1. Handbook on Mineral and Energy Asset Accounting A first - very preliminary - outline based on SEEA 2003 and the Eurostat guidelines for presentation at the 10th London Group Meeting New York, 19-21 June 2006 Ole Gravgård Statistics Denmark

2. Background London Group meeting in Copenhagen 2004: “Subgroup could aim at developing an annotated outline for guidelines for subsoil assets before the next London Group meeting. The Eurostat guidelines can be used as a starting point”. UNCEEA: ”Subgroup should prepare a handbook on mineral and energy asset accounts for consideration and approval by the UNCEEA”

3. Scope and coverage ? The Handbook should be a compilation and implementation manual Should we also include Theory/background ? Country practices/examples ? Uses of the accounts ?

4. Scope and coverage ? Handbook on asset accounting or Handbook on assets and flows SEEA Flows Stocks ?? Satellite Handbook

5. Basis for the handbook SEEA 2003 Eurostat guidelines for standard tables, etc. Country practices –(documents from Austria, Canada, New Zealand, Netherlands, Denmark, and UK collected by the subgroup) Issue papers Litterature, articles

6. 1. Preface 2. Purpose of the handboook 3.Introduction to mineral and energy asset acounting 3.1.Accounting entries for an asset account 4.Definitions and classifications of mineral and energy accounts 4.1.Mineral and energy resources in the SNA (AN.212) 4.2.Mineral and energy resources in the SEEA (EA.11) 4.3.Links between SNA and SEEA classifications 4.4.Classification of reserves 4.5.Aggregation of the same resource over different deposits 4.6.Stock level 4.7.Units of account Contents (1)

7. Contents (2) 5.Mineral and Energy asset accounts in the SNA 5.1.Economic appearance and disappearance 5.2.Other non-transactional changes in assets 5.3.Valuation of assets in 1993 SNA 6.Mineral and energy asset accounts in SEEA 6.1.Changes due to transactions 6.2.Additions to stock levels 6.3.Deductions from stock levels 6.4.Other changes in stock levels 6.5.Accounting entries for mineral and energy 6.6.The physical balance sheet and accumulation accounts 6.7.Monetary balance sheets and accumulation accounts

8. 7.Valuation 7.1.Estimating resource rent 7.2.Allocating overall value to specific types of products 7.3.The future resource rent 7.4.Future resource rent per unit extracted 7.5.Determining the pattern of resource rents 7.6.Determining the life length of the resource 7.7.Determining the discount rate 7.8.Determining the rate of return 7.9.Relationship between the discount rate and rate of return 7.10.Nominal and real rates 7.11.Estimating the value of the stock level of the resource as Net Present Value (NPV) 7.12.Possible problems with resource rent calculations 7.13.Fixed price calculations 7.14.Government appropriation of the resource rent 7.15.Resource rent derived from PIM calculations 7.16.Resource rent derived from capital service flow calculations 7.17.The net price or Hotelling alternative 7.18.Summary of methods for valuing natural resource stocks Contents (3)

9. 8.Accounting for changes in the stocks of mineral and energy reserves 8.1.The valuation of discoveries 8.2.Extractions 8.3.Separating produced and non-produced assets 8.4.Linking asset accounts and flow accounts 8.5.Example of valuation of stocks and flows 9.Mineral exploration and mineral extraction, decommissioning costs 9.1.Decommissioning costs 9.2.Mineral exploration 9.3.Cost of mineral exploration 9.4.Value of mineral exploration and value of the mineral resource 9.5.What is mineral exploration? 9.6.Is there double counting in respect of mineral exploration and mineral resources? 9.7.Options for recording the values of mineral exploration and mineral deposits Contents (4)

10. 10.Sensitivity analysis 11.Accounting for ownership 11.1.Ownership in the SNA 11.2.Ownership in the SEEA 12.Other issues 13.Analysis of the accounts 13.1.Valuation related to parameter changes 14.Examples 14.1.Example of asset accounts for oil and gas from SEEA-land 14.2.Country examples 15.Use of the accounts 15.1.Uses of physical asset accounts 16.Appendix - Explanation of terms used 16.1.Terminology for the use of capital 17.References Contents (5)