CHAPTER I NORM PRICE FOR TAX ASSESSMENT PURPOSES

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1 Regulations relating to norm price fixing. Stipulated by Royal Decree of 25 June 1976 pursuant to Act of 21 June 1963 No. 12 relating to exploration and exploitation of subsea natural resources and Act of 13 June 1975 No. 35 relating to taxation of subsea petroleum resources etc. Last amended by Royal Decree of 24 September CONTENTS CHAPTER I Norm price for tax assessment purposes... 2 CHAPTER II Norm price for royalty calculation purposes... 4 CHAPTER III Norm price for transfer of petroleum... 4 CHAPTER IV General provisions... 4 CHAPTER V Amendments... 5 CHAPTER VI Entry into force

2 CHAPTER I NORM PRICE FOR TAX ASSESSMENT PURPOSES Section 1 For tax assessment purposes, including assessment of special tax in accordance with Act of 13 June 1975 No. 35 relating to taxation of subsea petroleum accumulations etc. (the Petroleum Tax Act), norm prices may be fixed for different types and qualities of petroleum or parts thereof produced in areas as mentioned in Section 1, a-b of the Act. Section 2 The norm price shall correspond to the price the petroleum could have been traded for between independent parties in a free market. By independent parties is meant buyers and sellers who have no mutual common interest which might affect the agreed price. For valuation purposes, account shall be taken of the prices achieved and noted for petroleum of the same or equivalent type, adjusted as appropriate for differences in quality, transport costs etc to the North Sea area or other relevant market, delivery time, payment time and other terms and conditions, the priced achieved and noted for petroleum products after due adjustment for processing etc. and other comparable prices or valuations as may be available. Due consideration shall be paid to whether an agreement is between related companies or in some other way subject to conditions that may have affected the price fixed. The norm price is to be fixed retroactively as the price for petroleum produced during a given timeframe. The norm price is normally to be fixed for each single day. The norm price may be fixed for longer periods than a single day where this seems appropriate and not unreasonable. For petroleum landed by pipeline, the norm price is to be fixed on the basis of the its value at the landing site. For petroleum landed by ship, the Ministry shall decide, following consideration of the transport solution chosen, to what extent the norm price is to be fixed on the basis of the value delivered to a North Sea port, or on the basis of the value at the production site s ship-off point. The Ministry shall value at the production site s ship-off point. The Ministry shall decide the case of doubt what site shall be reckoned as the landing or ship-off point. The Ministry may exempt from the provision in the paragraph when this is called for or appropriate in order to enforce Norway s taxation powers in pursuance of tax and excise legislation or petroleum tax conventions with other countries. Section 3 Unless other reasons so dictate, the norm price shall be fixed four times a year, usually after the expiration of each quarter. Provisional norm prices may be set. Within four weeks of each of the three first quarters and three weeks of the fourth quarter, the affected parties shall state their views regarding the norm price for the respective quarter. The body authorised to fix the price may also summon the parties for discussions and to obtain further information. The parties access to view the documents of the case is governed by the provisions of the Public Administration Act, Sections 18 to 21 unless otherwise stated in the provision. Best judgements or figures based thereon are not considered to constitute factual information or processing of factual information in the terms of the Public Administration Act, Section 18 letter c. Affected parties have no claim to view documents presented to the price fixing body by other affected parties. Should, however, one affected party state that he wishes documents or parts thereof to be made known to others parties, the price fixing body shall arrange for this to be done. The price fixing body shall then, either in writing or in meetings with the affected parties, present its provisional views in the price fixing case. After announcing its provisional views to the affected parties, the latter shall have two weeks in which to make comments. If the price fixing body sees fit, a longer time limit for comments may be set. When fixing the provisional norm price, the affected parties shall as far as possible be notified and allowed a short deadline for comments. If the price fixing body finds in its provisional assessment that no 2

3 substantial changes have occurred, a decision may be made that the most recently fixed final norm price shall be taken as the provisional norm price in a later period. Where several companies join in a production venture, the Ministry may demand that the group appoints in writing one or several representative to receive notices, attend meetings and make statements etc on behalf of the group. Section 4 The Ministry shall be vested with the authority to fix the provisional and final norm price, including the authority to decide that no norm price shall be fixed for a given production area. The Ministry may also except individual shipments from the fixed norm price when required by special conditions. The Ministry may authorise a special Petroleum Price Council to make decisions as mentioned in this regulation. Section 5 The Petroleum Price Council s decision to fix a provisional or final norm price may be appealed to the Ministry. The complaint must be received by the Petroleum Price Council within 30 days of the decision. The other parties shall be notified of and be allowed to join in the complaint, even though they have not themselves appealed within the time limit. In connection with appeal of a decision pursuant to the first paragraph and final fixing of the norm price, the parties who have appealed or later joined in the complaint may demand submission of the price fixing matter to an Expert Committee for comment as to whether the norm price as fixed is clearly unreasonable before the Ministry makes its decision. The demand to appoint such an Expert Committee must be received by the Ministry no later than 14 days after the appeal deadline expires. The Committee shall consist of three members to be appointed by the Chief Justice after the Ministry and participating parties have been given the opportunity to comment on the appointment. The Committee shall give the Petroleum Price Council and parties demanding submission to the Committee and opportunity to state their case either in writing or orally, and shall also procure such information as the Committee sees fit. The Committee shall state its finding no later than three months after appointment, unless the Ministry decides otherwise. The Committee shall fix its own honorarium and method of splitting such honorarium and other expenses of its consideration among the parties. Section 6 The Ministry s decision concerning provisional or final fixing of the norm price may be appealed to the King if the decision is made by the Ministry in the first instance, or if the Ministry has reversed a previous, unappealed Petroleum Price Council decision. The provisions in Section 5, first paragraph shall apply correspondingly. Section 7 The Ministry s opportunity to reverse the norm price decision its own initiative is governed by the general administrative law rules and by Section 35 of the Public Administration Act, though in such a way that the time limit for such reversal shall be six months from the time of decision by the subordinate body. The provision relating to notification of the subordinate body in pursuance of the Public Administration Act, Section 35, second paragraph, shall not apply to the norm price decision. Section 8 No court action to test the validity of the norm price decision may be brought unless the appeal opportunities in pursuance of this regulation have been exhausted. The Civil Disputes Act Section 437 shall also apply correspondingly. Section 9 3

4 All parties who, when being assessed for income and capital tax including special tax as defined in the Petroleum Tax Act, Section 5, are assessed on the basis of the norm price, are bound to provide all information required for fixing of the norm price. Parties concerned shall also of their own initiative provide further information if such information must be expected to be of signification for the valuation of petroleum produced in the areas mentioned in the Petroleum Tax Act, Section 1, a-b. Information on sale etc. of petroleum produced from the Norwegian continental shelf may be required on a special price statement form drafted by the Ministry. The time limit for submission of such a price statement shall be set by the Ministry. Parties obliged to submit price statements shall confirm the submitted statement within 15 days of the end of the quarter in a special quarterly statement. Changes in the submitted information shall be notified to the Ministry within 15 days of the party obliged to submit the statement becoming aware of the change. Violation of the provisions in the previous paragraphs shall be punishable by fines, cf. the Penal Code, Section 339, subsection 2, unless more severe penal provisions applies. Section 10 The Petroleum Price Council shall consist of at least five members, to be appointed by the King. The term of office of members and alternates is two years. In individual cases, terms of office may be set which depart from the norm in order to secure continuity in the Council. The Council has a quorum for decision-making purposes when at least four of the Council members or their alternates are present and a majority of the present members vote in favour of the decision. Discussion with affected parties and procurement of information can, as decided by the Council, be left to a member, subcommittee or the Council s secretariat. CHAPTER II NORM PRICE FOR ROYALTY CALCULATION PURPOSES Section 11 For purposes of defining the calculation base for royalty and interim payments according to Royal Decree of 8 December 1972 (with later amendments) relating to exploration for and exploration of subsea petroleum resources, Section 26, the provisions in this regulation shall apply correspondingly. The calculation base shall in all cases be defined on the basis of the quantity and value of petroleum produced at the ship-off point of the production area. CHAPTER III NORM PRICE FOR TRANSFER OF PETROLEUM Section 12 The Ministry may by regulation or individual decision determine that the provisions in these regulations shall in whole or in part form the basis for fixing the price for produced petroleum assigned pursuant to a prior agreement for state participation in petroleum production on the Norwegian continental shelf. CHAPTER IV GENERAL PROVISIONS Section 13 In this decree «Ministry» shall mean the Royal Ministry for Petroleum and Energy and «Petroleum» shall mean all liquid or gaseous hydrocarbons produced from the ground below the seabed, as well as other 4

5 substances produced in association with such hydrocarbons. Section 14 The Ministry may issue regulations concerning implementation of the provisions in this decree, supplementary regulations concerning the fixing of norm price by the Petroleum Price Council and regulations concerning case consideration in the Petroleum Price Council. CHAPTER V AMENDMENTS Section 15 _ CHAPTER VI ENTRY INTO FORCE Section 16 These regulations enter into force immediately. (Last translated ) 5