0
185
0
129
Tax losses carried forward
3,944
947
3,458
930
Total unrecognised deferred tax assets
6,499
2,162
6,016
2,027
Approximately
90
% of the unrecognised carry forward tax losses can be carried forward indefinitely. The majority of the unrecognised
tax losses that cannot be carried forward indefinitely expire
after 2027
. The unrecognised tax credits expire from 2030, while the
unrecognised deductible temporary differences do not expire under the current tax legislation. Deferred tax assets have not been
recognised in respect of these items because currently there is insufficient evidence to support that future taxable profits will be
available to secure utilisation of the benefits.
At year-end 2023, unrecognised deferred tax assets in Angola and Canada represents USD
712
415
respectively, of the total unrecognised deferred tax assets of USD
2,162
636
Angola and USD
346
2,027
several different tax jurisdictions.
Equinor Annual Report on Form 20-F 2023
111
12 Property, plant and equipment
Accounting policies
Property, plant and equipment
Property, plant and equipment is reflected at cost, less accumulated depreciation and impairment. The initial cost of an asset
comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, the initial estimate
of an asset retirement obligation, exploration costs transferred from intangible assets and, for qualifying assets, borrowing costs.
Contingent consideration included in the acquisition of an asset or group of similar assets is initially measured at its fair value, with
later changes in fair value other than due to the passage of time reflected in the book value of the asset or group of assets, unless the
asset is impaired. Property, plant and equipment include costs relating to expenditures incurred under the terms of production sharing
agreements (PSAs) in certain countries, and which qualify for recognition as assets of Equinor. State-owned entities in the respective
countries, however, normally hold the legal title to such PSA-based property, plant and equipment.
Expenditure on major maintenance refits or repairs comprises the cost of replacement assets or parts of assets, inspection costs and
overhaul costs. Inspection and overhaul costs, associated with regularly scheduled major maintenance programmes planned and
carried out at recurring intervals exceeding one year, are capitalised and amortised over the period to the next scheduled inspection
and overhaul. All other maintenance costs are expensed as incurred.
Capitalised exploration and evaluation expenditures, development expenditure on the construction, installation or completion of
infrastructure facilities such as platforms, pipelines and the drilling of production wells, and field-dedicated transport systems for oil
and gas are capitalised as Producing oil and gas properties within Property, plant and equipment. Such capitalised costs, when
designed for significantly larger volumes than the reserves from already developed and producing wells, are depreciated using the
unit of production method (UoP) based on proved reserves expected to be recovered from the area during the concession or contract
period. Depreciation of production wells uses the UoP method based on proved developed reserves, and capitalised acquisition costs
of proved properties are depreciated using the UoP method based on total proved reserves. In the rare circumstances where the use
of proved reserves fails to provide an appropriate basis reflecting the pattern in which the asset’s future economic benefits are
expected to be consumed, a more appropriate reserve estimate is used. Depreciation of other assets and transport systems used by
several fields is calculated on the basis of their estimated useful lives, normally using the straight-line method. Each part of an item of
property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. For
exploration and production assets, Equinor has established separate depreciation categories which as a minimum distinguish
between platforms, pipelines and wells.
The estimated useful lives of property, plant and equipment are reviewed on an annual basis, and changes in useful lives are
accounted for prospectively. An item of property, plant and equipment is derecognised upon disposal. Any gain or loss arising on
derecognition of the asset is included in Other income or Operating expenses, respectively, in the period the item is derecognised.
Monetary or non-monetary grants from governments, when related to property, plant and equipment and considered reasonably
certain, are recognised in the Consolidated balance sheet as a deduction to the carrying value of the asset and subsequently
recognised in the Consolidated statement of income over the life of the depreciable asset as a reduced depreciation expense.
Research and development
Equinor undertakes research and development both on a funded basis for licence holders and on an unfunded basis for projects at its
own risk, developing innovative technologies to create opportunities and enhance the value of current and future assets. Expenses
relate both to in-house resources and the use of suppliers. Equinor's own share of the licence holders' funding and the total costs of
the unfunded projects are considered for capitalisation under the applicable IFRS Accounting Standard requirements. Subsequent to
initial recognition, any capitalised development costs are accounted for in the same manner as Property, plant and equipment. Costs
not qualifying for capitalisation are expensed as incurred, see note 9 Auditor’s remuneration and Research and development
expenditures for more details.
Estimation uncertainty regarding determining oil and gas reserves
Reserves quantities are, by definition, discovered, remaining, recoverable and economic. Recoverable oil and gas quantities are
always uncertain. Estimating reserves is complex and based on a high degree of professional judgement involving geological and
engineering assessments of in-place hydrocarbon volumes, the production, historical recovery and processing yield factors and
installed plant operating capacity. The reliability of these estimates depends on both the quality and availability of the technical and
economic data and the efficiency of extracting and processing the hydrocarbons.
Estimation uncertainty; Proved oil and gas reserves
Proved oil and gas reserves may impact the carrying amounts of oil and gas producing assets, as changes in the proved reserves, will
impact the unit of production rates used for depreciation and amortisation. Proved oil and gas reserves are those quantities of oil and
gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible
from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government
regulations. Unless evidence indicates that renewal is reasonably certain, estimates of proved reserves only reflect the period before
Equinor Annual Report on Form 20-F 2023 112
the contracts providing the right to operate expire. For future development projects, proved reserves estimates are included only
where there is a significant commitment to project funding and execution and when relevant governmental and regulatory approvals
have been secured or are reasonably certain to be secured.
Proved reserves are divided into proved developed and proved undeveloped reserves. Proved developed reserves are to be
recovered through existing wells with existing equipment and operating methods, or where the cost of the required equipment is
relatively minor compared to the cost of a new well. Proved undeveloped reserves are to be recovered from new wells on undrilled
acreage, or from existing wells where a relatively major capital expenditure is required. Undrilled well locations can be classified as
having proved undeveloped reserves if a development plan is in place indicating that they are scheduled to be drilled within five years
unless specific circumstances justify a longer time horizon. Specific circumstances are for instance fields which have large up-front
investments in offshore infrastructure, such as many fields on the NCS, where drilling of wells is scheduled to continue for much
longer than five years. For unconventional reservoirs where continued drilling of new wells is a major part of the investments, such as
the US onshore assets, the proved reserves are always limited to proved well locations scheduled to be drilled within five years.
Proved oil and gas reserves have been estimated by internal qualified professionals based on industry standards and are governed by
the oil and gas rules and disclosure requirements in the U.S. Securities and Exchange Commission (SEC) regulations S-K and S-X,
and the Financial Accounting Standards Board (FASB) requirements for supplemental oil and gas disclosures. The estimates have
been based on a 12-month average product price and on existing economic conditions and operating methods as required, and
recovery of the estimated quantities have a high degree of certainty (at least a 90% probability). An independent third party has
evaluated Equinor's proved reserves estimates, and the results of this evaluation do not differ materially from Equinor's estimates.
Estimation uncertainty; Expected oil and gas reserves
Changes in the expected oil and gas reserves may materially impact the amounts of asset retirement obligations, as a consequence
of timing of the removal activities. It will also impact value-in-use calculations for oil and gas assets, possibly affecting impairment
testing and the recognition of deferred tax assets. Expected oil and gas reserves are the estimated remaining, commercially
recoverable quantities, based on Equinor's judgement of future economic conditions, from projects in operation or decided for
development. As per Equinor’s internal guidelines, expected reserves are defined as the ‘forward looking mean reserves’ when based
on a stochastic prediction approach. In some cases, a deterministic prediction method is used, in which case the expected reserves
are the deterministic base case or best estimate. Expected reserves are therefore typically larger than proved reserves as defined by
the SEC, which are high confidence estimates with at least a 90% probability of recovery when a probabilistic approach is used.
Expected oil and gas reserves have been estimated by internal qualified professionals based on industry standards and classified in
accordance with the Norwegian resource classification system issued by the Norwegian Petroleum Directorate.
-----------------------------------------------------------------------------------------------------------------------------
Equinor Annual Report on Form 20-F 2023 113
(in USD million)
Machinery,
equipment and
transportation
equipment
Production
plants and oil
and gas
assets
Refining and
manufacturing
plants
Buildings
and land
Assets under
development
Right of use
assets
4)
Total
Cost at 1 January 2023
1,343
171,948
8,285
562
10,815
6,633
199,586
Additions through business acquisition
7)
48
1,121
339
38
370
8
1,923
Additions and transfers
6)
113
7,286
60
19
3,196
1,087
11,761
Changes in asset retirement obligations
0
772
0
0
55
0
827
Disposals at cost
(64)
(3,567)
(446)
(29)
(30)
(634)
(4,771)
Assets reclassified to held for sale
8)
(1)
(3,944)
0
0
(245)
(8)
(4,198)
Foreign currency translation effects
0
(2,705)
(133)
1
(64)
(36)
(2,937)
Cost at 31 December 2023
1,438
170,911
8,105
591
14,097
7,050
202,191
Accumulated depreciation and impairment at
1 January 2023
(1,203)
(131,455)
(6,763)
(338)
(135)
(3,194)
(143,088)
Depreciation
(44)
(7,976)
(224)
(26)
0
(1,079)
(9,350)
Impairment
(2)
(844)
(323)
0
(18)
(1)
(1,188)
Reversal of impairment
0
288
0
0
3
0
290
Transfers
6)
1
(11)
0
(1)
10
0
(2)
Accumulated depreciation and impairment
on disposed assets
52
3,355
442
28
22
634
4,533
Accumulated depreciation and impairment
assets classified as held for sale
8)
1
3,176
0
0
0
6
3,183
Foreign currency translation effects
7
2,142
88
0
3
10
2,251
Accumulated depreciation and impairment at
31 December 2023
5)
(1,188)
(131,325)
(6,780)
(337)
(117)
(3,623)
(143,369)
Carrying amount at 31 December 2023
250
39,585
1,325
254
13,980
3,427
58,822
Estimated useful lives (years)
UoP
1)
2)
3)
Equinor Annual Report on Form 20-F 2023 114
(in USD million)
Machinery,
equipment and
transportation
equipment
Production
plants and oil
and gas
assets
Refining and
manufacturing
plants
Buildings
and land
Assets under
development
Right of use
assets
Total
Cost at 1 January 2022
1,335
183,358
8,481
596
12,614
5,850
212,234
Additions and transfers
6)
52
9,390
378
6
(813)
1,319
10,332
Changes in asset retirement obligations
0
(4,756)
0
0
(48)
0
(4,805)
Disposals at cost
(9)
(3,487)
2
(20)
(5)
(347)
(3,865)
Foreign currency translation effects
(36)
(12,557)
(576)
(19)
(934)
(188)
(14,310)
Cost at 31 December 2022
1,343
171,948
8,285
562
10,815
6,633
199,586
Accumulated depreciation and impairment
at 1 January 2022
(1,188)
(137,763)
(7,926)
(320)
(344)
(2,619)
(150,159)
Depreciation
(52)
(7,643)
(160)
(33)
0
(969)
(8,856)
Impairment
(8)
(187)
(39)
0
(49)
(4)
(286)
Reversal of impairment
4
2,585
802
0
207
0
3,599
Transfers
6)
(2)
(20)
2
0
20
(8)
(8)
Accumulated depreciation and impairment
on disposed assets
8
2,002
(4)
5
0
347
2,359
Foreign currency translation effects
34
9,571
562
9
30
59
10,264
Accumulated depreciation and impairment
at 31 December 2022
5)
(1,203)
(131,455)
(6,763)
(338)
(135)
(3,194)
(143,088)
Carrying amount at 31 December 2022
140
40,493
1,522
224
10,679
3,439
56,498
Estimated useful lives (years)
UoP
1)
2)
3)
1)
Depreciation according to unit of production method.
2)
.
Buildings include leasehold improvements.
3)
4)
1,038
1,578
and Drilling rigs USD
504
5)
6)
in 2023 and 2022 amounted to
USD
1,280
982
7)
8)
Equinor Annual Report on Form 20-F 2023 115
13 Intangible assets
Accounting policies
Intangible assets including goodwill
Intangible assets are stated at cost, less accumulated amortisation and impairment. Intangible assets include acquisition cost for oil
and gas prospects, expenditures on the exploration for and evaluation of oil and natural gas resources, goodwill, and other intangible
assets. Intangible assets relating to expenditures on the exploration for and evaluation of oil and natural gas resources are not
amortised. When the decision to develop a particular area is made, related intangible exploration and evaluation assets are
reclassified to Property, plant and equipment.
Goodwill acquired in a business combination is allocated to each cash generating unit (CGU), or group of units, expected to benefit
from the combination’s synergies. Following initial recognition, goodwill is measured at cost less any accumulated impairment. In
acquisitions made on a post-tax basis according to the rules on the NCS, a provision for deferred tax is reflected in the accounts
based on the difference between the acquisition cost and the tax depreciation basis transferred from the seller. The offsetting entry to
such deferred tax amounts is reflected as goodwill, which is allocated to the CGU or group of CGUs on whose tax depreciation basis
the deferred tax has been computed.
Other intangible assets with a finite useful life, are depreciated over their useful life using the straight-line method.
Oil and gas exploration, evaluation and development expenditures
Equinor uses the successful efforts method of accounting for oil and gas exploration costs. Expenditures to acquire mineral interests
in oil and gas properties, including signature bonuses, expenditures to drill and equip exploratory wells and evaluation expenditures
are capitalised within Intangible assets as Exploration expenditures and Acquisition costs - oil and gas prospects. Geological and
geophysical costs and other exploration and evaluation expenditures are expensed as incurred.
Exploration wells that discover potentially economic quantities of oil and natural gas remain capitalised as intangible assets during the
evaluation phase of the discovery. This evaluation is normally finalised within one year after well completion. If, following the
evaluation, the exploratory well has not found potentially commercial quantities of hydrocarbons, the previously capitalised costs are
evaluated for derecognition or tested for impairment. Any derecognition or impairment is classified as Exploration expenses in the
Consolidated statement of income.
Capitalised exploration and evaluation expenditures related to offshore wells that find proved reserves, are transferred to Property,
plant and equipment at the time of sanctioning of the development project. The timing from evaluation of a discovery until a project is
sanctioned could take several years depending on the location and maturity, including existing infrastructure, of the area of discovery,
whether a host government agreement is in place, the complexity of the project and the financial robustness of the project. For
onshore wells where no sanction is required, the transfer to Property, plant and equipment occurs at the time when a well is ready for
production.
For exploration and evaluation asset acquisitions (farm-in arrangements) in which Equinor has decided to fund a portion of the selling
partner's exploration and/or future development expenditures (carried interests), these expenditures are reflected in the Consolidated
financial statements as and when the exploration and development work progresses.
Equinor reflects exploration and evaluation asset disposals (farm-out arrangements) on a historical cost basis with no gain or loss
recognition. Consideration from the sale of an undeveloped part of an asset reduces the carrying amount of the asset. If the
consideration exceeds the carrying amount of the asset, the excess amount is reflected in the Consolidated statement of income
under Other income. Equal-valued exchanges (swaps) of exploration and evaluation assets with only immaterial cash considerations
are accounted for at the carrying amounts of the assets given up with no gain or loss recognition.
Estimation uncertainty regarding exploration activities
Exploratory wells that have found reserves, but where classification of those reserves as proved depends on whether a major capital
expenditure can be justified, will remain capitalised during the evaluation phase for the findings on the exploration wells. Thereafter it
will be considered a trigger for impairment evaluation of the well if no development decision is planned for the near future, and there
moreover are no concrete plans for future drilling in the licence. Judgements as to whether these expenditures should remain
capitalised, be derecognised or impaired in the period may materially affect the carrying values of these assets and consequently, the
operating income for the period.
------------------------------------------------------------------------------------------------------------------------------
Equinor Annual Report on Form 20-F 2023 116
(in USD million)
Exploration
expenses
Acquisition
costs - oil and
gas prospects
Goodwill
Other
Total
Cost at 1 January 2023
1,599
2,035
1,380
528
5,542
Additions through business acquisition
0
5
348
446
799
Additions
410
360
9
210
989
Disposals at cost
0
0
(10)
(124)
(135)
Transfers
(961)
(319)
4
(4)
(1,280)
Expensed exploration expenditures previously capitalised
114
(61)
0
0
53
Foreign currency translation effects
7
16
2
16
41
Cost at 31 December 2023
1,169
2,036
1,733
1,072
6,010
Accumulated amortisation and impairment at 31 December 2023
1)
(302)
(302)
Carrying amount at 31 December 2023
1,169
2,036
1,733
2)
770
5,709
(in USD million)
Exploration
expenses
Acquisition
costs - oil and
gas prospects
Goodwill
Other
Total
Cost at 1 January 2022
1,958
2,670
1,467
722
6,816
Additions
227
4
36
57
324
Disposals at cost
(10)
(50)
0
1
(58)
Transfers
(227)
(516)
0
(239)
(982)
Expensed exploration expenditures previously capitalised
(283)
(59)
0
0
(342)
Impairment of goodwill
0
0
(3)
0
(3)
Foreign currency translation effects
(65)
(14)
(121)
(13)
(213)
Cost at 31 December 2022
1,599
2,035
1,380
528
5,542
Accumulated amortisation and impairment at 31 December 2022
1)
(384)
(384)
Carrying amount at 31 December 2022
1,599
2,035
1,380
144
5,158
1) See note 14 Impairments.
2) Goodwill at 31 December 2023 mainly consists of technical goodwill related to business acquisitions in 2019, of which USD
533
million in the Exploration & Production Norway area and USD
440
The table below shows the aging of capitalised exploration expenditures.
(in USD million)
2023
2022
Less than one year
345
250
Between one and five years
458
340
More than five years
366
1,009
Total capitalised exploration expenditures
1,169
1,599
Equinor Annual Report on Form 20-F 2023 117
The table below shows the components of the exploration expenses.
Full year
(in USD million)
2023
2022
2021
Exploration expenditures
1,275
1,087
1,027
Expensed exploration expenditures previously capitalised
(53)
342
171
Capitalised exploration
(427)
(224)
(194)
Exploration expenses
795
1,205
1,004
14 Impairments
Accounting policies
Impairment of property, plant and equipment, right-of-use assets, intangible assets including goodwill and equity accounted
investments
Equinor assesses individual assets or groups of assets for impairment whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. Assets are grouped into cash generating units (CGUs). Normally, separate CGUs are
individual oil and gas fields or plants, or equity accounted investments. Each unconventional asset play is considered a single CGU
when no cash inflows from parts of the play can be reliably identified as being largely independent of the cash inflows from other parts
of the play. In impairment evaluations, the carrying amounts of CGUs are determined on a basis consistent with that of the
recoverable amount.
Unproved oil and gas properties are assessed for impairment when facts and circumstances suggest that the carrying amount of the
asset or CGU to which the unproved properties belong may exceed its recoverable amount, and at least once a year. Exploratory
wells that have found reserves, but where classification of those reserves as proved depends on whether major capital expenditure
can be justified or where the economic viability of that major capital expenditure depends on the successful completion of further
exploration work, will remain capitalised during the evaluation phase for the exploratory finds. If, following evaluation, an exploratory
well has not found proved reserves, the previously capitalised costs are tested for impairment. After the initial evaluation phase for a
well, it will be considered a trigger for impairment testing of a well if no development decision is planned for the near future and there
is no firm plan for future drilling in the licence.
Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value
may be impaired. Impairment is determined by assessing the recoverable amount of the CGU, or group of units, to which the goodwill
relates. When impairment testing goodwill originally recognised as an offsetting item to the computed deferred tax provision in a post-
tax transaction on the NCS, the remaining amount of the deferred tax provision will factor into the impairment valuation.
Impairment and reversals of impairment are presented in the Consolidated statement of income as Exploration expenses or
Depreciation, amortisation and net impairment, on the basis of the nature of the impaired assets as either exploration assets
(intangible exploration assets) or development and producing assets (property, plant and equipment and other intangible assets),
respectively.
Measurement
The recoverable amount applied in Equinor’s impairment assessments is normally estimated value in use. Equinor may also apply the
assets’ fair value less cost of disposal as the recoverable amount when such a value is available, reasonably reliable, and based on a
recent and comparable transactions.
Value in use is determined using a discounted cash flow model. The estimated future cash flows are based on reasonable and
supportable assumptions and represent management's best estimates of the range of economic conditions that will exist over the
remaining useful life of the assets, as set down in Equinor's most recently approved forecasts. Assumptions and economic conditions
in establishing the forecasts are reviewed by management on a regular basis and updated at least annually. For assets and CGUs
with an expected useful life or timeline for production of expected oil and natural gas reserves extending beyond five years, including
planned onshore production from shale assets with a long development and production horizon, the forecasts reflect expected
production volumes, and the related cash flows include project or asset specific estimates reflecting the relevant period. Such
estimates are established based on Equinor's principles and assumptions and are consistently applied.
The estimated future cash flows are adjusted for risks specific to the asset or CGU and discounted using a real post-tax discount rate
which is based on Equinor's post-tax weighted average cost of capital (WACC). Country risk specific to a project is included as a
monetary adjustment to the projects’ cash flow. Equinor considers country risk primarily as an unsystematic risk. The cash flow is
Equinor Annual Report on Form 20-F 2023 118
adjusted for risk that influences the expected cash flow of a project and which is not part of the project itself. The use of post-tax
discount rates in determining value in use does not result in a materially different determination of the need for, or the amount of,
impairment that would be required if pre-tax discount rates had been used.
Impairment reversals
A previously recognised impairment is reversed only if there has been a change in the estimates used to determine the asset’s
recoverable amount since the last impairment was recognised. Previously recognised impairments of goodwill are not reversed in
future periods.
Estimation uncertainty regarding impairment
Evaluating whether an asset is impaired or if an impairment should be reversed requires a high degree of judgement and may to a
large extent depend upon the selection of key assumptions about the future. In Equinor's line of business, judgement is involved in
determining what constitutes a CGU. Development in production, infrastructure solutions, markets, product pricing, management
actions and other factors may over time lead to changes in CGUs such as splitting one original CGU into several CGUs.
The key assumptions used will bear the risk of change based on the inherent volatile nature of macro-economic factors such as future
commodity prices and discount rates, and uncertainty in asset specific factors such as reserve estimates and operational decisions
impacting the production profile or activity levels. Changes in foreign currency exchange rates will also affect value in use, especially
for assets on the NCS, where the functional currency is NOK. When estimating the recoverable amount, the expected cash flow
approach is applied to reflect uncertainties in timing and amounts inherent in the assumptions used in the estimated future cash flows.
For example, climate-related matters (see also Note 3
Climate change and energy transition
) are expected to have a pervasive effect on
the energy industry, affecting not only supply, demand and commodity prices, but also technology changes, increased emission-
related levies, and other matters with mainly mid-term and long-term effects. These effects have been factored into the price
assumptions used for estimating future cash flows using probability-weighted scenario analyses.
The estimated future cash flows, reflecting Equinor’s, market participants’ and other external sources’ assumptions about the future
and discounted to their present value, involve complexity. In order to establish relevant future cash flows, impairment testing requires
long-term assumptions to be made concerning a number of economic factors such as future market prices, refinery margins, foreign
currency exchange rates and future output, discount rates, impact of the timing of tax incentive regulations, and political and country
risk among others. Long-term assumptions for major economic factors are made at a group level, and there is a high degree of
reasoned judgement involved in establishing these assumptions, in determining other relevant factors such as forward price curves, in
estimating production outputs, and in determining the ultimate terminal value of an asset.
------------------------------------------------------------------------------------------------------------------------------
Net impairments/(reversal of impairments)
Full year
(in USD million)
2023
2022
2021
Property, plant and equipment
897
(3,313)
1,285
Intangible assets
61
62
154
Equity accounted investments
363
832
0
Total net impairments/(reversals) including exploration expenses
1,321
(2,419)
1,439
1)
The intangible assets line includes Goodwill, amortizable intangible assets, and certain acquisition costs related to oil and
gas prospects.
Equinor Annual Report on Form 20-F 2023 119
For impairment purposes, the asset’s carrying amount is compared to its recoverable amount. The table below describes, per area,
the Producing and development assets being impaired/(reversed), net impairment/(reversal), and the carrying amount after
impairment.
At 31 December 2023
At 31 December 2022
At 31 December 2021
(in USD million)
Carrying
amount after
impairment
Net
impairment
loss/
(reversal)
Carrying
amount after
impairment
Net
impairment
loss/
(reversal)
Carrying
amount after
impairment
Net
impairment
loss/
(reversal)
Exploration & Production Norway
887
588
3,201
(819)
5,379
(1,102)
Exploration & Production USA - onshore
0
0
546
(204)
1,979
48
Exploration & Production USA - offshore Gulf of Mexico
1,165
(290)
2,691
(882)
798
18
Europe and Asia
0
310
1,551
295
1,566
1,609
Marketing, Midstream & Processing
949
343
1,416
(895)
868
716
Renewables USA - offshore
134
300
0
0
0
0
Other
112
10
30
0
20
(7)
Total
3,247
1,261
9,435
(2,505)
10,611
1,282
Exploration & Production Norway
In 2023, the net impairment mainly relates to reduced expected reserves on a producing asset on the Norwegian Continental Shelf.
2022, the net impairment reversal was mainly caused by increased price estimates and changed gas export strategy. In 2021, the net
impairment reversal was mainly due to increased price estimates and an upward reserve revision.
Exploration & Production USA - onshore
In 2023, there were no impairments related to exploration and production assets USA – onshore. In 2022, the impairment reversal
was caused by increased gas price assumptions, while in 2021 the net impairment was caused by revision of reserves and sale of an
asset.
Exploration & Production USA - offshore Gulf of Mexico
In 2023, impairment reversals mainly relate to increased expected reserves on a producing asset. In 2022, the impairment reversal
was caused by increased price assumptions and higher reserves estimates, while in 2021, the impairment was due to a negative
reserve revision.
Exploration & Production International – Europe and Asia
In 2023, the impairment relates to the held for sale reclassification of Azerbaijan assets at the end of the year (see note 6 Acquisitions
and disposals). In 2022, the net impairment was mainly caused by the decision to exit Russia. This was to a large extent offset by a
reversal on Mariner in the UK mainly due to optimisation of the production profile and higher prices, supported by a slight increase in
reserves estimates. In 2021, the net impairment was mainly caused by downward reserve revisions partially offset by higher prices.
Marketing, Midstream & Processing
In 2023, net impairment mainly relates to expectations of stabilizing refinery margins at a lower level than the margins consumed in
recent periods. In 2022 the net impairment reversal was mainly related to increased refinery margin assumptions, while in 2021, the
impairment losses were caused by increased CO
2
Renewables USA – Offshore
In 2023, Equinor’s offshore wind projects on the US North East Coast are facing increased costs due to inflation and supply chain
constraints. On 12 October 2023, the New York State Public Service Commission (PSC) rejected price increase petitions related to
offtake agreements from several offshore and onshore wind farm developers, including Equinor’s joint ventures. As a consequence,
an impairment of USD
300
projects on the US North East Coast has been established applying a fair value approach. These investments are accounted for using
the equity method.
Accounting assumptions
There are inherent uncertainties in the assumptions, however the commodity price assumptions as well as currency assumptions
reflect management’s best estimate of the price and currency development over the life of the Group’s assets based on its view of
relevant current circumstances and the likely future development of such circumstances, including energy demand development,
energy and climate change policies as well as the speed of the energy transition, population and economic growth, geopolitical risks,
Equinor Annual Report on Form 20-F 2023 120
technology and cost development and other factors. Management’s best estimate also takes into consideration a range of external
forecasts.
Equinor has performed a thorough and broad analysis of the expected development in drivers for the different commodity markets and
exchange rates. Significant uncertainty exists regarding future commodity price development due to the transition to a lower carbon
economy, future supply actions by OPEC+ and other factors. Such analysis resulted in changes in the long-term price assumptions
with effect from the second quarter of 2023. The main price assumptions applied in impairment and impairment reversal assessments
are disclosed in the table below as price-points on price curves. Previous price-points applied from the third quarter of 2022 and up to
and including the first quarter of 2023 are provided in brackets.
Year
Prices in real term 1)
2025
2030
2040
2050
Brent Blend (USD/bbl)
79
(78)
78
(78)
73
(73)
68
(68)
European gas (USD/MMBtu) - TTF
15.5
20.9
9.1
(9.9)
9.5
(9.4)
9.5
(9.4)
Henry Hub (USD/MMBtu)
3.6
(4.2)
4.3
(3.9)
4.3
(3.9)
4.3
(3.9)
Electricity Germany (EUR/MWh)
106
(122)
78
(74)
71
(60)
71
(60)
EU ETS (EUR/tonne)
90
(84)
105
(84)
128
(111)
150
(137)
1) Basis year 2023. The prices in the table are price-points on price-curves.
Climate considerations are included in the impairment calculations directly by estimating the CO
2
the expected effect of climate change is also included in the estimated commodity prices where supply and demand are considered.
The prices also have effect on the estimated production profiles and economic cut-off of the projects. Furthermore, climate
considerations are a part of the investment decisions following Equinor’s strategy and commitments to the energy transition.
Norway’s Climate Action Plan for the period 2021-2030 (Meld. St 13 (2020-2021)) which assumes a gradually increased CO
2
total of EU ETS + Norwegian CO
2
2,000
upstream assets.
To reflect that carbon will have a cost for all our assets the current best estimate is considered to be EU ETS for countries outside EU
where carbon is not already subject to taxation or where Equinor has not established specific estimates.
The long-term NOK currency exchange rates are expected to be unchanged compared to previous long-term assumptions. The
NOK/USD rate from 2026 and onwards is kept at
8.50
, the NOK/EUR at
10.00
. The USD/GBP rate is kept at
1.35
.
The base discount rate applied in value in use calculations is
5.0
% real after tax. The discount rate is derived from Equinor’s weighted
average cost of capital. For projects, mainly within the REN segment in periods with fixed low risk income, a lower discount rate will be
considered. A derived pre-tax discount rate is in the range of
24
% for E&P Norway,
6
% for E&P USA and
7
% for MMP depending on
the asset’s characteristics, such as specific tax treatments, cash flow profiles, and economic life. The pre-tax rates for 2022 were
42
-
102
%,
6
-
9
% and
7
% respectively, in addition to
8
-
9
% for E&P International.
Sensitivities
Significant downward adjustments in Equinor's commodity price assumptions would result in impairment losses on certain producing
and development assets, including intangible assets subject to impairment assessment, while an opposite adjustment could lead to
impairment-reversals. Assuming a reasonably possible
30
% decline in commodity price forecasts over the assets' lifetime could result
in an illustrative impairment recognition of approximately USD
11
transition for possible effect of using the prices in a 1.5ºC compatible Net Zero Emission by 2050 scenario and the Announced
Pledges.
Similarly, for illustrative purposes, Equinor assessed the sensitivity of the discount rate used in the value in use calculations for
upstream producing assets and certain related intangible assets. It was determined an increase in the discount rate from
5.0
% to
6
%
real after tax, in isolation, the impairment amount recognised could have a potential impact of USD
2
The illustrative impairment sensitivities above are based on a simplified method, which assumes no changes to other input factors.
However, Equinor notes a price reduction of
30
% or those representing Net Zero Emission scenario and Announced Pledges
Scenario would likely impact business plans and other factors used in estimating an asset’s recoverable amount. The correlated
changes reduce the stand-alone impact of the price sensitivities. Changes in such input factors would likely include a reduction in the
cost level in the oil and gas industry and offsetting foreign currency effects, which has historically occurred following significant
changes in commodity prices.
Equinor Annual Report on Form 20-F 2023 121
15 Joint arrangements and associates
Accounting policies
Joint operations and similar arrangements, joint ventures and associates
A joint arrangement is a contractual arrangement whereby Equinor and other parties undertake an activity subject to joint control, i.e.
when decisions about the relevant activities require the unanimous consent of the parties sharing control. Such joint arrangements are
classified as either joint operations or joint ventures. In determining the appropriate classification, Equinor considers the nature of
products and markets of the arrangements and whether the substance of the agreements is that the parties involved have rights to
substantially all the arrangement's assets and obligations for the liabilities, or whether the parties involved have rights to the net
assets of the arrangement. Equinor accounts for its share of assets, liabilities, revenues and expenses in joint operations in
accordance with the principles applicable to those particular assets, liabilities, revenues and expenses.
Those of Equinor's exploration and production licence activities that are within the scope of IFRS 11 Joint Arrangements have been
classified as joint operations. A considerable number of Equinor's unincorporated joint exploration and production activities are
conducted through arrangements that are not jointly controlled, either because unanimous consent is not required among all parties
involved, or no single group of parties has joint control over the activity. Licence activities where control can be achieved through
agreement between more than one combination of involved parties are considered to be outside the scope of IFRS 11, and these
activities are accounted for on a pro-rata basis using Equinor's ownership share. Currently, Equinor uses IFRS 11 by analogy for all
such unincorporated licence arrangements whether these are in scope of IFRS 11 or not. Reference is made to note 5 Segments for
financial information related to Equinor’s participation in joint operations within upstream activities.
Joint ventures, in which Equinor has rights to the net assets currently include the majority of Equinor’s investments in the Renewables
(REN) operating and reporting segment. Equinor’s participation in joint arrangements that are joint ventures and investments in
companies in which Equinor has neither control nor joint control but has the ability to exercise significant influence over operating and
financial policies, are classified and accounted for as equity accounted investments.
Under the equity method, the investment is carried on the Consolidated balance sheet at cost plus post-acquisition changes in
Equinor’s share of net assets of the entity, less distributions received and less any impairment in value of the investment. Equinor also
reflects its share of the investment’s other comprehensive income (OCI) arisen after the acquisition. The part of an equity accounted
investment’s dividend distribution exceeding the entity’s carrying amount in the Consolidated balance sheet is reflected as income
from equity accounted investments in the Consolidated statement of income. Equinor will subsequently only reflect the share of net
profit in the investment that exceeds the dividend already reflected as income.
The Consolidated statement of income reflects Equinor’s share of the results after tax of an equity accounted entity, adjusted to
account for depreciation, amortisation and any impairment of the equity accounted entity’s assets based on their fair values at the
date of acquisition. In case of material differences in accounting policies, adjustments are made in order to bring the accounts of the
equity accounted investment in line with Equinor’s accounting policies. Net income/loss from equity accounted investments is
presented on a separate line as part of Total revenues and other income, as investments in and participation with significant influence
in other companies engaged in energy-related business activities is considered to be part of Equinor’s main operating activities.
Acquisition of ownership shares in joint ventures and other equity accounted investments in which the activity constitutes a business,
are accounted for in accordance with the requirements applicable to business combinations. Please refer to note 6 Acquisitions and
disposals for more details on acquisitions.
Equinor as operator of joint operations and similar arrangements
Indirect operating expenses such as personnel expenses are accumulated in cost pools. These costs are allocated on an hours’
incurred basis to business areas and Equinor-operated joint operations under IFRS 11 and to similar arrangements (licences) outside
the scope of IFRS 11. Costs allocated to the other partners' share of operated joint operations and similar arrangements are
reimbursed and only Equinor's share of the statement of income and balance sheet items related to Equinor-operated joint operations
and similar arrangements are reflected in the Consolidated statement of income and the Consolidated balance sheet.
-----------------------------------------------------------------------------------------------------------------------------
Equinor Annual Report on Form 20-F 2023 122
Joint ventures and other equity accounted investments
(in USD million)
2023
2022
Net investments at 1 January
2,758
2,686
Net income/(loss) from equity accounted investments
(1)
620
Impairment
1)
(363)
(832)
Acquisitions and increase in capital
926
337
Dividend and other distributions
(286)
(210)
Other comprehensive income/(loss)
(10)
384
Divestments, derecognition and decrease in paid in capital
2)
(517)
(22)
Other
0
(205)
Net investments at 31 December
2,507
2,758
1)
Mainly related to Renewable offshore wind industry in US, see also note 14 Impairments.
2)
st
2023).
Equity accounted investments consist of several investments, none above USD
0.5
an individual basis. Voting rights correspond to ownership share.
16 Financial investments and financial receivables
Non-current financial investments
At 31 December
(in USD million)
2023
2022
Bonds
1,863
1,448
Listed equity securities
1,035
794
Non-listed equity securities
543
491
Financial investments
3,441
2,733
Bonds and equity securities mainly relate to investment portfolios held by Equinor’s captive insurance company and other listed and
non-listed equities held for long-term strategic purposes, mainly accounted for using fair value through profit or loss.
Equinor Annual Report on Form 20-F 2023 123
Non-current prepayments and financial receivables
At 31 December
(in USD million)
2023
2022
Interest-bearing financial receivables
341
1,658
Other interest-bearing receivables
40
66
Prepayments and other non-interest-bearing receivables
910
339
Prepayments and financial receivables
1,291
2,063
Prepayments and other non-interest-bearing receivables mainly relate to commodity sales contracts with customers and lease
prepayments. Interest-bearing financial receivables primarily relate to loans to employees and project financing of equity accounted
companies. Other interest-bearing receivables primarily relate to financial sublease and tax receivables.
Current financial investments
At 31 December
(in USD million)
2023
2022
Time deposits
17,846
12,373
Interest-bearing securities
11,378
17,504
Financial investments
29,224
29,876
At 31 December 2023, current financial investments
include USD
458
insurance company which mainly are accounted for using fair value through profit or loss. The corresponding balance at 31 December
2022 was USD
410
For information about financial instruments by category, see note 28
Financial instruments and fair value measurement
.
Equinor Annual Report on Form 20-F 2023 124
17 Inventories
Accounting policies
Inventories
Commodity inventories not held for trading purposes are stated at the lower of cost and net realisable value. Cost is determined by the
first-in first-out method and comprises direct purchase costs, cost of production, transportation, and manufacturing expenses.
Commodity inventories held for trading purposes are measured at fair value less cost to sell (FVLCS), with subsequent changes in fair
value recognised in the Consolidated statement of income as part of Revenues. These inventories are categorised within level 2 of the
fair value hierarchy.
------------------------------------------------------------------------------------------------------------------------------
At 31 December
(in USD million)
2023
2022
Crude oil
2,051
2,115
Petroleum products
380
451
Natural gas
54
127
Commodity inventories at the lower of cost and net realisable value
2,485
2,693
Natural gas held for trading purposes measured at fair value
810
1,994
Other
520
517
Total inventories
3,814
5,205
Inventories held for trading purposes consist of natural gas storages held by Danske Commodities.
Equinor Annual Report on Form 20-F 2023 125
18 Trade and other receivables
At 31 December
(in USD million)
2023
2022
Trade receivables from contracts with customers
1)
10,706
15,213
Other current receivables
1,774
992
Collateral receivables
2)
2,186
3,468
Receivables from participation in joint operations and similar arrangements
471
661
Receivables from equity accounted associated companies and other related parties
1,056
1,276
Total financial trade and other receivables
16,193
21,611
Non-financial trade and other receivables
740
841
Trade and other receivables
16,933
22,452
1) Trade receivables from contracts with customers are shown net of an immaterial provision for expected losses.
2) Mainly related to cash paid as security for a portion of Equinor's credit exposure.
For more information about the credit quality of Equinor's counterparties, see note 4 Financial risk and capital management. For
currency sensitivities, see note 28 Financial instruments and fair value measurement. For further information on receivables from
equity accounted associated companies and other related parties, see note 27 Related parties.
19 Cash and cash equivalents
Accounting policies
Cash and cash equivalents are accounted for at amortised cost and include cash in hand, bank deposits, and short-term highly liquid
investments with original maturity of three months or less which are readily convertible to known amounts of cash and subject to
insignificant risk of changes in fair value. Contractually mandatory deposits in escrow bank accounts are included as restricted cash
and cash equivalents if the deposits are provided as part of the Group’s operating activities and therefore are deemed as held for the
purpose of meeting short
‑
term cash commitments, and the deposits can be released from the escrow account without undue
expenses.
At 31 December
(in USD million)
2023
2022
Cash at bank available
2,295
2,220
Time deposits
1,337
836
Money market funds
1,875
3,106
Interest-bearing securities
2,563
3,276
Restricted cash and cash equivalents, including collateral deposits
1,572
6,140
Cash and cash equivalents
9,641
15,579
Restricted cash and cash equivalents at 31 December 2023 includes collateral deposits of USD
1,572
activities. Correspondingly, collateral deposits at 31 December 2022 were USD
6,128
requirements of exchanges where Equinor is trading. The terms and conditions related to these requirements are determined by the
respective exchanges.
Equinor Annual Report on Form 20-F 2023 126
20 Shareholders' equity, capital distribution and earnings per share
Number of
shares
NOK per value
NOK
USD
Share capital at 1 January 2023
3,175,470,159
2.50
7,938,675,397.50
1,142,036,265
Capital reduction
(172,365,554)
2.50
(430,913,885.00)
(41,519,325)
Share capital at 31 December 2023
3,003,104,605
2.50
7,507,761,512.50
1,100,516,940
Number of
shares
NOK per value
Common Stock
Authorised and issued
3,003,104,605
2.50
7,507,761,512.50
Treasury shares
Share buy-back programme
(49,486,793)
2.50
(123,716,982.50)
Employees share saving plan
(8,884,668)
2.50
(22,211,670.00)
Total outstanding shares
2,944,733,144
2.50
7,361,832,860.00
Equinor ASA has only one class of shares and all shares have voting rights. The holders of shares are entitled to receive dividends as
and when declared and are entitled to one vote per share at the annual general meeting of the company.
Dividend
During 2023, dividend for the third and for the fourth quarter of 2022 and dividend for the first and second quarter of 2023 were
settled. Dividend declared but not yet settled is presented as dividends payable in the Consolidated balance sheet. The Consolidated
statement of changes in equity shows declared dividend in the period (retained earnings). Dividend declared in 2023 relates to the
fourth quarter of 2022 and to the first three quarters of 2023.
On 6 February 2024, the board of directors proposed to the annual general meeting on 14 May 2024 an ordinary cash dividend for the
fourth quarter of 2023 of USD
0.35
0.35
ex-dividend 15 May 2024 on Oslo Børs and for ADR holders on New York Stock Exchange. Record date will be 16 May 2024 and
payment date will be 28 May 2024.
At 31 December
(in USD million)
2023
2022
Dividends declared
10,783
7,549
USD per share or ADS
3.6000
2.4000
Dividends paid
10,906
5,380
USD per share or ADS
3.6000
1.6800
NOK per share
37.8522
16.4837
-------------------------------------------------------------------------------------------------------------------------------------
Accounting policies
Share buy-back
Where Equinor has either acquired own shares under a share buy-back programme or has placed an irrevocable order with a third
party for Equinor shares to be acquired in the market, such shares are reflected as a reduction in equity as treasury shares. Treasury
shares are not included in the weighted average number of ordinary shares outstanding in the calculation of Earnings per share. The
remaining outstanding part of an irrevocable order to acquire shares is accrued for and classified as Trade, other payables and
provisions.
-------------------------------------------------------------------------------------------------------------------------------------
Share buy-back programme
Equinor Annual Report on Form 20-F 2023 127
The purpose of the share buy-back programme is to reduce the issued share capital of the company. All shares repurchased as part
of the programme will be cancelled. According to an agreement between Equinor and the Norwegian State, the Norwegian State will
participate in share buy-backs on a proportionate basis, ensuring that its ownership interest in Equinor remains unchanged at
67
%.
On 6 February 2024, the board of directors decided to announce a two-year share buy-back programme for 2024-2025 of USD 10-12
billion in total, with USD 6 billion for 2024. The share buy-back programme will be subject to market outlook and balance sheet
strength.
The first tranche of up to USD 1.2 billion of the 2024 share buy-back programme will commence on 8 February and end no later than
5 April 2024. The first tranche of the 2024 share buy-back programme is based on the authorisation from the annual general meeting
in May 2023, valid until the next annual general meeting, but no later than 30 June 2024. Commencement of new share buy-back
tranches after the first tranche in 2024 will be decided by the board of directors on a quarterly basis in line with the company’s
dividend policy and will be subject to existing and new board authorisations for share buy-back from the company’s annual general
meeting and agreement with the Norwegian State regarding share buy-back.
Number of shares
2023
2022
Share buy-back programme at 1 January
42,619,172
13,460,292
Purchase
63,748,254
56,290,671
Cancellation
(56,880,633)
(27,131,791)
Share buy-back programme at 31 December
49,486,793
42,619,172
Equity impact of share buy-back programmes
(in USD million)
2023
2022
First tranche
330
330
Second tranche
550
440
Third tranche
550
605
Fourth tranche
550
605
Total open market share
1,980
1,980
Norwegian state share
1)
3,705
1,399
Total
5,685
3,380
1) Relates to second to fourth tranche of previous year programme and first tranche of current year programme.
Based on the authorisation from the annual general meeting on 10 May 2023, the Board of directors has, on a quarterly basis,
decided on share buy-back tranches. The 2023 programme was up to USD
6
Norwegian State.
During 2023, four tranches of in total USD
6
acquisition of the fourth tranche in the open market was finalised in January 2024. As of 31 December 2023, USD
410
fourth tranche had been purchased in the open market, of which USD
388
with a third party, the remaining order of USD
162
In order to maintain the Norwegian State’s ownership share in Equinor, a proportionate share of the second, third and fourth tranche
of the 2022 programme as well as the first tranche of the 2023 programme was redeemed and annulled after approval by the annual
general meeting on 10 May 2023. The liability to the Norwegian State of USD
3.705
39.071
2023.
Equinor Annual Report on Form 20-F 2023 128
Employees share saving plan
Number of shares
2023
2022
Share saving plan at 1 January
10,908,717
12,111,104
Purchase
2,204,207
2,127,172
Allocated to employees
(4,228,256)
(3,329,559)
Share saving plan at 31 December
8,884,668
10,908,717
In 2023 and 2022 treasury shares were purchased to employees participating in the share saving plan for USD
68
72
million, respectively. For further information, see note 8 Salaries and personnel expenses.
Earnings per share
(in USD million)
2023
2022
Basic earnings per share
Net income (loss) attributable to shareholders of the company
11,885
28,746
Weighted average number of ordinary shares outstanding
3,021
3,174
Basic earnings per share (in USD)
3.93
9.06
Diluted earnings per share
Net income (loss) attributable to shareholders of the company
11,885
28,746
Weighted average number of ordinary shares outstanding, diluted
3,027
3,183
Diluted earnings per share (in USD)
3.93
9.03
Basic and diluted earnings per share amounts are calculated by dividing the Net income (loss) for the year attributable to shareholders
by relevant weighted average number of ordinary shares outstanding during the year. Shares purchased to employees participating in
the share saving plan is the only diluting element.
21 Finance debt
Non-current finance debt
Finance debt measured at amortised cost
Weighted average interest
rates in %
1)
Carrying amount in USD
millions at 31 December
Fair value in USD
millions at 31 December
2)
2023
2022
2023
2022
2023
2022
Unsecured bonds
United States Dollar (USD)
3.82
3.82
15,705
17,190
15,037
16,167
Euro (EUR)
1.51
1.42
6,633
7,465
6,177
6,782
Great Britain Pound (GBP)
6.08
6.08
1,747
1,652
2,013
1,836
Norwegian Kroner (NOK)
4.18
4.18
295
304
302
311
Total unsecured bonds
24,380
26,612
23,529
25,097
Unsecured loans
Brazilian real (BRL)
10.10
-
179
-
179
-
Japanese Yen (JPY)
4.30
4.30
71
76
83
90
Equinor Annual Report on Form 20-F 2023 129
Total unsecured loans
250
76
262
90
Total
24,630
26,688
23,791
25,187
Non-current finance debt due within one year
2,400
2,547
2,415
2,597
Non-current finance debt
22,230
24,141
21,376
22,590
1)
Weighted average interest rates are calculated based on the contractual rates on the loans per currency at 31 December and do
not include the effect of swap agreements.
2)
level 2 in the fair value hierarchy. For more information regarding fair value hierarchy, see note 28 Financial instruments and fair
value measurement.
Unsecured bonds amounting to USD
15,705
amounting to USD
7,848
827
swapped. The table does not include the effects of agreements entered into to swap the various currencies into USD. For further
information see note 28 Financial instruments and fair value measurement.
Substantially all unsecured bonds and unsecured bank loan agreements contain provisions restricting future pledging of assets to
secure borrowings without granting a similar secured status to the existing bondholders and lenders.
No
Out of Equinor's total outstanding unsecured bond portfolio,
34
prior to its final redemption at par or at certain specified premiums if there are changes to the Norwegian tax laws. The carrying
amount of these agreements is USD
24,076
For more information about the revolving credit facility, maturity profile for undiscounted cash flows and interest rate risk management,
see note 4 Financial risk and capital management.
Non-current finance debt maturity profile
At 31 December
(in USD million)
2023
2022
Year 2 and 3
4,683
4,794
Year 4 and 5
4,511
4,510
After 5 years
13,035
14,837
Total repayment of non-current finance debt
22,230
24,141
Weighted average maturity (years - including current portion)
9
9
Weighted average annual interest rate (% - including current portion)
3.41
3.29
Current finance debt
At 31 December
(in USD million)
2023
2022
Collateral liabilities
458
1,571
Non-current finance debt due within one year
2,400
2,547
Other including US Commercial paper programme and bank overdraft
3,138
241
Total current finance debt
5,996
4,359
Weighted average interest rate (%)
3.77
2.22
Equinor Annual Report on Form 20-F 2023 130
Collateral liabilities and other current liabilities mainly relate to cash received as security for a portion of Equinor's credit exposure and
outstanding amounts on US Commercial paper (CP) programme. Issuance on the CP programme amounted to USD
1,895
of
31 December 2023 and USD
227
Reconciliation of cash flows from financing activities to finance line items in balance sheet
(in USD million)
Non-current
finance debt
Current
finance
debt
Financial
receivable
Collaterals
1)
Additional
paid in
capital
2)
Non-
controlling
interest
Dividend
payable
Lease
liabilities
3)
Total
At 1 January 2023
24,140
4,359
(3,468)
3,041
1
2,808
3,667
Repayment of finance debt
(2,818)
(2,818)
Repayment of lease liabilities
(1,422)
(1,422)
Dividend paid
(10,906)
(10,906)
Share buy-back
(5,589)
(5,589)
Net current finance debt and other
finance activities
1,385
1,287
(69)
(10)
2,593
Net cash flow from financing activities
(2,818)
1,385
1,287
(5,658)
(10)
(10,906)
(1,422)
(18,142)
Transfer to current portion
147
(147)
Effect of exchange rate changes
321
44
(5)
-
(25)
Dividend declared
10,783
Debt in RIO Energy
437
New leases
1,379
Other changes
2
354
(1)
2,617
19
(36)
(29)
Net other changes
907
251
(6)
2,617
19
10,747
1,325
At 31 December 2023
22,230
5,995
(2,185)
-
10
2,649
3,570
(in USD million)
Non-current
finance debt
Current
finance
debt
Financial
receivable
Collaterals
1)
Additional
paid in
capital
2)
Non-
controlling
interest
Dividend
payable
Lease
liabilities
3)
Total
At 1 January 2022
27,404
5,273
(1,577)
6,408
14
582
3,562
Repayment of finance debt
(250)
(250)
Repayment of lease liabilities
(1,366)
(1,366)
Dividend paid
(5,380)
(5,380)
Share buy-back
(3,315)
(3,315)
Net current finance debt and other
finance activities
-
(2,982)
(2,038)
(73)
(8)
(5,102)
Net cash flow from financing activities
(250)
(2,982)
(2,038)
(3,388)
(8)
(5,380)
(1,366)
(15,414)
Transfer to current portion
(2,297)
2,297
Effect of exchange rate changes
(710)
(78)
145
(3)
(149)
Dividend declared
7,549
New leases
1,644
Other changes
(7)
(151)
21
(2)
57
(24)
Equinor Annual Report on Form 20-F 2023 131
Net other changes
(3,014)
2,068
145
21
(5)
7,606
1,471
At 31 December 2022
24,140
4,359
(3,468)
3,041
1
2,808
3,667
1)
Financial receivable collaterals are included in Trade and other receivables in the Consolidated balance sheet. See note 18
Trade and other receivables for more information.
2)
3)
22 Pensions
Accounting policies
Equinor has pension plans for employees that either provide a defined pension benefit upon retirement or a pension dependent on
defined contributions and related returns. A portion of the contributions are provided for as notional contributions, for which the liability
increases with a promised notional return, set equal to the actual return of assets invested through the ordinary defined contribution
plan. For defined benefit plans, the benefit to be received by employees generally depends on many factors including length of
service, retirement date and future salary levels.
Equinor's proportionate share of multi-employer defined benefit plans is recognised as liabilities in the Consolidated balance sheet as
sufficient information is considered available, and a reliable estimate of the obligation can be made.
The cost of pension benefit plans is expensed over the period that the employees render services and become eligible to receive
benefits. The calculation is performed by an external actuary. Equinor's net obligation from defined benefit pension plans is calculated
separately for each plan by estimating the amount of future benefit that employees have earned in return for their services in the
current and prior periods. That benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.
The recognition of a net surplus for the funded plan is based on the assumption that the net assets represent a future value for
Equinor, either as a possible distribution to premium fund which can be used for future funding of new liabilities, or as disbursement of
equity in the pension fund.
Contributions to defined contribution schemes are recognised in the Consolidated statement of income as pension costs in the period
in which the contribution amounts are earned by the employees.
Notional contribution plans, reported in the parent company Equinor ASA, are recognised as Pension liabilities with the actual value of
the notional contributions and promised return at reporting date. Notional contributions are recognised in the Consolidated statement
of income as periodic pension cost, while changes in fair value of the employees’ notional assets are reflected in the Consolidated
statement of income under Net financial items.
Periodic pension cost is accumulated in cost pools and allocated to business areas and Equinor’s operated joint operations (licences)
on an hours’ incurred basis and recognised in the Consolidated statement of income based on the function of the cost.
------------------------------------------------------------------------------------------------------------------------------------
Pension plans in Equinor
The main pension plans for Equinor ASA and its most significant subsidiaries are defined contribution plans which includes certain
unfunded elements (notional contribution plans).
member of certain defined benefit plans. The benefit plan in Equinor ASA was closed in 2015 for new employees and for employees
with more than 15 years to regular retirement age.
Equinor's defined benefit plans are generally based on a minimum of 30 years of
service and 66% of the final salary level, including an assumed benefit from the Norwegian National Insurance Scheme.
Norwegian companies in the group are subject to, and complies with, the requirements of the Norwegian Mandatory Company
Pensions Act.
The defined benefit plans in Norway are managed and financed through Equinor Pensjon (Equinor's pension fund - hereafter Equinor
Pension). Equinor Pension is an independent pension fund that covers the employees in Equinor's Norwegian companies. The
pension fund's assets are kept separate from the company's and group companies' assets. Equinor Pension is supervised by the
Financial Supervisory Authority of Norway ("Finanstilsynet") and is licenced to operate as a pension fund.
Equinor has more than one defined benefit plan, but the disclosure is made in total since the plans are not subject to materially
different risks. Pension plans outside Norway are not material and as such not disclosed separately. In this note pension costs are
Equinor Annual Report on Form 20-F 2023 132
presented on a gross basis before allocation to licence partners. In the Consolidated statement of income, the pension costs in
Equinor ASA are presented net of costs allocated to licence partners.
Equinor is also a member of a Norwegian national agreement-based early retirement plan (“AFP”), and the premium is calculated
based on the employees' income but limited to 7.1 times the basic amount in the National Insurance scheme (7.1 G).
payable for all employees until age
62
. Pension from the AFP scheme will be paid from the AFP plan administrator to employees for
their full lifetime.
Net pension cost
Total pension costs amount to USD
441
458
488
cost and interest income related to defined benefit plans are included in the Consolidated statement of income within Net financial
items.
Changes in pension liabilities and plan assets during the year
(in USD million)
2023
2022
Pension liabilities at 1 January
7,664
9,358
Current service cost
145
183
Interest cost
318
105
Actuarial (gains)/losses and currency effects
338
(1,785)
Changes in notional contribution liability and other effects
56
67
Benefits paid
(284)
(258)
Losses/(gains) from curtailment, settlement or plan amendment
91
(5)
Pension liabilities at 31 December
8,328
7,664
Fair value of plan assets at 1 January
5,213
6,404
Interest income
190
116
Return on plan assets (excluding interest income)
202
(622)
Company contributions
211
104
Benefits paid
(141)
(121)
Losses (gains) from curtailment, settlement or plan amendment
113
(5)
Other effects
-
6
Foreign currency translation effects
(124)
(669)
Fair value of plan assets at 31 December
5,664
5,213
Net pension liability at 31 December
2,665
2,452
Represented by:
Asset recognised as non-current pension assets (funded plan)
1,260
1,219
Liability recognised as non-current pension liabilities (unfunded plans)
3,925
3,671
Pension liabilities specified by funded and unfunded pension plans
8,328
7,664
Funded
4,404
3,994
Unfunded
3,925
3,670
Equinor recognised an actuarial loss from changes in financial assumptions in 2023.
No
end 2022, but other assumptions increased with
50
Equinor Annual Report on Form 20-F 2023 133
Actuarial assumptions
Assumptions used to determine
benefit obligations in %
Rounded to the nearest quartile
2023
2022
Discount rate
3.75
3.75
Rate of compensation increase
4.00
3.50
Expected rate of pension increase
3.25
2.75
Expected increase of social security base amount (G-amount)
3.75
3.25
Weighted-average duration of the defined benefit obligation
13.25
13.50
The assumptions presented are for the Norwegian companies in Equinor which are members of Equinor's pension fund. The defined
benefit plans of other subsidiaries are immaterial to the consolidated pension assets and liabilities.
Sensitivity analysis
The table below presents an estimate of the potential effects of changes in discount rate and expected rate of pension increase for the
defined benefit plans. The following estimates are based on facts and circumstances as of 31 December 2023.
Discount rate
Expected rate of
pension increase
(in USD million)
0.50%
-0.50%
0.50%
-0.50%
Effect on:
Defined benefit obligation at 31 December 2023
(521)
587
494
(451)
The sensitivity of the financial results to each of the key assumptions has been estimated based on the assumption that all other
factors would remain unchanged. The estimated effects on the financial result would differ from those that would actually appear in the
Consolidated financial statements because the Consolidated financial statements would also reflect the relationship between these
assumptions.
Equinor Annual Report on Form 20-F 2023 134
Pension assets
The plan assets related to the defined benefit plans were measured at fair value. Equinor Pension invests in both financial assets and
real estate.
The table below presents the portfolio weighting as approved by the board of Equinor Pension for 2023. The portfolio weight during a
year will depend on the risk capacity.
Target portfolio
weight
(in %)
2023
2022
Equity securities
33.6
32.9
30
-
38
Interest bearing investments
61.7
60.5
52
-
65
Real estate
4.7
6.6
5
-
10
Total
100.0
100.0
In 2023,
100
% of the equity securities and
13
% of bonds had quoted market prices in an active market.
87
% of bonds and 100% of
money market instruments had market prices based on inputs other than quoted prices. If quoted market prices are not available, fair
values are determined from external calculation models based on market observations from various sources.
In 2022,
44
% of the equity securities and
3
% of bonds had quoted market prices in an active market.
54
% of the equity securities,
97
% of bonds and 100% of money market instruments had market prices based on inputs other than quoted prices.
For definition of the various levels, see note 28 Financial instruments and fair value measurement.
Estimated company contributions to be made to Equinor Pension in 2024 is approximately USD
109
23 Provisions and other liabilities
Accounting policies
Asset retirement obligations (ARO)
Provisions for asset retirement obligations (ARO) are recognised when Equinor has an obligation (legal or constructive) to dismantle
and remove a facility or an item of property, plant and equipment and to restore the site on which it is located, and when a reliable
estimate of that liability can be made. Normally an obligation arises for a new facility, such as an oil and natural gas production or
transportation facility, upon construction or installation. An obligation may also arise during the period of operation of a facility through
a change in legislation or through a decision to terminate operations or be based on commitments associated with Equinor's ongoing
use of pipeline transport systems where removal obligations rest with the volume shippers.
The amount recognised is the present value of the estimated future expenditures determined in accordance with local conditions and
requirements. The cost is estimated based on current regulations and technology, considering relevant risks and uncertainties. The
discount rate used in the calculation of the ARO is a market-based risk-free rate based on the applicable currency and time horizon of
the underlying cash flows. The provisions are classified under Provisions in the Consolidated balance sheet.
When a provision for ARO is recognised, a corresponding amount is recognised as an increase of the related asset within property,
plant and equipment and is subsequently depreciated over the useful life of the asset. Any change in the present value of the
estimated expenditure is reflected as an adjustment to the provision and the corresponding adjustment to the carrying value of the
property, plant and equipment. When a decrease in the ARO related to a producing asset exceeds the carrying amount of the asset,
the excess is recognised as a reduction of Depreciation, amortisation and net impairment in the Consolidated statement of income.
When an asset has reached the end of its useful life, all subsequent changes to the ARO are recognised as they occur in Operating
expenses in the Consolidated statement of income.
Removal provisions associated with Equinor's role as shipper of volumes through third party transport systems are expensed as
incurred.
Estimation uncertainty regarding asset retirement obligations
Establishing the appropriate estimates for such obligations are based on historical knowledge combined with knowledge of ongoing
technological developments, expectations about future regulatory and technological development and involve the application of
judgement and an inherent risk of significant adjustments. The costs of decommissioning and removal activities require revisions due
to changes in current regulations and technology while considering relevant risks and uncertainties. Most of the removal activities are
Equinor Annual Report on Form 20-F 2023 135
many years into the future, and the removal technology and costs are constantly changing. The speed of the transition to renewable
energy sources may also influence the production period, hence the timing of the removal activities. The estimates include
assumptions of norms, rates and time required which can vary considerably depending on the assumed removal complexity.
Moreover, changes in the discount rate and foreign currency exchange rates may impact the estimates significantly. As a result, the
initial recognition of ARO and subsequent adjustments involve the application of significant judgement.
---------------------------------------------------------------------------------------------------------------------------------
(in USD million)
Asset retirement
obligations
Other
provisions and
liabilities
Total
Non-current portion at 31 December 2022
11,569
4,064
15,633
Current portion at 31 December 2022 reported as Trade, other payables and
provisions
165
494
659
Provisions and other liabilities at 31 December 2022
11,734
4,558
16,292
New or increased provisions and other liabilities
488
443
931
Change in estimates
845
25
870
Amounts charged against provisions and other liabilities
(126)
(301)
(427)
Effects of change in the discount rate
(276)
13
(263)
Reduction due to divestments
(403)
97
(306)
Accretion expenses
462
76
538
Reclassification, transfer and other
(174)
(1,387)
(1,561)
Foreign currency translation effects
(190)
62
(128)
Provisions and other liabilities at 31 December 2023
12,360
3,586
15,946
Non-current portion at 31 December 2023
12,171
3,133
15,304
Current portion at 31 December 2023 reported as Trade, other payables and
provisions
190
452
642
Equinor Annual Report on Form 20-F 2023 136
Equinor's estimated asset retirement obligations (ARO) have increased by USD
626
12,360
2023 compared to year-end 2022. Changes in ARO are reflected within Property, plant and equipment and Provisions and other
liabilities in the Consolidated balance sheet.
In certain production sharing agreements (PSA), Equinor’s estimated share of asset retirement obligation (ARO) is paid into an escrow
account over the producing life of the field. These payments are considered down-payments of the liabilities and included in the line
item Amounts charged against provisions and other liabilities.
Claims and litigations mainly relate to expected payments for unresolved claims. The timing and amounts of potential settlements in
respect of these claims are uncertain and dependent on various factors that are outside management's control. For further information
on provisions and contingent liabilities, see note 26 Other commitments, contingent liabilities and contingent assets.
The timing of cash outflows of asset retirement obligations depends on the expected cease of production at the various facilities.
Line item Reclassification, transfer and other includes USD
1,388
further details.
Sensitivities with regards to discount rate on the total ARO portfolio
The discount rate sensitivity has been calculated by assuming a reasonably possible change of
1.3
An increase in the discount rate of
1.3
1,994
reduction would increase the liability by USD
2,507
regards to change in the removal year.
Expected timing of cash outflows
(in USD million)
Asset retirement
obligations
Other
provisions and
liabilities
Total
2024 - 2028
1,512
2,580
4,092
2029 - 2033
997
342
1,339
2034 - 2038
2,605
134
2,739
2039 - 2043
4,610
(42)
4,568
Thereafter
2,636
572
3,208
At 31 December 2023
12,360
3,586
15,946
24 Trade, other payables and provisions
At 31 December
(in USD million)
2023
2022
Trade payables
5,317
6,207
Non-trade payables and accrued expenses
2,210
2,688
Payables due to participation in joint operations and similar arrangements
2,283
2,074
Payables to equity accounted associated companies and other related parties
1,242
1,479
Total financial trade and other payables
11,052
12,449
Current portion of provisions and other non-financial payables
819
903
Trade, other payables and provisions
11,870
13,352
Included in Current portion of provisions and other non-financial payables are certain provisions that are further described in note 23
Provisions and other liabilities and in note 26 Other commitments, contingent liabilities and contingent assets. For information
Equinor Annual Report on Form 20-F 2023 137
regarding currency sensitivities, see note 28 Financial instruments and fair value measurement. For further information on payables to
equity accounted associated companies and other related parties, see note 27 Related parties.
25 Leases
Accounting policies
Leases
A lease is defined as a contract that conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. At the date at which the underlying asset is made available for Equinor, the present value of future lease payments
(including extension options considered reasonably certain to be exercised) is recognised as a lease liability. The present value is
calculated using Equinor’s incremental borrowing rate. A corresponding right-of-use (RoU) asset is recognised, including lease
payments and direct costs incurred at the commencement date. Lease payments are reflected as interest expense and a reduction of
lease liabilities. The RoU assets are depreciated over the shorter of each contract’s term and the assets’ useful life.
Short term leases (12 months or less) and leases of low value assets are expensed or (if appropriate) capitalised as incurred,
depending on the activity in which the leased asset is used.
Many of Equinor’s lease contracts, such as rig and vessel leases, involve several additional services and components, including
personnel cost, maintenance, drilling related activities, and other items. For a number of these contracts, the additional services
represent a not inconsiderable portion of the total contract value. Non-lease components within lease contracts are accounted for
separately for all underlying classes of assets and reflected in the relevant expense category or (if appropriate) capitalised as
incurred, depending on the activity involved.
Accounting judgement regarding leases
In the oil and gas industry, where activity frequently is carried out through joint arrangements or similar arrangements, the application
of IFRS 16 Leases requires evaluations of whether the joint arrangement or its operator is the lessee in each lease agreement and
consequently whether such contracts should be reflected gross (100%) in the operator’s financial statements, or according to each
joint operation partner’s proportionate share of the lease.
In many cases where an operator is the sole signatory to a lease contract of an asset to be used in the activities of a specific joint
operation, the operator does so implicitly or explicitly on behalf of the joint arrangement. In certain jurisdictions, and importantly for
Equinor as this includes the Norwegian continental shelf (NCS), the concessions granted by the authorities establish both a right and
an obligation for the operator to enter into necessary agreements in the name of the joint operations (licences).
As is the customary norm in upstream activities operated through joint arrangements, the operator will manage the lease, pay the
lessor, and subsequently re-bill the partners for their share of the lease costs. In each such instance, it is necessary to determine
whether the operator is the sole lessee in the external lease arrangement, and if so, whether the billings to partners may represent
sub-leases, or whether it is in fact the joint arrangement which is the lessee, with each participant accounting for its proportionate
share of the lease. Where all partners in a licence are considered to share the primary responsibility for lease payments under a
contract, Equinor’s proportionate share of the related lease liability and RoU asset will be recognised net by Equinor. When Equinor is
considered to have the primary responsibility for the full external lease payments, the lease liability is recognised gross (100%).
--------------------------------------------------------------------------------------------------------------------------------
Equinor leases certain assets, notably drilling rigs, transportation vessels, storages and office facilities for operational activities.
Equinor is mostly a lessee, and the use of leases serves operational purposes rather than as a tool for financing.
Information related to lease payments and lease liabilities
(in USD million)
2023
2022
Lease liabilities at 1 January
3,667
3,562
New leases, including remeasurements and cancellations
1,379
1,644
Gross lease payments
(1,590)
(1,484)
Lease interest
138
95
Lease repayments
(1,451)
(1,451)
(1,389)
(1,389)
Foreign currency translation effects
(25)
(149)
Equinor Annual Report on Form 20-F 2023 138
Lease liabilities at 31 December
3,570
3,667
Current lease liabilities
1,279
1,258
Non-current lease liabilities
2,291
2,409
Equinor recognised revenues of USD
337
319
partners related to lease contracts being recognised gross by Equinor.
Commitments relating to lease contracts which had not yet commenced at year-end are included within Other commitments in note
26 Other commitments, contingent liabilities and contingent assets.
A maturity profile based on undiscounted contractual cash flows for lease liabilities is disclosed in note 4 Financial risk and capital
management.
Non-current lease liabilities maturity profile
At 31 December
(in USD million)
2023
2022
Year 2 and 3
1,342
1,360
Year 4 and 5
470
483
After 5 years
478
566
Total repayment of non-current lease liabilities
2,291
2,409
The Right of use assets are included within the line item Property, plant and equipment in the Consolidated balance sheet. See also
note 12 Property, plant and equipment.
Equinor Annual Report on Form 20-F 2023 139
26 Other commitments, contingent liabilities and contingent assets
Accounting policies
Estimation uncertainty regarding levies
Equinor’s global business activities are subject to taxation on income and indirect taxes in various jurisdictions around the
world. In these jurisdictions, governments can respond to global or local development, including climate related matters and
public fiscal balances, by issuing new laws or other regulations stipulating changes in income tax, value added tax, tax on
emissions, customs duties or other levies which may affect profitability and even the viability of Equinor’s business in that
jurisdiction. Equinor mitigates this risk by using local legal representatives and staying up to date with the legislation in the
jurisdictions where activities are carried out. Occasionally, legal disputes arise from difference in interpretations. Equinor’s
legal department, together with local legal representatives, estimate the outcome from such legal disputes based on first-hand
knowledge. Such estimates may differ from the actual results.
--------------------------------------------------------------------------------------------------------------------------------
Contractual commitments
Equinor had contractual commitments of USD
11,259
proportional share and mainly comprise construction and acquisition of property, plant and equipment as well as committed
investments/funding or resources in equity accounted entities. It also includes Equinors’ estimated expenditures related to
commitments to drill a certain number of wells, commitments which sometimes can be a prerequisite to be awarded oil and gas
exploration and production licences.
At the end of 2023, Equinor was committed to participate in
34
46
%.
Equinor's share of estimated expenditures to drill these wells amounts to USD
609
committed to participating in depending on future discoveries in certain licences are not included in these numbers.
Other long-term commitments
Equinor has entered into various long-term agreements for pipeline transportation as well as terminal use, processing, storage and
entry/exit capacity commitments and commitments related to specific purchase agreements. The agreements ensure the rights to the
capacity or volumes in question, but also impose on Equinor the obligation to pay for the agreed-upon service or commodity,
irrespective of actual use. The contracts' terms vary, with durations of up to
2060
.
Take-or-pay contracts for the purchase of commodity quantities are only included in the table below if their contractually agreed
pricing is of a nature that will or may deviate from the obtainable market prices for the commodity at the time of delivery.
Obligations payable by Equinor to entities accounted for in the Equinor group using the equity method are included in the table below
with Equinor’s full proportionate share. For assets (such as pipelines) that are included in the Equinor accounts through joint
operations or similar arrangements, and where consequently Equinor’s share of assets, liabilities, income and expenses (capacity
costs) are reflected on a line-by-line basis in the Consolidated financial statements, the amounts in the table include the net
commitment payable by Equinor (i.e. Equinor’s proportionate share of the commitment less Equinor's ownership share in the
applicable entity).
The table below also includes USD
3,600
according to IFRS 16, as well as leases not yet commenced. For commenced leases, please refer to note 25 Leases.
Nominal minimum other long-term commitments at 31 December 2023:
(in USD million)
2024
2,659
2025
1,972
2026
1,615
2027
1,187
2028
1,010
Thereafter
6,775
Total other long-term commitments
15,218
Equinor Annual Report on Form 20-F 2023 140
Guarantees
Equinor has guaranteed for its proportionate share of some of our associates’ long-term bank debt, payment obligations under
contracts, and certain third-party obligations. The total amount guaranteed at year-end 2023 is USD
1,564
the guarantees is immaterial.
Contingent liabilities and contingent assets
Claim from Petrofac regarding multiple variation order requests performed in Algeria (In Salah)
Petrofac International (UAE) LLC (“PIUL”) was awarded the EPC Contract to execute the ISSF Project (the In Salah Southern Fields
Project in central Algeria). Following a suspension of activity in 2013, PIUL issued multiple Variation Order Requests (“VoRs”) related
to the costs incurred for stand-by and remobilization costs. Several VoRs have been paid, but the settlement of the remaining has
been unsuccessful. PIUL initiated arbitration in August 2020 claiming an estimated amount of USD
533
a
31.85
% share. Equinor's maximum exposure amounts to USD
163
Withholding tax dispute regarding remittances from Brazil to Norway
Remittances made from Brazil for services are normally subject to withholding income tax. In 2012, Equinor’s subsidiaries in Brazil
filed a lawsuit to avoid paying this tax on remittances made to Equinor ASA and Equinor Energy AS under the Double Tax Treaty
Brazil has with Norway. The lawsuit relates to services without transfer of technology on fields where Equinor is a partner. Court
proceedings through several levels in the legal system have been ongoing, and a final verdict has not yet been reached. Withholding
tax has not been paid since 2014. Equinor's share of maximum exposure in the case at year end 2023 is estimated at approximately
USD
159
developments in similar litigation in Brazil have led to an updated evaluation of the likelihood of loss, and Equinor has provided for the
best estimate in the case as income tax expense.
Suit for an annulment of Petrobras’ sale of the interest in BM-S-8 to Equinor
In March 2017, an individual connected to the Union of Oil Workers of Sergipe (Sindipetro) filed a class action suit against Petrobras,
Equinor, and ANP - the Brazilian Regulatory Agency - to seek annulment of Petrobras’ sale of the interest and operatorship in BM-S-8
to Equinor, which was closed in November 2016 after approval by the partners and authorities. In February 2022, sentence in the
annulment case was issued at the first instance level, and Equinor won on all merits. The case was appealed by the plaintiff and
Equinor has filed counter arguments. At the end of 2023, the acquired interest remains on Equinor’s balance sheet, where the assets
related to phase 1 have been reclassified to property, plant and equipment and the assets related to phase 2 are presented as
intangible assets, all of which are part of the Exploration & Production International (E&P International) segment.
Brazilian law creating uncertainty regarding certain tax incentives
Equinor is currently part in two legal matters in the state of Rio de Janeiro in Brazil related to a law requiring taxpayers that benefits
from ICMS tax incentives (i.e. Repetro) to deposit
10
% of the savings made from such benefits into a state fund. Equinor is of the
opinion that specific incentives so far relevant for the Roncador and Peregrino fields are not in scope of the law, while the state of Rio
de Janeiro requires deposits to be paid with the addition of fines and interest. While legal developments in 2023 have included
clarification from the Supreme Court that the law is constitutional, subject to a final ruling, Equinor’s litigation in the matter continues,
mainly related to the law’s impact specifically for Repetro and other state tax incentives. Equinor believes that our view in the matter
will ultimately be upheld by the courts, and no amounts have consequently been provided for in the financial statements. At year-end
2023, the maximum exposure for Equinor in the matter has been estimated to be a total of USD
114
KKD oil sands partnership
Canadian tax authorities have issued a notice of reassessment for 2014 for Equinor's Canadian subsidiary which was party to
Equinor's divestment of
40
% of the KKD Oil Sands partnership at that time. The reassessment adjusts the allocation of the proceeds
of disposition of certain Canadian resource properties from the partnership. Maximum exposure is estimated to be approximately USD
380
matter in 2023. While the court process may take several years, the reassessment will impact Equinor’s tax paying position while the
proceedings are ongoing. Equinor is of the view that all applicable tax regulations have been applied in the case and that Equinor has
a strong position. No amounts have consequently been provided for in the financial statements.
Other claims
During the normal course of its business, Equinor is involved in legal proceedings, and several other unresolved claims are currently
outstanding. The ultimate liability or asset, in respect of such litigation and claims cannot be determined at this time. Equinor has
provided in its Consolidated financial statements for probable liabilities related to litigation and claims based on its best estimate.
Equinor does not expect that its financial position, results of operations or cash flows will be materially affected by the resolution of
these legal proceedings. Equinor is actively pursuing the above disputes through the contractual and legal means available in each
case, but the timing of the ultimate resolutions and related cash flows, if any, cannot at present be determined with sufficient reliability.
Equinor Annual Report on Form 20-F 2023 141
Provisions related to claims other than those related to income tax are reflected within note 23 Provisions and other liabilities.
Uncertain income tax related liabilities are reflected as current tax payables or deferred tax liabilities as appropriate, while uncertain
tax assets are reflected as current or deferred tax assets.
27 Related parties
Transactions with the Norwegian State
The Norwegian State is the majority shareholder of Equinor and also holds major investments in other Norwegian companies. As of
31 December 2023, the Norwegian State had an ownership interest in Equinor of
67.0
% (excluding Folketrygdfondet, the Norwegian
national insurance fund, of
3.6
%). This ownership structure means that Equinor participates in transactions with many parties that are
under a common ownership structure and therefore meet the definition of a related party.
For accounting policies and accounting judgement related to transactions with the Norwegian State, see note 7 Total revenues and
other income. Total purchases of oil and natural gas liquids from the Norwegian State amounted to USD
10.1
12.6
and USD
9.6
parties specified in note 24 Trade and other payables are mostly related to these purchases, and is included in the below table within
Trade, other payables and provisions. In addition, Equinor sells in its own name, but for the Norwegian State’s account and risk, the
Norwegian State’s gas production.
Trade and other receivables include a receivable from the Norwegian State under the Marketing Instruction in relation to the state’s
(SDFI) participation in the gas sales activities of a foreign subsidiary of Equinor, estimated at USD
0.1
corresponding estimated amount of USD
1.5
financial receivables. The decrease is mainly related to reduced cost price for gas storage volume and realised gains in the period. A
corresponding non-current liability of USD
0.1
activities in the foreign subsidiary, and is included within Provisions and other liabilities in the below table. The estimated total non-
current liabilities to SDFI amount to USD
0.8
2.1
In addition, the line-item Finance debt, which form part of the sub-total Total current liabilities, includes a liability of USD
0.9
SDFI due to cash received for collateral deposits requirement (
0
Transactions with the Norwegian State related to Equinor’s share buy-back programme are presented in note 20 Shareholders’ equity,
capital distribution and earnings per share.
Other transactions
In its ordinary business operations, Equinor enters into contracts such as pipeline transport, gas storage and processing of petroleum
products, with companies in which Equinor has ownership interests.
Gassled and certain other infrastructure assets are operated by Gassco AS, which is an entity under common control by the
Norwegian Ministry of Energy. Gassco’s activities are performed on behalf of and for the risk and reward of pipeline and terminal
owners, and capacity payments flow through Gassco to the respective owners. Equinor payments that flowed through Gassco in this
respect amounted to USD
1.0
1.2
1.0
represent Equinor’s capacity payment net of Equinor’s own ownership interests in Gassco operated infrastructure. In addition, Equinor
manages, in its own name, but for the Norwegian State’s account and risk, the Norwegian State’s share of the Gassco costs. These
transactions are presented net.
Equinor has had transactions with other associated companies and joint ventures in the course of its ordinary business, for which
amounts have not been disclosed due to materiality. In addition, Equinor has had transactions with joint operations and similar
arrangements where Equinor is operator. Indirect operating expenses incurred as operator are charged to the joint operation or similar
arrangement based on the “no-gain/no-loss” principle.
Related party transactions with management are presented in note 8 Salaries and personnel expenses. Related party transactions
due to Equinor’s share buy-back programme are presented in note 20 Shareholders’ equity, capital distribution and earnings per
share. Outstanding balances to related parties split on SDFI and other related parties are presented in the below table. All related
party transactions are carried out on market terms.
Equinor Annual Report on Form 20-F 2023 142
At 31 December 2023
Norwegian State's Direct
Financial Interests
Equity accounted
associated companies
and other related
parties
Third parties
Total amount
(in USD million)
Assets
Prepayments and financial receivables
-
103
1,188
1,291
Trade and other receivables
1,007
49
15,877
16,933
Liabilities
Non-current provisions and other liabilities
850
-
14,454
15,304
Trade, other payables and provisions
1,195
47
10,628
11,870
Current finance debt
893
-
5,103
5,996
At 31 December 2022
Norwegian State's Direct
Financial Interests
Equity accounted
associated companies
and other related
parties
Third parties
Total amount
(in USD million)
Assets
Prepayments and financial receivables
1,461
61
541
2,063
Trade and other receivables
1,103
173
21,176
22,452
Liabilities
Non-current provisions and other liabilities
2,072
-
13,561
15,633
Trade, other payables and provisions
1,419
60
11,873
13,352
Current finance debt
-
-
4,359
4,359
28 Financial instruments and fair value measurement
Accounting policies
Financial assets
Financial assets are initially recognised at fair value when Equinor becomes a party to the contractual provisions of the asset.
Short-term highly liquid investments with original maturity exceeding 3 months are classified as current financial investments. Current
financial investments are primarily accounted for at amortised cost.
Trade receivables are carried at the original invoice amount less a provision for doubtful receivables which represent expected losses
computed on a probability-weighted basis.
A part of Equinor's financial investments is managed together as an investment portfolio of Equinor's captive insurance company and
is held in order to comply with specific regulations for capital retention. The investment portfolio is managed and evaluated on a fair
value basis in accordance with an investment strategy and is accounted for at fair value through profit or loss.
Financial assets are presented as current if they contractually will expire or otherwise are expected to be recovered within 12 months
after the balance sheet date, or if they are held for the purpose of being traded. Financial assets and financial liabilities are shown
separately in the Consolidated balance sheet, unless Equinor has both a legal right and a demonstrable intention to net settle certain
balances payable to and receivable from the same counterparty.
Gains and losses arising on the sale, settlement or cancellation of financial assets are recognised within Net financial items.
Financial liabilities
Financial liabilities are initially recognised at fair value when Equinor becomes a party to the contractual provisions of the liability. The
subsequent measurement of financial liabilities is either as financial liabilities at fair value through profit or loss or financial liabilities
measured at amortised cost using the effective interest method, depending on classification. The latter applies to Equinor's non-
current bank loans and bonds.
Equinor Annual Report on Form 20-F 2023 143
Financial liabilities are presented as current if the liability is expected to be settled as part of Equinor’s normal operating cycle, the
liability is due to be settled within 12 months after the balance sheet date, Equinor does not have the right to defer settlement of the
liability more than 12 months after the balance sheet date, or if the liabilities are held for the purpose of being traded.
Gains and losses arising on the repurchase, settlement or cancellation of liabilities are recognised within Net financial items.
Derivative financial instruments
Equinor uses derivative financial instruments to manage certain exposures to fluctuations in foreign currency exchange rates, interest
rates and commodity prices. Such derivative financial instruments are initially recognised at fair value on the date on which a
derivative contract is entered into and are subsequently remeasured at fair value through profit and loss. The impact of commodity-
based derivative financial instruments is recognised in the Consolidated statement of income as part of Revenues, as such derivative
instruments are related to sales contracts or revenue-related risk management for all significant purposes. The impact of other
derivative financial instruments is reflected under Net financial items.
Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Derivative assets or
liabilities expected to be settled, or with the legal right to be settled more than 12 months after the balance sheet date, are classified
as non-current. Derivative financial instruments held for the purpose of being traded are however always classified as current.
Contracts to buy or sell a non-financial item that can be settled net in cash or another financial instrument are accounted for as
financial instruments. However, contracts that are entered into and continue to be held for the purpose of the receipt or delivery of a
non-financial item in accordance with Equinor's expected purchase, sale or usage requirements, also referred to as own-use, are not
accounted for as financial instruments. Such sales and purchases of physical commodity volumes and power are reflected in the
Consolidated statement of income as Revenue from contracts with customers and Purchases [net of inventory variation], respectively.
This is applicable to a significant number of contracts for the purchase or sale of crude oil and natural gas, as well as for some
contracts for the purchase or sale of power.
For contracts to sell a non-financial item that can be settled net in cash, but which ultimately are physically settled despite not
qualifying as own use prior to settlement, the changes in fair value are included in Gain/loss on commodity derivatives. When these
derivatives are physically settled, the previously recognised unrealised gain/loss is included in Physically settled commodity
derivatives. Both these elements are included as part of Revenues. The physical deliveries made through such contracts are included
in Revenue from contracts with customers at contract price.
Derivatives embedded in host contracts which are not financial assets within the scope of IFRS 9 are recognised as separate
derivatives and are reflected at fair value with subsequent changes through profit and loss, when their risks and economic
characteristics are not closely related to those of the host contracts, and the host contracts are not carried at fair value. Where there is
an active market for a commodity or other non-financial item referenced in a purchase or sale contract, a pricing formula will, for
instance, be considered to be closely related to the host purchase or sales contract if the price formula is based on the active market
in question. A price formula with indexation to other markets or products will however result in the recognition of a separate derivative.
In Equinor, this mainly relates to certain natural gas sales contracts where the pricing formula references power.
--------------------------------------------------------------------------------------------------------------------------------------
Financial instruments by category
The following tables present Equinor's classes of financial instruments and their carrying amounts by the categories as they are
defined in IFRS 9 Financial Instruments. For financial investments, the difference between measurement as defined by IFRS 9
categories and measurement at fair value is immaterial. For trade and other receivables and payables, and cash and cash
equivalents, the carrying amounts are considered a reasonable approximation of fair value. See note 21 Finance
debt for fair value
information of non-current bonds and bank loans.
At 31 December 2023
Fair value
through profit
or loss
Non-financial
assets
Total carrying
amount
(in USD million)
Note
Amortised cost
Assets
Non-current derivative financial instruments
559
559
Non-current financial investments
16
75
3,366
3,441
Prepayments and financial receivables
16
341
950
1,291
Trade and other receivables
18
16,193
740
16,933
Current derivative financial instruments
1,378
1,378
Equinor Annual Report on Form 20-F 2023 144
Current financial investments
16
28,822
402
29,224
Cash and cash equivalents
19
7,767
1,875
9,641
Total
53,198
7,580
1,690
62,467
At 31 December 2022
Fair value
through profit
or loss
Non-financial
assets
Total carrying
amount
(in USD million)
Note
Amortised cost
Assets
Non-current derivative financial instruments
691
691
Non-current financial investments
16
117
2,616
2,733
Prepayments and financial receivables
16
1,658
404
2,063
Trade and other receivables
18
21,611
841
22,452
Current derivative financial instruments
4,039
4,039
Current financial investments
16
29,577
300
29,876
Cash and cash equivalents
19
12,473
3,106
15,579
Total
65,436
10,752
1,245
77,433
Equinor Annual Report on Form 20-F 2023 145
At 31 December 2023
Amortised
cost
Fair value
through
profit or loss
Non-financial
liabilities
Total
carrying
amount
(in USD million)
Note
Liabilities
Non-current finance debt
21
22,230
22,230
Non-current derivative financial instruments
1,795
1,795
Trade, other payables and provisions
24
11,052
819
11,870
Current finance debt
21
5,996
5,996
Dividend payable
2,649
2,649
Current derivative financial instruments
1,619
1,619
Total
41,927
3,414
819
46,159
At 31 December 2022
Amortised
cost
Fair value
through
profit or loss
Non-financial
liabilities
Total
carrying
amount
(in USD million)
Note
Liabilities
Non-current finance debt
21
24,141
24,141
Non-current derivative financial instruments
2,376
2,376
Trade, other payables and provisions
24
12,449
903
13,352
Current finance debt
21
4,359
4,359
Dividend payable
2,808
2,808
Current derivative financial instruments
4,106
4,106
Total
43,757
6,482
903
51,142
Equinor Annual Report on Form 20-F 2023 146
Measurement of fair values
Quoted prices in active markets represent the best evidence of fair value and are used by Equinor in determining the fair values of
assets and liabilities to the extent possible. Financial instruments quoted in active markets will typically include financial instruments
with quoted market prices obtained from the relevant exchanges or clearing houses. The fair values of quoted financial assets,
financial liabilities and derivative instruments are determined by reference to mid-market prices, at the close of business on the
balance sheet date.
Where there is no active market, fair value is determined using valuation techniques. These include using recent arm's-length market
transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and pricing models and
related internal assumptions. In the valuation techniques, Equinor also takes into consideration the counterparty and its own credit
risk. This is either reflected in the discount rate used or through direct adjustments to the calculated cash flows. Consequently, where
Equinor reflects elements of long-term physical delivery commodity contracts at fair value, such fair value estimates to the extent
possible are based on quoted forward prices in the market and underlying indexes in the contracts, as well as assumptions of forward
prices and margins where observable market prices are not available. Similarly, the fair values of interest and currency swaps are
estimated based on relevant quotes from active markets, quotes of comparable instruments, and other appropriate valuation
techniques.
Fair value hierarchy
The following table summarises each class of financial instruments which are recognised in the Consolidated balance sheet at fair
value, split by Equinor's basis for fair value measurement.
(in USD million)
Non-current
financial
investments
Non-current
derivative
financial
instruments
- assets
Current
financial
investments
Current
derivative
financial
instruments
- assets
Cash
equivalents
Non-current
derivative
financial
instruments
- liabilities
Current
derivative
financial
instruments
- liabilities
Net fair
value
At 31 December 2023
Level 1
1,294
0
-
6
0
-
1,300
Level 2
1,528
104
402
1,195
1,875
(1,754)
(1,577)
1,773
Level 3
543
455
177
(42)
(41)
1,092
Total fair value
3,366
559
402
1,378
1,875
(1,795)
(1,619)
4,166
At 31 December 2022
Level 1
903
-
-
25
-
(60)
868
Level 2
1,222
97
300
3,722
3,106
(2,352)
(3,952)
2,143
Level 3
491
594
292
(24)
(94)
1,259
Total fair value
2,616
691
300
4,039
3,106
(2,376)
(4,106)
4,270
Level 1, fair value based on prices quoted in an active market for identical assets or liabilities, includes financial instruments actively
traded and for which the values recognized in the Consolidated balance sheet are determined based on observable prices on identical
instruments. For Equinor this category will, in most cases, only be relevant for investments in listed equity securities and government
bonds.
Level 2, fair value based on inputs other than quoted prices included within level 1, which are derived from observable market
transactions, includes Equinor's non-standardised contracts for which fair values are determined on the basis of price inputs from
observable market transactions. This will typically be when Equinor uses forward prices on crude oil, natural gas, interest rates and
foreign currency exchange rates as inputs to the valuation models to determine the fair value of it derivative financial instruments.
Level 3, fair value based on unobservable inputs, includes financial instruments for which fair values are determined on the basis of
input and assumptions that are not from observable market transactions. The fair values presented in this category are mainly based
on internal assumptions. The internal assumptions are only used in the absence of quoted prices from an active market or other
observable price inputs for the financial instruments subject to the valuation.
The fair value of certain earn-out agreements and embedded derivative contracts are determined by the use of valuation techniques
with price inputs from observable market transactions as well as internally generated price assumptions and volume profiles. The
discount rate used in the valuation is a risk-free rate based on the applicable currency and time horizon of the underlying cash flows
adjusted for a credit premium to reflect either Equinor's credit premium, if the value is a liability, or an estimated counterparty credit
Equinor Annual Report on Form 20-F 2023 147
premium if the value is an asset. In addition, a risk premium for risk elements not adjusted for in the cash flow may be included when
applicable. The fair values of these derivative financial instruments have been classified in their entirety in the third category within
current derivative financial instruments and non-current derivative financial instruments. Another reasonable assumption, that could
have been applied when determining the fair value of these contracts, would be to extrapolate the last observable forward prices with
inflation. If Equinor had applied this assumption, the fair value of the contracts included would have increased by approximately USD
0.3
0.5
During 2023 the financial instruments within level 3 have had a net decrease in fair value of USD
167
191
derivatives and earn-out agreements. During 2022, the same financial instruments had a net increase in fair value of USD
416
of which a gain of USD
370
29 Subsequent events
Swap of US Offshore Wind assets
In January 2024, Equinor entered into a swap agreement with bp. Equinor will acquire bp’s
50
% share and take full ownership of
Empire Offshore Wind Holdings LLC, including the Empire Wind lease and projects, while bp will acquire Equinor’s
50
% share and
take full ownership of Beacon Wind Holdings LLC, including the Beacon Wind lease and projects. It is anticipated that Equinor will
consolidate Empire Wind and derecognise its
50
% share of Beacon Wind in the first quarter of 2024. Equinor will also acquire bp's
50
% interest in the South Brooklyn Marine Terminal (SBMT) lease. The transaction, pending regulatory approvals, is anticipated to be
cash neutral, with the exception of standard cash and working capital settlements and will be recognised in the REN segment.