The role of oil and gas companies in global climate policies Energy Outlook, Arendal, 16 August 2016 Eirik Wærness, Senior Vice President and Chief Economist

The triple energy challenge – a balancing act Population growth Economic growth Increasing energy demand Fighting decline from existing fields Satisfy demand Clean and affordable energy for all Limiting greenhouse gas emissions Policy gap between targets and measures Price uncertainty Cost challenges Risks Policy uncertainty Risk/reward balance Sustainability

Three possible scenarios to 2040: Rivalry, Reform, Renewal* Large uncertainties call for scenarios – Energy Perspectives 2016: www.statoil.com/energyperspectives Energy intensity Index, 1990=100 World GDP and energy demand Index, 1990=100 Global energy mix % 2013 2040 Source: IEA (history), Statoil (projections) *Rivalry: Geopolitical uncertainty, regional conflicts; Reform: COP21 followed up and tightened; Renewal: Energy revolution delivering emissions consistent with 2°-C target

A strong trend affecting economics and energy All growth in energy demand in emerging economies, in particular in Asia The global population centre is in Asia World energy demand per region Bn toe Each small square represents 1 million people Source: BigThink, IEA, Statoil (projections) © Statoil ASA

Speeding up the change in global energy mix … with Renewal displaying a paradigm shift Bn toe Source: IEA (history), Statoil (projections) © Statoil ASA

Huge investments needed in oil, gas and renewable electricity …to replace declining production and ensure sustainability New oil production 2015-2040 Mbd New gas production 2015-2040 Bcm Incremental New RES production 2015-40 Thousand TWh Source: Statoil

What is required to deliver on demand and sustainability? A huge change in parts of the energy sector… Sales Light Duty Vehicles Millions Light Duty Vehicle fleet composition Billions Fuel mix in electricity generation % 2013 2040 Source: IEA (history), Statoil (projections) © Statoil ASA

…because other sectors are more challenging to change … and because demand here will grow as the economy grows… Fuel mix in Final Energy Demand for Transport excluding LDVs Bn toe Fuel mix in Final Energy Demand for Residential, Commercial & Industrial sectors Bn toe 2013 2040 Source: IEA (history), Statoil (projections)

So what is the role of oil and gas companies? … given the triple energy challenge? Deliver clean, affordable and available energy for all Replace existing reserves and develop low-carbon sources of energy Ensure attractive cost/risk balance Improve energy and carbon efficiency Statoil: Developing low-carbon energy CO2 emissions 50% of average Reducing flaring from low levels 50 USD/ton carbon price Oil and Gas Climate Initiative: Supporting policies consistent with a 2°C future Evaluating + reporting on climate risk Satisfy demand Risk/ reward balance Sustain-ability