Total revenues and other income increased from NOK 428 billion in 2007 to NOK 531 billion in 2008. The increase from 2007 to 2008 was mainly due to higher prices for crude and other oil products. The average crude price in USD increased by approximately 40% in 2008 compared to 2007 but was partly offset by the weakening of the average USD exchange rate by almost 4%.

The increase from 2006 to 2007 was mainly due to higher prices and volumes for crude and gasoil products. The average oil price increased by 12% in 2006 compared to 2007, which was partly offset by the weakening of the average USD exchange rate by almost 9% in 2006 compared to 2007.

Cost of goods sold increased from NOK 402 billion in 2007 to NOK 501 billion in 2008, primarily due to increased prices on volumes purchased. The increase of 5% from 2006 to 2007 was also a result of increased crude oil prices and purchased volumes.

Operating, selling and administrative expenses increased by 19% in 2008 compared with 2007. This was due to increased transportation costs of NOK 0.7 billion for shipments of crude made to Asia in 2008, and a provision of NOK 1.3 billion for an expected increased cost related to a take-or-pay contract at Mongstad. Manufacturing incurred increased operating costs in 2008 due to high maintenance activity. During 2007 there were additional costs associated with provisions for pension liabilities of NOK 0.7 billion included in restructuring costs relating to the merger.

Costs increased by 3% in 2007 compared with 2006, mainly due to the provision for pension liabilities of NOK 0.7 billion.

Depreciation, amortisation and impairment totalled NOK 2.1 billion in 2008, compared with NOK 2.8 billion in 2007. The decrease was mainly due to an impairment loss of NOK 0.95 billion in 2007 in Energy & Retail Sweden, of which NOK 0.5 billion was included in restructuring costs relating to the merger.

The increase of 24% in 2007 compared with 2006 was the result of impairment write-downs in 2007.

In 2008, net operating income was NOK 4.5 billion, compared with NOK 3.8 billion in 2007. The increase was primarily due to a net positive effect of NOK 2.4 billion relating to operational and commercial storage valuation changes, a large positive effect due to currency and a negative effect due to price changes. In addition, there were pension cost provisions of NOK 0.7 billion in 2007. Impairment losses and provisions in connection with restructuring of the retail business in Sweden were NOK 0.5 billion lower in 2008 compared to 2007. Negative effects in 2008 when compared to 2007 included an expected increased cost related to a take-or-pay contract of NOK 1.3 billion and lost revenues due to the turnaround at Mongstad.

The NOK 3.4 billion decrease from 2006 to 2007 was mainly due to increased retirement pension costs of NOK 0.7 billion, negative currency effects of NOK 0.7 billion, a decrease in trading results of NOK 0.6 billion, and impairment loss and provisions of NOK 0.5 billion due to weak market conditions and restructuring of the retail business in Sweden. A gain of NOK 0.6 billion was also achieved in 2006 from the sale of our retail business in Ireland.

Oil sales, trading and supply

In 2008, net operating income was NOK 4.2 billion, compared with NOK 1.3 billion in 2007. The good result in 2008 was mainly due to a net positive effect of NOK 2.8 billion relating to operational and commercial storage valuation changes. The overall trading results improved, but within product trading we experienced negative trading results, leading to a scaling down of product trading by the end of the year.

The decrease of NOK 0.9 billion from 2006 to 2007 was mainly due to NOK 0.7 billion in currency losses, lower trading results of NOK 0.6 billion compared with 2006 and a deferred gain on inventories, which was partly offset by gains on operational storage.

Manufacturing

In 2008, net operating income was NOK 0.7 billion, compared with NOK 3.3 billion in 2007. The decrease in 2008 was mainly due to a provision for a take-or-pay contract of NOK 1.3 billion, a large turnaround at Mongstad, and high operating costs due to the increased activity levels in maintenance, modifications and business development. Margins were low at Mongstad due to the turnaround, but improving at Kalundborg due to the fuel reduction project and good feedstock optimisation. The average contract price for methanol increased by 9% from EUR 317/tonne in 2007 to EUR 344/tonne in 2008.

The NOK 1.1 billion decrease from 2006 to 2007 was mainly due to lower regularity and higher operating costs due to turnaround activities. The lower USD/NOK exchange rate and lower capacity utilisation also contributed negatively. Margins were good at Mongstad, but they were lower than expected at Kalundborg due to high crude differentials and the delay in the fuel reduction project. The average contract price for methanol increased by 6% from EUR 300/tonne in 2006 to EUR 317/tonne in 2007.

Energy and retail

The net operating loss was NOK 0.2 billion in 2008, compared with NOK 17 million in 2007.  We experienced increased revenues during 2008, mainly due to a large increase in transport fuel market prices, and a small increase in sales volumes at our outlets, from 8.3 billion to 8.4 billion litres. The decrease in total net income was mainly due to increased operating costs coupled with negative effects from storage valuation changes. Costs related to the restructuring of our retail business in Sweden were reduced from NOK 1.1 billion in 2007 to NOK 0.5 billion in 2008.

The NOK 0.6 billion decrease from 2006 to 2007 was mainly due to increased impairment losses and provisions, from NOK 0.6 billion in 2006 to NOK 1.1 billion in 2007, due to weaker market conditions and restructuring of our retail business in Sweden. There was also a net gain of NOK 0.6 billion in 2006 related to the sale of our retail business in Ireland. These effects were offset to some extent by an increase of 8% in transport fuel volumes at our outlets, from 7.7 billion to 8.3 billion litres, together with an increase in margins. During the same period, margins on convenience products rose by 15%.