Legal framework and finance
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 Danish oil and gas licences. At the same time, it paved the way for the state to join DUC in 2012. 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 a decision to allow partial privatisation of the DONG organisation meant that it was no longer possible for the state to participate through this channel.
The law was amended in 2014 such that Nordsøenheden became an independent state company with its own Board of Directors.
The framework for the business is set out in the Act concerning Nordsøenheden and Nordsøfonden, and in our 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 from Nordsøfonden’s participation in the exploration and production of oil and gas in Denmark.
Nordsøfonden participates on behalf of the state as a partner with a 20 % share in all Danish licences awarded since 2005. Nordsøfonden is also a partner in DUC. 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 we are involved in making key decisions under the individual licences. We participate on equal terms and with the same rights and obligations as the other commercial oil and gas companies, but we cannot take on the role of operator.
Financing and dividend
Nordsøfonden and Nordsøenheden are financed via the revenue from the sale of Nordsøfonden’s oil and gas. 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.
Surplus liquidity is transferred to the Danish treasury in the form of a dividend paid annually, which means that no liquidity is built up in Nordsøfonden. As Nordsøfonden is required to pay out all surplus liquidity in the form of a dividend – irrespective of the net result for the year – 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 revenue, financing is arranged through state relending.