In recent years, our results have been significantly affected by inflation in the cost of certain raw materials and services necessary for the development and operation of oil and gas producing assets. Other parts of our business are not exposed to similar cost pressures.

While some of the cost pressure relates to capitalised expenditures thus only affecting our annual profit through increased depreciation, certain elements of operating expenditures have also been affected by this inflation. See our analysis of profit and loss as well as applicable outlook sections in report section 4.1 Financial performance - Strong operational performance for details. 

As measured by the general consumer price index, inflation in Norway for the years ending 31 December 2008, 2007 and 2006 was 2.1%, 0.9% and 2.6%, respectively.