Nordsøfonden and Nordsøenheden were established through an act of parliament passed with a broad majority in 2005.
The purpose was to establish active participation by the Danish state in licences for exploration and production of oil and gas in the Danish sector of the North Sea. State participation in DUC was a key element in the agreement to extend A. P. Møller’s Sole Concession in 2003. DONG A/S was already a state participant in several licences, but due to a political decision to allow partial privatisation of DONG, it was no longer possible for the state to participate through this channel. Therefore a new state participant, namely Nordsøfonden, had to be established.
The law was amended in 2014 such that Nordsøenheden became an independent state company with its own Board of Directors.
In 2023 the law was amended with the purpose to provide the legal basis for Nordsøfonden to participate in licences and activities related to carbon storage in Denmark.
The framework for the business is set out in the Act concerning Nordsøenheden and Nordsøfonden, and in Nordsøfonden’s articles of association.
The purpose of state participation
The natural resources in the Danish subsoil belong to the state, and the purpose clause of the relevant act stipulates that the objective of Nordsøenheden is to generate the greatest possible value for the state by exploiting the potential of Denmark’s subsurface assets.
Nordsøfonden participates on behalf of the state as a partner with a 20 % share in all Danish oil and gas licences awarded since 2005, and is also a partner in DUC. Nordsøfonden also participates on behalf of the Danish state in all licences for carbon storage.
Nordsøfonden is to exercise active ownership of Nordsøfonden’s share in the licences, and to act as a commercial company.
Nordsøenheden is tasked with administrating Nordsøfonden, and is involved in making key decisions under the individual licences. Nordsøfonden participates on equal terms and with the same rights and obligations as the other companies, but cannot take on the role of operator.
The financial framework for Nordsøenheden’s administration of Nordsøfonden is set out in the Danish national budget. The two businesses publish separate accounts.
Nordsøfonden generates revenue from the sale of Nordsøfonden’s share of the oil and gas produced. This revenue is then used to cover expenses for licence activities, taxes, administration and so on. In the future Nordsøfonden may also generate revenue from carbon storage activities.
Regardless of Nordsøfonden's net result for the year, all surplus liquidity is transferred to the Danish treasury in the form of a dividend paid annually; consequently, no liquidity is accumulated in Nordsøfonden over time. Therefor Nordsøfonden will not build up significant equity over time either. It is thus possible for Nordsøfonden to register a net loss for the year at the same time as paying a dividend to the state. This deviates compared to other companies.
It also means that Nordsøfonden cannot save up liquidity in a reserve. If the need arises to finance activities that cannot be covered by Nordsøfonden’s current cash flow, financing is arranged through state loans. State loans must be repaid prior to dividends being allotted.