EBN annual report 2012
description
Transcript of EBN annual report 2012
AnnuAl report 2012the future of energy
Start gaS production from groningen field
1963
about ebn
Based in Utrecht, EBN B.V. is active in exploration, production, storage and
trading in natural gas and oil and is the number one partner for oil and gas
companies in the Netherlands.
EBN’s legal predecessor, DSM Aardgas, was set up on 2 January 1973, exactly 40 years ago. DSM Aardgas incorporated
the state’s interests in Dutch natural gas production. All the stocks were held by DSM. When DSM was launched on the
stock exchange in 1989, the State took over DSM Aardgas’ stocks and placed them with the Ministry of Economic Affairs.
The name was changed to Energie Beheer Nederland B.V.
On 1 January 2006, DSM’s administrative responsibility for EBN ended. Since then, EBN has been an independent company
with the Executive Board reporting directly to an independent Supervisory Board. In 2011, the official name changed to EBN B.V.
Together with national and international oil and gas companies, EBN invests in the exploration for and production of oil
and natural gas, as well as in gas storage facilities in the Netherlands. The interest in these activities amounts to between
40% and 50%. EBN also advises the Dutch government on the mining climate and on new opportunities for making use
of the Dutch subsurface.
National and international oil and gas companies, the licence holders, take the initiative in activities in the area of develop-
ment, exploration and production of gas and oil. EBN invests, facilitates and shares knowledge.
In addition to interests in oil and gas activities, EBN has interests in offshore gas collection pipelines, onshore underground
gas storage and a 40% interest in gas trading company GasTerra B.V.
The profits generated by these activities are paid in full to the Dutch State, represented by the Ministry of Economic Affairs,
our sole shareholder.
Exploration
EBN’s influence and responsibilities
Gas storageProductionDistribution (wholesale)
Distribution (private)
| EBN Annual Report | 20124
2012 2011
number of participations 187 183
of which exploration 47 48
EBN’s share of sales (billion m3)1 302 302
in millions of euros:
sales 8,528 7,103
net profit 2,360 2,131
payments to the State 6,932 5,788
capital expenditure 621 611
depreciation and amortization 745 617
number of employees3 70 68
absenteeism 2.9% 4.1%
Operational performance4 2012 2011
CO2-emissions t.b.d. 765 ton
methane emissions t.b.d. 6.2 ton
energy consumption t.b.d. 16.7 PJ
Key figureS
1 Unless otherwise stated, all volumes in this report are expressed in billions of m3 natural gas (35.17 billion at 0 degrees Celsius and 101.325 kPa) based on EBN’s participation percentage.
2 This includes the proportional share of sales in the concessions in which EBN does not, itself, receive the gas but is entitled to a proportional share in the proceeds.
3 Total number of employees year end 2012.4 EBN’s share in the operational performance. In the course of 2013, the performance for 2012 will be published at:
http://www.ebn.nl/Documents/EBN_operationele_prestatie-indicatoren.pdf.
EBN Annual Report | 2012 | 5
About EBN 1
Key figures 2
Vision, mission and strategic pillars 5
Preface by Jan Dirk Bokhoven 8
1 Report by the Supervisory Board 15
2 Report by the Executive Board 23
3 Corporate Governance and Risk Management 41
4 Annual Report 53
General 54
Principles for the valuation of assets and liabilities and determination of profit 56
Consolidated profit and loss account 64
Consolidated balance sheet 65
Summary of changes in shareholder’s equity 66
Consolidated cash flow overview 67
Notes to the consolidated annual accounts 68
Notes to the statement of comprehensive income 69
Notes to the balance sheet 72
Policy to control financial risks 78
Other notes 84
Company profit and loss account 86
Company balance sheet 87
Notes to the company annual accounts 88
Other details 89
Auditor’s report by an independent accountant 90
Key figures 93
Glossary 94
Contact information 96
table of contentS
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EBN Annual Report | 2012 | 7
EBN invests in the exploration, production and underground storage of natural
gas and oil in the Netherlands. By our participation we secure the revenue for
the Dutch state and we guarantee the security of supply of the Netherlands’s
main energy source: natural gas.
There are still substantial amounts of potentially producible gas in the Dutch subsurface. A great deal of oil and gas has
already been found in the Dutch subsurface, but we are constantly discovering new reserves. However, it will become
increasingly difficult to produce them. The easily recoverable reserves have already been produced or are in production,
while the less easily recoverable reserves still pose many challenges. EBN facilitates and stimulates its partners in optimally
exploiting the subsurface potential.
Furthermore, EBN aims to contribute to a stable energy supply in the Netherlands and, where possible, to contribute to
making it sustainable. Gas is the backbone of the current energy supply and gas will remain a significant part of the energy
mix. It is the cleanest fossil fuel, with a high energy density and is flexibly deployable. This makes natural gas the ideal energy
source for supplying energy when there a fluctuating energy supply.
EBN primarily sees a connection with its activities with geothermal energy (using the subsurface), biogas (using existing gas
infrastructure) and offshore wind energy (offshore installation and maintenance knowledge, power to gas technology).
ViSion, miSSion and Strategic pillarS
VisionThere is a
substantial amount of potentially producible gas
in Northwest Europe. Gas is a continuous energy and income source
for the Netherlands and is essential for a sustainable energy supply in Europe.
To facilitate and stimulate operators in
optimally exploiting (existing/new) gas fields
To contribute to sustainable energy system in the Netherlands
MissionTo optimally exploit the subsurface and contribute to a
sustainable energy supply
Strategic pillarsTo discover and develop
existing and new subsurface potential for the Netherlands
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ViSion of the future
2030
EBN Annual Report | 2012 | 9
It is the year 2030. The energy sector is turbulent, the
energy transition is in full swing. The Netherlands is well
on its way to achieving the ambition of having an entirely
renewable energy supply by the year 2050. This is largely
made possible by support from natural gas, which has
proved to be the most affordable, reliable and clean fossil
fuel.
Modern, efficient natural gas generating stations are
playing a crucial role in accommodating the fluctuating
renewable energy production. Despite the decline in
natural gas consumption in the electricity sector and
buildings, the use of natural gas is still significant. Part
of the transport sector has switched to natural gas and
superior oil products based on natural gas have made
their debut.
The Netherlands fulfills a key role as a natural gas hub,
partly due to the presence of small fields that are still
productive and the fact that gas storages and an extensive
infrastructure ensure the necessary flexibility. One and all
agree: Natural gas continues to fulfill a significant role, not
only socially, ecologically and economically, but also (geo)
politically. In the Netherlands. And in our neighbouring
countries.
| EBN Jaarverslag | 201210
“There is sufficient potential for remaining self-sufficient for decades to come.”
Jan dirK boKhoVen:
EBN Annual Report | 2012 | 11
As for the last argument – natural gas will be all gone by
2030 – this issue is rather more subtle than many suspect.
Although gas reserves in the Netherlands have, indeed,
been decreasing, a considerable amount of natural gas
still remains in the Dutch subsurface, especially if we add
the potential of not so easily recoverable natural gas. In
short, there is plenty of natural gas. Now, in 2030 and for
many years thereafter. One condition for extracting these
reserves and generating the associated revenue is that the
investment climate must remain positive and a stable sales
market and societal support are required.
Where do we go from here?In this annual report, we mark the moment when the
Groningen gas field went into production 50 years ago.
Since then, this country has benefited from a great,
constant flow of natural gas. And although, to this day,
there are considerable reserves, from the very beginning
our organisation has been thinking about natural gas’s
importance and position in the Dutch energy supply. The
question ‘Where do we go from here?’ was already a
topic back then and, in the present highly changeable
circumstances, is still a topic now. As a major player in the
energy and natural gas sector, we see it as our task and
responsibility to express, on one hand, how we perceive
the role of natural gas in the energy transition and, on the
other hand, to enter into dialogue with interested parties,
in order to test and enrich our viewpoints. We did so at
various points in 2012 and also do so in this report. We
asked four stakeholders with diverse interests for their
view of the future of energy supply in the Netherlands.
En route to 2030In addition to exploring the future of natural gas, as an or-
ganisation we are also firmly anchored in the here and now.
In early 2012, for example, we presented our employees
with the new EBN strategy. A strategy that is intended as
a compass for how we think and act and which consists
of three pillars: facilitating and stimulating operators to
optimally exploit fields, discovering and developing new
and existing subsurface potential and contributing to a
sustainable energy system. We have given further structure
and content to this in 2012 and we have started compiling
a programme of specific actions and projects that will
facilitate implementation. You can read about two of these
activities, ‘best in class’ NOV-management1 and the
execution of specific roadmaps, further on in this report.
Energy transitionGoing back briefly to the central theme of this report and
Admittedly, the scenario described adjacent is no more than a glance into the
future. A projected image, of which there are many, especially when it comes
down to how our energy sector will be structured in 20 years or so. This much is
certain: with the rise of coal at the expense of natural gas and the presumption
that there will be no natural gas left by 2030, the prospect we outlined will not
automatically become the reality.
1 Non-operated venture management; managing EBN’s joint ventures.
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diScoVery groningen gaS field
EBN Annual Report | 2012 | 13
the issue that regularly occupies our organisation: Where
do we go from here, after 50 years of natural gas? The
fact is that natural gas is of great, if not crucial, importance
to Dutch society. And, in our view, that will not be signifi-
cantly different in the future. The fact that this country cur-
rently produces almost twice as much gas as it consumes,
in itself, is significant from that point of view. There is
sufficient potential for remaining self-sufficient for decades
to come. In our view, therefore, the natural gas debate
should focus not so much on how far reserves will be de-
pleted by 2030, but rather: How can we ensure that Dutch
natural gas becomes the engine in the energy transition
and that it continues to flow abundantly in 2030?
Our view of the future To gain a certain grip on these and similar issues, we
reflected on our vision of 2030 in 2012. This is primarily
intended to organise and hone our thoughts and provide
a frame of reference when looking to the future. All this in
the knowledge that the Dutch and European gas market
is developing extraordinarily quickly and is hard to predict.
Unquestionably, there will be a great many changes in the
area of energy in the coming decades. Output from the
Groningen field will decline, the energy market is focusing
on sustainability and increasing electrification, and the
possibility of a profitable production of gas from challen-
ging formations – such as shale and coal. EBN is keeping
a close eye on these developments and, where necessary,
applying them to its policy.
Pioneering roleWe already said it in so many words: It’s good to think
about the future, even though nobody really knows what
the world will be like in twenty years time or longer. And
that applies to us too. Nevertheless, we are convinced that
we will be able to continue extracting natural gas profitably
and in a socially responsible manner in 2030, to retain our
energy independence. Time and again, the success we
have had, in 2012 and in previous years, has shown that it
is still profitable to invest in small fields. From that point of
view, it is also worth to seriously investigate the possibility of
extracting gas that is more difficult to retrieve - from shale
or coal layers, for example.
We also believe that, despite the major changes in
demand and the steep rise in natural gas production in
the US, gas revenues will continue to make a significant
contribution to the Dutch economy. Our aim is that the
Netherlands will still play a pioneering role on the interna-
tional energy playing field in 2030 and natural gas will con-
stitute a major component in achieving the Netherlands’
CO2 reduction targets. It is therefore essential for choices
to be made concerning the energy policy and ensure that
gas can start warming up now as the future ‘engine for the
energy transition’.
At the end of this preface, I should not omit to mention
that 2013 is an anniversary year for not only Dutch gas,
but also our organisation. This year, we are celebrating
the 40th anniversary of the incorporation of our company
under the name of our legal predecessor DSM Aardgas
in 1973.
J.D. Bokhoven (CEO)
“it is still profitable to invest in small fields.”
| EBN Annual Report | 201214
Chairman of the Social and Economic Council (SER)
gueSt column by Wiebe draiJer:
Lagging behindThis Energy Agreement is essentially about capitalising on
trading opportunities. After all, sustainable growth offers
a great many opportunities. Just look at how many jobs it
enables us to retain and create. We have to move forward
and do what we are good at: leading the way and looking
ahead. We have done too little of that in recent years. We
have been too focused on ourselves. As a result, we are
currently not a model country, we are lagging behind. If
you realise that we have now dropped to number 25 in
terms of sustainability policy and we have to admit that
we are not doing what needs to be done in a number of
areas, then evidently, as a country, we have to act. Take
energy production, for example, a major sustainability
indicator. While other countries are showing an increase in
sustainable energy production, in the Netherlands output
is declining.
IncentiveThat we have fallen behind in the area of energy and
sustainability policy can partly be explained by the fact
that historic natural gas finds have enabled our country to
achieve a tremendous acceleration in the use of natural
gas as an energy source. The search for alternative energy
The National Energy Agreement offers
the Netherlands a fantastic opportunity
to play a pioneering role in sustain-
ability. We are launching a coherent
package of initiatives and agreements
that give concrete form to the sustain-
ability objectives.
EBN Annual Report | 2012 | 15
“We can’t afford to follow”
sources and energy renewal has lagged somewhat behind
as a result. Natural gas may have provided us with won-
derful infrastructure and knowledge, but its abundance
and the low gas prices have, to some degree, eliminated
the real incentive to innovate. Things are different for coun-
tries such as Germany, England and Denmark. They have
always had a far greater energy demand and have been
far more dependent on imports. That promotes inventive-
ness and a broader outlook.
SympatheticPresident Obama recently said about sustainability: ‘We
can’t afford to follow’. And that, in my view, applies to the
Netherlands, too. We will have to actively structure our
own sustainability drive. In my opinion, this entails a com-
bination of three things: catching up in making renewable
energy sources sustainable, cashing in on the local energy
and involvement of citizens and neighbourhoods and
earning money from promoting sustainability. These are
the themes being debated at Energy Agreement meetings.
That is where the energy future is discussed and we con-
sider how to structure the energy transition, which energy
source plays which role.
Naturally, I am sympathetic toward the position natural
gas could occupy, especially as we have a great deal of
competencies and a huge head start in that field. Time will
tell how that will develop, however, in relation to coal for
example. The process currently underway is determining
how the transition will ultimately be structured and ac-
complished. The Energy Agreement roundtables will also
determine the speed at which this develops. So if these
discussions lead us to conclude that natural gas is the
best choice within the energy transition, then fine. I take an
open, objective and independent stance.
OptimisticIn my view, one thing is top priority: the time is ripe for
doing things another way, and together. An increasing
number of parties are coming to the table, in search of a
shared solution. The debate used to be far more difficult
and more fragmented, but now we are really working on a
shared agreement. Not a recommendation or guidelines,
but an agreement. I realise that we are dealing with big is-
sues that need to be solved, but the commitment to tackle
them is there. As a country, too, we have the scale for
such an approach. In the end, we meet up with everyone
and can look everyone in the eye. I’m hugely optimistic
about the collaboration. And, for the books: It’s not a
SER agreement, but a Dutch agreement. The traditional
partners are participating, but also others, such as envi-
ronmental organisations, decentralised energy companies
and representatives from society. That’s what I like about
it. It’s a new approach.
We have to earn our position in the world and become
a prominent world player again. We did not create the
first polder in our country to gain land, for example, but
to protect ourselves. We also have to demonstrate that
competency in doing things differently and market it in the
world when it comes to energy and sustainability. From
that point of view, we are going back to our roots! In my
eyes, we will have succeeded if, together, we manage to
concretise the innovation, advance in sustainability and
acceleration. A shared growth agenda.
| EBN Annual Report | 201216
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EBN Annual Report | 2012 | 17
report by the SuperViSory board 1
| EBN Annual Report | 201218
GeneralEBN is not a listed company, so the Corporate Governance
Code does not apply to the organisation. EBN does, how-
ever, endorse the code’s point of view that transparency
towards stakeholders is crucial and, where possible and
relevant, follows the principles of the code. Thereby EBN
follows the government policy for State participations. The
section on Corporate Governance and Risk Management in
this report includes a paragraph indicating those principles
of the code EBN follows.
The Supervisory Board (the board) complies with the inde-
pendence criteria and the profile sketch as approved by the
shareholder on the grounds of article 12 paragraph 2 of the
articles of association.
The chairman of the board, Mr Van der Meer, is the primary
contact person for EBN’s Executive Board. The entire board
has a joint responsibility. All members of the board are also
members of the audit committee, the remuneration com-
mittee, the selection and appointment committee. The table
below shows the memberships and chairmanships of the
board and the committees.
The members of the board do not maintain any other busi-
ness relationships with the company. The board has not
noted any conflict of interest between the company and the
members of the board.
The personal details, the current ancillary functions of the
members of the board and the retirement schedule are
published at the company’s website, under Corporate
Governance – Supervisory Board
(www.ebn.nl/en/OverEBN/Pages/Supervisory-Board.aspx).
The retirement schedule on page 17 has been discussed.
Mr Van der Meer has decided not to offer himself for re-
election for a new term in 2013. At the end of his term, Mr
Gratama van Andel is re-electable. In accordance with the
board regulations, discussions regarding the nominations
for reappointment will take place in the absence of those
involved and nomination for reappointment is not automatic.
Nomination for reappointment will always be carefully
considered.
The Annual General Meeting of Shareholders appoints
the supervisory directors on the binding nomination of the
board. For the appointment of a new supervisory director,
the board has a profile sketch, which is also published at
the EBN website. The profile sketch indicates the charac-
teristics that the individual members and the board as a
whole should possess. The board should be composed
report by the SuperViSory board
Supervisory Board
Audit Committee
Remuneration Committee /Selection and
Appointment Committee
Ir. R.M.J. van der Meer chairman member member
Drs. A.H.P. Gratama van Andel member chairman member
Ir. G-J. Kramer member member chairman
Mr. H.M.C.M. van Oorschot member member member
EBN Annual Report | 2012 | 19
in such a way that the members can operate critically and
independently in relation to each other, the Executive Board
and each partial interest. The composition of the board
must account for the nature of EBN’s activities, its mission
and objectives, the board’s terms of reference and the
expertise of the other board members.
Meetings of the boardThe board met four times in 2012. In addition to the board,
members of EBN’s team of Directors also attended these
meetings. The external auditor was present at the first
meeting during which the annual auditor’s Board report
regarding the administrative organisation and internal
control and the annual report control was discussed.
Mr Gratama van Andel attended one consultation meeting
between EBN’s Executive Board and the Works Council.
In June 2012, together with EBN’s team of Directors, the
board paid a working visit to the LNG terminal in Maas-
vlakte 2, in Rotterdam.
Approvals by the board The board approved a number of Executive Board deci-
sions. The following investments were approved: The
expansion of the Norg gas storage and the Chevron A18-A
field development. Budget overruns were approved for
three investments approved earlier by the board. These
are the budget overrun for the Medway project, the budget
raise for the K18-G field development and the budget raise
for the K4a-Z subsea development.
In the last meeting of 2012, the board approved the working
schedule and budget for 2013 and the associated financing
plan. In this meeting, the Executive Board explained the
proposed amendment to EBN’s and EBN Capital B.V.’s
articles of association. The transfer of EBN’s Bergermeer
gas storage assets to EBN Capital B.V. was approved.
EBN’s strategyThe board discussed EBN’s long-term strategy. The central
issue is how the role of natural gas can be maintained in
the future. After all, natural gas accounts for almost half the
Netherlands’ energy supply. The board and the team of
Directors thoroughly discussed this topic and exchanged
ideas on future scenarios. Clearly, the number of interested
parties in this field is sizeable and growing. This has led the
board to articulate the importance of public affairs, resulting
in new initiatives in 2012, partly through collaboration with
the NSOB (Netherlands School of Public Administration).
The board and the team of Directors also discussed the
GasTerra strategy and business plan in two meetings.
Schedule for resignation by rotationDate of first appointment
Date ofreappointment
End of4-year term
Ir. R.M.J. van der Meer 1 January 2006 2009 2013
Drs. A.H.P. Gratama van Andel 1 January 2006 2009 2013
Ir. G-J. Kramer 1 January 2006 2010 2014
Mr. H.M.C.M. van Oorschot 1 January 2006 2010 2014
| EBN Annual Report | 201220
Mr Dessens attended one of these meetings. Mr Dessens
is chairman of Gasterra’s Supervisory Board and also
chairman of GasTerra’s Board of Delegated Supervisory
Directors.
Relevant developmentsOn the basis of quarterly reports, the Executive Board
informed the board about the relevant developments within
EBN and, in particular, the developments in EBN’s joint
ventures. A number of discussed topics are explained in
further detail below.
Bergermeer Gas Storage The board discussed the progress of the Bergermeer gas
storage. After the positive pronouncement by the Council of
State, the building work has actually begun. The board will
continue to follow the progress of this project in 2013.
Earthquakes in GroningenThe Executive Board informed the board of the most recent
earthquakes in Groningen, including the one in Huizinge,
and how NAM dealt with the damage it caused. This topic
is discussed in more detail on page 36.
Shale discussionThe Executive Board also informed the board of the societal
discussion on the possibility of extracting gas from shale in
North Brabant. The research the Minister of Economic Af-
fairs has commissioned should be completed in 2013.
Self-evaluationThe Supervisory Board discussed the functioning of the
Executive Board without its presence. In 2011, together
with the team of Directors, the board carried out a self-
evaluation of the functioning of the individual board mem-
bers and the team of Directors. At the beginning of 2012,
discussions were held on the functioning of the board and
the joint team of Directors, respectively, as well as on the
cooperation between the board and the team of Directors.
This gave no cause for any specific action. The next self-
evaluation will take place in 2013.
Meetings of the audit committeeThe tasks and methods of the audit committee are set
out in the ‘regulations for the Audit Committee of the
Supervisory Board’. The audit committee’s tasks include
supervising, auditing and advising the Executive Board on
the functioning of internal risk management and control sys-
tems and supervising the company’s financial reporting.
The audit committee met twice in 2012. In addition to the
members of the audit committee, a number of members of
the team of Directors also attended these meetings.
In the first meeting, the audit committee reviewed, amongst
other issues, the annual report, the financial statements
and the independent auditor’s report for 2011. The external
auditor Ernst & Young also attended this meeting for the
purpose of the audit for 2011. The audit committee advised
the board to approve the annual report for 2011.
In the second meeting, the audit committee discussed the
internal audit plan for 2012. The Director Finance explained
this plan. The audit committee had nothing to add to this.
Attention was also devoted to the Weighted Averaged
Cost of Capital (WACC) EBN will be using and the post
investment review. Furthermore, the findings of the audit
of the tax authorities with regard to value added tax were
discussed.
EBN Annual Report | 2012 | 21
The board asked the Executive Board to provide the board
with a statement for 2012 to support the usual reports
to the Executive Board. The Executive Board issued that
declaration, which serves to support provision III.1.8 of
the Corporate Governance Code. In accordance with this
provision, the board discussed the following topics with the
Executive Board: the company’s strategy and strategic risk
analysis and the results of the Executive Board’s evaluation
of the structure and functioning of the internal risk manage-
ment and control systems.
Meetings of the remuneration committee/ selection and appointment committeeThe tasks and methods of the remuneration committee/
selection and appointment committee are set out in the
‘Supervisory Board’s regulations for the remuneration com-
mittee/selection and appointment committee’. This commit-
tee’s tasks include presenting proposals to the board for the
remuneration policy the Executive Board will implement - to
be established by the AGM -, proposing the remuneration
of the individual members and compiling a remuneration
report.
The remuneration committee/selection and appoint-
ment committee met three times in 2012. The committee
discussed the Executive Board’s functioning and set the
variable remuneration for the Executive Board for 2011.
The Executive Board’s variable remuneration was made de-
pendent on achieving the objectives in the following areas:
added economic value, exploration, budget and HR.
As from 2011, the Executive Board consists solely of
J.D. Bokhoven. Since the beginning of 2013, the team
of Directors comprises of one statutory director (Jan Dirk
Bokhoven) and three functional directors. The fourth
functional director who was in function during 2012, will
resign in the course of 2013. The statutory director is chair-
man of the team of Directors.
Financial statementsThe Supervisory Board reviewed the annual report, the
financial statements and the independent auditor’s report
issued by the auditors Ernst & Young. The board can
accept these and recommends the General Meeting of
Shareholders to adopt the financial statements accordingly.
The board advises the Annual General Meeting of Share-
holders to discharge the Executive Board of responsibility
in respect of the policy it has implemented and the Super-
visory Board of responsibility in respect of its supervision.
Supervisory Board, Utrecht, 20 March 2013
R.M.J. van der Meer (chairman)
A.H.P. Gratama van Andel
G-J. Kramer
H.M.C.M. van Oorschot
| EBN Annual Report | 201222
Sector head of climate, air and energy at the Netherlands Environmental
Assessment Agency
gueSt column by pieter boot:
The drawback of a 2020 or 2030 objective is that it does
provide direction, but it also implies that the job is then
finished and there is no more to be done. And that doesn’t
seem like a good approach to me. Naturally, the problem
with every scenario is that the future is extremely difficult
to predict. Certainly when you are looking more than thirty
years ahead. In principle, we can make a reasonable es-
timation and foresee which elements will then need to be
included in the energy picture. I see the route mapped out
until that time not so much as a fixed schedule, but rather
as a guideline for reflecting on the question: What will we
really need by that time? I see 2030 as a stopover.
Focal pointsIn my view, there will be five major focal points over the
coming years. The first is more efficient energy use, by bet-
ter insulating our homes, for instance. The second is clean
electricity and, in saying that, we already know we will never
succeed in making our energy mix entirely renewable, as
that is technically extraordinarily difficult. Thirdly, there will
be sustainable biomass. It’s becoming scarce, but it can
be used in places where you have no alternative. Number
four is CO2 storage, under the sea, for example. There is
There are two ways of viewing the year
2030: As seventeen years hence, or
from the point of view that it will then
be twenty years before 2050. What
I want to say is that the world will
simply go on turning after 2030, so
we have to approach it from both
perspectives.
EBN Annual Report | 2012 | 23
“We should step up our combined efforts”
an awful lot of industry producing emissions and, in the
end, you have to do something with those emissions.
Finally, the other greenhouse gases. All these themes and
developments are influence each other. From our agency’s
perspective, climate and energy are interlinked.
ClearHopefully, the Energy Agreement will make it quite clear
what steps we need to take to set the process in motion
and keep it moving. All those countries that are relatively
successful in the field of energy have such a long-term
approach. Actually, it’s impossible to do without it; having
your own energy process is crucial. In some aspects, policy
is stable; in others it’s less stable. Where gas is concerned,
policy is clear and stable, but where renewability is con-
cerned things are far from unambiguous.
PaceThere are those who feel the whole energy transition is pro-
ceeding too slowly. Particularly when you look at neighbou-
ring countries, where everything seems to be progressing
rather more quickly. I also think we have lost momentum in
recent years and could speed things up a bit. At the same
time, however, implementing the energy transition is a huge
undertaking, even though that’s relative compared with
countries such as Germany. It is a fact that, in the energy
system, everyone is pulling switches and there is nobody
who is pulling all the switches. Therefore, everything de-
pends on collaboration. And we’re convinced that it’s pos-
sible: Companies are willing, politicians are also keen now
and environmental organisations want to cooperate, too.
InteractionCitizens definitely play a role too. We have dubbed this the
‘energetic society’. And its’ extremely important. These
days, policy will no longer succeed if you are working
against the will and the wishes of the citizens. Take the CO2
storage project in Barendrecht, for example. In the end,
citizens managed to halt the project, because they simply
did not want it. It’s essential to involve citizens and listen to
them. Otherwise you will not succeed. These days, citizen
initiatives are regarded far more sympathetically than the
figures suggest, but ultimately it’s all about creating aware-
ness. You have to remove the hurdles for people and en-
courage them with good policy. What you definitely have to
avoid is to compare small-scale campaigns with large-scale
activities. You have to fit them together. This interaction is
increasingly important and is key to achieving size, signifi-
cance and dynamics. So far, I have been seeing too little in
the way of combined efforts and cooperation.
ExampleI feel there is still too great a focus on indicators such as
volume, size and quantity. And there is too little attention
being paid to quality and distinction. What we need is smart
applications, innovative solutions, outstanding experiments.
The Netherlands should be more prominent in this area, so
it can act as a testing ground for Europe. A model of smart,
sensible policy, focusing on pooling knowledge, learning
from one another, sharing. Denmark is an extremely good
example. They are also experimenting within their regions.
This has produced various smart grids, which are attracting
a great deal of attention from abroad. In short: increasingly,
policy has to provide added value. And that is what makes
the gas policy so interesting. How closely can gas and
renewable energy be combined? In Germany, they are not
sure how they feel about gas or how they should proceed
with renewability. We can play a pioneering role in this res-
pect, acting as their testing ground.
| EBN Annual Report | 201224
1965
EBN Annual Report | 2012 | 25
report by the executiVe board 2
| EBN Annual Report | 201226
Looking back at 2012EBN’s share in the total gas production corresponded with
the forecast and amounted to more than 30 billion m³.
This production level is comparable with preceding years.
The investment level rose slightly in 2012. The start of a
number of new projects contributed to that rise. Both the
number of exploration and appraisal wells and the number
of production wells was lower in 2012 than in 2011. In
2012, EBN also further elaborated on its strategy. The
concrete result was an improved approach to non-operated
venture (NOV) management. This should, in principle, lead
to more intensive collaboration with the operators.
Participation in licencesIn 2012, the number of EBN joint ventures increased
further to 187. Two licences were transferred from explora-
tion to production. Two extra licences were created by
splitting two production licences. EBN is participating in
nine new joint ventures for exploration while eight joint
ventures have ended. These exploration licences were re-
turned by the licence holders to the Ministry of Economic
Affairs.
In addition to 176 joint ventures in exploration and produc-
tion licences, EBN participates in four pipelines, four gas
storages, the gas purification plant in Emmen, the K-13
gas treatment installation in Den Helder and gas trading
company GasTerra B.V.
EBN Capital B.V.On 15 November 2012, EBN’s two wholly-owned subsidi-
aries, F3/A6 Extensie B.V. and K13 Beheer B.V., merged.
At the same time as the merger, the articles of association
for F3/A6 Extensie B.V. (the surviving entity) were amended
and the name changed to EBN Capital B.V.
This merger is part of EBN’s restructuring in order to trans-
fer the Bergermeer gas storage – in accordance with the
Minister’s requirements – to a separate company, namely
EBN Capital B.V.
report by the executiVe board
EBN closed the 2012 year with net sales of EUR 8.528 billion. This generated a
net profit of EUR 2.360 billion. Total payments to the Dutch state, including taxes,
amounted to EUR 6.932 billion.
2012 2011
Offshore exploration Onshore exploration
27
101
total 176 total 172
43
5
Onshore production
200
150
100
50
0
Participation in exploration and production
Offshore production
42
24
101
5
EBN Annual Report | 2012 | 27
Activities 2012By project type
• Enhanced gas recovery
• Field development
• Gas storage
• Seismic
• Drilled well
• Abandoned well
| EBN Annual Report | 201228
Portfolio of gas and oil fieldsThe total number of gas fields in the Netherlands in which
EBN participates is 265, of which 235 fields are in produc-
tion. EBN also participates in four producing oil fields and
four gas storage facilities. In the year under review, 10 new
gas fields and one new oil field were taken into production.
These fields account for 11 billion m3 of gas reserves and
0.3 billion m3 of oil reserves. The added production capacity
due to new fields is 8 million m3 of gas and 400 m3 of oil
per day.
Capital expenditureCapital expenditure in EBN’s joint ventures rose slightly
from EUR 611 million in 2011 to EUR 621 million in
2012. The biggest investments were made in building the
Bergermeer gas storage and the expansion of the Norg
gas storage. Substantial investments are also expected for
these projects in 2013.
Wells10 out of 15 exploration and appraisal wells struck oil or
natural gas. At 67%, the success ratio is comparable with
performances of previous years. Over the period between
2005 and 2011 the success ratio was 60%. The number
of production wells fell sharply from 38 in 2011 to 18 in
2012. Activity in 2011 was higher due to the redevelop-
ment of the Schoonebeek oil field. 17% of production
wells were unsuccessful, a surprising and disappointing
result.
Production and reservesIn 2012, gas production from the Groningen field amount-
ed to more than 47 billion m³ and gas production from
small fields in which EBN participates to almost 27 billion
m³. This brought the total of gas produced in 2012 up to
more than 74 billion m³. EBN’s share of the gas production
was more than 30 billion m³ and our organisation’s net oil
production was 0.3 million m³. Production from and injec-
tion into the Norg, Grijpskerk and Alkmaar underground
gas storage was more than 3 billion m³ in the year under
review and, net, approximately equal to zero.
In determining the reserves, our organisation applies
the definitions set down in the Petroleum Resources
2012 2011
Explorationactivities
140
323
total 621 total 611
148
Productionwells
800
600
400
200
0
Investments ( in EUR million )
Construction operations
36
294
291
Exploration wells Production wells
Oil Gas
12
total 15 total 18
15
Uneconomical
20
15
10
5
0
Exploration and production wells 2012
Dry
12
9
3
EBN Annual Report | 2012 | 29
Management System, with categories 1 to 3 are taken
into consideration as reserves. As at 31 December 2012,
gas reserves (on a 100% field basis) in the fields in which
EBN participates amounted to 977 billion m³, of which
EBN’s share is 395 billion m³. The decline in reserves from
1,065 billion m³ in 2011 to 977 billion m³ in 2012 can be
explained by the quantity of gas produced, a downgrade
of more than 38 billion m³ of existing reserves and an
addition of 24 billion m³ to new reserves.
The downgrade merely concerns a change in the ultimate
recovery from the Groningen field and the associated gas
storage. The new reserves originate from the ‘small’ fields
and primarily concern resources transformed into reserves
in 2012 and a number of successful exploration wells.
SalesUnlike the demand for gas, Northwest European gas
market prices remained stable last year. Contrary to
expectations, the increased demand for coal, growing
energy efficiency, sustainable electricity generation and the
economic crisis evidently had no negative effect on the
development in gas prices in 2012. The TTF Month Ahead
(MA) price level was around 25 EUR/MWh. Spot prices
demonstrated a slight uptrend in the year under review. In
the first six months of 2012, on average, the TTF MA was
below 25 EUR/MWh and, in the second half of the year,
slightly above. Apart from a slight peak in February, there
were almost no seasonal influences.
In 2012, the Normative Buying Price (NBP, the price
GasTerra pays for gas from small fields) followed the same
trend as the TTF MA, but with a premium of roughly 2
EUR/MWh. The oil link percentage of the 2012 NBP fell
slightly in relation to 2011, but that was compensated for
by the relatively high oil production prices in 2012. EBN’s
result from gas production rose again in 2012 compared
with the same period in the previous year, primarily due to
the higher gas prices in 2012.
Result for the yearThe annual sales for the year grew compared to 2011 by
EUR 1.425 billion (20%), to EUR 8.528 billion. The increase
in sales is mainly due to higher sales prices (18%), with
natural gas sales remaining virtually constant. Sales
volumes for oil rose (81%) and the average oil price was
lower than in 2011 (-4%). The drop in average oil prices
is mainly explained by the low quality of the oil from the
Schoonebeek field, leading to lower sales prices. Sales
volumes for condensate fell (-8%), while the average
condensate price rose (14%).
The net profit amounted to EUR 2.360 billion. Operational
costs amounted to EUR 797 million, EUR 139 million more
than in 2011 (21%). Total payments to the Dutch State,
including levies, amounted to EUR 6.932 billion.
2012 2011
Corporate Income Tax
3,801771
2,360
Levies
8,000
6,000
4,000
2,000
0
Payments to the Dutch state ( in EUR million)
Net profit
2,131
2,964693
total 5,788total 6,932
| EBN Annual Report | 201230
In May 2012, EBN and operating partner TAQA
received the green light from the Council of State for
constructing the Gas Storage Bergermeer after years
of preparation and an extensive licensing procedure.
The official start of the construction was celebrated
in October in the presence of former Minister of
Economic Affairs, Agriculture and Innovation,
Minister Verhagen.
The construction was able to proceed once an optimal
layout for the project had been devised, together with
local stakeholders. For example, the gas storage will
be blended into the landscape, drilling will be carried
out under the Heilooërbos woods for laying gas pipe-
lines and a breeding ground is in place for black-tailed
godwits.
Achieving sufficient storage capacity contributes to
the Dutch government’s ambition of developing the
Netherlands as the number one hub for the Northwest
European gas market. Furthermore, the gas storage
provides the necessary flexibility in energy supply when
there is insufficient solar and wind energy available.
For the same reasons, we are investing in expanding
the Norg gas storage, together with operating partner
NAM.
The investment of more than EUR 800 million in the
Gas Storage Bergermeer can be counted amongst
the biggest private investments in the Dutch economy
of this moment. We see this as a positive sign for the
Dutch investment climate. Moreover, the project gives
a major boost to the development of the energy region
around Alkmaar. The construction of the gas storage
will generate 3,300 man years of work, of which 2,650
in the Netherlands. Wherever possible, the work is
awarded to local subcontractors.
With a capacity of 4.1 billion cubic metres, the Gas
Storage Bergermeer will be the biggest freely-acces-
sible gas storage in West Europe. That is the equiva-
lent of the average annual gas consumption for 2.5
million Dutch households. This will double gas storage
capacity in the Netherlands. The additional capacity
will ensure a better functioning energy market and,
ultimately, more competitive consumer prices. Re-
nowned energy companies, such as Statoil, Vattenfall
and EDF, have already reserved capacity during the
open seasons.
The main theme for 2013 is project realisation: the
connection pipelines are being delivered, a start is
being made on putting the treatment plant into
operation and 14 new wells are being drilled at the
Bergermeer well site. The gas storage will partially
be put into operation in 2014, after which the entire
capacity will be available in 2015
Flexible Energy
bergermeer gaS Storage
EBN Annual Report | 2012 | 31
FinancingIn July, EBN issued new loans in Swiss francs for the value
of a total of EUR 300 million. This comprises a tranche
of CHF 235 million with a seven-year term and a tranche
of CHF 125 million with a twelve-year term. After swap-
ping the return into euros and covering the interest rate
and currency risk, the total costs amounted to 1.87% for
the seven-year tranche and 2.46% for the twelve-year
tranche. The bonds are issued primarily to finance capital
expenditure.
RoadmapsThere are still many steps to be taken before EBN’s ambi-
tion of annually producing 30 billion m³ of natural gas from
small fields up until 2030 has been achieved. To chart
these steps, EBN compiled seven roadmaps in 2010. The
associated action and activities are intended to ensure
more innovation in exploration and production technology
and methods that lead to the development of new gas
and oil fields. We present the findings ensuing from these
activities on (inter)national stages and conferences and
during workshops with operators active in the Nether-
lands, so that knowledge can be shared within the (Dutch)
E&P sector. In line with 2011, in the year under review we
also focused on the progress of the roadmaps.
Exploration
Two major studies dominated EBN’s exploration activities
in 2012. One was the research into the prospectivity in the
offshore A, B, D, E and F quadrants, where relatively little
exploration has taken place in the past. The objective of
this study is to analyse the chances and bring them to the
attention of the industry. A comparable study focuses on the
prospectivity of the Dinantian limestone. This is found on-
shore in the Netherlands and in the southern offshore areas.
Stranded fields
In the past, more than 120 gas or oil fields have been identi-
fied that have not (yet) been developed, for various reasons.
In 2012, the overview of these fields was further detailed
and a study was carried out into how the gas reserves
could be developed, for instance by investigating the
possibility of using the technology of hydraulic fracturing.
End of field life
Old gas wells have the tendency to stop production as
a result of diminishing pressure and an accumulation
of water at the bottom of the well. There are, however,
various techniques for extending the life of these wells
and therefore maximising their output. In 2012, EBN
conducted research into these options and compared
operators’ performance in this area. With this knowledge,
operators are being proactively approached with proposals
for improved end-of-field-life strategies.
Tight reservoirs
Low-production reservoirs are often characterised by
reservoir rock, which is difficult for gas and oil to permeate.
In 2012, these tight reservoirs were inventoried and we
carried out simulations to provide insight into the value of
this part of the gas portfolio. EBN is issuing its recommen-
dations to its partners based partly on the results of these
analyses. Successes that have been achieved show that
the technology of hydraulic fracturing can, for instance,
play a key role in the possible future development of these
low-production reservoir rock formations.
Shallow reservoirs
In 2012, EBN conducted a number of detailed studies
into natural gas in shallow reservoirs in areas for which
no licences have yet been issued. The ‘bright spot
| EBN Annual Report | 201232
characterisation system’ was also expanded. With this
system, a score can be awarded to each potential gas
reserve, indicating the chance of the presence of
(economically) producible quantities of natural gas.
Infrastructure
EBN has determined a number of scenarios for the dis-
mantling date for all offshore gas production installations
in the Netherlands. The options for developments near the
installations which are at the end of their life were analysed
on the basis of an urgency list. For operators, this clari-
fies the importance of retaining these installations on the
Continental Shelf.
Shale reservoirs
In 2012, EBN succeeded in carrying out important data
acquisition in a geothermal well in North Limburg. These
data have proved to be extremely useful in determining
the geographic distribution and quality of shale layers in
the subsurface. EBN provided information on request to
interested media and held presentations during various
public meetings.
Social importanceEBN sees corporate social responsibility as an integral part
of its activities. This is reflected in such areas as:
— contributing to Dutch society witch revenues from
natural gas
— developing and sharing knowledge
— interaction with stakeholders
— care for personnel
Societal contribution through gas revenues
Gas revenues are an important source of income for
the Netherlands. The dividend and tax EBN pays to the
As part of its role to maximise the value of the
subsurface for Dutch society, EBN is investigating
the potential of new technological possibilities and
the deployment of existing techniques for new ap-
plications in the Netherlands, such as natural gas in
shale layers. One condition here is that exploration
and production activities must be carried out respon-
sibly, with care for man and the environment. There
are many concerns with regard to extracting natural
gas from shale. For that reason, a study into the risks
entailed in these activities for man and the environ-
ment is being carried out. The study is issued by the
Ministry of Economic Affairs. EBN considers this
independent research to be important and is looking
forward to the results.
In the year under review, EBN attended an external
‘knowledge workshop’, where EBN shared its
knowledge in the field of extracting gas from shale.
Various stakeholders attended, which led to a
valuable and broad exchange of views and informa-
tion. In 2013, too, EBN will communicate transparently
and openly and will continue listening to stakeholders,
in order to produce natural gas responsibly with
societal acceptance.
Gas from shale layers
Societal concern
EBN Annual Report | 2012 | 33
Dutch State amounts to approximately half the total gas
revenues. This income accounts for 5% of the total state
income and therefore contributes significantly to the
Netherlands’ prosperity. In 2012, according to expecta-
tions, the total gas revenues amounted to approximately
EUR 14 billion, the equivalent of EUR 850 per capita of
the population. We therefore consider it to be our respon-
sibility to secure the revenue from gas production for the
Netherlands in the future.
Developing and sharing knowledge
Developing and sharing knowledge and information and
making them accessible are a crucial part of EBN’s tasks
and responsibilities. That applies both within the oil and
gas industry and in relation to the government. EBN is
keen to interpret this role as broadly as possible to give
our social involvement a structured, demonstrable form
and make it transparent for all our stakeholders.
In the year under review, we also supported various or-
ganisations and events that contribute to the development
and distribution of knowledge on oil and gas production
in the Netherlands. EBN contributes to the Clingendael
International Energy Programme (a think-tank for geopoliti-
cal issues) and the Energy Delta Institute (a training and
knowledge institute for the gas industry); in addition, we
are one of the founding partners of the Energy Academy
Europe, which was launched in 2012. As a knowledge
organisation, EBN is an employer with a great many spe-
cialists in specific domains related to oil and gas produc-
tion. This in-depth knowledge is shared on diverse stages.
In 2012, for example, EBN personnel gave 35 lectures on
topics such as the mining climate in the Netherlands, the
production of gas from small fields and the importance of
gas in the Dutch total energy supply.
Top sectors
EBN participates in the Top Consortium for Knowledge
and Innovation (TKI) in the context of the gas innovation
contract (TKI-gas). The TKI-gas contract includes the
upstream gas programme line, in which EBN participates.
Within the various innovation contracts, businesses and
researchers join forces to develop new products and ser-
vices. The objective of the upstream gas programme line
is to provide innovative solutions to enable the extraction
of the maximum amount of gas from the Dutch subsur-
face, an ambition that fits in well with our organisation’s
objectives. A number of projects have been formulated for
contributing to achieving this objective. EBN, the industry,
knowledge institutions and universities are the participating
organisations.
Operational performance
To monitor the economic, social and environmental
aspects of its operational management and operational
activities, EBN has formulated key performance indicators
(KPIs). These were enlarged upon in 2012. Data is being
gathered from EBN’s operating partners in gas and oil
extraction.
We see monitoring EBN’s economic, social and environ-
mental performances as the next step in our aim to stimu-
late the Dutch E&P sector in delivering better operational
performance. Aided by the GRI performance indicators,
our overarching position enables us to provide the sector
with insight and take a leading role. This also provides us
with the opportunity to discuss individual performances
with the operators.
The KPIs have partly been established on the basis of
general GRI guidelines and partly on the specific guidelines
| EBN Annual Report | 201234
for the oil and gas industry. All figures and the background
on the 21 KPIs for the period between 2003 and 2011
can be found at www.ebn.nl/Documents/EBN_opera-
tionele_prestatie-indicatoren.pdf. The figures for 2012 will
be added in the course of 2013.
Operational performance 2011 2010
Energy consumption 16.7 PJ 15.7 PJ
Energy saving 2,963 TJ 3,126 TJ
Energy consumption as a percentage of the energetic hydrocarbon production 1.7% 1.5%
CO2-emissions 765 ton 720 ton
Methane emissions 6.2 ton 6.5 ton
Production water discharges 3.1 M m3 3.3 M m3
Number of incidental discharges 15 22
Volume of incidental discharges 1.2 ton 17.6 ton
Industrial accidents (entire industry) 2011 2010
Fatal 0 0
Industrial accidents leading to absenteeism 20 21
Industrial accidents not leading to absenteeism 23 24
Interaction with stakeholders
EBN aims to be approachable, clear and transparent and
considers it to be important to maintain contact with its
surroundings. We believe in listening and learning, but
also in informing and inspiring. As our organisation always
lends an ear to other people’s opinions, we also consider
it to be an important task to actively express our vision of
the importance of natural gas.
Increasingly frequent, we are having intensive discus-
sions with partners. Consequentially, EBN is increasingly
Non-operated venture (NOV) management essentially
entails intensifying the relationship with our operators,
proactively managing the existing EBN asset portfo-
lio and finding themes and topics to serve as input
for developing EBN’s long-term vision. In 2012, an
intensive programme was started for lifting the NOV
management to a higher plane.
EBN realises that, without the solid, continuous
growth of projects that can add gas reserves, the
annual production from small fields will rapidly
diminish. To tackle that reduction, EBN developed the
NOV management cycle in 2012. This annual cycle en-
sues from the re-assessment of the strategy in 2011.
As a non-operating partner in almost 200 participa-
tions, EBN considers it important to have a strong
focus on activities that create the most added value
for the Netherlands. With the NOV management cycle,
EBN has developed a system for working with strate-
gies and action plans aimed specifically at individual
operators. This further increases the possibilities for
optimal management, giving an extra boost to the
management of the existing asset portfolio in the short
and medium term. In 2013, the NOV management
cycle will be rolled out under the responsibility of the
Director Asset Management. The link with the existing
roadmaps and knowledge sharing within the industry
will be expressly reinforced. A great deal of attention
will also be devoted to operationalising an effective
performance measurement
Proactively adding value
noV-management
EBN Annual Report | 2012 | 35
being seen as the binding factor in the sector. We would
like to make optimal use of this position for sharing our
knowledge and experiences and making them of benefit
to the various (energy) dossiers. For us, incidentally, the
focus here is on informing, rather than influencing people’s
opinions. We gather our discussion partners from amongst
the major stakeholders in the energy debate, such as the
Dutch government, the E&P sector, knowledge and re-
search institutions and universities, but also Dutch society
as a whole.
At various times in 2012, too, we invested in numerous
ways in relations and knowledge exchange with stake-
holders. One important element in this is EBN’s renewed
website, which was launched in April 2012. The main
reason was our wish to provide the environment in which
we operate with better and more concrete information on
EBN’s essence and intentions but, more particularly, on
natural gas. The website gives a clear, accessible overview
of what we do and think, what we contribute to and in
what activities we participate.
We see it as one of our major tasks to act as a source of
information on natural gas, so in 2012 we helped to set up
the aardgas-in-nederland.nl website. This online platform
gives an accessible, comprehensive view of the oil and
gas world. The website was created with six partners.
EBN was responsible for the content regarding natural
gas and the energy transition. EBN also contributed to
De Bosatlas van de energie, an energy atlas. The book
provides insight into the present, past and future of energy
supply in the Netherlands. The atlas will be distributed to
schools in 2013, together with a specially compiled teach-
ing package.
Complaints handling
Stakeholders and discussion partners can reach EBN by
telephone and e-mail, but the general public can also con-
tact EBN in the event of complaints about operational ac-
tivities. Although EBN is never the operator, our communi-
cations department will ensure that complaints are passed
on to the appropriate department and to our operating
partners. Together with our partners, we aim to deal with
complaints as swiftly as possible and to the satisfaction of
all parties involved. EBN received no complaints in 2012.
The people of EBNEBN offers professionals with a passion for their discipline
the chance to develop themselves, thus contributing to
EBN’s unique position in the Dutch energy chain and cre-
ating support for natural gas projects.
Workforce
EBN grew slightly in 2012 from 63.5 FTE to 65.8 FTE.
Over the past year, EBN also engaged nine external em-
ployees on a temporary basis and offered five students the
opportunity of a (graduation) work placement at EBN.
One of EBN’s aims is to increase the percentage of
women personnel, particularly in technical and manage-
ment positions. In relation to 2011, the percentage of
women working at EBN rose slightly, to 33% of the total
population, with 25% of professional and management
positions filled by women. Within the technical depart-
ment, too, EBN succeeded in achieving an increase in the
number of women. Over the past year, two new women
employees have joined us in specialist technical roles and
one of the two Ph. D. research projects is being carried
out by a woman.
| EBN Annual Report | 201236
The average age of the EBN population relatively declined
in 2012 to 41 years. 66% of our workforce is under the
age of 45. You can find more information on the composi-
tion of our workforce online, at:
www.ebn.nl/en/werkenbijebn
Training
EBN is a knowledge organisation with a high average level
of education (81% higher than intermediate professional
education):
Education level
University: 70% Higher professional education: 11.4%
Intermediate professional education: 18.6%
Naturally, we invest in the development and training of our
personnel. EBN also develops special management days in
which current affairs and strategic leadership components
are discussed.
We encourage employees to continue developing them-
selves both personally and professionally. Employees
attend, on average, 53 hours of training a year, and the
total number of training days rose from 417 in 2011 to
477 in 2012. Inspiring and contentual training will remain
a focal point for HR policy in the years to come.
Offering training and work placements is an essential part
of EBN’s strategy. Moreover, in 2012, the second Geo
Energy Master Award was presented in collaboration with
the University Fund Delft. The prize encourages students
of Delft University to conduct high-quality research into
energy sources from the Dutch subsurface and, in this way,
EBN endeavours to meet potential future employees.
Investing in small fields
neW reSerVeS
The Dutch gas reserves are diminishing due to the
annual gas production. According to Focus on Dutch
Gas, the annual EBN publication on the Dutch E&P
sector, without further investments gas production
from small fields will be halved by 2015. It is important
to add new reserves to combat that reduction.
The small fields offer many opportunities for adding
reserves. We are attempting to exploit those oppor-
tunities by investing, together with our partners, in
exploration wells and field developments. Investments
in almost depleted gas fields enable us to produce
more gas from these fields, for example.
2012’s figures show that our investments are pay-
ing off: 26.8 billion m3 were produced from the small
fields, while the developed reserves increased by 0.3
billion m3 (from 129.5 billion m3 to 129.8 billion m3). In
other words, production was replaced for more than
100% by newly developed reserves. 25.5 billion m3
were added to the existing reserves and 1.7 billion m3
were added to new reserves as a result of exploration.
Resources are identified opportunities that can pos-
sibly be transformed into reserves. EBN analyses
new resources with the aid of roadmaps. Due to our
investments in exploration and new projects, in 2012
the resources increased from 200.4 billion m3 to 252.5
billion m3. This increase shows that there is still plenty
of potential in the Dutch subsurface. A large part of
these resources can be transferred to reserves in the
coming years.
EBN Annual Report | 2012 | 37
Health and safety
Vitality and health are major focal points for EBN. In 2012,
for example, following up on the Periodic Medical Sur-
vey (conducted in 2011), we offered our employees the
chance to make use of chair massages to prevent work-
related conditions. After evaluation, the effect of the chair
massages proved positive, which made us decide to con-
tinue the service on a structural basis. Additionally, EBN
encouraged its employees in 2012 to develop a healthier
lifestyle, by providing individual vitality coaching.
In 2012, we commissioned an asbestos check at the
office in Utrecht. Asbestos was discovered, but in such
a degree that it constitutes no health risk as long as no
structural rebuilding takes place. Protective coating and
stickering will be carried out in the first quarter of 2013.
At year-end 2012, the EBN emergency response team
had six members. One evacuation exercise was carried
out. There were no safety incidents in 2012 and no
industrial accidents, either with or without absenteeism
as a result.
Absenteeism
Absenteeism fell strongly in relation to 2011 from 4.1% to
2.9%. EBN implements an active reintegration policy for
getting employees back to work responsibly, as soon as
possible after (protracted) illness. Long-term absenteeism
fell in 2012 to 1.3% (from 2.8%) and short-term absentee-
ism decreased slightly from 1.3% in 2011 to 1.2% in the
year under review. Our organisation therefore also com-
plied in 2012 with its aim to keep short and medium-term
absenteeism below 3%.
Absenteeism in % 2012 2011
Short-term absenteeism (<8 days) 1.1 1.0
Medium-term absenteeism (8-42 days) 0.5 0.3
Long-term absenteeism (>43 days) 1.3 2.8
Total 2.9 4.1
Confidant(e)
In the event of complaints, employees can approach a
confidant(e) or the complaints board. In 2012, neither the
confidant nor the complaints board received any com-
plaints.
Works council
In 2012, formal consultation between the CEO and the
works council took place four times. A member of the Su-
pervisory Board attended one of these meetings. As usual,
there was informal discussion on a regular basis.
The major issues dealt with in the year under review were
the proposed relocation of the organisation within Utrecht
and a change to the evaluation and remuneration system.
The major issues completed in 2012 are an amendment
of the target and remuneration cycle and a revision of the
regulations protecting whistle-blowers.
The works council consists of three members: Jeroen
Piket (chairman), Ruben Swart and Edmund Wellenstein
(secretary). Martin Boubin resigned in mid-2012. No suc-
cessor has yet been found for him. The works council’s
term of office runs until 31 December 2013.
Outlook for 2013In view of the current recession and the crisis in Europe,
we do not expect the economic situation in 2013 to be
much different from that in 2012. From that point of view,
the outlook therefore remains slightly negative, which will
| EBN Annual Report | 201238
also affect the demand for and consumption of natural
gas. Although the gas supply is slowly declining, due to
falling production and the decrease in LNG deliveries in
Europe, the turning point from a gas surplus to a shortage
in Northwest Europe is now expected in 2018. Six months
ago, that date was still 2016. As a result of the present
economic conditions, the Netherlands is not expected to
constitute an exception in terms of gas surplus.
Supply from the Groningen system is expected to remain
at virtually the same level in 2013 as in 2012. If that
expectation is fulfilled, which partly depends on the
average temperature throughout the year, then supply
from Groningen will have to be adjusted slightly down-
wards in 2014 and 2015 to comply with the (legally
defined) Groningen ceiling for the 2011 - 2015 period.
Following the earthquake in August 2012 in Huizinge, in
the municipality of Loppersum, research will be carried
out in 2013 into the earthquake risk due to natural gas
production from the Groningen field. The results of this
investigation are expected in the course of 2013 and may
have consequences for future gas production.
In 2013 an inventory study will be conducted in the
province of Groningen, into the vulnerability of buildings
as a result of earthquakes induced by gas production from
the Groningen field. Where necessary, this study will lead
to preventive measures being taken.
EBN’s portfolio of oil production for 2013 will comprise
four producing fields. In 2013, one oil field is in develop-
ment and the oil portfolio is expected to grow in the
coming years.
On 16 August 2012, there was an earthquake (3.6 on
the Richter scale) in Huizinge, in the municipality of
Loppersum. The force of this earthquake prompted
the Dutch State Supervision of Mines (SodM) to
conduct further research into the relationship between
the production of gas from the Groningen field and
the frequency and force of earthquakes.
SodM then discussed the findings of this research
with the Royal Netherlands Meteorological Institute
(KNMI) and NAM. In the months of November and
December, EBN experts participated in discussions
with SodM, KNMI, NAM and Shell, with the aim of
arriving at a widely supported analysis and recommen-
dation. EBN was closely involved in this issue at policy
level too, through consultation with the partners in the
Gas building partnership (apart from GasTerra).
In January 2013, the Minister informed the govern-
ment about the recommendation received from SodM,
his decision to not yet intervene in the production
practice from the Groningen field and the preventive
measures to be taken in 2013. Based on the outcome
of the studies to be carried out this year, in December
2013 the Minister will decide whether to adjust the
production from the Groningen field.
EBN shares the concerns for the consequences of
earthquakes induced by gas production and supports
the agreed approach for 2013.
Thorough investigation necessary
earthquaKe riSK in groningen
EBN Annual Report | 2012 | 39
In 2013, EBN expects roughly as many licences to be re-
turned as requested. This applies to both exploration and
production licences. The number of EBN’s participations
therefore remains virtually constant.
According to EBN’s estimation, 18 exploration wells will be
drilled in 2013. Of these, 12 are expected to be completed
within the year. The budget for exploration expenses will
rise, primarily due to higher costs for drilling installations.
There are also 15 fields in development, of which nine are
expected to be taken into production in 2013.
| EBN Annual Report | 201240
Director of Energy Valley
gueSt column by gerrit Van WerVen:
HubHere in the region, in the four northern provinces, innova-
tion is high on the agenda and in full swing. There is a
reservoir of proposed and promised investments for the
coming years to the value of EUR 25 billion, which makes
this the biggest investment programme in the Netherlands.
We are talking about cables, wind parks, gas pipelines,
central storage, biomass, conversion – you name it. To a
large extent, this has been initiated by Energy Valley. It’s
our ambition to become a European energy hub in terms
of both technology and applications. Where renewable
energy is concerned, we aim to play a leading role in the
energy transition and in developing programmes for that
purpose. And although we are a regional energy centre,
we are also expressly looking at areas outside the region.
In the future, we want to further expand this cluster to be-
come the engine for energy management and the energy
transition in Europe.
IntegratedGas plays a crucial role in the energy transition. We have
plenty of gas and it’s a very convenient, pleasant form
of energy. I am sure that the gas chain will change in the
What Eindhoven is to technology and
Edam is to cheese, Groningen is to
energy. With Energy Valley playing a
crucial, central role . We started this
initiative based on the conviction that
‘every region needs a business’. Today,
our regional role is to boost, direct,
mobilise, help, bind and advise.
EBN Annual Report | 2012 | 41
“When it comes to renewable energy, you need gas.”
long run and the position of gas will change. It will become
extremely important in the transport sector, for example,
and become closely associated with the electricity sector.
We have a hybrid model at the moment – consumers are
supplied with electricity and gas separately, but we will be
moving to a far more complex, integrated situation. When
it comes to renewable energy, you need gas. It’s cheaper
than electricity, partly because electricity is transported
through high voltage cables and the energy value is not
fixed. For gas, it is. In any event, it will not be possible to
treat natural gas and electricity separately in the long run.
PlaythingI can see a number of challenges at the moment. One
of the major challenges is the imperfection of the energy
market. I consider it ridiculous that gas generating plants
are standing idle while coal is being imported and burned.
At the same time, billions are being poured into clean gas.
That is perfidious. In my view, an entirely different financial
system has to be introduced, combined with a range of
measures, such as lowering gas prices and taxing coal
and carbon emissions. That automatically creates a new
market balance. We are currently actually favouring the
most polluting form while also investing billions in clean
energy. If you look at the National Energy Agreement,
the focus is largely on achieving that 16%. That is fine, of
course, and it has to be done, but the real story, natu-
rally, is the remaining 84%. And natural gas should play a
central role there, too. There should be far more thought
put to how we are going to deal with that 84%. However,
it seems as if the debate on ‘clean’ has ground to a halt
where it comes to the fossil element of the energy mix. In
my opinion, that is not prudent and, as a result, we risk
becoming the plaything of market forces. That is both
undesirable and untenable.
ExpansionEBN has been a reliable, expert partner within the energy
sector for many years. The organisation concentrates
on a part of the energy market, namely oil and gas. That
is fine in itself, but EBN could expand its profile. With its
triple A status, EBN is perfectly positioned for making
projects financeable. So why not also use that strength for
renewable energy? I feel the state should draw far more
on EBN’s knowledge. Take the offshore wind parks. Bil-
lions of euros of government money are involved. Isn’t that
something you would rather do and participate in yourself
– exercising influence, control and involvement? It comes
extremely close to EBN’s competencies and expertise in
the field of logistics and infrastructure. EBN should build
on and expand that expertise, harnessing its strength to
promote sustainable forms of energy. That way, EBN can
serve state interests even better than it does now.
AccelerateCentral in my vision of the future of energy supply is the
triple helix. In other words: everything depends on co-
operation from various perspectives and with different
parties. For Energy Valley, these are knowledge institutes,
research agencies and businesses. These three parties
interface when it comes to exchange and innovation in
the energy domain . And if you really want to get ahead
and accelerate, then they are crucial when it comes to
providing investments and support. Of course, you can
also proceed on your own, but if you really want to make
progress, then you need all these parties.
| EBN Annual Report | 201242
1967
EBN Annual Report | 2012 | 43
corporate goVernance and riSK management 3
| EBN Annual Report | 201244
Corporate Governance
Shareholder
EBN is a private limited company with limited liability with
the Dutch State as its sole shareholder. All shares are
owned by the Ministry of Economic Affairs.
EBN’s authorised share capital is EUR 128,137,500 and is
divided into 284,750 ordinary shares with a nominal value
of EUR 450 per share. The subscribed capital is equal to
the authorised share capital. The shares were paid up in
full as of 29 December 2005.
One shareholders’ meeting was held in 2012. The Execu-
tive Board and a number of members of the Supervisory
Board attended this shareholders’ meeting. During the an-
nual general meeting of shareholders, in any circumstance
the following topics are dealt with:
— review of the written annual report by the Executive
Board on issues concerning the company and its
management
— adoption of the financial statements and determination
of the profit appropriation
— discharging the Executive Board of its responsibility for
its management over the past financial year
— discharging the Supervisory Board of its responsibility
for supervision over the past financial year
The above topics were discussed during the shareholders’
meeting. The financial statements were adopted and
the Executive Board and the supervisory directors were
discharged of their responsibility. In addition to the share-
holders’ meeting, the Ministry also regularly conferred
informally with EBN. The objective of this informal discus-
sion is, for instance, to provide shareholders promptly
with all relevant information that is needed for the general
meeting of shareholders to exercise its authorities. Providing
relevant information is an obligation of the Executive Board
and the Supervisory Board.
The shareholder appoints EBN’s Executive Board and
Supervisory Board members. The Executive Board is
appointed by the shareholder on the basis of a binding
nomination by the Supervisory Board. The Minister of Eco-
nomic Affairs has to approve this nomination beforehand.
The members of the Supervisory Board are appointed
by the shareholder on the basis of a nomination by the
Supervisory Board. The shareholder appoints a chairman
from the members of the Supervisory Board.
EBN’s articles of association also state that the Execu-
tive Board requires prior approval by the shareholder for
certain decisions, for example entering into or terminating
any sustainable collaboration or investment with a value
exceeding EUR 200 million, closing of the company, any
of its subsidiaries or a significant part of the company and
for decisions by the Executive Board concerning major
changes to the identity or character of the company,
including acquiring or hiving off a significant participation
in the capital of another company and transferring the
company to a third party.
Supervisory Board
The chairman and the members of the Supervisory Board
are appointed by the shareholder. The Supervisory Board
is responsible for supervising the Executive Board’s policy
and the general course of affairs within EBN and advises
the Executive Board where necessary and desired. In turn,
the Executive Board provides the Supervisory Board with
corporate goVernance and riSK management
EBN Annual Report | 2012 | 45
CEO
Legal
CommercialDepartment
HR
CorporateCommunication
OfficeManagement
Director AssetManagement
AssetGroups
GasTerra
BusinessDevelopment
DirectorTechnology
TechnologySupport
Technology Projects& Innovation
TechnologyQuality
DirectorFinance
BusinessControl
Accounting& Reporting
Treasury
ICT
Organisational structure
all necessary and relevant information to enable it to opti-
mally interpret and execute its tasks and responsibilities.
EBN’s articles of association also state that the Executive
Board requires the approval of the Supervisory Board for
certain decisions, such as defining amendments to the
exploitation budget and the investment and financing plan,
appointing proxy-holders and making (dis)investments and
conducting other legal transactions to the value of more
than EUR 50 million.
The report by the Supervisory Board is on page 16 of this
report.
Executive Board
The Executive Board comprises one statutory director
(Jan Dirk Bokhoven) and is responsible for the company’s
general policy and strategy with the company’s associated
risk profile. The Executive Board is also responsible for
achieving the company’s objectives, the results achieved
and the social aspects of business relevant to the company.
Where necessary, the Executive Board submits decisions
to the shareholder or the Supervisory Board for approval.
It also ensures the proper functioning of the internal risk
management and control system.
| EBN Annual Report | 201246
The Executive Board is assisted by three functional direc-
tors: Thijs Starink (Director Asset Management); Berend
Scheffers (Director Technology) and Jan Boekelman
(Director Finance), who jointly form the team of Directors.
The fourth functional director, who was in function as
Director of Corporate Affairs during 2012, will resign in the
course of 2013. The statutory director is chairman of the
team of Directors.
The organogram is shown on page 43.
The team of Directors’ Regulations, which are approved
by the Supervisory Board, divide the duties among the
members of the team of Directors. The team of Directors
functions on the basis of joint responsibility. Within that joint
responsibility, the tasks are divided into functional areas.
This specific task division is set down in writing. Each mem-
ber of the team of Directors is responsible for preparing
policy matters and decisions in his or her own operational
area. After decision-making within the team of Directors, the
members of the team of Directors ensure the prompt imple-
mentation of the decisions made. In principle, the team of
Directors meets once every two weeks.
In the annual report, the Executive Board gives a descrip-
tion of the primary risks related to EBN’s strategy, the
structure and functioning of the internal risk management
and control systems with regard to the primary risks related
to EBN’s strategy and any shortcomings in the internal risk
management and control systems detected in the financial
year, any significant amendments that have been made and
any important improvements that have been proposed. For
this description, please refer to page 46.
Remuneration, other board memberships
and conflicts of interest
The shareholder determines the policy for the team of
Directors remuneration. The Supervisory Board determines
the actual remuneration of the individual members of the
team of Directors within the frameworks of that policy,
including the team of Directors’ variable remuneration. The
team of Directors’ variable remuneration is explained in the
report by the Supervisory Board.
Jan Dirk Bokhoven is a member of the Supervisory
Board of GasTerra and a member of GasTerra’s board
of delegated supervisory directors.
EBN endorses principle II.3 of the Corporate Governance
Code that any form or suggestion of a conflict of interest
between the company and the team of Directors should
be avoided. The articles of association and the team of
Directors Regulations include a regulation concerning
(potential) conflicts of interest between the team of Direc-
tors and the company. Any (potential) conflicting interest of
material significance must be immediately reported to the
chairman of the Supervisory Board. No incidences were
reported by the team of Directors in 2012.
Even distribution of seats on the team of
Directors and the Supervisory Board
In 2012, no seats became vacant on the team of Directors
or the Supervisory Board that were filled otherwise than
by the reappointment of a supervisory director, to ensure
the continuity of the functioning of the Supervisory Board.
The division of seats between women and men in 2011
therefore remained unchanged in 2012. As soon as a
vacancy arises that is not filled by reappointment, action is
taken to achieve a division complying with article 2:276 of
the Dutch Civil Code.
EBN Annual Report | 2012 | 47
External auditors
The shareholder is responsible for appointing the external
auditors, with the Supervisory Board having a right of nomi-
nation. In 2011, Ernst & Young was appointed to audit the
financial statements for the years 2012, 2013 and 2014.
Code of conduct, complaints board
and confidant(e)
As we attach importance to transparency and clarity
externally, that also applies within the confines of our or-
ganisation. EBN has a code of conduct that is accessible
and applicable to all employees. This provides a guideline
for making personal choices and individual decisions. We
also use the code of conduct to test the actual conduct
of the company and its employees. In the event of internal
complaints, employees can approach a confidant(e) or
the complaints board. Neither the confidant(e) nor the
complaints board received or dealt with any complaints in
2012. The code of conduct is available at
www.ebn.nl/documents/gedragscode_EBN.pdf
Regulations protecting whistle-blowers
On the basis of the regulations protecting whistle-blowers,
employees can report any alleged abuse to the Executive
Board or the Supervisory Board. No alleged incidences of
abuse were reported in 2012. The regulations protecting
whistle-blowers are available at
www.ebn.nl/documents/klokkenluidersregeling_EBN.pdf
Application of the Corporate Governance Code
As EBN qualifies as a state participation, the company
adheres to the government’s policy, which stipulates that
state participations must follow the Corporate Governance
Code. Although EBN is not a listed company and is not
obliged to apply the code for that reason, it does endorse
the Corporate Governance Code principle that transparency
towards stakeholders is crucial. We do, accordingly, follow
a number of the code’s principles(1), whereby, however,
not all best practice provisions included in these Corporate
Governance Code principles are applicable to EBN. The
specific principles and best practices we do follow have
been elaborated upon in EBN’s articles of association
and regulations are a conduct guideline for the Executive
Board, the Supervisory Board and the shareholder. You
can read the full Corporate Governance Code at
http://commissiecorporategovernance.nl
Risk managementRisk management is an essential part of EBN’s operational
management. It enables our organisation to constantly
maintain a good overview of the strategic and operational
opportunities and risks, and respond effectively to them.
When identifying these opportunities and risks, we do not
rely solely on structural elements, such as analyses and
reports; we also focus specifically and consistently on the
risk awareness and integrity within the organisation.
Risk management structure
To structure and manage our operational activities, we
use the ‘EBN Framework’. This consists of four individual
pillars, within which various activities are identified and
carried out coherently. Risk management constitutes a
fundamental, integral part of the entire framework. In es-
sence, the aim is:
— to analyse opportunities and risks based on the organi-
sation’s strategy
— to formulate and implement control regulations
— to test the effectiveness of the control measures
The figure on page 46 represents the EBN Framework,
including the major risk management elements per pillar.
(1) EBN complies with the following principles of the Corporate Governance Code: II.1 Executive Board: role and procedures, II.3 Executive Board: conflicts of interest, III.1 Supervisory Board: role and procedures, III.2 Supervisory Board: independence, III.3 Supervisory Board: expertise and composition, III.4 Supervi-sory Board: the chairman of the Supervisory Board and the company secretary, III.5 Supervisory Board: composition and role of the board’s three key commit-tees, III.6 Supervisory Board: conflicts of interest, III.7 Supervisory Board: remuneration, V.1 Financial reporting, V.2 Role, appointment, reward and performance evaluation of the external auditors, V.3 and V.4 External auditors’ relationship and communication with the company’s bodies.
| EBN Annual Report | 201248
Risks and opportunities
Based on our organisation’s strategic objectives, the
Executive Board carries out an annual strategic risk analy-
sis, which analyses both the opportunities and risks for
achieving these objectives. The departments within EBN
carry out an annual operational risk analyses. During these
analyses risks are identified and it is assessed whether
these risks are effectively managed. The analysis also
investigate whether opportunities are being adequately
identified and capitalised upon. Both the strategic and the
operational risk analyses were carried out in 2012.
Risk management
To manage risks as efficiently as possible, measures are
formulated and implemented where necessary on the
basis of the strategic and operational risk analyses. These
are then embedded in the EBN working processes, of
which the most important are described in detail and
recorded centrally. The working processes are available to
all employees on our intranet, under ‘Integral Management
System’.
Each year, EBN establishes a working programme and
budget, the WP&B. This defines the ambitions, plans
and activities for that year at both organisational and
Risk management
Risks and opportunities
Vision, mission and
strategy
ControlEffectiveness assurance
Strategic Risk Analysis (SRA)
Operational Risk Analyses (ORAs)
Defined working processes
Planning & control cycle / performance measurement
Policy, regulations, codes
EBN strategy
Annual working programme and budget
Self evaluations
In control statements
Internal audits
Joint venture audits
External audit
Following up internal and external audits
EBN Annual Report | 2012 | 49
departmental level. The planning and control cycle is used
throughout the year to check the degree to which the
objectives included in the WP&B are being achieved. To
that end, monthly and quarterly management reports are
compiled, which are discussed at various levels within
the organisation. Where necessary, actions can be taken
based on these reports.
Within the framework of risk management, EBN publishes
internal policy documents and internal regulations, such
as the authorisation and procuration regulations, on its
intranet, making them accessible and available to all
employees.
The effect of control measures
The design and operating effectiveness of the control
measures is tested annually. This was done in 2012,
as usual, through open, informal sessions, in which the
department manager carries out a self-evaluation of the
major control measures with his or her staff and discusses
their design and operating effectiveness. Where necessary,
concrete actions are defined for improving the control
level. The results of the self-evaluations are reported to the
Executive Board, with the department managers issuing
an ‘in control statement’. This states that the major risks
in their area of responsibility have been identified and
explains whether they are being adequately managed.
In 2012, like every year, a number of internal audits were
carried out. These are aimed at evaluating the quality and
effectiveness of important working processes and/or a
number of specific themes within those working pro-
cesses. In 2012, internal audits were carried out for the
salary administration and processing, integrity and system
security.
The findings of these audits are presented and explained
to the Executive Board and the most important points are
discussed with the Supervisory Board’s audit committee.
The internal audits also resulted in findings in the year un-
der review. Actions have been defined to deal with them,
‘owners’ are appointed and end dates determined. The
team of Directors periodically monitors the implementation
of the actions.
In addition to internal audits, in 2012 EBN also conducted
a financial audit of the costs charged on to our organisa-
tion within the framework of various partnerships.
Financial markets
To achieve our strategic objectives, we depend on good
access to the capital markets, effective currency and inte-
rest rate risk management and sound creditworthiness of
our financial counterparts. How these aspects are managed
are described starting page 78 of the annual report.
Risk profileEach year, EBN does its utmost to achieve its strategic
objectives for the short and long term. Naturally, it is
inevitable that risks and uncertainties occur that affect the
actual execution of these plans to one degree or another.
The major and most topical of these are described below.
Support for gas and oil production
It is essential to have sufficient societal support for natural
gas and oil exploration and production. EBN therefore
attaches great value to clear communication on the role of
natural gas in the Netherlands. We also feel it is important to
inform stakeholders proactively, factually and transparently
regarding specific activities and to use actual projects to
demonstrate in practice how the production of natural gas
| EBN Annual Report | 201250
can be embedded into the natural living environment. This,
we do by listening to and learning from stakeholders. We
also encourage a safe production process that minimises
environmental impact.
Share of gas in the energy mix
Natural gas potentially plays an essential role in the transi-
tion to the use of renewable energy sources. Natural gas
is the cleanest fossil fuel and, moreover, it forms a natural
combination with renewable energy, such as solar and
wind power, as it is flexibly deployable.
However, with increasing energy production from coal,
as a result of the relatively low coal price, there is a risk of
natural gas’ potential role not being realised. EBN there-
fore considers it important to convey the potential and
importance of natural gas in the energy transition and
enter into broad social dialogue on the topic.
Investment climate and critical infrastructure
If the investment climate for natural gas and oil exploration
and production is unfavourable, oil and gas companies
will increasingly shift their priorities to countries where they
can earn a better return on investment. That also means
the Netherlands are unable to attract sufficient new inves-
tors. The result will be lower investments in Dutch gas and
oil production in general and in the application of new in-
novative technology in particular. Without the necessary in-
vestments, the existing infrastructure will also be removed
prematurely. For offshore gas production, it is essential
that the critical infrastructure will be retained as long as
possible, to facilitate the development of new fields.
Otherwise, there is a risk that the level of natural gas and
oil production will trail behind in the long term. EBN will in-
vestigate the possibilities for further optimising the invest-
ment climate and, together with the government, mobilise
the sector and knowledge institutions to achieve this aim.
We will also actively draw national and international at-
tention to the possibilities for natural gas exploration and
production in the Netherlands.
External factors
If an extended period of low market prices would occur,
there is a risk of oil and gas companies investing less. EBN
continuously monitors the development of gas prices. EBN
does not, however, take any measures such as hedging
to control the risk of fluctuating market prices. Due to our
low operational cost structure, low market prices have little
effect on EBN’s continuity.
Executive Board statement
The Executive Board is responsible to maintain an adequate
internal control structure and for the evaluating of its
effectiveness. During the financial year, the actual business
performance is periodically compared with the approved
plans and budgets, and discussed during the Executive
Board meetings. The Executive Board declares that the
financial reporting systems operated properly during the
year under review and provide a reasonable degree of
assurance that the financial statements do not contain
any material misstatements.
EBN Annual Report | 2012 | 51
| EBN Annual Report | 201252
Team manager for climate and energy at Stichting Natuur & Milieu,
the Netherlands Society for Nature and Environment
gueSt column by ron Wit:
In the Netherlands, the fairy-tale of flexible gas generating
stations and more renewable electricity together determi-
ning a sustainable future has gone up in smoke. In reality,
the electricity sector is not adhering to it and the market
seems to be entirely focusing on coal. In this respect,
there is a gap between the intended transition and the
whims of the market.
ProgressIn the Netherlands, we are always talking about objectives.
We talk about the 16% renewable energy target in terms
of ‘Isn’t it too much?’ and ‘Won’t it be too expensive?’
But that discussion is not in the interest of the necessary
investment security of a rapidly-growing clean technology
industry. Worse still, it’s an excuse for postponing things
and not making any progress. We need to talk less about
objectives and more about what is really needed.
This year, it would be a good idea for the cabinet to an-
nounce the volumes contracted annually for offshore wind
Energy is important in people’s lives.
Without energy, we cannot drive cars,
we have no light and no water. Major
changes and interventions will there-
fore always affect individuals’ lives.
Moreover, making energy more sus-
tainable leads to energy forms with
a higher impact on the spatial envi-
ronment. All in all, this will involve an
unparalleled energy transition
EBN Annual Report | 2012 | 53
“We are champions when it comes to talking about objectives, but we are not making any progress.”
energy generation. That would give a tremendous boost
to the sector, as companies can then be sure there will
be sufficient volume in the market to justify innovation and
investment. This confidence is key. Moreover, there is suffi-
cient money reserved in the coalition agreement to finance
the unprofitable top of such a contracting plan. Naturally,
it’s good that an Energy Agreement is being developed for
up to 2030 and beyond, but we should not let that distract
us from what needs to be done today. We are champi-
ons when it comes to talking about objectives, but not in
acting upon them.
Bogged downI had the privilege of being involved in the process for
the energy agreement. I have always wondered how the
Netherlands can have remained stationary for the past ten
years when it comes to sustainability. I think it’s because
everyone talks about technology and tools, but when it co-
mes down to it we get bogged down. In this country, we
always pay too much attention to content and too little to
the underlying interests. Also today, there is too much talk
of content and figures, while we are unwilling or unable
to quantify the interests and find out more about them
from each other. Dare to agree to a second best; 100%
agreement may not be able to muster sufficient support.
An analysis has never been made of why we fail to make
progress together, but these are largely the reasons.
Only if we stand shoulder to shoulder and bridge the gap
between our mutual interests will we really move forward.
Competitiveness The major challenge at the moment is energy saving: eve-
ryone is for it, but nobody is really doing it. The risk is that
we only pay lip service. I consider it a strategic loss that
energy saving is primarily seen as a means to achieving
the climate objectives. It means we are not benefiting fully
from the value it can offer our economy. We should see
it from an economic point of view: our level of energy ef-
ficiency is among the worse in Europe and is deteriorating.
This affects our competitiveness and therefore our eco-
nomy. We have to shift to a situation where energy saving
is an economic objective, a business case.
Leading in terms of climate policy can harm our compe-
titive position. But when it comes to energy saving, the
opposite applies. If the rest of the world is doing little when
it comes to climate policy, then fossil fuel prices will rise
and we can earn a lot of money with energy saving. The
payback time for energy-saving investments then beco-
mes shorter and the benefits will outweigh the costs for
the country.
Dream will sufferWe have to take care that natural gas as a transition fuel
does not become a marketing concept – a good story
without anything to back it up. Admittedly, natural gas is
flexible, but that alone is not enough to earn it a sustai-
nable image. In that respect, the gas sector will have to
do more to realise the importance of natural gas in the
transition. In theory, it can play an extremely important role
but, as I said, the market is inexorable. So what do you do
then? Look at the present situation: idle gas generating
stations, coal-fired stations running full blast. It’s high time
that the established gas sector dared to take a political
stand: “We want substantially higher CO2 prices!” Other-
wise, your dream will suffer.
| EBN Annual Report | 201254
1973
founding of dSm aardgaS b.V.
EBN Annual Report | 2012 | 55
financial StatementS 4
| EBN Annual Report | 201256
The Executive Board has prepared and, by resolution
of 20 March 2013, formally approved the financial state-
ments of EBN B.V. (EBN) for the 2012 financial year.
The financial statements were subsequently submitted to
the Supervisory Board. EBN is a private limited company
with limited liability, based and with its business premises
in the Netherlands and with its registered office in Utrecht.
EBN was established on 2 January 1973 in Maastricht.
Pursuant to Article 20.2 of the articles of association the
Supervisory Board also provides a preliminary recommen-
dation to the shareholders. The financial statements will
be submitted to the General Meeting of Shareholders on
18 April 2013, where they will be adopted and subse-
quently published. All shares in EBN are held by the
Dutch State.
The consolidated financial statements of EBN for the
2012 financial year include the company and its subsi-
diary EBN Capital B.V. (created on 15 November 2012
from the merger of K13 Extensie Beheer B.V. and F3/
A6 Extensie B.V.) and have been prepared in accordance
with the International Financial Reporting Standards (IFRS)
and interpretations of the International Financial Reporting
Interpretations Committee (IFRIC) as applicable on 31
December 2012 and as adopted by the European Union
and section 9, Book 2 of the Dutch civil code.
The consolidated financial statements incorporate the
financial statements of EBN and the entities over which
EBN has control. EBN has control of a subsidiary if EBN
is able to determine the subsidiary’s financial policy and
corporate policy in order to obtain benefit from its activi-
ties. The subsidiary’s financial statements are compiled on
the basis of the same principles as EBN. All transactions,
balances, assets and liabilities within the Group are elimi-
nated on consolidation level. The results of the subsidiaries
acquired or hived off in the course of the year are entered
in the consolidated profit and loss account from the date
of acquisition or until the date of hiving off, as appropriate.
The financial statements of EBN pertain mainly to EBN’s
share in joint ventures in the field of oil and gas production
in the Netherlands and the Dutch part of the continental
shelf. The information shown relates to EBN’s share in
the assets and liabilities, as well as in the revenues and
expenses of such joint ventures. EBN also participates
in a number of companies.
Joint venturesJoint ventures are defined as contractual or other company
cooperation agreements with partners with whom EBN
jointly performs operations. These operations use assets
that are jointly controlled by EBN and its partners. EBN
accounts proportionally for these joint assets and related
liabilities, expenses and revenues in the financial statements.
The Maatschap Groningen [Groningen Partnership] is the
main joint venture. In total, EBN participates in 27 onshore
production licences, 101 offshore production licences, 48
exploration licences, the Emmen gas purification plant and
4 underground natural gas storage facilities. The participa-
tion percentages in these joint ventures range from 40%
to 50%. EBN also participates in the K13-Den Helder gas
processing plant and pipeline, the K13-Extension pipeline
(through a subsidiary) and the F3/A6 Extension pipeline
(through a subsidiary).
EBN is the sole shareholder of EBN Capital B.V. as a result
of the above participations in the K13 Extension and F3/
A6 Extension pipelines.
general
EBN Annual Report | 2012 | 57
AssociatesEBN has a 40% participation in GasTerra B.V. GasTerra
B.V. is seated in Groningen and its core activity is trading
in gas. EBN also has a 45% participation in NOGAT B.V.
and a 12% participation in NGT Extensie. The core activity
of these organisations is gas transport from the North Sea.
| EBN Annual Report | 201258
The financial statements have been prepared in accor-
dance with the historical cost convention and on going
concern basis, unless stated otherwise.
Conversion of foreign currenciesThe euro is the operating and reporting currency of EBN.
This also applies to its joint ventures. Commercial trans-
actions and borrowings in foreign currencies are shown
in the financial statements at the spot exchange rates
applying on the transaction dates. Balance sheet items
denominated in foreign currencies are converted at the
spot exchange rates applying on the balance sheet date.
Differences in exchange rates resulting from settlement of
these transactions and conversion of balance sheet items
are charged to the profit for the year.
Current versus non-current assets and liabilitiesAn asset is classed as current if it is expected to be rea-
lised within 12 months of the balance sheet date. A liability
or debt is classified as current if it will be settled within 12
months of the balance sheet date.
Property, plant and equipmentTangible fixed assets for production
The tangible fixed asset for gas and oil production and
the other operational equipment are valued at purchase
value minus depreciation and any impairment losses.
Replacement investments constituting an improvement
are capitalised and amortised and identical replacement
investments are charged to the profit and loss account.
The estimated costs of decommissioning, dismantling and
removal of platforms and other installations are capitalised
and amortised as part of the purchase value of the tangi-
ble asset in question.
A tangible asset is no longer included in the balance sheet
once it has been divested or when no future economic
benefits are expected from its future use, or if the licence
is returned or sold. Any profit or loss ensuing from the
asset that is no longer included in the balance sheet is
incorporated into the result.
Exploration assets
EBN capitalises and amortises expenditure on exploration.
Exependitures on the activities listed below are capitalised
and amortised as part of the exploration and evaluation
assets: Acquisition of exploration licences, exploration
drilling, trenching (surveying by means of soil sections),
sampling and activities related to evaluating the technical
and commercial possibilities for extracting minerals.
The costs of the following are not capitalised or amortised:
topographical, geological, geochemical and geophysical
surveys, unless they are related to existing and proven
reserves (e.g. to determine the best place to drill).
If such costs are considered to be part of the partner
reimbursement then they are capitalised and amortised.
Partner reimbursements are generally made when pro-
duction seems feasible. That provides more certainty than
when the surveys are carried out independently.
Exploration wells
Expenses for exploration wells are capitalised (wells under
construction). If an exploration well turns out to be dry,
the costs incurred are charged to comprehensive income.
These assets are not depreciated as long as there is no
production from a gas or oil exploration well.
Expenses related to exploration wells that are older than
12 months are charged to comprehensive income, unless:
principleS for the Valuation of aSSetS and liabilitieS and determination of profit
EBN Annual Report | 2012 | 59
1) they are located in an area where significant capital
expenditure is required before production can com-
mence, and
2) commercially recoverable quantities have been found,
and
3) further exploration or appraisal activities are taking
place, i.e. additional exploration wells are being drilled
or there are definite plans to do this in the near future.
Management regularly evaluates, on the basis of the
above criteria, whether it is still appropriate to capitalise
expenses relating to exploration drilling, and whether the
drilling activities can be continued. Exploration wells older
than 12 months are additionally evaluated to determine
whether any facts or circumstances have changed and
whether the above criteria still apply.
Reimbursement of partners
The costs of reimbursements paid to partners – mainly
exploration costs and interest payments related to proven
reserves – are capitalised and amortised on the basis of
the Unit-of-Production method (see next section for more
information).
Depreciation
Tangible fixed assets for gas and oil production are
depreciated on the basis of the Unit-of-Production (UoP)
method: The ratio between the production in the financial
year and the PRMS reserve classification of proven reserves
(category 1) as at 31 December of the financial year. The
reserves are determined in accordance with the definitions
laid down by the Society of Petroleum Engineers (SPE),
World Petroleum Council (WPC), American Association of
Petroleum Geologists (AAPG) and Society of Petroleum
Evaluation Engineers (SPEE) and are recorded in the
Petroleum Resources Management System. The reserves
are based on the current estimates of EBN’s proven
reserves and production profiles.
Other property, plant and equipment are depreciated on
a straight line basis over their estimated useful economic
life. For trunk transport pipelines and facilities for the
underground storage of natural gas (UGSs), an economic
life of ten years is assumed. Land is not depreciated. The
estimated remaining economic life of this property, plant
and equipment is tested annually, taking into account
economic and technological obsolescence and normal
wear and tear.
Capital expenditure and wells under constructionCapital expenditure and wells under construction are not
depreciated.
Financing costs of projectsFinancing costs of projects are capitalised. The interest
rate used for the financial year is based on the average
interest rate applying on long-term borrowings in the past
financial year.
AssociatesAn associate is an interest in an entity on which EBN can
exert significant influence, but over which it cannot exer-
cise decisive control. Associates are shown in accordance
with the equity method. This means that EBN’s share in
an associate is shown as EBN’s share in the net assets of
this entity, less any impairment. EBN’s share in the profit or
loss of the associate is charged to comprehensive income.
If EBN’s share in the loss of an associate exceeds the
carrying amount of that associate, including any other
| EBN Annual Report | 201260
receivables, the carrying amount is reduced to nil. No
further losses are accounted for unless EBN has assu-
med responsibility for the associate through a guarantee
or other commitments. Unrealised gains and losses on
transactions with associates are eliminated in proportion to
EBN’s share in these associates.
ImpairmentAn assessment is made on each balance sheet date as
to whether the carrying amount of a non-current asset
(property, plant and equipment or associate) exceeds its
realisable value (the higher of the indirect and direct reali-
sable values). If so, the value of the asset will be deemed
to be impaired. If an asset does not generate sufficient
independent cash flow, the realisable value is determined
for the cash-generating unit to which the asset belongs.
A typical EBN property, plant and equipment type cash-
generating unit is a concession. To determine the indirect
realisable value, estimated future cash flows are discoun-
ted at a rate before taxes, on the basis of the market
interest rate, plus a mark-up for the asset’s specific risks.
EBN uses the WACC (Weighted Average Cost of Capital)
for this calculation.
If the realisable value of an asset is lower than the car-
rying amount, the carrying amount will be reduced to the
realisable value. Impairment can be reversed, either wholly
or partially, in the event of a change in the estimate that is
of significance for determining the realisable value.
Impairment is shown as a separate item in the statement
of comprehensive income.
InventoriesInventories of gas stored underground and materials and
equipment are shown at the lower of average purchase
prices or net realisable values. Inventories of above-ground
condensate and oil are shown at their net realisable values
at the year-end.
ReceivablesReceivables are shown at amortised cost less any amount
deemed necessary for bad and doubtful debts. On first
recognition, receivables are shown at fair value.
Cash and cash equivalentsCash and cash equivalents are cash in hand, bank balan-
ces and deposits at banks with a remaining term to matu-
rity of less than three months. Amounts owed to banks are
shown as current liabilities.
Shareholder’s equityEBN’s shareholder’s equity consists of share capital and
any dividend declared. The Dutch State is EBN’s sole
shareholder. The dividend payable to this shareholder is
shown as a liability in the period for which it is due, in ac-
cordance with EBN’s articles of association. An exception
to this rule is made for the proposed final dividend, which
does not become a liability until it has been approved by
the General Meeting of Shareholders.
ProvisionsProvisions are shown in the balance sheet if the following
conditions are satisfied:
1) there is a legal or actual obligation as a consequence
of an event in the past, and
2) it is likely that assets will be withdrawn from the com-
pany in order to meet this obligation, and
3) the amount of the obligation can be reliably estimated.
If the effect of the time value of money is material, provisi-
EBN Annual Report | 2012 | 61
ons are determined by calculating the present value of the
forecast cash flows at a discount rate before tax. Once
the present value has been calculated, any increase in
provisions as a result of the passing of time is shown as
interest expense. The provision for deferred tax liabilities is
not discounted.
The provision for decommissioning and restoration costs
is designed to cover the expected estimated costs of
decommissioning, dismantling, and land restoration on the
basis of present-day requirements, technology and price
estimates. The amount of this provision is based on infor-
mation provided to EBN by the operators. Any changes in
this information will, after EBN has made its own assess-
ment, generally result in a corresponding change in the
capitalisation of decommissioning and restoration costs of
the relevant property, plant and equipment. The provision
for ground subsidence is designed to cover certain additi-
onal liabilities arising during the production phase.
LiabilitiesOutstanding borrowings are shown at amortised cost. On
first recognition, such items are shown at fair value less
costs. Borrowings in foreign currencies are converted at
the exchange rates applying on the balance sheet date.
Premiums or discounts on borrowings are amortised
during the term to maturity of the loan concerned. Interest
expense is charged to the result in the period to which it
pertains, using the effective interest rate method.
PensionsEBN provides a defined benefit pension scheme, which is
managed as part of the ABP pension fund. In its financial
statements EBN treats the scheme as a defined contribution
pension scheme because the pension fund is unable to
provide the information required to determine and specify
EBN’s share in the underlying pension obligations, fund
investments and costs of the scheme in a consistent and
reliable manner.
Contingent assets and liabilitiesContingent assets and liabilities are not shown in the
balance sheet.
Emission rightsAs a result of its interests in the various joint ventures, EBN
must comply with legislation designed to reduce green-
house gas emissions. The operator trades the emission
rights on behalf of the joint venture partners.
The operator reserves emission rights in order to be
able to satisfy delivery obligations. These rights are not
shown in the balance sheet. Income is reported when the
operator sells EBN’s share in surplus emission rights. If the
operator has to purchase additional emission rights, EBN
records an expense item to the extent of its share.
Net salesNet sales from the sale of gas, oil and condensate are ac-
counted for at the time of delivery, which is when owner-
ship of and the risks associated with the delivered goods
pass to the buyer. Revenues from oil and gas production
generated from assets in which EBN participates with
other producers are shown in proportion to EBN’s relative
interest in these assets.
Operating expensesExpenses are determined on the basis of historical costs.
These include the share in the expenses of the joint ven-
ture that corresponds with EBN’s interest, as well as the
| EBN Annual Report | 201262
costs of managing the joint venture. Operational costs also
include levies out to the Dutch State.
Financial income and expenseInterest income and interest expense are shown on a time-
proportionate basis. Interest expense also includes interest
accrued on provisions.
Share of profit from associates The share in the profit from associates is shown as the
share of the profit for the year under review corresponding
with EBN’s interest, after deduction of taxes.
TaxesTaxes on profits are determined in accordance with the
balance sheet method. Tax liabilities are specified in the
statement of comprehensive income except insofar as
they relate to an item included in other comprehensive
income.
Current tax expenses are taxes that are expected to be
payable on the taxable profit for the year, based on the
tax rates applying on the balance sheet date, net of any
adjustments for taxes payable in respect of previous years.
Deferred tax assets and liabilities are shown on the basis
of the expected fiscal consequences of temporary dif-
ferences between the fiscal and commercial carrying
amounts of assets and liabilities. Deferred tax assets and
liabilities are calculated on the basis of the tax rates that
are applicable or materially determined on the balance
sheet date, and in accordance with the tax regulations
expected to apply when the specific deferred assets and
liabilities are settled.
Financial derivativesFinancial derivatives are shown at fair value on initial
recognition and then at the current fair value prevailing on
each subsequent balance sheet date. Any resultant gains
or losses are charged to comprehensive income. EBN
does not apply hedge accounting.
International Financial Reporting Standards (IFRS) The 2012 financial statements take into account the conse-
quences of the following standard, the application of which
has been in force since the start of the 2012 financial year:
— IFRS 7 Financial Instruments: Disclosures - Amendment
to Disclosures
EBN has opted not to apply the following standards,
amendments to standards and interpretations which have
not yet come into force or which have not yet been adop-
ted by the European Union:
— IFRS 9 Financial Instruments
— IFRS 10 Consolidated Financial Statements
— IFRS 11 Joint Arrangements
— IFRS 12 Disclosure of Interests in Other Entities
— IFRS 13 Fair Value Measurement
— IAS 1 Presentation of Financial Statements
— IAS 12 Income Taxes - Recovery of Tax Assets
— IAS 16 Property Plant and Equipment
— IAS 19 Employee Benefits
— IAS 28 Investments in Associates and Joint Ventures
— IAS 32 Offsetting Financial Assets and Financial
Liabilities & Financial Instruments, Presentation
— IAS 34 Interim Financial Reporting
— IFRIC 20 Stripping Cost in the Production Phase of
a Surface Mine
EBN Annual Report | 2012 | 63
1975
Start offShore gaS production
| EBN Annual Report | 201264
1989
change of name: dSm aardgaS becomeS ebn
EBN Annual Report | 2012 | 65
EBN is investigating the consequences of the standards,
amendments to standards and interpretations. On the
basis of the provisional results, EBN does not expect
the application of these new standards, amendments to
standards or new IFRIC interpretations to have any mate-
rial consequences for the company’s financial statements
in future financial years.
| EBN Annual Report | 201266
conSolidated Statement of comprehenSiVe income
In EUR million
note 2012 changes in relation to 2011 2011
net sales 2 8,528 20% 7,103
levies 3 3,801 2,964
operational costs 4 797 658
depreciation and amortization 5 745 617
operating expenses 5,343 26% 4,239
operating profit 3,185 11% 2,864
financial income 6 99 139
financial expenses 6 -201 -232
share of profit from associates 7 48 53
pre-tax profit 3,131 11% 2,824
taxes 8 -771 11% -693
net profit 9 2,360 11% 2,131
other comprehensive income - -
total comprehensive income 2,360 11% 2,131
EBN Annual Report | 2012 | 67
conSolidated balance Sheet
In EUR million
assets note year-end 2012
year-end 2011 liabilities note year-end
2012year-end
2011
non-current assets shareholder’s equity 14
property, plant and equipment 10 3,911 4,206 share capital 128 128
associates 11 112 113 retained earnings 72 76
4,023 4,319 200 204
non-current liabilities
provisions 15 1,957 2,033
deferred tax liabilities 8 135 120
borrowings 16 1,652 1,733
other 17 16 16
3,760 3,902
current assets
inventories 12 40 68 current liabilities
receivables 13 1,079 1,085 borrowings 16 373 713
deferred tax credits - 80 tax 110 96
derivatives 19 257 327 other 18 1,289 956
cash and cash equivalents 366 9 derivatives 19 33 17
1,742 1,569 1,805 1,782
total 5,765 5,888 total 5,765 5,888
| EBN Annual Report | 201268
Summary of changeS in Shareholder’S equity
In EUR million
The retained profit at year-end 2012 of EUR 72 million represents the proposed final dividend. Total earnings per share for 2012 amounted
to EUR 8,288, which was an increase of 11% in relation to 2011.
For more information, please refer to note 14.
share capital
retained earnings
total equity
balance as at 1 January 2011 128 46 174
net profit - 2,131 2,131
other comprehensive income - - -
total comprehensive income - 2,131
final dividend 2010 - -46 -46
interim dividend . -2,055 -2,055
balance as at 31 December 2011 128 76 204
net profit - 2,360 2,360
other comprehensive income - - -
total comprehensive income - 2,360 2,360
final dividend 2011 - -76 -76
interim dividend - -2,288 -2,288
balance as at 31 December 2012 128 72 200
EBN Annual Report | 2012 | 69
conSolidated Statement of caSh floWS
In EUR million
2012 2011
operating activities
net profit from continuing activities 2,360 2,131
conversion to net cash from operating activities
- income from participations -48 -53
- depreciation and amortization 745 617
- change in provisions 64 19
- writing off dry wells 50 28
- interest - charged to comprehensive income 97 93
- taxes - charged to comprehensive income 771 693
conversion to net cash provided by operating activities
- change in working capital - inventories 28 -29
- receivables 6 159
- current liabilities (excluding loans,
debts to credit institutions and profit distribution
79 -393
- withdrawals provision -13 -
- interest - received 57 45
- paid -78 -69
- taxes - received 80 0
- paid -753 -717
1,085 391
net cash from operating activities 3,445 2,522
investing activities
property, plant and equipment -621 -611
dividend received 48 53
kasstroom aangewend voor investeringsactiviteiten -573 -558
net cash used in investing activities
profit distribution -2.102 -2.320
loans taken up 300 415
loans repaid -289 -
change in debts to credit institutions -425 -79
net cash from financing activities -2,516 -1,984
change in cash and cash equivalents 357 -20
balance cash and cash equivalents at 1 January 9 29
balance cash and cash equivalents at 31 December 366 9
| EBN Annual Report | 201270
noteS to the conSolidated financial StatementS
(1) General informationAll amounts in these explanatory notes are in millions of
euros unless otherwise stated.
The company profit and loss account
As permitted by section 402, Book 2 of the Dutch Civil
Code, the company profit and loss account is presented
in a condensed format.
Estimates and assessments
Estimates and assessments have to be made in the pre-
paration of the financial statements. These have conse-
quences for the amounts reported for assets and liabilities,
income and expenditure items and the related reporting of
contingent assets and liabilities on the date of the financial
statements. Results can be influenced by such estimates
and assessments. In those cases, these explanatory notes
set out the principles that management considers to be
most important and that are usually the most difficult to
estimate due to intrinsic uncertainties.
Decommissioning and storage costs
The provision in the balance sheet for decommissioning
and storage costs and the capitalisation and amortisation
of those costs is based on information from operators
and our own analyses. For further explanation of how that
provision is calculated, please refer to the “Principles for
the valuation of assets and liabilities and determination of
profit”, paragraph “Provisions”, on page 59.
Reserves
EBN determines the gas and oil reserves in accordance
with definitions set down by SPE, WPC, AAPG and SPEE
in the PRMS.
Realisable value
The estimation of the realisable value of assets is partly
based on the reserves, production profiles, estimated
future sales prices and the WACC.
The Executive Board emphasizes that future events may
differ from projections and that estimates have to be
adjusted regularly.
EBN Annual Report | 2012 | 71
noteS to the Statement of comprehenSiVe income
(2) Net salesEBN performs one main activity: exploration for and
production of natural gas and oil. All sales are realised in
the Netherlands. The assets in which EBN participates are
also located in the Netherlands. Information on the main
debtors can be found in note 22.
Net sales in 2012 from ordinary activities amounted to
EUR 8,528 million, representing an increase of EUR 1,425
million in relation to 2011 (20%).
The increase in sales was mainly due to higher sales pri-
ces (18%) and higher gas sales (2%). Sales volumes for oil
and condensate were also higher than in 2011.
(3 and 4) Levies and operational costs
In EUR million 2012 2011
levies 3,801 2,964
operational costs 797 658
Levies were EUR 837 million (28%) higher than in 2011.
This item mainly comprises the special payments made to
the Dutch State in respect of production from the Gro-
ningen field in 2012, i.e. the MOR payments, amounting
to EUR 3,668 million and the State’s share of EUR 126
million. The increase in payments in 2012 was primarily as
a result of higher sales volumes and a higher average gas
price.
The operational costs chiefly concern production and
transport costs.
At year-end 2012, one person had been seconded from
GasTerra to EBN. The total wage costs have been inclu-
ded in the operational costs. In 2012, these amounted to
EUR 8.2 million (2011: EUR 8.6 million), of which EUR 6.4
million gross wages (2011: EUR 6.6 million), EUR 0.5 mil-
lion social charges (2011: EUR 0.3 million), EUR 1.2 million
pension costs (2011: EUR 1.1 million) and EUR 0.1 million
other costs (2011: EUR 0.5 million).
As at the balance sheet date, the company did not have
any contractual obligations – other than the possibility of
higher contributions in future – to pay additional amounts
in the event of the pension fund being in deficit.
(5) Depreciation and amortization
In EUR million 2012 2011
depreciation of property, plant and equipment 574 565
depreciation of property, plant and equipment by reason of decommissioning and restoration
171 52
total 745 617
The higher depreciation and amortisation costs were
primarily caused by the fact that in 2011 there was a
substantial addition to the capitalised and amortised
decommissioning and storage costs. This led to higher
depreciation costs in relation to 2011, at EUR 128 million.
For further information please refer to note 10.
| EBN Annual Report | 201272
(6) Financial income and expense
In EUR million 2012 2011
interest income 4 7
interest income on financialinstruments at fair value via the result
43 40
income on financial instruments at fair value via the result 25 90
other financial income 27 2
total financial income 99 139
interest expenses -43 -40
interest expenses on financial instruments at fair value via the result
-59 -50
expenses on financial instruments at fair value via the result -54 -46
interest expense on discounted provisions -45 -25
other financial income and expenses - -71
total financial expenses -201 -232
net financing costs -102 -93
Despite the higher amount of cash available in the year
under review, interest income was lower than in 2011 as a
result of lower market interest rates.
Interest expenses relate to expenses for short-term and
long-tem loans.
In addition to the interest result, income and expenses on
financial instruments relate among others to the valuation
results for non-current loan-related derivatives.
(7) Result for associates
In EUR million 2012 2011
GasTerra B.V. 14 14
NOGAT B.V. 26 32
NGT-Extensie 8 7
total 48 53
(8) Tax
In EUR million 2012 2011
current tax expenses 759 622
deferred tax expenses arising from temporary differences 12 71
total 771 693
At 25.0%, the effective tax burden for 2012 was the same
as in 2011.
In 2012, the nominal rate for corporate tax in the Nether-
lands was 25.0% (2011: 25.0%).
EBN Annual Report | 2012 | 73
The balance of deferred tax assets and tax liabilities rose
by EUR 15 million as a result of the following changes:
In EUR million 2012 2011
balance at 1 January
deferred tax assets 102 19
deferred tax liabilities -222 -67
total -120 -48
movements as a result of:
- differences between commercial and fiscal valuation of property, plant and equipment
79 -155
- differences between commercial and fiscal valuation of provisions -94 83
balance at 31 December -135 -120
of which:
- deferred tax assets 8 102
- deferred tax liabilities -143 -222
movement in assets -94 83
movement in liabilities 79 -155
Deferred tax assets and liabilities include future tax assets
and liabilities arising from temporary differences between
the amounts calculated in accordance with the commer-
cial principles and those calculated in accordance with
fiscal standards.
(9) Net profitThe net profit for 2012 from continuing operations was
EUR 2,360 million, EUR 229 million (11%) higher than
for 2011.
| EBN Annual Report | 201274
noteS to the conSolidated balance Sheet
(10) Property, plant and equipment
In EUR million totalproduction, transport and storage facilities
drilling reimbursements
capitalisation of decommissioning and storage costs
capital expenditure & wells under construction
balance at 1 January 2011
cost 11,327 5,948 2,625 1,428 631 695
depreciation and amortization 7,763 4,401 1,817 1,177 368 -
carrying amount 3,564 1,547 808 251 263 695
changes in 2011
cost:
- capital expenditure 463 239 49 - - 169
- capital expenditure on exploration drilling 148 - 131 - - 17
- commissioning - 329 245 - - -574
- capitalisation of borrowing costs 1 - - - - 1
- capitalisation of decommissioning and storage costs 675 - - - 675 -
- decommissioning -20 -20 - - - -
- writing off dry wells -28 - - - - -28
depreciation and amortization:
- depreciation and amortization -617 -298 -242 -26 -51 -
- decommissioning 20 20 - - - -
642 270 183 -20 624 -415
balance at 31 December 2011
cost 12,566 6,496 3,050 1,434 1,306 280
depreciation and amortization 8,360 4,679 2,059 1,203 419 -
carrying amount 4,206 1,817 991 231 887 280
changes in 2012
cost:
- capital expenditure 567 89 177 5 - 296
- capital expenditure on exploration drilling 54 - - - - 54
- commissioning - 55 143 - - -198
- capitalisation of borrowing costs 3 - - - - 3
- capitalisation of decommissioning and storage costs -126 - - - -126 -
- decommissioning - - - - - -
- writing off dry wells -48 - -40 - - -8
depreciation and amortization:
- depreciation and amortization -745 -290 -260 -24 -171 -
- decommissioning - - - - - -
-295 -146 20 -19 -297 147
balance at 31 December 2012
cost 13,016 6,640 3,330 1,439 1,180 427
depreciation and amortization 9,105 4,969 2,319 1,227 590 -
carrying amount 3,911 1,671 1,011 212 590 427
EBN Annual Report | 2012 | 75
At EUR 621 million, capital expenditure in 2012 was 2%
higher than in 2011 (EUR 611 million). That expenditure
was split between onshore at EUR 204 million (2011:
EUR 228 million) and offshore at EUR 417 million (2011:
EUR 383 million).
In 2012, the decrease in the capitalisation and amortisation
of the estimated decommissioning and storage costs for
installations amounted to EUR 126 million (2011: plus EUR
675 million). For further information please refer to note 15.
As a result of the application of IAS 23 “Borrowing Costs”,
for the Bergermeer project and Norg gas storage project,
interest is added to the capitalised and amortised amount
at 3.4%, bringing the amount of financing costs capitalised
and amortised up to EUR 3 million (2011: EUR 1 million).
(11) AssociatesEBN defines as associates its 40% participation in GasTerra
B.V., its 45% participation in NOGAT B.V. and a number
of smaller participations, including the 12% participation
in the NGT Extensie. The latter participation is included
under ‘other’. Associates are shown on the basis of the
equity method. The profits are distributed annually, and so
there is no change in the amounts for which the participa-
tions are shown in the balance sheet.
in EUR million GasTerra NOGAT other2012total GasTerra NOGAT other
2011total
balance at 1 January 86 13 14 113 86 13 14 113
share in profit 14 26 7 47 14 32 6 52
dividend received -14 -26 -8 -48 -14 -32 -6 -52
balance at 31 December 86 13 13 112 86 13 14 113
The following table shows summarised financial information on the GasTerra B.V., NOGAT B.V. and NGT Extensie associates
on a 100%-basis.
in EUR million GasTerra NOGATNGT-
Extensie2012total GasTerra NOGAT
NGT-Extensie
2011total
Balance sheet total assets current 3,697 67 - 3,764 4,017 84 - 4,101
non-current 37 52 13 102 33 44 14 91
liabilities current 3,518 11 1 3,530 3,834 7 1 3,842
non-current - - - - - - - -
net sales 23,381 88 95 23,564 21,095 106 78 21,279
net profit 36 58 95 189 36 71 74 181
| EBN Annual Report | 201276
(12) Inventories
In EUR million 2012 2011
materials 6 5
gas 27 61
condensate and oil 7 2
total 40 68
(13) ReceivablesThese can be specified as follows:
In EUR million 2012 2011
accounts receivable from associates 1,005 873
other trade accounts receivable 22 39
total trade accounts receivable 1,027 912
other receivables and deferred items 52 173
total 1,079 1,085
Receivables fell by EUR 6 million (1%), chiefly as a result
of lower sales volumes in the fourth quarter of 2012 in
relation to the fourth quarter of 2011.
Associates relates to GasTerra B.V., in which EBN has a
40% participation. For information on credit risks please
refer to note 19.
(14) Shareholder’s equity
In EUR million 2012 2011
balance at 1 January 204 174
total profit 2,360 2,131
final dividend previous year -76 -46
interim dividend -2,288 -2,055
balance at 31 December 200 204
Each month EBN pays the (provisional) profit to the share-
holder, the Ministry of Economic Affairs. These periodic
payments largely determine EBN’s balance sheet structure
and result in the comparatively low amount of the company’s
shareholders’ equity. On the other hand, the company has
very substantial cash flow throughout the year.
The authorised, issued and paid up share capital amounted
to EUR 128 million in 2012 (2011: EUR 128 million) and
comprised 284,750 shares (2011: 284,750 shares), each
with a nominal value of EUR 450. The declared dividend
per share amounted to EUR 8,302 (2011:
EUR 7,378).
The proposed final dividend of EUR 72 million (2011:
EUR 76 million) will be paid out once the General Meeting
of Shareholders has adopted the financial statements. This
amount is the balance of the net profit balance at EUR
2,360 million and the interim dividend already paid out at
EUR 2,288 million. The proposed final dividend has not
been deducted from the shareholders’ equity.
EBN Annual Report | 2012 | 77
(15) ProvisionsProvisions for decommissioning and restoration costs
cover commitments with terms of 1 to 50 years.
Provisions for ground subsidence also cover commitments
with terms of 1 to 50 years.
The provision for decommissioning and storage costs is
based on information from the operators and our own
analysis and is determined by estimating the costs on
the basis of the current price level, without allowing for
inflation, and stated at the present value with an effective
interest rate of 1.2% (2011: 0.3%). The equivalent of the
provision stated at the present value is included in
tangible fixed assets and depreciated on the basis of the
UoP method. The unwinding of discount of the provision
is calculated based on the nominal interest percentage
of 2.3% (2011: 2.0%).
The total for provisions was reduced by EUR 76 million,
which is the balance of the changes shown below:
in EUR millionDecommissioning
and restoration costs
subsidence total
balance at 1 January 2010 1,276 62 1,338
additions - 5 5
withdrawals -9 -1 -10
revision 675 - 675
unwinding of discount 25 - 25
balance at 31 December 2011 1,967 66 2,033
additions - 19 19
withdrawals -13 -1 -14
revision -126 - -126
unwinding of discount 45 - 45
balance at 31 December 2012 1,873 84 1,957
The reduction in the provision for decommissioning and
storage costs at EUR 94 million was primarily caused by
amending the discount rate to an effective interest rate
of 1.2% (2011: 0.3%).
Additionally, the estimated costs for dismantling and
removing installations have been updated by the increase
in the estimated costs and new insight into the dates for
terminating production.
| EBN Annual Report | 201278
(16) Current and non-current borrowings
in EUR million 2012 2011
total of which current total of which
current
debenture loans 1,893 373 1,871 288
private loans 132 - 150 -
commercial paper - - 425 425
total 2,025 373 2,446 713
Non-current borrowings
Non-current borrowings in the balance sheet comprise the following:
in EUR million 2012 2011
JPY 5.000 mn 1,59% private loan 2004/2014 44 50
CHF 350 mn 1,75% public loan 2005/2012 - 288
CHF 450 mn 2,75% public loan 2006/2013 372 370
CHF 400 mn 3,00% public loan 2007/2014 331 329
CHF 125 mn 3,00% public loan 2007/2014 104 103
JPY 10.000 mn 1,775% private loan 2007/2017 88 100
CHF 325 mn 2,125% public loan 2010/2020 269 267
CHF 125 mn 2,125% public loan 2010/2020 104 103
CHF 350 mn 0,75% public loan 2011/2016 290 288
CHF 150 mn 1,625% public loan 2011/2023 124 123
CHF 235 mn 0,625% public loan 2012/2019 195 -
CHF 125 mn 1,125% public loan 2012/2024 104 -
total 2,025 2,021
In 2012, one debenture loan of CHF 350 million fell due.
Total borrowings decreased by EUR 421 million (-17%).
This decrease is chiefly the result of the strong increase of
net cash from operating activities in 2012 and as a result
thereof not taking out commercial paper and reducing the
debenture loan position. In 2013, a debenture loan with a
nominal value of CHF 450 million will be repaid. This was
shown in 2012 as a short-term loan.
No security has been provided for the outstanding borro-
wings with a total remaining debt at 2012 year-end of EUR
2,025 million. Clauses are included in the agreements for
these loans that limit the security that can be demanded.
EBN Annual Report | 2012 | 79
Borrowings in foreign currencies and associated interest
charges have been fully converted into euros by means
of cross-currency interest rate swaps. This neutralises
any currency-fluctuation effects, as shown in the table.
The average interest rate on all long-terms borrowings,
including the effects of the cross-currency interest rate
swaps, was 3.3% (2011: 3.4%). All long-term borrowings
have fixed interest rates. All cross-currency swap borro-
wings also have fixed interest rates, with the exception of
the cross-currency interest-rate swap associated with the
JPY 2004/2014 loan and the JPY 2007/2017 loan.
The following table lists the outstanding debenture loans
and private loans in order of their term to maturity.
in EUR million 2012 2011
within 1 year 372 288
within 1 to 2 years 479 370
within 2 to 3 years - 482
within 3 to 4 years 290 -
within 4 to 5 years 88 288
after 5 years 796 593
total 2,025 2,021
More than 50% of the outstanding non-current borrowings
have remaining terms to maturity of more than three years.
Of the borrowings with remaining terms to maturity of
more than 5 years, a total of EUR 195 million will mature
in 2019, EUR 373 million in 2020, EUR 124 million in 2023
and EUR 104 million in 2024.
(17) Other non-current liabilitiesThis item mainly relates to a debt of EUR 17 million (2011:
EUR 17 million) to the State resulting from the GasTerra
B.V. stock dividend. The Dutch State is entitled to part
of EBN’s entitlement to the GasTerra B.V. dividend in the
event of GasTerra B.V. being liquidated.
(18) Other current liabilities This item can be specified as follows:
in EUR million 2012 2011
trade accounts payable 487 251
interest payments 33 32
levies 679 525
other liabilities 90 148
total 1,289 956
The increase in levies is mainly due to a higher outstanding
MOR obligation.
| EBN Annual Report | 201280
(19) Risk management
General
The main financial risks for EBN are the liquidity risk, the
credit risk and the market risk (consisting of interest rate risk
and currency risk). EBN’s financial policy focuses on limiting
the effects of currency and interest-rate fluctuations on its
profit. EBN uses financial derivatives to manage interest and
currency risks, specifically those relating to the funding of
its operations. The company does not take any speculative
positions with financial derivatives.
Capital management
EBN aims for continuous good access to the money and
capital markets by means of, for example, prudent financing
policy aimed at maintaining the short and long-term credit
ratings at the highest possible levels. Capital expenditure
decisions are evaluated on the basis of the expected return,
considering EBN’s weighted average cost of capital.
Net liabilities In EUR million 2012 2011
borrowings
non-current borrowings 1,652 1,733
current borowings 373 713
total borrowings 2,025 2,446
cash and cash equivalents -366 -9
financial derivatives -224 -310
net liabilities (A) 1,435 2,127
shareholder’s equity (B) 200 204
gearing ratio A/(A+B)*100% 88% 91%
Liquidity risk
EBN has a commercial paper programme of EUR 2,000
million. This is the same as in 2011. At year-end 2012 no
commercial paper was issued.
The following table shows the expected annual cash flows, along with the interest payable on the borrowings and the costs of
redeeming the associated derivatives:
in EUR million 2011 2011 2010
borrowings interest payment at redemption
cash flow from
derivatives
total cash out
total cash out
within 1 year 713 -58 -713 35 -736 -545
within 1 to 2 years 370 -48 -370 58 -360 -272
within 2 to 3 years 482 -36 -482 131 -387 -325
within 3 to 4 years - -22 - - -22 -376
within 4 to 5 years 288 -22 -288 -4 -313 -11
after 5 years 593 -72 -593 92 -574 -430
total 2,446 -258 -2,446 312 -2,392 -1,959
policy to control financial riSKS
EBN Annual Report | 2012 | 81
Credit risk
The credit risk to which EBN is exposed consists mainly
of the amount it has on deposit at credit institutions,
investments in money market funds and the market value
of outstanding financial derivatives. EBN limits the credit
risk by only doing business with financial institutions with
high creditworthiness and by setting specific credit limits
for each financial institution, based on the institution in
question’s credit rating. For lending money, the minimum
is a P-1 Moody’s or A-1 Standard & Poor’s short-term
rating and an A2 Moody’s or A Standard & Poor’s long-
term rating. A minimum credit rating of Moody’s Aaa and
Standard & Poor’s AAA applies for money market funds.
If derivative transactions are carried out in the context of
long-tem financing this is only done with a counterparty
with a minimum of A2 Moody’s or A Standard & Poor’s
long-term rating. EBN did not suffer any credit losses in
2012.
Credit risk on receivables
In 2012 EBN made 91% (2011: 91%) of its sales to Gas-
Terra B.V. (long term rating S&P AA+), for which the credit
risk is estimated as low. Amounts owed by GasTerra B.V.
account for 93% (2011: 97%) of total receivables.
Interest rate risk
The objective of EBN’s interest rate risk policy is to limit
interest rate risks arising from the company’s funding and
thus to achieve minimal interest charges. A maximum of
60% of the long-term borrowings and financial derivatives
shall have a variable interest rate in accordance with inter-
nal guidelines. At year-end 2012, 94% of the debt position
was at a fixed interest rate.
The following analysis of the sensitivity of borrowings and
the related financial derivatives to interest rate movements
is based on a direct change of 1 percentage point in the
interest rates for all currencies and maturities as at 31
December 2012. All other variables remain unchanged.
A reduction of 1% in interest rates would result in an
estimated decrease of EUR 13 million in net financing
costs, based on the portfolio of financial instruments at
31 December 2012. An increase of 1% in interest rates
would result in an estimated increase of EUR 12 million in
net financing costs. The main reason for these effects is
that a change in the fair value of derivatives as a result of
a change in interest rate is charged directly to profit.
in EUR million 2011 2011 2010
borrowings interest payment at redemption
cash flow from
derivatives
total cash out
total cash out
within 1 year 372 -54 -372 61 -365 -736
within 1 to 2 years 479 -42 -479 113 -408 -360
within 2 to 3 years - -28 - - -28 -387
within 3 to 4 years 290 -28 -290 -1 -319 -22
within 4 to 5 years 88 -21 -88 27 -82 -313
after 5 years 796 -83 -796 55 -824 -574
total 2,025 -256 -2,025 255 -2,026 -2,392
| EBN Annual Report | 201282
The following table shows the sensitivity of the fair value of the financial instruments to changes in interest rate as at
31 December 2012.
2012 carrying amount fair value change in fair
value +1%change in fair
value -1%
in EUR million
cash and cash equivalents 366 366 -2 2
receivables 1,079 1,079 - -
current borrowings -373 -378 2 -2
other current liabilities -1,289 -1,289 - -
non-current borrowings -1,652 -1,744 88 -95
cross currency swaps positive used for non-current borrowings 257 257 -12 13
cross currency swaps negative used for non-current borrowings -33 -33 - -
forward exchange contracts used for current borrowings - - - -
totaal -1,645 -1,742 76 -82
2011 carrying amount fair value change in fair
value +1%change in fair
value -1%
in EUR million
cash and cash equivalents 9 9 - -
receivables 1,085 1,085 - -
current borrowings -713 -716 2 -2
other current liabilities -956 -956 - -
non-current borrowings -1,733 -1,820 83 -89
cross currency swaps positive used for non-current borrowings 314 314 -17 19
cross currency swaps negative used for non-current borrowings -17 -17 - 1
forward exchange contracts used for current borrowings 13 13 - -
total -1,998 -2,088 68 -71
At year-end 2011, sensitivity of financial liabilities to interest rate changes with regard to the fair value of the financial
instruments ranged between a negative amount of EUR 17 million (+1% change in interest rates) and a positive amount of
EUR 19 million (-1% change in interest rates).
EBN Annual Report | 2012 | 83
Currency risk
EBN fully hedges currency risks arising from sales, purchases and borrowings at the time that the trade receivables or
trade liabilities arise. At year-end 2012, a currency risk of USD 7 million in respect of trade receivables was hedged
(year-end 2011 none).
Currency risks on short-term borrowings in foreign currencies are hedged with forward exchange contracts. At year-end
2012 no forward currency contracts had been concluded relating to short-term loans issued in foreign currencies (at year-
end 2011 USD 550 million). Currency risks on long-term borrowings in foreign currency are hedged with cross currency
interest rate swaps (see note 16).
The following analysis of the sensitivity of the net debt (including financial derivatives) to fluctuations in exchange rates
against the euro is based on a 10% movement in all exchange rates in relation to the euro compared to their levels at
31 December 2012, with all other variables remaining unchanged. A change of +10% means the euro weakens against the
foreign currencies, while a change of -10% means the euro strengthens against the foreign currencies.
2012 carrying amount fair value change in fair
value +10%change in fair
value -10%
in EUR million
cash and cash equivalents 366 366 - -
receivables 1,079 1,079 - -
current borrowings -373 -378 -43 35
other current liabilities -1,289 -1,289 - -
non-current borrowings -1,652 -1,744 -195 159
cross currency swaps used for non-current borrowings 257 257 150 -123
forward exchange contracts used for current borrowings -33 -33 87 -72
forward exchange contracts used for economic hedging - - - -
total -1,645 -1,742 -1 -1
| EBN Annual Report | 201284
2011 carrying amount fair value change in fair
value +10%change in fair
value -10%
in EUR million
cash and cash equivalents 9 9 - -
receivables 1,085 1,085 - -
current borrowings -713 -713 -80 65
other current liabilities -956 -956 - -
non-current borrowings -1,733 -1,820 -205 168
cross currency swaps used for non-current borrowings 314 314 190 -155
forward exchange contracts used for current borrowings -17 -17 47 -39
forward exchange contracts used for economic hedging 13 13 48 -39
total -1,998 -2,085 - -
Fair value of financial instruments
The table below summarises the carrying amounts and estimated fair values of financial instruments:
in EUR million31 december 2012 31 december 2011
carrying amount fair value carrying amount fair value
assets
associates 112 112 113 113
current receivables 1,079 1,079 1,165 1,165
financial derivatives 257 257 327 327
cash and cash equivalents 366 366 9 9
liabilities
non-current borrowings 1,652 1,744 1,733 1,820
current borrowings 373 378 713 716
financial derivatives 33 33 17 17
other current liabilities 1,399 1,399 1,052 1,052
Fair values of listed non-current borrowings are based on published rate (level 1 according to IFRS), while the other fair
values are calculated on the basis of the market information available (level 2 according to IFRS). All financial assets and
liabilities at fair values with changes in value recognised in comprehensive income of profit are classified at level 2.
EBN Annual Report | 2012 | 85
Current receivables, cash and cash equivalents and short-term debts are shown at their carrying amounts. In view of the
short term to maturity of these instruments, these amounts approximate their fair values. The following table summarises the
carrying amounts of financial derivatives, specified according to type and objective:
in EUR million assets liabilities total
cross currency interest rate swaps 314 -17 314
forward currency contracts 13 - 13
total financial derivatives in relation to borrowings 327 - 327
balance as at 31 December 2011 327 - 327
cross currency interest rate swaps 257 -33 224
forward currency contracts - - -
total financial derivatives in relation to borrowings 257 -33 224
balance as at 31 December 2012 257 -33 224
| EBN Annual Report | 201286
EBN Annual Report | 2012 | 87
other noteS
* This includes the proportional share of sales in the concessions in which EBN does not, itself, receive the gas but is entitled to a proportional share in the proceeds. GasTerra pays the proceeds directly to EBN.
(20) Rights and obligations not shown in the balance sheet
As indicated in the accounting principles with respect to
the valuation of assets and liabilities and the determination
of the profit, EBN participates in numerous joint ventures.
The basis for this is laid down in agreements of coopera-
tion, from which multi-year financial rights and obligations
arise for the future. As an indication, at the balance sheet
date, the remaining obligations at year-end 2012 for three
large investment projects (Bergermeer gas storage, Q13
Amstel, Norg UGS) amounted to EUR 453 million (2011:
EUR 429 million).
Furthermore, as at 31 December 2012, EBN’s (in)direct
share in proven and probable gas reserves in fields in
which EBN participates amounted to 395 billion m3 GE
(2011: 431 billion m3 GE).
In 2013, NAM will conduct an inventory study in the
Groningen Province regarding the vulnerability of buildings
as a result of earthquakes induced by gas production in
the Groningen field. Where necessary, this study will lead
to preventive measures being taken. It is not possible, at
the moment, to give a reliable estimation of the volume
of expenditure entailed in these measures.
(21) Notes on the statement of cash flows
The statement of cash flows was prepared on the basis of
the indirect method with a comparison made between the
opening and closing balances. Movements not resulting in
an inflow or outflow of cash were subsequently eliminated.
Information on movements in the statement of cash flows
can largely be derived from the statements of movements
in the relevant balance sheet items.
(22) Related partiesGasTerra B.V. and EBN are related parties. EBN has a
total of 78 (2011: 79) contracts with GasTerra B.V. Of the
net sales of EUR 8,528 million, EUR 7,798 million was
generated through GasTerra B.V. (2011: EUR 7,103 million
and EUR 6,488 million respectively). In 2012, receivables
included an amount of EUR 1,005 million (2011: EUR 873
million) for supplies to GasTerra B.V.*
The Dutch State, being the shareholder, can be regarded
as an associated party. All levies, corporation taxes and net
profits are paid to the State. More information can be found
in notes 14 and 18 in these Financial Statements.
(23) Key managementIn 2012, the total remuneration, pension and other labour
costs paid to key management (5 team of Directors
and 4 Supervisory Board) amounted to EUR 1.5 million
(2011: EUR 1.0 million; 3 Executive Board members and
4 Supervisory Board). The total labour costs paid to key
management in 2012 can be specified as follows:
in EUR million 2012
short-term employee benefits 1.2
post-employment benefits 0.3
total 1.5
(24) Events after the balance sheet dateThere were no events after the balance sheet date requi-
ring further disclosure.
Utrecht, 20 March 2013
Executive Board Supervisory Board
J.D. Bokhoven R.M.J. van der Meer
A.H.P. Gratama van Andel
G-J. Kramer
H.M.C.M. van Oorschot
| EBN Annual Report | 201288
company profit and loSS account
in EUR million 2012 2011
income from participations 56 60
other income after tax 2,304 2,071
net profit 2,360 2,131
other comprehensive income - -
total comprehensive income 2,360 2,131
EBN Annual Report | 2012 | 89
company balance Sheet
in EUR million
assets note year-end 2012
year-end 2011 liabilities note year-end
2012year-end
2011
non-current assets shareholder’s equity 14
property, plant and equipment 10 3,877 4,196 share capital 128 128
associates 11 112 113 retained earnings 72 76
3,989 4,309 200 204
non-current liabilities
provisions 15 1,932 2,033
deferred tax liabilities 8 135 120
borrowings 16 1,652 1,733
other 17 16 16
3,735 3,902
current assets
inventories 12 40 68 current liabilities
receivables 13 1,079 1,085 borrowings 16 373 713
deferred tax credits - 80 tax 110 96
derivatives 19 257 327 other 18 1,261 956
cash and cash equivalents 347 19 derivatives 19 33 17
1,723 1,579 1,777 1,782
total 5,712 5,888 total 5,712 5,888
| EBN Annual Report | 201290
noteS to the company financial StatementS
General
EBN’s company financial statements are prepared in
accordance with the principles for financial reporting gene-
rally accepted in the Netherlands and the legal stipulations
regarding the financial statements as defined in Part 9,
Book 2 of the Dutch Civil Code.
To the determination of the accounting principles applied
for valuing assets and liabilities and the determination of
the results of the company financial statements, use has
been made of the option presented in article 2:362, para-
graph 8 of the Dutch Civil Code. The principles for the va-
luation of assets and liabilities and determining the result of
the company financial statements are therefore the same
as those used in the consolidated financial statements.
Participations where any significant influence is exerted on
the commercial and financial policy are valued on the basis
of the net asset value.
The consolidated financial statements have been prepared
in accordance with the International Financial Reporting
Standards (IFRS) as accepted within the European Union
(EU-IFRS) and with section 9, Book 2 of the Dutch Civil
Code. For a description of the principles applied, please
refer to pages 56 to 63.
Company profit and loss account
The company profit and loss account has been formulated
in accordance with the limitations permitted pursuant to
article 2:402 of the Dutch Civil Code.
Other notes
The single balance sheet includes the valuation of the
100% participations, which are consolidated in the
consolidated financial statements. In view of the minimal
differences between the other balance sheet items shown
in the consolidated and company financial statements, for
further information on these items, please refer to the no-
tes of explanation to the consolidated financial statements,
which can be found on pages 68 to 85.
Commitments
General guarantees as referred to in section 403, Book 2,
of the Dutch civil code, have been given by EBN on behalf
of EBN Capital B.V.
Fiscal unity
For corporate Income Tax and Value Added Tax, EBN
forms a fiscal unity with EBN Capital B.V. EBN and her
subsidiary form a fiscal unity and are jointly and separately
liable for the liabilities of the fiscal unity.
Fees paid to external auditors
Fees paid to Ernst & Young, which are included in the
operational costs, amounted in 2012 to:
EUR 782,000 for audit services (company and joint
venture audits) (2011: EUR 629,000), EUR 0 for tax
advice (2011: EUR 0) and EUR 32,000 for other services
(2011: EUR 187,000).
Director’s remuneration
As of 2012, EBN’s statutary Executive Board comprises
one person. Consequentially, for the disclosure of the re-
muneration of Directors in 2012, exemption in accordance
with article 2:383 paragraph 1 of the Dutch Civil Code has
been applied. In 2012 remuneration paid to the Supervi-
sory Board members amounted to EUR 0.1 million (2011:
EUR 0.1 million).
EBN Annual Report | 2012 | 91
other information
Profit appropriation
Profit appropriation takes place in accordance with what is
defined in article 21 of the company’s articles of association.
To the shareholder:
— part of the profit will be distributed annually as a
special profit distribution;
— the remainder of the profit will be distributed as a
dividend.
Events after the balance sheet date
For more information, please refer to note 24 of these
Financial Statements.
Utrecht, 20 March 2013
Executive Board Supervisory Board
J.D. Bokhoven R.M.J. van der Meer
A.H.P. Gratama van Andel
G-J. Kramer
H.M.C.M. van Oorschot
| EBN Annual Report | 201292
To: the Shareholder of EBN B.V.
Report on the financial statementsWe have audited the accompanying financial statements
2012 of EBN B.V., Utrecht. The financial statements
include the consolidated financial statements and the
company financial statements. The consolidated financial
statements comprise the consolidated balance sheet as
at 31 December 2012, the consolidated statements of
comprehensive income, summary of changes in sharehol-
der’s equity and statement of cash flows for the year then
ended, and notes, comprising a summary of the significant
accounting policies and other explanatory information.
The company financial statements comprise the company
balance sheet as at 31 December 2012, the company
income statement for the year then ended and the notes,
comprising a summary of the accounting policies and
other explanatory information.
Executive Board’s responsibilityThe Executive Board is responsible for the preparation and
fair presentation of these financial statements in accor-
dance with International Financial Reporting Standards as
adopted by the European Union and with Part 9 of Book
2 of the Dutch Civil Code, and for the preparation of the
report by the Executive Board in accordance with Part
9 of Book 2 of the Dutch Civil Code. Furthermore, the
Executive Board is responsible for such internal control as
it determines is necessary to enable the preparation of the
financial statements that are free from material misstate-
ment, whether due to fraud or error.
Auditor’s responsibilityOur responsibility is to express an opinion on these finan-
cial statements based on our audit. We conducted our
audit in accordance with Dutch law, including the Dutch
Standards on Auditing. This requires that we comply with
ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on
the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements,
whether due to fraud or error.
In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design
audit procedures that are appropriate in the circumstan-
ces, but not for the purpose of expressing an opinion on
the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting esti-
mates made by the Executive Board, as well as evaluating
the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Opinion with respect to the consolidated
financial statements
In our opinion, the consolidated financial statements give
a true and fair view of the financial position of EBN B.V. as
at 31 December 2012 its result and its cash flows for the
year then ended in accordance with International Financial
Reporting Standards as adopted by the European Union
and with Part 9 of Book 2 of the Dutch Civil Code.
independent auditor’S report
EBN Annual Report | 2012 | 93
Opinion with respect to the company
financial statements
In our opinion, the company financial statements give a
true and fair view of the financial position of EBN B.V. as
at 31 December 2012 and of its result for the year then
ended in accordance with Part 9 of Book 2 of the Dutch
Civil Code.
Report on other legal and regulatory requirementsPursuant to the legal requirement under Section 2:393 sub
5 at e and f of the Dutch Civil Code, we have no defici-
encies to report as a result of our examination whether
the report by the Executive Board, to the extent we can
assess, has been prepared in accordance with Part 9
of Book 2 of this Code, and whether the information as
required under Section 2:392 sub 1 at b-h has been
annexed. Further we report that the report by the Executive
Board, to the extent we can assess, is consistent with the
financial statements as required by Section 2:391 sub 4
of the Dutch Civil Code.
Amsterdam, 20 March 2013
Ernst & Young Accountants LLP
Signed by J.J. Vernooij
| EBN Annual Report | 201294
2012
EBN Annual Report | 2012 | 95
Key figureS
in EUR million IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS
2012 2011 2010 2009 2008 2007 2006 2005 2005 2004 2003
number of EBN participations in joint ventures:
- production licences onshore 27 24 23 22 21 20 14 14 14 14 14
- production licences offshore 101 101 103 103 100 95 85 85 85 77 77
- exploration licences 48 47 48 45 41 26 17 19 19 22 26
sales (billion m³, 100%) 73 72 80 70 73 64 66 67 67 72 63
change in % compared to previous year (100%) +1 -10 +14 -5 +11 -3 -1 -7 -7 +15 -4
- sales Groningen (billion m³, EBN share) 19 18 20 15 16 12 13 13 13 13 11
- sales small fields (billion m³, EBN share) 11 12 13 14 15 15 15 15 15 18 15
total sales (billion m³, EBN share) 30 30 33 29 30 27 28 28 28 30 26
average selling price of gas
(€-cents per m³, 35.17 MJ/m³) 26,76 22,63 18,58 20,72 26,91 20,67 21,52 16,46 16,46 13,17 13,88
sales from:
- continuing operations 8,528 7,103 6,486 6,387 8,698 6,090 6,264 4,883 4,883 4,230 3,872
- discontinued operations 3,384 3,384
total sales 8,528 7,103 6,486 6,387 8,698 6,090 6,264 8,267 8,267 4,230 3,872
change from continuing operations in % compared
to previous year 20 10 2 -27 +43 -3 +28 +15 +15 +9 +7
net profit from:
- continuing operations 2,360 2,131 2,076 2,211 3,269 2,367 2,378 1,673 1,637 1,534 1,380
- discontinued operations 2,154 2,154
total net profit 2,360 2,131 2,076 2,211 3,269 2,367 2,378 3,827 3,791 1,534 1,380
net profit from continuing operations
in % of sales 28 30 32 35 38 39 38 34 34 36 36
property, plant and equipment:
- capital expenditure onshore 202 228 224 238 129 277 146 121 121 143 138
- capital expenditure offshore 419 383 383 475 447 405 478 446 446 207 316
- decommissioning and restoration -126 675 57 -163 93 137 273 149
total capital expenditure 495 1,286 664 550 669 819 896 716 567 350 454
depreciation and amortization 745 617 499 462 501 494 403 374 376 337 344
shareholders’ equity 200 204 174 158 160 162 290 237 437 348 329
gearing ratio (%) 88 91 91 93 91 93 86
outside capital 5,565 5,684 5,146 4,520 5,386 4,664 3,902 3,437 2,977 2,730 2,592
| EBN Annual Report | 201296
Bcm Billion cubic metres.
BOE Barrel of oil equivalent
CCS Carbon capture and storage.
Cluster Location from which multiple wells can be drilled.
Corporate Governance Code (old) Code of Conduct for Companies listed on the stock exchange.
Corporate Governance Code (new) The Dutch Corporate Governance Code of the Corporate Governance Code
Monitoring Committee.
COSO The Committee of Sponsoring Organizations of the Treadway Commission.
CSR Corporate Social Responsibility
Cushion gas Gas that has to be present in a field or storage facility to maintain the pressure.
Dashboard Review of company-specific performance indicators.
Energy mix Proportion of energy used in the Netherlands from different sources of energy.
End-of-field-life Gas or oil field in the final phase of production.
E&P Exploration and production.
EZ Ministry of Economic Affairs.
Fallow Acreage Convenant Covenant, signed on 31 August 2010, for stimulating the exploration for and
production of oil and gas reserves and the storage of minerals in the Dutch part
of the continental shelf, as agreed between the Minister of Economic Affairs,
Agriculture and Innovation and mining companies with operations on the conti-
nental shelf.
Fracking Technique by which fluid is injected under high pressure into stone containing
gas, ‘breaking’ the stone so the gas can be extracted.
Fuel mix Percentage of each fuel source in the total fuels used to generate energy.
Gasgebouw Public-private cooperation in the Groningen Partnership and GasTerra.
Gas Hub European gas-market centre.
Gas Hub Discussion Platform Discussion forum of the Dutch government, the gas industry and knowledge
infrastructure organisations to discuss new initiatives and strategic issues con-
cerning the physical national and international gas-hub infrastructure
Gas deposit Subsurface accumulation of producible gas.
GE Groningen equivalent (m3 gas with a combustion value of 35.17 MJ at 0 degrees
Celsius and 101.325 kPa).
Geothermal energy Thermal energy generated and stored in the Earth.
HR Human Resources.
ICT Information and Communication Technologies.
IFRIC International Financial Reporting Interpretations Committee.
IFRS International Financial Reporting Standards.
gloSSary
EBN Annual Report | 2012 | 97
IMS Integral Management System.
JIP Joint Industry Project
LNG Liquefied natural gas.
Mining Act Dutch Act containing regulations governing the exploration for and production
and storage of minerals.
NAM Nederlandse Aardolie Maatschappij (Dutch oil company in which Royal Dutch
Shell and Exxon Mobil have equal shares).
Near-field exploration Exploration for gas close to existing production locations.
NOGEPA Netherlands Oil and Gas Exploration and Production Association.
NOV management Non-operated venture management
Offshore At sea.
Operating partner See operator.
Operator Party in the production process that carries out production activities on behalf of
the partners.
Permeability The degree to which a solid substance can be pervaded by other substances.
PRMS Petroleum Resources Management System: international classification system
describing the status and volumes of oil and gas resources.
ROAD Rotterdam Storage and Capture Demonstration Project.
Scorecard Review of department-specific performance indicators.
Shale gas Gas held in tight reservoirs in shales that have insufficient permeability for the
gas to flow easily to the well bore.
Shallow gas Gas produced from relatively shallow reservoirs (< 800 m depth, mostly uncon-
solidated).
SodM State Supervision of Mines.
Spot market Public financial market, in which surpluses are traded and shortages made up
for immediate delivery and payment in the very short term.
State participation Shareholder status of the Dutch State.
Stranded reserves or fields Natural gas deposits that are technically or economically impractical to develop
and produce at a particular time.
Tight gas Gas produced from tight reservoirs in sandstones that have insufficient permea-
bility for the gas to flow easily to the well bore.
TNO Netherlands Organisation for Applied Science TNO.
Treasury Management of a company’s cash and cash equivalents.
| EBN Annual Report | 201298
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