EBN annual report 2012

AnnuAl report 2012the future of energy

Start gaS production from groningen field

1963

about ebn

Based in Utrecht, EBN B.V. is active in exploration, production, storage and

trading in natural gas and oil and is the number one partner for oil and gas

companies in the Netherlands.

EBN’s legal predecessor, DSM Aardgas, was set up on 2 January 1973, exactly 40 years ago. DSM Aardgas incorporated

the state’s interests in Dutch natural gas production. All the stocks were held by DSM. When DSM was launched on the

stock exchange in 1989, the State took over DSM Aardgas’ stocks and placed them with the Ministry of Economic Affairs.

The name was changed to Energie Beheer Nederland B.V.

On 1 January 2006, DSM’s administrative responsibility for EBN ended. Since then, EBN has been an independent company

with the Executive Board reporting directly to an independent Supervisory Board. In 2011, the official name changed to EBN B.V.

Together with national and international oil and gas companies, EBN invests in the exploration for and production of oil

and natural gas, as well as in gas storage facilities in the Netherlands. The interest in these activities amounts to between

40% and 50%. EBN also advises the Dutch government on the mining climate and on new opportunities for making use

of the Dutch subsurface.

National and international oil and gas companies, the licence holders, take the initiative in activities in the area of develop-

ment, exploration and production of gas and oil. EBN invests, facilitates and shares knowledge.

In addition to interests in oil and gas activities, EBN has interests in offshore gas collection pipelines, onshore underground

gas storage and a 40% interest in gas trading company GasTerra B.V.

The profits generated by these activities are paid in full to the Dutch State, represented by the Ministry of Economic Affairs,

our sole shareholder.

Exploration

EBN’s influence and responsibilities

Gas storageProductionDistribution (wholesale)

Distribution (private)

| EBN Annual Report | 20124

2012 2011

number of participations 187 183

of which exploration 47 48

EBN’s share of sales (billion m3)1 302 302

in millions of euros:

sales 8,528 7,103

net profit 2,360 2,131

payments to the State 6,932 5,788

capital expenditure 621 611

depreciation and amortization 745 617

number of employees3 70 68

absenteeism 2.9% 4.1%

Operational performance4 2012 2011

CO2-emissions t.b.d. 765 ton

methane emissions t.b.d. 6.2 ton

energy consumption t.b.d. 16.7 PJ

Key figureS

1 Unless otherwise stated, all volumes in this report are expressed in billions of m3 natural gas (35.17 billion at 0 degrees Celsius and 101.325 kPa) based on EBN’s participation percentage.

2 This includes the proportional share of sales in the concessions in which EBN does not, itself, receive the gas but is entitled to a proportional share in the proceeds.

3 Total number of employees year end 2012.4 EBN’s share in the operational performance. In the course of 2013, the performance for 2012 will be published at:

http://www.ebn.nl/Documents/EBN_operationele_prestatie-indicatoren.pdf.

EBN Annual Report | 2012 | 5

About EBN 1

Key figures 2

Vision, mission and strategic pillars 5

Preface by Jan Dirk Bokhoven 8

1 Report by the Supervisory Board 15

2 Report by the Executive Board 23

3 Corporate Governance and Risk Management 41

4 Annual Report 53

General 54

Principles for the valuation of assets and liabilities and determination of profit 56

Consolidated profit and loss account 64

Consolidated balance sheet 65

Summary of changes in shareholder’s equity 66

Consolidated cash flow overview 67

Notes to the consolidated annual accounts 68

Notes to the statement of comprehensive income 69

Notes to the balance sheet 72

Policy to control financial risks 78

Other notes 84

Company profit and loss account 86

Company balance sheet 87

Notes to the company annual accounts 88

Other details 89

Auditor’s report by an independent accountant 90

Key figures 93

Glossary 94

Contact information 96

table of contentS



EBN invests in the exploration, production and underground storage of natural

gas and oil in the Netherlands. By our participation we secure the revenue for

the Dutch state and we guarantee the security of supply of the Netherlands’s

main energy source: natural gas.

There are still substantial amounts of potentially producible gas in the Dutch subsurface. A great deal of oil and gas has

already been found in the Dutch subsurface, but we are constantly discovering new reserves. However, it will become

increasingly difficult to produce them. The easily recoverable reserves have already been produced or are in production,

while the less easily recoverable reserves still pose many challenges. EBN facilitates and stimulates its partners in optimally

exploiting the subsurface potential.

Furthermore, EBN aims to contribute to a stable energy supply in the Netherlands and, where possible, to contribute to

making it sustainable. Gas is the backbone of the current energy supply and gas will remain a significant part of the energy

mix. It is the cleanest fossil fuel, with a high energy density and is flexibly deployable. This makes natural gas the ideal energy

source for supplying energy when there a fluctuating energy supply.

EBN primarily sees a connection with its activities with geothermal energy (using the subsurface), biogas (using existing gas

infrastructure) and offshore wind energy (offshore installation and maintenance knowledge, power to gas technology).

ViSion, miSSion and Strategic pillarS

VisionThere is a

substantial amount of potentially producible gas

in Northwest Europe. Gas is a continuous energy and income source

for the Netherlands and is essential for a sustainable energy supply in Europe.

To facilitate and stimulate operators in

optimally exploiting (existing/new) gas fields

To contribute to sustainable energy system in the Netherlands

MissionTo optimally exploit the subsurface and contribute to a

sustainable energy supply

Strategic pillarsTo discover and develop

existing and new subsurface potential for the Netherlands


ViSion of the future

2030


It is the year 2030. The energy sector is turbulent, the

energy transition is in full swing. The Netherlands is well

on its way to achieving the ambition of having an entirely

renewable energy supply by the year 2050. This is largely

made possible by support from natural gas, which has

proved to be the most affordable, reliable and clean fossil

fuel.

Modern, efficient natural gas generating stations are

playing a crucial role in accommodating the fluctuating

renewable energy production. Despite the decline in

natural gas consumption in the electricity sector and

buildings, the use of natural gas is still significant. Part

of the transport sector has switched to natural gas and

superior oil products based on natural gas have made

their debut.

The Netherlands fulfills a key role as a natural gas hub,

partly due to the presence of small fields that are still

productive and the fact that gas storages and an extensive

infrastructure ensure the necessary flexibility. One and all

agree: Natural gas continues to fulfill a significant role, not

only socially, ecologically and economically, but also (geo)

politically. In the Netherlands. And in our neighbouring

countries.

| EBN Jaarverslag | 201210

“There is sufficient potential for remaining self-sufficient for decades to come.”

Jan dirK boKhoVen:


As for the last argument – natural gas will be all gone by

2030 – this issue is rather more subtle than many suspect.

Although gas reserves in the Netherlands have, indeed,

been decreasing, a considerable amount of natural gas

still remains in the Dutch subsurface, especially if we add

the potential of not so easily recoverable natural gas. In

short, there is plenty of natural gas. Now, in 2030 and for

many years thereafter. One condition for extracting these

reserves and generating the associated revenue is that the

investment climate must remain positive and a stable sales

market and societal support are required.

Where do we go from here?In this annual report, we mark the moment when the

Groningen gas field went into production 50 years ago.

Since then, this country has benefited from a great,

constant flow of natural gas. And although, to this day,

there are considerable reserves, from the very beginning

our organisation has been thinking about natural gas’s

importance and position in the Dutch energy supply. The

question ‘Where do we go from here?’ was already a

topic back then and, in the present highly changeable

circumstances, is still a topic now. As a major player in the

energy and natural gas sector, we see it as our task and

responsibility to express, on one hand, how we perceive

the role of natural gas in the energy transition and, on the

other hand, to enter into dialogue with interested parties,

in order to test and enrich our viewpoints. We did so at

various points in 2012 and also do so in this report. We

asked four stakeholders with diverse interests for their

view of the future of energy supply in the Netherlands.

En route to 2030In addition to exploring the future of natural gas, as an or-

ganisation we are also firmly anchored in the here and now.

In early 2012, for example, we presented our employees

with the new EBN strategy. A strategy that is intended as

a compass for how we think and act and which consists

of three pillars: facilitating and stimulating operators to

optimally exploit fields, discovering and developing new

and existing subsurface potential and contributing to a

sustainable energy system. We have given further structure

and content to this in 2012 and we have started compiling

a programme of specific actions and projects that will

facilitate implementation. You can read about two of these

activities, ‘best in class’ NOV-management1 and the

execution of specific roadmaps, further on in this report.

Energy transitionGoing back briefly to the central theme of this report and

Admittedly, the scenario described adjacent is no more than a glance into the

future. A projected image, of which there are many, especially when it comes

down to how our energy sector will be structured in 20 years or so. This much is

certain: with the rise of coal at the expense of natural gas and the presumption

that there will be no natural gas left by 2030, the prospect we outlined will not

automatically become the reality.

1 Non-operated venture management; managing EBN’s joint ventures.


1959

diScoVery groningen gaS field


the issue that regularly occupies our organisation: Where

do we go from here, after 50 years of natural gas? The

fact is that natural gas is of great, if not crucial, importance

to Dutch society. And, in our view, that will not be signifi-

cantly different in the future. The fact that this country cur-

rently produces almost twice as much gas as it consumes,

in itself, is significant from that point of view. There is

sufficient potential for remaining self-sufficient for decades

to come. In our view, therefore, the natural gas debate

should focus not so much on how far reserves will be de-

pleted by 2030, but rather: How can we ensure that Dutch

natural gas becomes the engine in the energy transition

and that it continues to flow abundantly in 2030?

Our view of the future To gain a certain grip on these and similar issues, we

reflected on our vision of 2030 in 2012. This is primarily

intended to organise and hone our thoughts and provide

a frame of reference when looking to the future. All this in

the knowledge that the Dutch and European gas market

is developing extraordinarily quickly and is hard to predict.

Unquestionably, there will be a great many changes in the

area of energy in the coming decades. Output from the

Groningen field will decline, the energy market is focusing

on sustainability and increasing electrification, and the

possibility of a profitable production of gas from challen-

ging formations – such as shale and coal. EBN is keeping

a close eye on these developments and, where necessary,

applying them to its policy.

Pioneering roleWe already said it in so many words: It’s good to think

about the future, even though nobody really knows what

the world will be like in twenty years time or longer. And

that applies to us too. Nevertheless, we are convinced that

we will be able to continue extracting natural gas profitably

and in a socially responsible manner in 2030, to retain our

energy independence. Time and again, the success we

have had, in 2012 and in previous years, has shown that it

is still profitable to invest in small fields. From that point of

view, it is also worth to seriously investigate the possibility of

extracting gas that is more difficult to retrieve - from shale

or coal layers, for example.

We also believe that, despite the major changes in

demand and the steep rise in natural gas production in

the US, gas revenues will continue to make a significant

contribution to the Dutch economy. Our aim is that the

Netherlands will still play a pioneering role on the interna-

tional energy playing field in 2030 and natural gas will con-

stitute a major component in achieving the Netherlands’

CO2 reduction targets. It is therefore essential for choices

to be made concerning the energy policy and ensure that

gas can start warming up now as the future ‘engine for the

energy transition’.

At the end of this preface, I should not omit to mention

that 2013 is an anniversary year for not only Dutch gas,

but also our organisation. This year, we are celebrating

the 40th anniversary of the incorporation of our company

under the name of our legal predecessor DSM Aardgas

in 1973.

J.D. Bokhoven (CEO)

“it is still profitable to invest in small fields.”


Chairman of the Social and Economic Council (SER)

gueSt column by Wiebe draiJer:

Lagging behindThis Energy Agreement is essentially about capitalising on

trading opportunities. After all, sustainable growth offers

a great many opportunities. Just look at how many jobs it

enables us to retain and create. We have to move forward

and do what we are good at: leading the way and looking

ahead. We have done too little of that in recent years. We

have been too focused on ourselves. As a result, we are

currently not a model country, we are lagging behind. If

you realise that we have now dropped to number 25 in

terms of sustainability policy and we have to admit that

we are not doing what needs to be done in a number of

areas, then evidently, as a country, we have to act. Take

energy production, for example, a major sustainability

indicator. While other countries are showing an increase in

sustainable energy production, in the Netherlands output

is declining.

IncentiveThat we have fallen behind in the area of energy and

sustainability policy can partly be explained by the fact

that historic natural gas finds have enabled our country to

achieve a tremendous acceleration in the use of natural

gas as an energy source. The search for alternative energy

The National Energy Agreement offers

the Netherlands a fantastic opportunity

to play a pioneering role in sustain-

ability. We are launching a coherent

package of initiatives and agreements

that give concrete form to the sustain-

ability objectives.


“We can’t afford to follow”

sources and energy renewal has lagged somewhat behind

as a result. Natural gas may have provided us with won-

derful infrastructure and knowledge, but its abundance

and the low gas prices have, to some degree, eliminated

the real incentive to innovate. Things are different for coun-

tries such as Germany, England and Denmark. They have

always had a far greater energy demand and have been

far more dependent on imports. That promotes inventive-

ness and a broader outlook.

SympatheticPresident Obama recently said about sustainability: ‘We

can’t afford to follow’. And that, in my view, applies to the

Netherlands, too. We will have to actively structure our

own sustainability drive. In my opinion, this entails a com-

bination of three things: catching up in making renewable

energy sources sustainable, cashing in on the local energy

and involvement of citizens and neighbourhoods and

earning money from promoting sustainability. These are

the themes being debated at Energy Agreement meetings.

That is where the energy future is discussed and we con-

sider how to structure the energy transition, which energy

source plays which role.

Naturally, I am sympathetic toward the position natural

gas could occupy, especially as we have a great deal of

competencies and a huge head start in that field. Time will

tell how that will develop, however, in relation to coal for

example. The process currently underway is determining

how the transition will ultimately be structured and ac-

complished. The Energy Agreement roundtables will also

determine the speed at which this develops. So if these

discussions lead us to conclude that natural gas is the

best choice within the energy transition, then fine. I take an

open, objective and independent stance.

OptimisticIn my view, one thing is top priority: the time is ripe for

doing things another way, and together. An increasing

number of parties are coming to the table, in search of a

shared solution. The debate used to be far more difficult

and more fragmented, but now we are really working on a

shared agreement. Not a recommendation or guidelines,

but an agreement. I realise that we are dealing with big is-

sues that need to be solved, but the commitment to tackle

them is there. As a country, too, we have the scale for

such an approach. In the end, we meet up with everyone

and can look everyone in the eye. I’m hugely optimistic

about the collaboration. And, for the books: It’s not a

SER agreement, but a Dutch agreement. The traditional

partners are participating, but also others, such as envi-

ronmental organisations, decentralised energy companies

and representatives from society. That’s what I like about

it. It’s a new approach.

We have to earn our position in the world and become

a prominent world player again. We did not create the

first polder in our country to gain land, for example, but

to protect ourselves. We also have to demonstrate that

competency in doing things differently and market it in the

world when it comes to energy and sustainability. From

that point of view, we are going back to our roots! In my

eyes, we will have succeeded if, together, we manage to

concretise the innovation, advance in sustainability and

acceleration. A shared growth agenda.


1963

Start production groningen gaS field


report by the SuperViSory board 1


GeneralEBN is not a listed company, so the Corporate Governance

Code does not apply to the organisation. EBN does, how-

ever, endorse the code’s point of view that transparency

towards stakeholders is crucial and, where possible and

relevant, follows the principles of the code. Thereby EBN

follows the government policy for State participations. The

section on Corporate Governance and Risk Management in

this report includes a paragraph indicating those principles

of the code EBN follows.

The Supervisory Board (the board) complies with the inde-

pendence criteria and the profile sketch as approved by the

shareholder on the grounds of article 12 paragraph 2 of the

articles of association.

The chairman of the board, Mr Van der Meer, is the primary

contact person for EBN’s Executive Board. The entire board

has a joint responsibility. All members of the board are also

members of the audit committee, the remuneration com-

mittee, the selection and appointment committee. The table

below shows the memberships and chairmanships of the

board and the committees.

The members of the board do not maintain any other busi-

ness relationships with the company. The board has not

noted any conflict of interest between the company and the

members of the board.

The personal details, the current ancillary functions of the

members of the board and the retirement schedule are

published at the company’s website, under Corporate

Governance – Supervisory Board

(www.ebn.nl/en/OverEBN/Pages/Supervisory-Board.aspx).

The retirement schedule on page 17 has been discussed.

Mr Van der Meer has decided not to offer himself for re-

election for a new term in 2013. At the end of his term, Mr

Gratama van Andel is re-electable. In accordance with the

board regulations, discussions regarding the nominations

for reappointment will take place in the absence of those

involved and nomination for reappointment is not automatic.

Nomination for reappointment will always be carefully

considered.

The Annual General Meeting of Shareholders appoints

the supervisory directors on the binding nomination of the

board. For the appointment of a new supervisory director,

the board has a profile sketch, which is also published at

the EBN website. The profile sketch indicates the charac-

teristics that the individual members and the board as a

whole should possess. The board should be composed

report by the SuperViSory board

Supervisory Board

Audit Committee

Remuneration Committee /Selection and

Appointment Committee

Ir. R.M.J. van der Meer chairman member member

Drs. A.H.P. Gratama van Andel member chairman member

Ir. G-J. Kramer member member chairman

Mr. H.M.C.M. van Oorschot member member member


in such a way that the members can operate critically and

independently in relation to each other, the Executive Board

and each partial interest. The composition of the board

must account for the nature of EBN’s activities, its mission

and objectives, the board’s terms of reference and the

expertise of the other board members.

Meetings of the boardThe board met four times in 2012. In addition to the board,

members of EBN’s team of Directors also attended these

meetings. The external auditor was present at the first

meeting during which the annual auditor’s Board report

regarding the administrative organisation and internal

control and the annual report control was discussed.

Mr Gratama van Andel attended one consultation meeting

between EBN’s Executive Board and the Works Council.

In June 2012, together with EBN’s team of Directors, the

board paid a working visit to the LNG terminal in Maas-

vlakte 2, in Rotterdam.

Approvals by the board The board approved a number of Executive Board deci-

sions. The following investments were approved: The

expansion of the Norg gas storage and the Chevron A18-A

field development. Budget overruns were approved for

three investments approved earlier by the board. These

are the budget overrun for the Medway project, the budget

raise for the K18-G field development and the budget raise

for the K4a-Z subsea development.

In the last meeting of 2012, the board approved the working

schedule and budget for 2013 and the associated financing

plan. In this meeting, the Executive Board explained the

proposed amendment to EBN’s and EBN Capital B.V.’s

articles of association. The transfer of EBN’s Bergermeer

gas storage assets to EBN Capital B.V. was approved.

EBN’s strategyThe board discussed EBN’s long-term strategy. The central

issue is how the role of natural gas can be maintained in

the future. After all, natural gas accounts for almost half the

Netherlands’ energy supply. The board and the team of

Directors thoroughly discussed this topic and exchanged

ideas on future scenarios. Clearly, the number of interested

parties in this field is sizeable and growing. This has led the

board to articulate the importance of public affairs, resulting

in new initiatives in 2012, partly through collaboration with

the NSOB (Netherlands School of Public Administration).

The board and the team of Directors also discussed the

GasTerra strategy and business plan in two meetings.

Schedule for resignation by rotationDate of first appointment

Date ofreappointment

End of4-year term

Ir. R.M.J. van der Meer 1 January 2006 2009 2013

Drs. A.H.P. Gratama van Andel 1 January 2006 2009 2013

Ir. G-J. Kramer 1 January 2006 2010 2014

Mr. H.M.C.M. van Oorschot 1 January 2006 2010 2014


Mr Dessens attended one of these meetings. Mr Dessens

is chairman of Gasterra’s Supervisory Board and also

chairman of GasTerra’s Board of Delegated Supervisory

Directors.

Relevant developmentsOn the basis of quarterly reports, the Executive Board

informed the board about the relevant developments within

EBN and, in particular, the developments in EBN’s joint

ventures. A number of discussed topics are explained in

further detail below.

Bergermeer Gas Storage The board discussed the progress of the Bergermeer gas

storage. After the positive pronouncement by the Council of

State, the building work has actually begun. The board will

continue to follow the progress of this project in 2013.

Earthquakes in GroningenThe Executive Board informed the board of the most recent

earthquakes in Groningen, including the one in Huizinge,

and how NAM dealt with the damage it caused. This topic

is discussed in more detail on page 36.

Shale discussionThe Executive Board also informed the board of the societal

discussion on the possibility of extracting gas from shale in

North Brabant. The research the Minister of Economic Af-

fairs has commissioned should be completed in 2013.

Self-evaluationThe Supervisory Board discussed the functioning of the

Executive Board without its presence. In 2011, together

with the team of Directors, the board carried out a self-

evaluation of the functioning of the individual board mem-

bers and the team of Directors. At the beginning of 2012,

discussions were held on the functioning of the board and

the joint team of Directors, respectively, as well as on the

cooperation between the board and the team of Directors.

This gave no cause for any specific action. The next self-

evaluation will take place in 2013.

Meetings of the audit committeeThe tasks and methods of the audit committee are set

out in the ‘regulations for the Audit Committee of the

Supervisory Board’. The audit committee’s tasks include

supervising, auditing and advising the Executive Board on

the functioning of internal risk management and control sys-

tems and supervising the company’s financial reporting.

The audit committee met twice in 2012. In addition to the

members of the audit committee, a number of members of

the team of Directors also attended these meetings.

In the first meeting, the audit committee reviewed, amongst

other issues, the annual report, the financial statements

and the independent auditor’s report for 2011. The external

auditor Ernst & Young also attended this meeting for the

purpose of the audit for 2011. The audit committee advised

the board to approve the annual report for 2011.

In the second meeting, the audit committee discussed the

internal audit plan for 2012. The Director Finance explained

this plan. The audit committee had nothing to add to this.

Attention was also devoted to the Weighted Averaged

Cost of Capital (WACC) EBN will be using and the post

investment review. Furthermore, the findings of the audit

of the tax authorities with regard to value added tax were

discussed.


The board asked the Executive Board to provide the board

with a statement for 2012 to support the usual reports

to the Executive Board. The Executive Board issued that

declaration, which serves to support provision III.1.8 of

the Corporate Governance Code. In accordance with this

provision, the board discussed the following topics with the

Executive Board: the company’s strategy and strategic risk

analysis and the results of the Executive Board’s evaluation

of the structure and functioning of the internal risk manage-

ment and control systems.

Meetings of the remuneration committee/ selection and appointment committeeThe tasks and methods of the remuneration committee/

selection and appointment committee are set out in the

‘Supervisory Board’s regulations for the remuneration com-

mittee/selection and appointment committee’. This commit-

tee’s tasks include presenting proposals to the board for the

remuneration policy the Executive Board will implement - to

be established by the AGM -, proposing the remuneration

of the individual members and compiling a remuneration

report.

The remuneration committee/selection and appoint-

ment committee met three times in 2012. The committee

discussed the Executive Board’s functioning and set the

variable remuneration for the Executive Board for 2011.

The Executive Board’s variable remuneration was made de-

pendent on achieving the objectives in the following areas:

added economic value, exploration, budget and HR.

As from 2011, the Executive Board consists solely of

J.D. Bokhoven. Since the beginning of 2013, the team

of Directors comprises of one statutory director (Jan Dirk

Bokhoven) and three functional directors. The fourth

functional director who was in function during 2012, will

resign in the course of 2013. The statutory director is chair-

man of the team of Directors.

Financial statementsThe Supervisory Board reviewed the annual report, the

financial statements and the independent auditor’s report

issued by the auditors Ernst & Young. The board can

accept these and recommends the General Meeting of

Shareholders to adopt the financial statements accordingly.

The board advises the Annual General Meeting of Share-

holders to discharge the Executive Board of responsibility

in respect of the policy it has implemented and the Super-

visory Board of responsibility in respect of its supervision.

Supervisory Board, Utrecht, 20 March 2013

R.M.J. van der Meer (chairman)

A.H.P. Gratama van Andel

G-J. Kramer

H.M.C.M. van Oorschot


Sector head of climate, air and energy at the Netherlands Environmental

Assessment Agency

gueSt column by pieter boot:

The drawback of a 2020 or 2030 objective is that it does

provide direction, but it also implies that the job is then

finished and there is no more to be done. And that doesn’t

seem like a good approach to me. Naturally, the problem

with every scenario is that the future is extremely difficult

to predict. Certainly when you are looking more than thirty

years ahead. In principle, we can make a reasonable es-

timation and foresee which elements will then need to be

included in the energy picture. I see the route mapped out

until that time not so much as a fixed schedule, but rather

as a guideline for reflecting on the question: What will we

really need by that time? I see 2030 as a stopover.

Focal pointsIn my view, there will be five major focal points over the

coming years. The first is more efficient energy use, by bet-

ter insulating our homes, for instance. The second is clean

electricity and, in saying that, we already know we will never

succeed in making our energy mix entirely renewable, as

that is technically extraordinarily difficult. Thirdly, there will

be sustainable biomass. It’s becoming scarce, but it can

be used in places where you have no alternative. Number

four is CO2 storage, under the sea, for example. There is

There are two ways of viewing the year

2030: As seventeen years hence, or

from the point of view that it will then

be twenty years before 2050. What

I want to say is that the world will

simply go on turning after 2030, so

we have to approach it from both

perspectives.


“We should step up our combined efforts”

an awful lot of industry producing emissions and, in the

end, you have to do something with those emissions.

Finally, the other greenhouse gases. All these themes and

developments are influence each other. From our agency’s

perspective, climate and energy are interlinked.

ClearHopefully, the Energy Agreement will make it quite clear

what steps we need to take to set the process in motion

and keep it moving. All those countries that are relatively

successful in the field of energy have such a long-term

approach. Actually, it’s impossible to do without it; having

your own energy process is crucial. In some aspects, policy

is stable; in others it’s less stable. Where gas is concerned,

policy is clear and stable, but where renewability is con-

cerned things are far from unambiguous.

PaceThere are those who feel the whole energy transition is pro-

ceeding too slowly. Particularly when you look at neighbou-

ring countries, where everything seems to be progressing

rather more quickly. I also think we have lost momentum in

recent years and could speed things up a bit. At the same

time, however, implementing the energy transition is a huge

undertaking, even though that’s relative compared with

countries such as Germany. It is a fact that, in the energy

system, everyone is pulling switches and there is nobody

who is pulling all the switches. Therefore, everything de-

pends on collaboration. And we’re convinced that it’s pos-

sible: Companies are willing, politicians are also keen now

and environmental organisations want to cooperate, too.

InteractionCitizens definitely play a role too. We have dubbed this the

‘energetic society’. And its’ extremely important. These

days, policy will no longer succeed if you are working

against the will and the wishes of the citizens. Take the CO2

storage project in Barendrecht, for example. In the end,

citizens managed to halt the project, because they simply

did not want it. It’s essential to involve citizens and listen to

them. Otherwise you will not succeed. These days, citizen

initiatives are regarded far more sympathetically than the

figures suggest, but ultimately it’s all about creating aware-

ness. You have to remove the hurdles for people and en-

courage them with good policy. What you definitely have to

avoid is to compare small-scale campaigns with large-scale

activities. You have to fit them together. This interaction is

increasingly important and is key to achieving size, signifi-

cance and dynamics. So far, I have been seeing too little in

the way of combined efforts and cooperation.

ExampleI feel there is still too great a focus on indicators such as

volume, size and quantity. And there is too little attention

being paid to quality and distinction. What we need is smart

applications, innovative solutions, outstanding experiments.

The Netherlands should be more prominent in this area, so

it can act as a testing ground for Europe. A model of smart,

sensible policy, focusing on pooling knowledge, learning

from one another, sharing. Denmark is an extremely good

example. They are also experimenting within their regions.

This has produced various smart grids, which are attracting

a great deal of attention from abroad. In short: increasingly,

policy has to provide added value. And that is what makes

the gas policy so interesting. How closely can gas and

renewable energy be combined? In Germany, they are not

sure how they feel about gas or how they should proceed

with renewability. We can play a pioneering role in this res-

pect, acting as their testing ground.


1965


report by the executiVe board 2


Looking back at 2012EBN’s share in the total gas production corresponded with

the forecast and amounted to more than 30 billion m³.

This production level is comparable with preceding years.

The investment level rose slightly in 2012. The start of a

number of new projects contributed to that rise. Both the

number of exploration and appraisal wells and the number

of production wells was lower in 2012 than in 2011. In

2012, EBN also further elaborated on its strategy. The

concrete result was an improved approach to non-operated

venture (NOV) management. This should, in principle, lead

to more intensive collaboration with the operators.

Participation in licencesIn 2012, the number of EBN joint ventures increased

further to 187. Two licences were transferred from explora-

tion to production. Two extra licences were created by

splitting two production licences. EBN is participating in

nine new joint ventures for exploration while eight joint

ventures have ended. These exploration licences were re-

turned by the licence holders to the Ministry of Economic

Affairs.

In addition to 176 joint ventures in exploration and produc-

tion licences, EBN participates in four pipelines, four gas

storages, the gas purification plant in Emmen, the K-13

gas treatment installation in Den Helder and gas trading

company GasTerra B.V.

EBN Capital B.V.On 15 November 2012, EBN’s two wholly-owned subsidi-

aries, F3/A6 Extensie B.V. and K13 Beheer B.V., merged.

At the same time as the merger, the articles of association

for F3/A6 Extensie B.V. (the surviving entity) were amended

and the name changed to EBN Capital B.V.

This merger is part of EBN’s restructuring in order to trans-

fer the Bergermeer gas storage – in accordance with the

Minister’s requirements – to a separate company, namely

EBN Capital B.V.

report by the executiVe board

EBN closed the 2012 year with net sales of EUR 8.528 billion. This generated a

net profit of EUR 2.360 billion. Total payments to the Dutch state, including taxes,

amounted to EUR 6.932 billion.

2012 2011

Offshore exploration Onshore exploration

27

101

total 176 total 172

43

5

Onshore production

200

150

100

50

0

Participation in exploration and production

Offshore production

42

24

101

5


Activities 2012By project type

• Enhanced gas recovery

• Field development

• Gas storage

• Seismic

• Drilled well

• Abandoned well


Portfolio of gas and oil fieldsThe total number of gas fields in the Netherlands in which

EBN participates is 265, of which 235 fields are in produc-

tion. EBN also participates in four producing oil fields and

four gas storage facilities. In the year under review, 10 new

gas fields and one new oil field were taken into production.

These fields account for 11 billion m3 of gas reserves and

0.3 billion m3 of oil reserves. The added production capacity

due to new fields is 8 million m3 of gas and 400 m3 of oil

per day.

Capital expenditureCapital expenditure in EBN’s joint ventures rose slightly

from EUR 611 million in 2011 to EUR 621 million in

2012. The biggest investments were made in building the

Bergermeer gas storage and the expansion of the Norg

gas storage. Substantial investments are also expected for

these projects in 2013.

Wells10 out of 15 exploration and appraisal wells struck oil or

natural gas. At 67%, the success ratio is comparable with

performances of previous years. Over the period between

2005 and 2011 the success ratio was 60%. The number

of production wells fell sharply from 38 in 2011 to 18 in

2012. Activity in 2011 was higher due to the redevelop-

ment of the Schoonebeek oil field. 17% of production

wells were unsuccessful, a surprising and disappointing

result.

Production and reservesIn 2012, gas production from the Groningen field amount-

ed to more than 47 billion m³ and gas production from

small fields in which EBN participates to almost 27 billion

m³. This brought the total of gas produced in 2012 up to

more than 74 billion m³. EBN’s share of the gas production

was more than 30 billion m³ and our organisation’s net oil

production was 0.3 million m³. Production from and injec-

tion into the Norg, Grijpskerk and Alkmaar underground

gas storage was more than 3 billion m³ in the year under

review and, net, approximately equal to zero.

In determining the reserves, our organisation applies

the definitions set down in the Petroleum Resources

2012 2011

Explorationactivities

140

323

total 621 total 611

148

Productionwells

800

600

400

200

0

Investments ( in EUR million )

Construction operations

36

294

291

Exploration wells Production wells

Oil Gas

12

total 15 total 18

15

Uneconomical

20

15

10

5

0

Exploration and production wells 2012

Dry

12

9

3


Management System, with categories 1 to 3 are taken

into consideration as reserves. As at 31 December 2012,

gas reserves (on a 100% field basis) in the fields in which

EBN participates amounted to 977 billion m³, of which

EBN’s share is 395 billion m³. The decline in reserves from

1,065 billion m³ in 2011 to 977 billion m³ in 2012 can be

explained by the quantity of gas produced, a downgrade

of more than 38 billion m³ of existing reserves and an

addition of 24 billion m³ to new reserves.

The downgrade merely concerns a change in the ultimate

recovery from the Groningen field and the associated gas

storage. The new reserves originate from the ‘small’ fields

and primarily concern resources transformed into reserves

in 2012 and a number of successful exploration wells.

SalesUnlike the demand for gas, Northwest European gas

market prices remained stable last year. Contrary to

expectations, the increased demand for coal, growing

energy efficiency, sustainable electricity generation and the

economic crisis evidently had no negative effect on the

development in gas prices in 2012. The TTF Month Ahead

(MA) price level was around 25 EUR/MWh. Spot prices

demonstrated a slight uptrend in the year under review. In

the first six months of 2012, on average, the TTF MA was

below 25 EUR/MWh and, in the second half of the year,

slightly above. Apart from a slight peak in February, there

were almost no seasonal influences.

In 2012, the Normative Buying Price (NBP, the price

GasTerra pays for gas from small fields) followed the same

trend as the TTF MA, but with a premium of roughly 2

EUR/MWh. The oil link percentage of the 2012 NBP fell

slightly in relation to 2011, but that was compensated for

by the relatively high oil production prices in 2012. EBN’s

result from gas production rose again in 2012 compared

with the same period in the previous year, primarily due to

the higher gas prices in 2012.

Result for the yearThe annual sales for the year grew compared to 2011 by

EUR 1.425 billion (20%), to EUR 8.528 billion. The increase

in sales is mainly due to higher sales prices (18%), with

natural gas sales remaining virtually constant. Sales

volumes for oil rose (81%) and the average oil price was

lower than in 2011 (-4%). The drop in average oil prices

is mainly explained by the low quality of the oil from the

Schoonebeek field, leading to lower sales prices. Sales

volumes for condensate fell (-8%), while the average

condensate price rose (14%).

The net profit amounted to EUR 2.360 billion. Operational

costs amounted to EUR 797 million, EUR 139 million more

than in 2011 (21%). Total payments to the Dutch State,

including levies, amounted to EUR 6.932 billion.

2012 2011

Corporate Income Tax

3,801771

2,360

Levies

8,000

6,000

4,000

2,000

0

Payments to the Dutch state ( in EUR million)

Net profit

2,131

2,964693

total 5,788total 6,932


In May 2012, EBN and operating partner TAQA

received the green light from the Council of State for

constructing the Gas Storage Bergermeer after years

of preparation and an extensive licensing procedure.

The official start of the construction was celebrated

in October in the presence of former Minister of

Economic Affairs, Agriculture and Innovation,

Minister Verhagen.

The construction was able to proceed once an optimal

layout for the project had been devised, together with

local stakeholders. For example, the gas storage will

be blended into the landscape, drilling will be carried

out under the Heilooërbos woods for laying gas pipe-

lines and a breeding ground is in place for black-tailed

godwits.

Achieving sufficient storage capacity contributes to

the Dutch government’s ambition of developing the

Netherlands as the number one hub for the Northwest

European gas market. Furthermore, the gas storage

provides the necessary flexibility in energy supply when

there is insufficient solar and wind energy available.

For the same reasons, we are investing in expanding

the Norg gas storage, together with operating partner

NAM.

The investment of more than EUR 800 million in the

Gas Storage Bergermeer can be counted amongst

the biggest private investments in the Dutch economy

of this moment. We see this as a positive sign for the

Dutch investment climate. Moreover, the project gives

a major boost to the development of the energy region

around Alkmaar. The construction of the gas storage

will generate 3,300 man years of work, of which 2,650

in the Netherlands. Wherever possible, the work is

awarded to local subcontractors.

With a capacity of 4.1 billion cubic metres, the Gas

Storage Bergermeer will be the biggest freely-acces-

sible gas storage in West Europe. That is the equiva-

lent of the average annual gas consumption for 2.5

million Dutch households. This will double gas storage

capacity in the Netherlands. The additional capacity

will ensure a better functioning energy market and,

ultimately, more competitive consumer prices. Re-

nowned energy companies, such as Statoil, Vattenfall

and EDF, have already reserved capacity during the

open seasons.

The main theme for 2013 is project realisation: the

connection pipelines are being delivered, a start is

being made on putting the treatment plant into

operation and 14 new wells are being drilled at the

Bergermeer well site. The gas storage will partially

be put into operation in 2014, after which the entire

capacity will be available in 2015

Flexible Energy

bergermeer gaS Storage


FinancingIn July, EBN issued new loans in Swiss francs for the value

of a total of EUR 300 million. This comprises a tranche

of CHF 235 million with a seven-year term and a tranche

of CHF 125 million with a twelve-year term. After swap-

ping the return into euros and covering the interest rate

and currency risk, the total costs amounted to 1.87% for

the seven-year tranche and 2.46% for the twelve-year

tranche. The bonds are issued primarily to finance capital

expenditure.

RoadmapsThere are still many steps to be taken before EBN’s ambi-

tion of annually producing 30 billion m³ of natural gas from

small fields up until 2030 has been achieved. To chart

these steps, EBN compiled seven roadmaps in 2010. The

associated action and activities are intended to ensure

more innovation in exploration and production technology

and methods that lead to the development of new gas

and oil fields. We present the findings ensuing from these

activities on (inter)national stages and conferences and

during workshops with operators active in the Nether-

lands, so that knowledge can be shared within the (Dutch)

E&P sector. In line with 2011, in the year under review we

also focused on the progress of the roadmaps.

Exploration

Two major studies dominated EBN’s exploration activities

in 2012. One was the research into the prospectivity in the

offshore A, B, D, E and F quadrants, where relatively little

exploration has taken place in the past. The objective of

this study is to analyse the chances and bring them to the

attention of the industry. A comparable study focuses on the

prospectivity of the Dinantian limestone. This is found on-

shore in the Netherlands and in the southern offshore areas.

Stranded fields

In the past, more than 120 gas or oil fields have been identi-

fied that have not (yet) been developed, for various reasons.

In 2012, the overview of these fields was further detailed

and a study was carried out into how the gas reserves

could be developed, for instance by investigating the

possibility of using the technology of hydraulic fracturing.

End of field life

Old gas wells have the tendency to stop production as

a result of diminishing pressure and an accumulation

of water at the bottom of the well. There are, however,

various techniques for extending the life of these wells

and therefore maximising their output. In 2012, EBN

conducted research into these options and compared

operators’ performance in this area. With this knowledge,

operators are being proactively approached with proposals

for improved end-of-field-life strategies.

Tight reservoirs

Low-production reservoirs are often characterised by

reservoir rock, which is difficult for gas and oil to permeate.

In 2012, these tight reservoirs were inventoried and we

carried out simulations to provide insight into the value of

this part of the gas portfolio. EBN is issuing its recommen-

dations to its partners based partly on the results of these

analyses. Successes that have been achieved show that

the technology of hydraulic fracturing can, for instance,

play a key role in the possible future development of these

low-production reservoir rock formations.

Shallow reservoirs

In 2012, EBN conducted a number of detailed studies

into natural gas in shallow reservoirs in areas for which

no licences have yet been issued. The ‘bright spot


characterisation system’ was also expanded. With this

system, a score can be awarded to each potential gas

reserve, indicating the chance of the presence of

(economically) producible quantities of natural gas.

Infrastructure

EBN has determined a number of scenarios for the dis-

mantling date for all offshore gas production installations

in the Netherlands. The options for developments near the

installations which are at the end of their life were analysed

on the basis of an urgency list. For operators, this clari-

fies the importance of retaining these installations on the

Continental Shelf.

Shale reservoirs

In 2012, EBN succeeded in carrying out important data

acquisition in a geothermal well in North Limburg. These

data have proved to be extremely useful in determining

the geographic distribution and quality of shale layers in

the subsurface. EBN provided information on request to

interested media and held presentations during various

public meetings.

Social importanceEBN sees corporate social responsibility as an integral part

of its activities. This is reflected in such areas as:

— contributing to Dutch society witch revenues from

natural gas

— developing and sharing knowledge

— interaction with stakeholders

— care for personnel

Societal contribution through gas revenues

Gas revenues are an important source of income for

the Netherlands. The dividend and tax EBN pays to the

As part of its role to maximise the value of the

subsurface for Dutch society, EBN is investigating

the potential of new technological possibilities and

the deployment of existing techniques for new ap-

plications in the Netherlands, such as natural gas in

shale layers. One condition here is that exploration

and production activities must be carried out respon-

sibly, with care for man and the environment. There

are many concerns with regard to extracting natural

gas from shale. For that reason, a study into the risks

entailed in these activities for man and the environ-

ment is being carried out. The study is issued by the

Ministry of Economic Affairs. EBN considers this

independent research to be important and is looking

forward to the results.

In the year under review, EBN attended an external

‘knowledge workshop’, where EBN shared its

knowledge in the field of extracting gas from shale.

Various stakeholders attended, which led to a

valuable and broad exchange of views and informa-

tion. In 2013, too, EBN will communicate transparently

and openly and will continue listening to stakeholders,

in order to produce natural gas responsibly with

societal acceptance.

Gas from shale layers

Societal concern


Dutch State amounts to approximately half the total gas

revenues. This income accounts for 5% of the total state

income and therefore contributes significantly to the

Netherlands’ prosperity. In 2012, according to expecta-

tions, the total gas revenues amounted to approximately

EUR 14 billion, the equivalent of EUR 850 per capita of

the population. We therefore consider it to be our respon-

sibility to secure the revenue from gas production for the

Netherlands in the future.

Developing and sharing knowledge

Developing and sharing knowledge and information and

making them accessible are a crucial part of EBN’s tasks

and responsibilities. That applies both within the oil and

gas industry and in relation to the government. EBN is

keen to interpret this role as broadly as possible to give

our social involvement a structured, demonstrable form

and make it transparent for all our stakeholders.

In the year under review, we also supported various or-

ganisations and events that contribute to the development

and distribution of knowledge on oil and gas production

in the Netherlands. EBN contributes to the Clingendael

International Energy Programme (a think-tank for geopoliti-

cal issues) and the Energy Delta Institute (a training and

knowledge institute for the gas industry); in addition, we

are one of the founding partners of the Energy Academy

Europe, which was launched in 2012. As a knowledge

organisation, EBN is an employer with a great many spe-

cialists in specific domains related to oil and gas produc-

tion. This in-depth knowledge is shared on diverse stages.

In 2012, for example, EBN personnel gave 35 lectures on

topics such as the mining climate in the Netherlands, the

production of gas from small fields and the importance of

gas in the Dutch total energy supply.

Top sectors

EBN participates in the Top Consortium for Knowledge

and Innovation (TKI) in the context of the gas innovation

contract (TKI-gas). The TKI-gas contract includes the

upstream gas programme line, in which EBN participates.

Within the various innovation contracts, businesses and

researchers join forces to develop new products and ser-

vices. The objective of the upstream gas programme line

is to provide innovative solutions to enable the extraction

of the maximum amount of gas from the Dutch subsur-

face, an ambition that fits in well with our organisation’s

objectives. A number of projects have been formulated for

contributing to achieving this objective. EBN, the industry,

knowledge institutions and universities are the participating

organisations.

Operational performance

To monitor the economic, social and environmental

aspects of its operational management and operational

activities, EBN has formulated key performance indicators

(KPIs). These were enlarged upon in 2012. Data is being

gathered from EBN’s operating partners in gas and oil

extraction.

We see monitoring EBN’s economic, social and environ-

mental performances as the next step in our aim to stimu-

late the Dutch E&P sector in delivering better operational

performance. Aided by the GRI performance indicators,

our overarching position enables us to provide the sector

with insight and take a leading role. This also provides us

with the opportunity to discuss individual performances

with the operators.

The KPIs have partly been established on the basis of

general GRI guidelines and partly on the specific guidelines


for the oil and gas industry. All figures and the background

on the 21 KPIs for the period between 2003 and 2011

can be found at www.ebn.nl/Documents/EBN_opera-

tionele_prestatie-indicatoren.pdf. The figures for 2012 will

be added in the course of 2013.

Operational performance 2011 2010

Energy consumption 16.7 PJ 15.7 PJ

Energy saving 2,963 TJ 3,126 TJ

Energy consumption as a percentage of the energetic hydrocarbon production 1.7% 1.5%

CO2-emissions 765 ton 720 ton

Methane emissions 6.2 ton 6.5 ton

Production water discharges 3.1 M m3 3.3 M m3

Number of incidental discharges 15 22

Volume of incidental discharges 1.2 ton 17.6 ton

Industrial accidents (entire industry) 2011 2010

Fatal 0 0

Industrial accidents leading to absenteeism 20 21

Industrial accidents not leading to absenteeism 23 24

Interaction with stakeholders

EBN aims to be approachable, clear and transparent and

considers it to be important to maintain contact with its

surroundings. We believe in listening and learning, but

also in informing and inspiring. As our organisation always

lends an ear to other people’s opinions, we also consider

it to be an important task to actively express our vision of

the importance of natural gas.

Increasingly frequent, we are having intensive discus-

sions with partners. Consequentially, EBN is increasingly

Non-operated venture (NOV) management essentially

entails intensifying the relationship with our operators,

proactively managing the existing EBN asset portfo-

lio and finding themes and topics to serve as input

for developing EBN’s long-term vision. In 2012, an

intensive programme was started for lifting the NOV

management to a higher plane.

EBN realises that, without the solid, continuous

growth of projects that can add gas reserves, the

annual production from small fields will rapidly

diminish. To tackle that reduction, EBN developed the

NOV management cycle in 2012. This annual cycle en-

sues from the re-assessment of the strategy in 2011.

As a non-operating partner in almost 200 participa-

tions, EBN considers it important to have a strong

focus on activities that create the most added value

for the Netherlands. With the NOV management cycle,

EBN has developed a system for working with strate-

gies and action plans aimed specifically at individual

operators. This further increases the possibilities for

optimal management, giving an extra boost to the

management of the existing asset portfolio in the short

and medium term. In 2013, the NOV management

cycle will be rolled out under the responsibility of the

Director Asset Management. The link with the existing

roadmaps and knowledge sharing within the industry

will be expressly reinforced. A great deal of attention

will also be devoted to operationalising an effective

performance measurement

Proactively adding value

noV-management


being seen as the binding factor in the sector. We would

like to make optimal use of this position for sharing our

knowledge and experiences and making them of benefit

to the various (energy) dossiers. For us, incidentally, the

focus here is on informing, rather than influencing people’s

opinions. We gather our discussion partners from amongst

the major stakeholders in the energy debate, such as the

Dutch government, the E&P sector, knowledge and re-

search institutions and universities, but also Dutch society

as a whole.

At various times in 2012, too, we invested in numerous

ways in relations and knowledge exchange with stake-

holders. One important element in this is EBN’s renewed

website, which was launched in April 2012. The main

reason was our wish to provide the environment in which

we operate with better and more concrete information on

EBN’s essence and intentions but, more particularly, on

natural gas. The website gives a clear, accessible overview

of what we do and think, what we contribute to and in

what activities we participate.

We see it as one of our major tasks to act as a source of

information on natural gas, so in 2012 we helped to set up

the aardgas-in-nederland.nl website. This online platform

gives an accessible, comprehensive view of the oil and

gas world. The website was created with six partners.

EBN was responsible for the content regarding natural

gas and the energy transition. EBN also contributed to

De Bosatlas van de energie, an energy atlas. The book

provides insight into the present, past and future of energy

supply in the Netherlands. The atlas will be distributed to

schools in 2013, together with a specially compiled teach-

ing package.

Complaints handling

Stakeholders and discussion partners can reach EBN by

telephone and e-mail, but the general public can also con-

tact EBN in the event of complaints about operational ac-

tivities. Although EBN is never the operator, our communi-

cations department will ensure that complaints are passed

on to the appropriate department and to our operating

partners. Together with our partners, we aim to deal with

complaints as swiftly as possible and to the satisfaction of

all parties involved. EBN received no complaints in 2012.

The people of EBNEBN offers professionals with a passion for their discipline

the chance to develop themselves, thus contributing to

EBN’s unique position in the Dutch energy chain and cre-

ating support for natural gas projects.

Workforce

EBN grew slightly in 2012 from 63.5 FTE to 65.8 FTE.

Over the past year, EBN also engaged nine external em-

ployees on a temporary basis and offered five students the

opportunity of a (graduation) work placement at EBN.

One of EBN’s aims is to increase the percentage of

women personnel, particularly in technical and manage-

ment positions. In relation to 2011, the percentage of

women working at EBN rose slightly, to 33% of the total

population, with 25% of professional and management

positions filled by women. Within the technical depart-

ment, too, EBN succeeded in achieving an increase in the

number of women. Over the past year, two new women

employees have joined us in specialist technical roles and

one of the two Ph. D. research projects is being carried

out by a woman.


The average age of the EBN population relatively declined

in 2012 to 41 years. 66% of our workforce is under the

age of 45. You can find more information on the composi-

tion of our workforce online, at:

www.ebn.nl/en/werkenbijebn

Training

EBN is a knowledge organisation with a high average level

of education (81% higher than intermediate professional

education):

Education level

University: 70% Higher professional education: 11.4%

Intermediate professional education: 18.6%

Naturally, we invest in the development and training of our

personnel. EBN also develops special management days in

which current affairs and strategic leadership components

are discussed.

We encourage employees to continue developing them-

selves both personally and professionally. Employees

attend, on average, 53 hours of training a year, and the

total number of training days rose from 417 in 2011 to

477 in 2012. Inspiring and contentual training will remain

a focal point for HR policy in the years to come.

Offering training and work placements is an essential part

of EBN’s strategy. Moreover, in 2012, the second Geo

Energy Master Award was presented in collaboration with

the University Fund Delft. The prize encourages students

of Delft University to conduct high-quality research into

energy sources from the Dutch subsurface and, in this way,

EBN endeavours to meet potential future employees.

Investing in small fields

neW reSerVeS

The Dutch gas reserves are diminishing due to the

annual gas production. According to Focus on Dutch

Gas, the annual EBN publication on the Dutch E&P

sector, without further investments gas production

from small fields will be halved by 2015. It is important

to add new reserves to combat that reduction.

The small fields offer many opportunities for adding

reserves. We are attempting to exploit those oppor-

tunities by investing, together with our partners, in

exploration wells and field developments. Investments

in almost depleted gas fields enable us to produce

more gas from these fields, for example.

2012’s figures show that our investments are pay-

ing off: 26.8 billion m3 were produced from the small

fields, while the developed reserves increased by 0.3

billion m3 (from 129.5 billion m3 to 129.8 billion m3). In

other words, production was replaced for more than

100% by newly developed reserves. 25.5 billion m3

were added to the existing reserves and 1.7 billion m3

were added to new reserves as a result of exploration.

Resources are identified opportunities that can pos-

sibly be transformed into reserves. EBN analyses

new resources with the aid of roadmaps. Due to our

investments in exploration and new projects, in 2012

the resources increased from 200.4 billion m3 to 252.5

billion m3. This increase shows that there is still plenty

of potential in the Dutch subsurface. A large part of

these resources can be transferred to reserves in the

coming years.


Health and safety

Vitality and health are major focal points for EBN. In 2012,

for example, following up on the Periodic Medical Sur-

vey (conducted in 2011), we offered our employees the

chance to make use of chair massages to prevent work-

related conditions. After evaluation, the effect of the chair

massages proved positive, which made us decide to con-

tinue the service on a structural basis. Additionally, EBN

encouraged its employees in 2012 to develop a healthier

lifestyle, by providing individual vitality coaching.

In 2012, we commissioned an asbestos check at the

office in Utrecht. Asbestos was discovered, but in such

a degree that it constitutes no health risk as long as no

structural rebuilding takes place. Protective coating and

stickering will be carried out in the first quarter of 2013.

At year-end 2012, the EBN emergency response team

had six members. One evacuation exercise was carried

out. There were no safety incidents in 2012 and no

industrial accidents, either with or without absenteeism

as a result.

Absenteeism

Absenteeism fell strongly in relation to 2011 from 4.1% to

2.9%. EBN implements an active reintegration policy for

getting employees back to work responsibly, as soon as

possible after (protracted) illness. Long-term absenteeism

fell in 2012 to 1.3% (from 2.8%) and short-term absentee-

ism decreased slightly from 1.3% in 2011 to 1.2% in the

year under review. Our organisation therefore also com-

plied in 2012 with its aim to keep short and medium-term

absenteeism below 3%.

Absenteeism in % 2012 2011

Short-term absenteeism (<8 days) 1.1 1.0

Medium-term absenteeism (8-42 days) 0.5 0.3

Long-term absenteeism (>43 days) 1.3 2.8

Total 2.9 4.1

Confidant(e)

In the event of complaints, employees can approach a

confidant(e) or the complaints board. In 2012, neither the

confidant nor the complaints board received any com-

plaints.

Works council

In 2012, formal consultation between the CEO and the

works council took place four times. A member of the Su-

pervisory Board attended one of these meetings. As usual,

there was informal discussion on a regular basis.

The major issues dealt with in the year under review were

the proposed relocation of the organisation within Utrecht

and a change to the evaluation and remuneration system.

The major issues completed in 2012 are an amendment

of the target and remuneration cycle and a revision of the

regulations protecting whistle-blowers.

The works council consists of three members: Jeroen

Piket (chairman), Ruben Swart and Edmund Wellenstein

(secretary). Martin Boubin resigned in mid-2012. No suc-

cessor has yet been found for him. The works council’s

term of office runs until 31 December 2013.

Outlook for 2013In view of the current recession and the crisis in Europe,

we do not expect the economic situation in 2013 to be

much different from that in 2012. From that point of view,

the outlook therefore remains slightly negative, which will


also affect the demand for and consumption of natural

gas. Although the gas supply is slowly declining, due to

falling production and the decrease in LNG deliveries in

Europe, the turning point from a gas surplus to a shortage

in Northwest Europe is now expected in 2018. Six months

ago, that date was still 2016. As a result of the present

economic conditions, the Netherlands is not expected to

constitute an exception in terms of gas surplus.

Supply from the Groningen system is expected to remain

at virtually the same level in 2013 as in 2012. If that

expectation is fulfilled, which partly depends on the

average temperature throughout the year, then supply

from Groningen will have to be adjusted slightly down-

wards in 2014 and 2015 to comply with the (legally

defined) Groningen ceiling for the 2011 - 2015 period.

Following the earthquake in August 2012 in Huizinge, in

the municipality of Loppersum, research will be carried

out in 2013 into the earthquake risk due to natural gas

production from the Groningen field. The results of this

investigation are expected in the course of 2013 and may

have consequences for future gas production.

In 2013 an inventory study will be conducted in the

province of Groningen, into the vulnerability of buildings

as a result of earthquakes induced by gas production from

the Groningen field. Where necessary, this study will lead

to preventive measures being taken.

EBN’s portfolio of oil production for 2013 will comprise

four producing fields. In 2013, one oil field is in develop-

ment and the oil portfolio is expected to grow in the

coming years.

On 16 August 2012, there was an earthquake (3.6 on

the Richter scale) in Huizinge, in the municipality of

Loppersum. The force of this earthquake prompted

the Dutch State Supervision of Mines (SodM) to

conduct further research into the relationship between

the production of gas from the Groningen field and

the frequency and force of earthquakes.

SodM then discussed the findings of this research

with the Royal Netherlands Meteorological Institute

(KNMI) and NAM. In the months of November and

December, EBN experts participated in discussions

with SodM, KNMI, NAM and Shell, with the aim of

arriving at a widely supported analysis and recommen-

dation. EBN was closely involved in this issue at policy

level too, through consultation with the partners in the

Gas building partnership (apart from GasTerra).

In January 2013, the Minister informed the govern-

ment about the recommendation received from SodM,

his decision to not yet intervene in the production

practice from the Groningen field and the preventive

measures to be taken in 2013. Based on the outcome

of the studies to be carried out this year, in December

2013 the Minister will decide whether to adjust the

production from the Groningen field.

EBN shares the concerns for the consequences of

earthquakes induced by gas production and supports

the agreed approach for 2013.

Thorough investigation necessary

earthquaKe riSK in groningen


In 2013, EBN expects roughly as many licences to be re-

turned as requested. This applies to both exploration and

production licences. The number of EBN’s participations

therefore remains virtually constant.

According to EBN’s estimation, 18 exploration wells will be

drilled in 2013. Of these, 12 are expected to be completed

within the year. The budget for exploration expenses will

rise, primarily due to higher costs for drilling installations.

There are also 15 fields in development, of which nine are

expected to be taken into production in 2013.


Director of Energy Valley

gueSt column by gerrit Van WerVen:

HubHere in the region, in the four northern provinces, innova-

tion is high on the agenda and in full swing. There is a

reservoir of proposed and promised investments for the

coming years to the value of EUR 25 billion, which makes

this the biggest investment programme in the Netherlands.

We are talking about cables, wind parks, gas pipelines,

central storage, biomass, conversion – you name it. To a

large extent, this has been initiated by Energy Valley. It’s

our ambition to become a European energy hub in terms

of both technology and applications. Where renewable

energy is concerned, we aim to play a leading role in the

energy transition and in developing programmes for that

purpose. And although we are a regional energy centre,

we are also expressly looking at areas outside the region.

In the future, we want to further expand this cluster to be-

come the engine for energy management and the energy

transition in Europe.

IntegratedGas plays a crucial role in the energy transition. We have

plenty of gas and it’s a very convenient, pleasant form

of energy. I am sure that the gas chain will change in the

What Eindhoven is to technology and

Edam is to cheese, Groningen is to

energy. With Energy Valley playing a

crucial, central role . We started this

initiative based on the conviction that

‘every region needs a business’. Today,

our regional role is to boost, direct,

mobilise, help, bind and advise.


“When it comes to renewable energy, you need gas.”

long run and the position of gas will change. It will become

extremely important in the transport sector, for example,

and become closely associated with the electricity sector.

We have a hybrid model at the moment – consumers are

supplied with electricity and gas separately, but we will be

moving to a far more complex, integrated situation. When

it comes to renewable energy, you need gas. It’s cheaper

than electricity, partly because electricity is transported

through high voltage cables and the energy value is not

fixed. For gas, it is. In any event, it will not be possible to

treat natural gas and electricity separately in the long run.

PlaythingI can see a number of challenges at the moment. One

of the major challenges is the imperfection of the energy

market. I consider it ridiculous that gas generating plants

are standing idle while coal is being imported and burned.

At the same time, billions are being poured into clean gas.

That is perfidious. In my view, an entirely different financial

system has to be introduced, combined with a range of

measures, such as lowering gas prices and taxing coal

and carbon emissions. That automatically creates a new

market balance. We are currently actually favouring the

most polluting form while also investing billions in clean

energy. If you look at the National Energy Agreement,

the focus is largely on achieving that 16%. That is fine, of

course, and it has to be done, but the real story, natu-

rally, is the remaining 84%. And natural gas should play a

central role there, too. There should be far more thought

put to how we are going to deal with that 84%. However,

it seems as if the debate on ‘clean’ has ground to a halt

where it comes to the fossil element of the energy mix. In

my opinion, that is not prudent and, as a result, we risk

becoming the plaything of market forces. That is both

undesirable and untenable.

ExpansionEBN has been a reliable, expert partner within the energy

sector for many years. The organisation concentrates

on a part of the energy market, namely oil and gas. That

is fine in itself, but EBN could expand its profile. With its

triple A status, EBN is perfectly positioned for making

projects financeable. So why not also use that strength for

renewable energy? I feel the state should draw far more

on EBN’s knowledge. Take the offshore wind parks. Bil-

lions of euros of government money are involved. Isn’t that

something you would rather do and participate in yourself

– exercising influence, control and involvement? It comes

extremely close to EBN’s competencies and expertise in

the field of logistics and infrastructure. EBN should build

on and expand that expertise, harnessing its strength to

promote sustainable forms of energy. That way, EBN can

serve state interests even better than it does now.

AccelerateCentral in my vision of the future of energy supply is the

triple helix. In other words: everything depends on co-

operation from various perspectives and with different

parties. For Energy Valley, these are knowledge institutes,

research agencies and businesses. These three parties

interface when it comes to exchange and innovation in

the energy domain . And if you really want to get ahead

and accelerate, then they are crucial when it comes to

providing investments and support. Of course, you can

also proceed on your own, but if you really want to make

progress, then you need all these parties.


1967


corporate goVernance and riSK management 3


Corporate Governance

Shareholder

EBN is a private limited company with limited liability with

the Dutch State as its sole shareholder. All shares are

owned by the Ministry of Economic Affairs.

EBN’s authorised share capital is EUR 128,137,500 and is

divided into 284,750 ordinary shares with a nominal value

of EUR 450 per share. The subscribed capital is equal to

the authorised share capital. The shares were paid up in

full as of 29 December 2005.

One shareholders’ meeting was held in 2012. The Execu-

tive Board and a number of members of the Supervisory

Board attended this shareholders’ meeting. During the an-

nual general meeting of shareholders, in any circumstance

the following topics are dealt with:

— review of the written annual report by the Executive

Board on issues concerning the company and its

management

— adoption of the financial statements and determination

of the profit appropriation

— discharging the Executive Board of its responsibility for

its management over the past financial year

— discharging the Supervisory Board of its responsibility

for supervision over the past financial year

The above topics were discussed during the shareholders’

meeting. The financial statements were adopted and

the Executive Board and the supervisory directors were

discharged of their responsibility. In addition to the share-

holders’ meeting, the Ministry also regularly conferred

informally with EBN. The objective of this informal discus-

sion is, for instance, to provide shareholders promptly

with all relevant information that is needed for the general

meeting of shareholders to exercise its authorities. Providing

relevant information is an obligation of the Executive Board

and the Supervisory Board.

The shareholder appoints EBN’s Executive Board and

Supervisory Board members. The Executive Board is

appointed by the shareholder on the basis of a binding

nomination by the Supervisory Board. The Minister of Eco-

nomic Affairs has to approve this nomination beforehand.

The members of the Supervisory Board are appointed

by the shareholder on the basis of a nomination by the

Supervisory Board. The shareholder appoints a chairman

from the members of the Supervisory Board.

EBN’s articles of association also state that the Execu-

tive Board requires prior approval by the shareholder for

certain decisions, for example entering into or terminating

any sustainable collaboration or investment with a value

exceeding EUR 200 million, closing of the company, any

of its subsidiaries or a significant part of the company and

for decisions by the Executive Board concerning major

changes to the identity or character of the company,

including acquiring or hiving off a significant participation

in the capital of another company and transferring the

company to a third party.

Supervisory Board

The chairman and the members of the Supervisory Board

are appointed by the shareholder. The Supervisory Board

is responsible for supervising the Executive Board’s policy

and the general course of affairs within EBN and advises

the Executive Board where necessary and desired. In turn,

the Executive Board provides the Supervisory Board with

corporate goVernance and riSK management


CEO

Legal

CommercialDepartment

HR

CorporateCommunication

OfficeManagement

Director AssetManagement

AssetGroups

GasTerra

BusinessDevelopment

DirectorTechnology

TechnologySupport

Technology Projects& Innovation

TechnologyQuality

DirectorFinance

BusinessControl

Accounting& Reporting

Treasury

ICT

Organisational structure

all necessary and relevant information to enable it to opti-

mally interpret and execute its tasks and responsibilities.

EBN’s articles of association also state that the Executive

Board requires the approval of the Supervisory Board for

certain decisions, such as defining amendments to the

exploitation budget and the investment and financing plan,

appointing proxy-holders and making (dis)investments and

conducting other legal transactions to the value of more

than EUR 50 million.

The report by the Supervisory Board is on page 16 of this

report.

Executive Board

The Executive Board comprises one statutory director

(Jan Dirk Bokhoven) and is responsible for the company’s

general policy and strategy with the company’s associated

risk profile. The Executive Board is also responsible for

achieving the company’s objectives, the results achieved

and the social aspects of business relevant to the company.

Where necessary, the Executive Board submits decisions

to the shareholder or the Supervisory Board for approval.

It also ensures the proper functioning of the internal risk

management and control system.


The Executive Board is assisted by three functional direc-

tors: Thijs Starink (Director Asset Management); Berend

Scheffers (Director Technology) and Jan Boekelman

(Director Finance), who jointly form the team of Directors.

The fourth functional director, who was in function as

Director of Corporate Affairs during 2012, will resign in the

course of 2013. The statutory director is chairman of the

team of Directors.

The organogram is shown on page 43.

The team of Directors’ Regulations, which are approved

by the Supervisory Board, divide the duties among the

members of the team of Directors. The team of Directors

functions on the basis of joint responsibility. Within that joint

responsibility, the tasks are divided into functional areas.

This specific task division is set down in writing. Each mem-

ber of the team of Directors is responsible for preparing

policy matters and decisions in his or her own operational

area. After decision-making within the team of Directors, the

members of the team of Directors ensure the prompt imple-

mentation of the decisions made. In principle, the team of

Directors meets once every two weeks.

In the annual report, the Executive Board gives a descrip-

tion of the primary risks related to EBN’s strategy, the

structure and functioning of the internal risk management

and control systems with regard to the primary risks related

to EBN’s strategy and any shortcomings in the internal risk

management and control systems detected in the financial

year, any significant amendments that have been made and

any important improvements that have been proposed. For

this description, please refer to page 46.

Remuneration, other board memberships

and conflicts of interest

The shareholder determines the policy for the team of

Directors remuneration. The Supervisory Board determines

the actual remuneration of the individual members of the

team of Directors within the frameworks of that policy,

including the team of Directors’ variable remuneration. The

team of Directors’ variable remuneration is explained in the

report by the Supervisory Board.

Jan Dirk Bokhoven is a member of the Supervisory

Board of GasTerra and a member of GasTerra’s board

of delegated supervisory directors.

EBN endorses principle II.3 of the Corporate Governance

Code that any form or suggestion of a conflict of interest

between the company and the team of Directors should

be avoided. The articles of association and the team of

Directors Regulations include a regulation concerning

(potential) conflicts of interest between the team of Direc-

tors and the company. Any (potential) conflicting interest of

material significance must be immediately reported to the

chairman of the Supervisory Board. No incidences were

reported by the team of Directors in 2012.

Even distribution of seats on the team of

Directors and the Supervisory Board

In 2012, no seats became vacant on the team of Directors

or the Supervisory Board that were filled otherwise than

by the reappointment of a supervisory director, to ensure

the continuity of the functioning of the Supervisory Board.

The division of seats between women and men in 2011

therefore remained unchanged in 2012. As soon as a

vacancy arises that is not filled by reappointment, action is

taken to achieve a division complying with article 2:276 of

the Dutch Civil Code.


External auditors

The shareholder is responsible for appointing the external

auditors, with the Supervisory Board having a right of nomi-

nation. In 2011, Ernst & Young was appointed to audit the

financial statements for the years 2012, 2013 and 2014.

Code of conduct, complaints board

and confidant(e)

As we attach importance to transparency and clarity

externally, that also applies within the confines of our or-

ganisation. EBN has a code of conduct that is accessible

and applicable to all employees. This provides a guideline

for making personal choices and individual decisions. We

also use the code of conduct to test the actual conduct

of the company and its employees. In the event of internal

complaints, employees can approach a confidant(e) or

the complaints board. Neither the confidant(e) nor the

complaints board received or dealt with any complaints in

2012. The code of conduct is available at

www.ebn.nl/documents/gedragscode_EBN.pdf

Regulations protecting whistle-blowers

On the basis of the regulations protecting whistle-blowers,

employees can report any alleged abuse to the Executive

Board or the Supervisory Board. No alleged incidences of

abuse were reported in 2012. The regulations protecting

whistle-blowers are available at

www.ebn.nl/documents/klokkenluidersregeling_EBN.pdf

Application of the Corporate Governance Code

As EBN qualifies as a state participation, the company

adheres to the government’s policy, which stipulates that

state participations must follow the Corporate Governance

Code. Although EBN is not a listed company and is not

obliged to apply the code for that reason, it does endorse

the Corporate Governance Code principle that transparency

towards stakeholders is crucial. We do, accordingly, follow

a number of the code’s principles(1), whereby, however,

not all best practice provisions included in these Corporate

Governance Code principles are applicable to EBN. The

specific principles and best practices we do follow have

been elaborated upon in EBN’s articles of association

and regulations are a conduct guideline for the Executive

Board, the Supervisory Board and the shareholder. You

can read the full Corporate Governance Code at

http://commissiecorporategovernance.nl

Risk managementRisk management is an essential part of EBN’s operational

management. It enables our organisation to constantly

maintain a good overview of the strategic and operational

opportunities and risks, and respond effectively to them.

When identifying these opportunities and risks, we do not

rely solely on structural elements, such as analyses and

reports; we also focus specifically and consistently on the

risk awareness and integrity within the organisation.

Risk management structure

To structure and manage our operational activities, we

use the ‘EBN Framework’. This consists of four individual

pillars, within which various activities are identified and

carried out coherently. Risk management constitutes a

fundamental, integral part of the entire framework. In es-

sence, the aim is:

— to analyse opportunities and risks based on the organi-

sation’s strategy

— to formulate and implement control regulations

— to test the effectiveness of the control measures

The figure on page 46 represents the EBN Framework,

including the major risk management elements per pillar.

(1) EBN complies with the following principles of the Corporate Governance Code: II.1 Executive Board: role and procedures, II.3 Executive Board: conflicts of interest, III.1 Supervisory Board: role and procedures, III.2 Supervisory Board: independence, III.3 Supervisory Board: expertise and composition, III.4 Supervi-sory Board: the chairman of the Supervisory Board and the company secretary, III.5 Supervisory Board: composition and role of the board’s three key commit-tees, III.6 Supervisory Board: conflicts of interest, III.7 Supervisory Board: remuneration, V.1 Financial reporting, V.2 Role, appointment, reward and performance evaluation of the external auditors, V.3 and V.4 External auditors’ relationship and communication with the company’s bodies.


Risks and opportunities

Based on our organisation’s strategic objectives, the

Executive Board carries out an annual strategic risk analy-

sis, which analyses both the opportunities and risks for

achieving these objectives. The departments within EBN

carry out an annual operational risk analyses. During these

analyses risks are identified and it is assessed whether

these risks are effectively managed. The analysis also

investigate whether opportunities are being adequately

identified and capitalised upon. Both the strategic and the

operational risk analyses were carried out in 2012.

Risk management

To manage risks as efficiently as possible, measures are

formulated and implemented where necessary on the

basis of the strategic and operational risk analyses. These

are then embedded in the EBN working processes, of

which the most important are described in detail and

recorded centrally. The working processes are available to

all employees on our intranet, under ‘Integral Management

System’.

Each year, EBN establishes a working programme and

budget, the WP&B. This defines the ambitions, plans

and activities for that year at both organisational and

Risk management

Risks and opportunities

Vision, mission and

strategy

ControlEffectiveness assurance

Strategic Risk Analysis (SRA)

Operational Risk Analyses (ORAs)

Defined working processes

Planning & control cycle / performance measurement

Policy, regulations, codes

EBN strategy

Annual working programme and budget

Self evaluations

In control statements

Internal audits

Joint venture audits

External audit

Following up internal and external audits


departmental level. The planning and control cycle is used

throughout the year to check the degree to which the

objectives included in the WP&B are being achieved. To

that end, monthly and quarterly management reports are

compiled, which are discussed at various levels within

the organisation. Where necessary, actions can be taken

based on these reports.

Within the framework of risk management, EBN publishes

internal policy documents and internal regulations, such

as the authorisation and procuration regulations, on its

intranet, making them accessible and available to all

employees.

The effect of control measures

The design and operating effectiveness of the control

measures is tested annually. This was done in 2012,

as usual, through open, informal sessions, in which the

department manager carries out a self-evaluation of the

major control measures with his or her staff and discusses

their design and operating effectiveness. Where necessary,

concrete actions are defined for improving the control

level. The results of the self-evaluations are reported to the

Executive Board, with the department managers issuing

an ‘in control statement’. This states that the major risks

in their area of responsibility have been identified and

explains whether they are being adequately managed.

In 2012, like every year, a number of internal audits were

carried out. These are aimed at evaluating the quality and

effectiveness of important working processes and/or a

number of specific themes within those working pro-

cesses. In 2012, internal audits were carried out for the

salary administration and processing, integrity and system

security.

The findings of these audits are presented and explained

to the Executive Board and the most important points are

discussed with the Supervisory Board’s audit committee.

The internal audits also resulted in findings in the year un-

der review. Actions have been defined to deal with them,

‘owners’ are appointed and end dates determined. The

team of Directors periodically monitors the implementation

of the actions.

In addition to internal audits, in 2012 EBN also conducted

a financial audit of the costs charged on to our organisa-

tion within the framework of various partnerships.

Financial markets

To achieve our strategic objectives, we depend on good

access to the capital markets, effective currency and inte-

rest rate risk management and sound creditworthiness of

our financial counterparts. How these aspects are managed

are described starting page 78 of the annual report.

Risk profileEach year, EBN does its utmost to achieve its strategic

objectives for the short and long term. Naturally, it is

inevitable that risks and uncertainties occur that affect the

actual execution of these plans to one degree or another.

The major and most topical of these are described below.

Support for gas and oil production

It is essential to have sufficient societal support for natural

gas and oil exploration and production. EBN therefore

attaches great value to clear communication on the role of

natural gas in the Netherlands. We also feel it is important to

inform stakeholders proactively, factually and transparently

regarding specific activities and to use actual projects to

demonstrate in practice how the production of natural gas


can be embedded into the natural living environment. This,

we do by listening to and learning from stakeholders. We

also encourage a safe production process that minimises

environmental impact.

Share of gas in the energy mix

Natural gas potentially plays an essential role in the transi-

tion to the use of renewable energy sources. Natural gas

is the cleanest fossil fuel and, moreover, it forms a natural

combination with renewable energy, such as solar and

wind power, as it is flexibly deployable.

However, with increasing energy production from coal,

as a result of the relatively low coal price, there is a risk of

natural gas’ potential role not being realised. EBN there-

fore considers it important to convey the potential and

importance of natural gas in the energy transition and

enter into broad social dialogue on the topic.

Investment climate and critical infrastructure

If the investment climate for natural gas and oil exploration

and production is unfavourable, oil and gas companies

will increasingly shift their priorities to countries where they

can earn a better return on investment. That also means

the Netherlands are unable to attract sufficient new inves-

tors. The result will be lower investments in Dutch gas and

oil production in general and in the application of new in-

novative technology in particular. Without the necessary in-

vestments, the existing infrastructure will also be removed

prematurely. For offshore gas production, it is essential

that the critical infrastructure will be retained as long as

possible, to facilitate the development of new fields.

Otherwise, there is a risk that the level of natural gas and

oil production will trail behind in the long term. EBN will in-

vestigate the possibilities for further optimising the invest-

ment climate and, together with the government, mobilise

the sector and knowledge institutions to achieve this aim.

We will also actively draw national and international at-

tention to the possibilities for natural gas exploration and

production in the Netherlands.

External factors

If an extended period of low market prices would occur,

there is a risk of oil and gas companies investing less. EBN

continuously monitors the development of gas prices. EBN

does not, however, take any measures such as hedging

to control the risk of fluctuating market prices. Due to our

low operational cost structure, low market prices have little

effect on EBN’s continuity.

Executive Board statement

The Executive Board is responsible to maintain an adequate

internal control structure and for the evaluating of its

effectiveness. During the financial year, the actual business

performance is periodically compared with the approved

plans and budgets, and discussed during the Executive

Board meetings. The Executive Board declares that the

financial reporting systems operated properly during the

year under review and provide a reasonable degree of

assurance that the financial statements do not contain

any material misstatements.



Team manager for climate and energy at Stichting Natuur & Milieu,

the Netherlands Society for Nature and Environment

gueSt column by ron Wit:

In the Netherlands, the fairy-tale of flexible gas generating

stations and more renewable electricity together determi-

ning a sustainable future has gone up in smoke. In reality,

the electricity sector is not adhering to it and the market

seems to be entirely focusing on coal. In this respect,

there is a gap between the intended transition and the

whims of the market.

ProgressIn the Netherlands, we are always talking about objectives.

We talk about the 16% renewable energy target in terms

of ‘Isn’t it too much?’ and ‘Won’t it be too expensive?’

But that discussion is not in the interest of the necessary

investment security of a rapidly-growing clean technology

industry. Worse still, it’s an excuse for postponing things

and not making any progress. We need to talk less about

objectives and more about what is really needed.

This year, it would be a good idea for the cabinet to an-

nounce the volumes contracted annually for offshore wind

Energy is important in people’s lives.

Without energy, we cannot drive cars,

we have no light and no water. Major

changes and interventions will there-

fore always affect individuals’ lives.

Moreover, making energy more sus-

tainable leads to energy forms with

a higher impact on the spatial envi-

ronment. All in all, this will involve an

unparalleled energy transition


“We are champions when it comes to talking about objectives, but we are not making any progress.”

energy generation. That would give a tremendous boost

to the sector, as companies can then be sure there will

be sufficient volume in the market to justify innovation and

investment. This confidence is key. Moreover, there is suffi-

cient money reserved in the coalition agreement to finance

the unprofitable top of such a contracting plan. Naturally,

it’s good that an Energy Agreement is being developed for

up to 2030 and beyond, but we should not let that distract

us from what needs to be done today. We are champi-

ons when it comes to talking about objectives, but not in

acting upon them.

Bogged downI had the privilege of being involved in the process for

the energy agreement. I have always wondered how the

Netherlands can have remained stationary for the past ten

years when it comes to sustainability. I think it’s because

everyone talks about technology and tools, but when it co-

mes down to it we get bogged down. In this country, we

always pay too much attention to content and too little to

the underlying interests. Also today, there is too much talk

of content and figures, while we are unwilling or unable

to quantify the interests and find out more about them

from each other. Dare to agree to a second best; 100%

agreement may not be able to muster sufficient support.

An analysis has never been made of why we fail to make

progress together, but these are largely the reasons.

Only if we stand shoulder to shoulder and bridge the gap

between our mutual interests will we really move forward.

Competitiveness The major challenge at the moment is energy saving: eve-

ryone is for it, but nobody is really doing it. The risk is that

we only pay lip service. I consider it a strategic loss that

energy saving is primarily seen as a means to achieving

the climate objectives. It means we are not benefiting fully

from the value it can offer our economy. We should see

it from an economic point of view: our level of energy ef-

ficiency is among the worse in Europe and is deteriorating.

This affects our competitiveness and therefore our eco-

nomy. We have to shift to a situation where energy saving

is an economic objective, a business case.

Leading in terms of climate policy can harm our compe-

titive position. But when it comes to energy saving, the

opposite applies. If the rest of the world is doing little when

it comes to climate policy, then fossil fuel prices will rise

and we can earn a lot of money with energy saving. The

payback time for energy-saving investments then beco-

mes shorter and the benefits will outweigh the costs for

the country.

Dream will sufferWe have to take care that natural gas as a transition fuel

does not become a marketing concept – a good story

without anything to back it up. Admittedly, natural gas is

flexible, but that alone is not enough to earn it a sustai-

nable image. In that respect, the gas sector will have to

do more to realise the importance of natural gas in the

transition. In theory, it can play an extremely important role

but, as I said, the market is inexorable. So what do you do

then? Look at the present situation: idle gas generating

stations, coal-fired stations running full blast. It’s high time

that the established gas sector dared to take a political

stand: “We want substantially higher CO2 prices!” Other-

wise, your dream will suffer.


1973

founding of dSm aardgaS b.V.


financial StatementS 4


The Executive Board has prepared and, by resolution

of 20 March 2013, formally approved the financial state-

ments of EBN B.V. (EBN) for the 2012 financial year.

The financial statements were subsequently submitted to

the Supervisory Board. EBN is a private limited company

with limited liability, based and with its business premises

in the Netherlands and with its registered office in Utrecht.

EBN was established on 2 January 1973 in Maastricht.

Pursuant to Article 20.2 of the articles of association the

Supervisory Board also provides a preliminary recommen-

dation to the shareholders. The financial statements will

be submitted to the General Meeting of Shareholders on

18 April 2013, where they will be adopted and subse-

quently published. All shares in EBN are held by the

Dutch State.

The consolidated financial statements of EBN for the

2012 financial year include the company and its subsi-

diary EBN Capital B.V. (created on 15 November 2012

from the merger of K13 Extensie Beheer B.V. and F3/

A6 Extensie B.V.) and have been prepared in accordance

with the International Financial Reporting Standards (IFRS)

and interpretations of the International Financial Reporting

Interpretations Committee (IFRIC) as applicable on 31

December 2012 and as adopted by the European Union

and section 9, Book 2 of the Dutch civil code.

The consolidated financial statements incorporate the

financial statements of EBN and the entities over which

EBN has control. EBN has control of a subsidiary if EBN

is able to determine the subsidiary’s financial policy and

corporate policy in order to obtain benefit from its activi-

ties. The subsidiary’s financial statements are compiled on

the basis of the same principles as EBN. All transactions,

balances, assets and liabilities within the Group are elimi-

nated on consolidation level. The results of the subsidiaries

acquired or hived off in the course of the year are entered

in the consolidated profit and loss account from the date

of acquisition or until the date of hiving off, as appropriate.

The financial statements of EBN pertain mainly to EBN’s

share in joint ventures in the field of oil and gas production

in the Netherlands and the Dutch part of the continental

shelf. The information shown relates to EBN’s share in

the assets and liabilities, as well as in the revenues and

expenses of such joint ventures. EBN also participates

in a number of companies.

Joint venturesJoint ventures are defined as contractual or other company

cooperation agreements with partners with whom EBN

jointly performs operations. These operations use assets

that are jointly controlled by EBN and its partners. EBN

accounts proportionally for these joint assets and related

liabilities, expenses and revenues in the financial statements.

The Maatschap Groningen [Groningen Partnership] is the

main joint venture. In total, EBN participates in 27 onshore

production licences, 101 offshore production licences, 48

exploration licences, the Emmen gas purification plant and

4 underground natural gas storage facilities. The participa-

tion percentages in these joint ventures range from 40%

to 50%. EBN also participates in the K13-Den Helder gas

processing plant and pipeline, the K13-Extension pipeline

(through a subsidiary) and the F3/A6 Extension pipeline

(through a subsidiary).

EBN is the sole shareholder of EBN Capital B.V. as a result

of the above participations in the K13 Extension and F3/

A6 Extension pipelines.

general


AssociatesEBN has a 40% participation in GasTerra B.V. GasTerra

B.V. is seated in Groningen and its core activity is trading

in gas. EBN also has a 45% participation in NOGAT B.V.

and a 12% participation in NGT Extensie. The core activity

of these organisations is gas transport from the North Sea.


The financial statements have been prepared in accor-

dance with the historical cost convention and on going

concern basis, unless stated otherwise.

Conversion of foreign currenciesThe euro is the operating and reporting currency of EBN.

This also applies to its joint ventures. Commercial trans-

actions and borrowings in foreign currencies are shown

in the financial statements at the spot exchange rates

applying on the transaction dates. Balance sheet items

denominated in foreign currencies are converted at the

spot exchange rates applying on the balance sheet date.

Differences in exchange rates resulting from settlement of

these transactions and conversion of balance sheet items

are charged to the profit for the year.

Current versus non-current assets and liabilitiesAn asset is classed as current if it is expected to be rea-

lised within 12 months of the balance sheet date. A liability

or debt is classified as current if it will be settled within 12

months of the balance sheet date.

Property, plant and equipmentTangible fixed assets for production

The tangible fixed asset for gas and oil production and

the other operational equipment are valued at purchase

value minus depreciation and any impairment losses.

Replacement investments constituting an improvement

are capitalised and amortised and identical replacement

investments are charged to the profit and loss account.

The estimated costs of decommissioning, dismantling and

removal of platforms and other installations are capitalised

and amortised as part of the purchase value of the tangi-

ble asset in question.

A tangible asset is no longer included in the balance sheet

once it has been divested or when no future economic

benefits are expected from its future use, or if the licence

is returned or sold. Any profit or loss ensuing from the

asset that is no longer included in the balance sheet is

incorporated into the result.

Exploration assets

EBN capitalises and amortises expenditure on exploration.

Exependitures on the activities listed below are capitalised

and amortised as part of the exploration and evaluation

assets: Acquisition of exploration licences, exploration

drilling, trenching (surveying by means of soil sections),

sampling and activities related to evaluating the technical

and commercial possibilities for extracting minerals.

The costs of the following are not capitalised or amortised:

topographical, geological, geochemical and geophysical

surveys, unless they are related to existing and proven

reserves (e.g. to determine the best place to drill).

If such costs are considered to be part of the partner

reimbursement then they are capitalised and amortised.

Partner reimbursements are generally made when pro-

duction seems feasible. That provides more certainty than

when the surveys are carried out independently.

Exploration wells

Expenses for exploration wells are capitalised (wells under

construction). If an exploration well turns out to be dry,

the costs incurred are charged to comprehensive income.

These assets are not depreciated as long as there is no

production from a gas or oil exploration well.

Expenses related to exploration wells that are older than

12 months are charged to comprehensive income, unless:

principleS for the Valuation of aSSetS and liabilitieS and determination of profit


1) they are located in an area where significant capital

expenditure is required before production can com-

mence, and

2) commercially recoverable quantities have been found,

and

3) further exploration or appraisal activities are taking

place, i.e. additional exploration wells are being drilled

or there are definite plans to do this in the near future.

Management regularly evaluates, on the basis of the

above criteria, whether it is still appropriate to capitalise

expenses relating to exploration drilling, and whether the

drilling activities can be continued. Exploration wells older

than 12 months are additionally evaluated to determine

whether any facts or circumstances have changed and

whether the above criteria still apply.

Reimbursement of partners

The costs of reimbursements paid to partners – mainly

exploration costs and interest payments related to proven

reserves – are capitalised and amortised on the basis of

the Unit-of-Production method (see next section for more

information).

Depreciation

Tangible fixed assets for gas and oil production are

depreciated on the basis of the Unit-of-Production (UoP)

method: The ratio between the production in the financial

year and the PRMS reserve classification of proven reserves

(category 1) as at 31 December of the financial year. The

reserves are determined in accordance with the definitions

laid down by the Society of Petroleum Engineers (SPE),

World Petroleum Council (WPC), American Association of

Petroleum Geologists (AAPG) and Society of Petroleum

Evaluation Engineers (SPEE) and are recorded in the

Petroleum Resources Management System. The reserves

are based on the current estimates of EBN’s proven

reserves and production profiles.

Other property, plant and equipment are depreciated on

a straight line basis over their estimated useful economic

life. For trunk transport pipelines and facilities for the

underground storage of natural gas (UGSs), an economic

life of ten years is assumed. Land is not depreciated. The

estimated remaining economic life of this property, plant

and equipment is tested annually, taking into account

economic and technological obsolescence and normal

wear and tear.

Capital expenditure and wells under constructionCapital expenditure and wells under construction are not

depreciated.

Financing costs of projectsFinancing costs of projects are capitalised. The interest

rate used for the financial year is based on the average

interest rate applying on long-term borrowings in the past

financial year.

AssociatesAn associate is an interest in an entity on which EBN can

exert significant influence, but over which it cannot exer-

cise decisive control. Associates are shown in accordance

with the equity method. This means that EBN’s share in

an associate is shown as EBN’s share in the net assets of

this entity, less any impairment. EBN’s share in the profit or

loss of the associate is charged to comprehensive income.

If EBN’s share in the loss of an associate exceeds the

carrying amount of that associate, including any other


receivables, the carrying amount is reduced to nil. No

further losses are accounted for unless EBN has assu-

med responsibility for the associate through a guarantee

or other commitments. Unrealised gains and losses on

transactions with associates are eliminated in proportion to

EBN’s share in these associates.

ImpairmentAn assessment is made on each balance sheet date as

to whether the carrying amount of a non-current asset

(property, plant and equipment or associate) exceeds its

realisable value (the higher of the indirect and direct reali-

sable values). If so, the value of the asset will be deemed

to be impaired. If an asset does not generate sufficient

independent cash flow, the realisable value is determined

for the cash-generating unit to which the asset belongs.

A typical EBN property, plant and equipment type cash-

generating unit is a concession. To determine the indirect

realisable value, estimated future cash flows are discoun-

ted at a rate before taxes, on the basis of the market

interest rate, plus a mark-up for the asset’s specific risks.

EBN uses the WACC (Weighted Average Cost of Capital)

for this calculation.

If the realisable value of an asset is lower than the car-

rying amount, the carrying amount will be reduced to the

realisable value. Impairment can be reversed, either wholly

or partially, in the event of a change in the estimate that is

of significance for determining the realisable value.

Impairment is shown as a separate item in the statement

of comprehensive income.

InventoriesInventories of gas stored underground and materials and

equipment are shown at the lower of average purchase

prices or net realisable values. Inventories of above-ground

condensate and oil are shown at their net realisable values

at the year-end.

ReceivablesReceivables are shown at amortised cost less any amount

deemed necessary for bad and doubtful debts. On first

recognition, receivables are shown at fair value.

Cash and cash equivalentsCash and cash equivalents are cash in hand, bank balan-

ces and deposits at banks with a remaining term to matu-

rity of less than three months. Amounts owed to banks are

shown as current liabilities.

Shareholder’s equityEBN’s shareholder’s equity consists of share capital and

any dividend declared. The Dutch State is EBN’s sole

shareholder. The dividend payable to this shareholder is

shown as a liability in the period for which it is due, in ac-

cordance with EBN’s articles of association. An exception

to this rule is made for the proposed final dividend, which

does not become a liability until it has been approved by

the General Meeting of Shareholders.

ProvisionsProvisions are shown in the balance sheet if the following

conditions are satisfied:

1) there is a legal or actual obligation as a consequence

of an event in the past, and

2) it is likely that assets will be withdrawn from the com-

pany in order to meet this obligation, and

3) the amount of the obligation can be reliably estimated.

If the effect of the time value of money is material, provisi-


ons are determined by calculating the present value of the

forecast cash flows at a discount rate before tax. Once

the present value has been calculated, any increase in

provisions as a result of the passing of time is shown as

interest expense. The provision for deferred tax liabilities is

not discounted.

The provision for decommissioning and restoration costs

is designed to cover the expected estimated costs of

decommissioning, dismantling, and land restoration on the

basis of present-day requirements, technology and price

estimates. The amount of this provision is based on infor-

mation provided to EBN by the operators. Any changes in

this information will, after EBN has made its own assess-

ment, generally result in a corresponding change in the

capitalisation of decommissioning and restoration costs of

the relevant property, plant and equipment. The provision

for ground subsidence is designed to cover certain additi-

onal liabilities arising during the production phase.

LiabilitiesOutstanding borrowings are shown at amortised cost. On

first recognition, such items are shown at fair value less

costs. Borrowings in foreign currencies are converted at

the exchange rates applying on the balance sheet date.

Premiums or discounts on borrowings are amortised

during the term to maturity of the loan concerned. Interest

expense is charged to the result in the period to which it

pertains, using the effective interest rate method.

PensionsEBN provides a defined benefit pension scheme, which is

managed as part of the ABP pension fund. In its financial

statements EBN treats the scheme as a defined contribution

pension scheme because the pension fund is unable to

provide the information required to determine and specify

EBN’s share in the underlying pension obligations, fund

investments and costs of the scheme in a consistent and

reliable manner.

Contingent assets and liabilitiesContingent assets and liabilities are not shown in the

balance sheet.

Emission rightsAs a result of its interests in the various joint ventures, EBN

must comply with legislation designed to reduce green-

house gas emissions. The operator trades the emission

rights on behalf of the joint venture partners.

The operator reserves emission rights in order to be

able to satisfy delivery obligations. These rights are not

shown in the balance sheet. Income is reported when the

operator sells EBN’s share in surplus emission rights. If the

operator has to purchase additional emission rights, EBN

records an expense item to the extent of its share.

Net salesNet sales from the sale of gas, oil and condensate are ac-

counted for at the time of delivery, which is when owner-

ship of and the risks associated with the delivered goods

pass to the buyer. Revenues from oil and gas production

generated from assets in which EBN participates with

other producers are shown in proportion to EBN’s relative

interest in these assets.

Operating expensesExpenses are determined on the basis of historical costs.

These include the share in the expenses of the joint ven-

ture that corresponds with EBN’s interest, as well as the


costs of managing the joint venture. Operational costs also

include levies out to the Dutch State.

Financial income and expenseInterest income and interest expense are shown on a time-

proportionate basis. Interest expense also includes interest

accrued on provisions.

Share of profit from associates The share in the profit from associates is shown as the

share of the profit for the year under review corresponding

with EBN’s interest, after deduction of taxes.

TaxesTaxes on profits are determined in accordance with the

balance sheet method. Tax liabilities are specified in the

statement of comprehensive income except insofar as

they relate to an item included in other comprehensive

income.

Current tax expenses are taxes that are expected to be

payable on the taxable profit for the year, based on the

tax rates applying on the balance sheet date, net of any

adjustments for taxes payable in respect of previous years.

Deferred tax assets and liabilities are shown on the basis

of the expected fiscal consequences of temporary dif-

ferences between the fiscal and commercial carrying

amounts of assets and liabilities. Deferred tax assets and

liabilities are calculated on the basis of the tax rates that

are applicable or materially determined on the balance

sheet date, and in accordance with the tax regulations

expected to apply when the specific deferred assets and

liabilities are settled.

Financial derivativesFinancial derivatives are shown at fair value on initial

recognition and then at the current fair value prevailing on

each subsequent balance sheet date. Any resultant gains

or losses are charged to comprehensive income. EBN

does not apply hedge accounting.

International Financial Reporting Standards (IFRS) The 2012 financial statements take into account the conse-

quences of the following standard, the application of which

has been in force since the start of the 2012 financial year:

— IFRS 7 Financial Instruments: Disclosures - Amendment

to Disclosures

EBN has opted not to apply the following standards,

amendments to standards and interpretations which have

not yet come into force or which have not yet been adop-

ted by the European Union:

— IFRS 9 Financial Instruments

— IFRS 10 Consolidated Financial Statements

— IFRS 11 Joint Arrangements

— IFRS 12 Disclosure of Interests in Other Entities

— IFRS 13 Fair Value Measurement

— IAS 1 Presentation of Financial Statements

— IAS 12 Income Taxes - Recovery of Tax Assets

— IAS 16 Property Plant and Equipment

— IAS 19 Employee Benefits

— IAS 28 Investments in Associates and Joint Ventures

— IAS 32 Offsetting Financial Assets and Financial

Liabilities & Financial Instruments, Presentation

— IAS 34 Interim Financial Reporting

— IFRIC 20 Stripping Cost in the Production Phase of

a Surface Mine


1975

Start offShore gaS production


1989

change of name: dSm aardgaS becomeS ebn


EBN is investigating the consequences of the standards,

amendments to standards and interpretations. On the

basis of the provisional results, EBN does not expect

the application of these new standards, amendments to

standards or new IFRIC interpretations to have any mate-

rial consequences for the company’s financial statements

in future financial years.


conSolidated Statement of comprehenSiVe income

In EUR million

note 2012 changes in relation to 2011 2011

net sales 2 8,528 20% 7,103

levies 3 3,801 2,964

operational costs 4 797 658

depreciation and amortization 5 745 617

operating expenses 5,343 26% 4,239

operating profit 3,185 11% 2,864

financial income 6 99 139

financial expenses 6 -201 -232

share of profit from associates 7 48 53

pre-tax profit 3,131 11% 2,824

taxes 8 -771 11% -693

net profit 9 2,360 11% 2,131

other comprehensive income - -

total comprehensive income 2,360 11% 2,131


conSolidated balance Sheet

In EUR million

assets note year-end 2012

year-end 2011 liabilities note year-end

2012year-end

2011

non-current assets shareholder’s equity 14

property, plant and equipment 10 3,911 4,206 share capital 128 128

associates 11 112 113 retained earnings 72 76

4,023 4,319 200 204

non-current liabilities

provisions 15 1,957 2,033

deferred tax liabilities 8 135 120

borrowings 16 1,652 1,733

other 17 16 16

3,760 3,902

current assets

inventories 12 40 68 current liabilities

receivables 13 1,079 1,085 borrowings 16 373 713

deferred tax credits - 80 tax 110 96

derivatives 19 257 327 other 18 1,289 956

cash and cash equivalents 366 9 derivatives 19 33 17

1,742 1,569 1,805 1,782

total 5,765 5,888 total 5,765 5,888


Summary of changeS in Shareholder’S equity

In EUR million

The retained profit at year-end 2012 of EUR 72 million represents the proposed final dividend. Total earnings per share for 2012 amounted

to EUR 8,288, which was an increase of 11% in relation to 2011.

For more information, please refer to note 14.

share capital

retained earnings

total equity

balance as at 1 January 2011 128 46 174

net profit - 2,131 2,131

other comprehensive income - - -

total comprehensive income - 2,131

final dividend 2010 - -46 -46

interim dividend . -2,055 -2,055

balance as at 31 December 2011 128 76 204

net profit - 2,360 2,360

other comprehensive income - - -

total comprehensive income - 2,360 2,360

final dividend 2011 - -76 -76

interim dividend - -2,288 -2,288

balance as at 31 December 2012 128 72 200


conSolidated Statement of caSh floWS

In EUR million

2012 2011

operating activities

net profit from continuing activities 2,360 2,131

conversion to net cash from operating activities

- income from participations -48 -53

- depreciation and amortization 745 617

- change in provisions 64 19

- writing off dry wells 50 28

- interest - charged to comprehensive income 97 93

- taxes - charged to comprehensive income 771 693

conversion to net cash provided by operating activities

- change in working capital - inventories 28 -29

- receivables 6 159

- current liabilities (excluding loans,

debts to credit institutions and profit distribution

79 -393

- withdrawals provision -13 -

- interest - received 57 45

- paid -78 -69

- taxes - received 80 0

- paid -753 -717

1,085 391

net cash from operating activities 3,445 2,522

investing activities

property, plant and equipment -621 -611

dividend received 48 53

kasstroom aangewend voor investeringsactiviteiten -573 -558

net cash used in investing activities

profit distribution -2.102 -2.320

loans taken up 300 415

loans repaid -289 -

change in debts to credit institutions -425 -79

net cash from financing activities -2,516 -1,984

change in cash and cash equivalents 357 -20

balance cash and cash equivalents at 1 January 9 29

balance cash and cash equivalents at 31 December 366 9


noteS to the conSolidated financial StatementS

(1) General informationAll amounts in these explanatory notes are in millions of

euros unless otherwise stated.

The company profit and loss account

As permitted by section 402, Book 2 of the Dutch Civil

Code, the company profit and loss account is presented

in a condensed format.

Estimates and assessments

Estimates and assessments have to be made in the pre-

paration of the financial statements. These have conse-

quences for the amounts reported for assets and liabilities,

income and expenditure items and the related reporting of

contingent assets and liabilities on the date of the financial

statements. Results can be influenced by such estimates

and assessments. In those cases, these explanatory notes

set out the principles that management considers to be

most important and that are usually the most difficult to

estimate due to intrinsic uncertainties.

Decommissioning and storage costs

The provision in the balance sheet for decommissioning

and storage costs and the capitalisation and amortisation

of those costs is based on information from operators

and our own analyses. For further explanation of how that

provision is calculated, please refer to the “Principles for

the valuation of assets and liabilities and determination of

profit”, paragraph “Provisions”, on page 59.

Reserves

EBN determines the gas and oil reserves in accordance

with definitions set down by SPE, WPC, AAPG and SPEE

in the PRMS.

Realisable value

The estimation of the realisable value of assets is partly

based on the reserves, production profiles, estimated

future sales prices and the WACC.

The Executive Board emphasizes that future events may

differ from projections and that estimates have to be

adjusted regularly.


noteS to the Statement of comprehenSiVe income

(2) Net salesEBN performs one main activity: exploration for and

production of natural gas and oil. All sales are realised in

the Netherlands. The assets in which EBN participates are

also located in the Netherlands. Information on the main

debtors can be found in note 22.

Net sales in 2012 from ordinary activities amounted to

EUR 8,528 million, representing an increase of EUR 1,425

million in relation to 2011 (20%).

The increase in sales was mainly due to higher sales pri-

ces (18%) and higher gas sales (2%). Sales volumes for oil

and condensate were also higher than in 2011.

(3 and 4) Levies and operational costs

In EUR million 2012 2011

levies 3,801 2,964

operational costs 797 658

Levies were EUR 837 million (28%) higher than in 2011.

This item mainly comprises the special payments made to

the Dutch State in respect of production from the Gro-

ningen field in 2012, i.e. the MOR payments, amounting

to EUR 3,668 million and the State’s share of EUR 126

million. The increase in payments in 2012 was primarily as

a result of higher sales volumes and a higher average gas

price.

The operational costs chiefly concern production and

transport costs.

At year-end 2012, one person had been seconded from

GasTerra to EBN. The total wage costs have been inclu-

ded in the operational costs. In 2012, these amounted to

EUR 8.2 million (2011: EUR 8.6 million), of which EUR 6.4

million gross wages (2011: EUR 6.6 million), EUR 0.5 mil-

lion social charges (2011: EUR 0.3 million), EUR 1.2 million

pension costs (2011: EUR 1.1 million) and EUR 0.1 million

other costs (2011: EUR 0.5 million).

As at the balance sheet date, the company did not have

any contractual obligations – other than the possibility of

higher contributions in future – to pay additional amounts

in the event of the pension fund being in deficit.

(5) Depreciation and amortization


depreciation of property, plant and equipment 574 565

depreciation of property, plant and equipment by reason of decommissioning and restoration

171 52

total 745 617

The higher depreciation and amortisation costs were

primarily caused by the fact that in 2011 there was a

substantial addition to the capitalised and amortised

decommissioning and storage costs. This led to higher

depreciation costs in relation to 2011, at EUR 128 million.

For further information please refer to note 10.


(6) Financial income and expense


interest income 4 7

interest income on financialinstruments at fair value via the result

43 40

income on financial instruments at fair value via the result 25 90

other financial income 27 2

total financial income 99 139

interest expenses -43 -40

interest expenses on financial instruments at fair value via the result

-59 -50

expenses on financial instruments at fair value via the result -54 -46

interest expense on discounted provisions -45 -25

other financial income and expenses - -71

total financial expenses -201 -232

net financing costs -102 -93

Despite the higher amount of cash available in the year

under review, interest income was lower than in 2011 as a

result of lower market interest rates.

Interest expenses relate to expenses for short-term and

long-tem loans.

In addition to the interest result, income and expenses on

financial instruments relate among others to the valuation

results for non-current loan-related derivatives.

(7) Result for associates


GasTerra B.V. 14 14

NOGAT B.V. 26 32

NGT-Extensie 8 7

total 48 53

(8) Tax


current tax expenses 759 622

deferred tax expenses arising from temporary differences 12 71

total 771 693

At 25.0%, the effective tax burden for 2012 was the same

as in 2011.

In 2012, the nominal rate for corporate tax in the Nether-

lands was 25.0% (2011: 25.0%).


The balance of deferred tax assets and tax liabilities rose

by EUR 15 million as a result of the following changes:


balance at 1 January

deferred tax assets 102 19

deferred tax liabilities -222 -67

total -120 -48

movements as a result of:

- differences between commercial and fiscal valuation of property, plant and equipment

79 -155

- differences between commercial and fiscal valuation of provisions -94 83

balance at 31 December -135 -120

of which:

- deferred tax assets 8 102

- deferred tax liabilities -143 -222

movement in assets -94 83

movement in liabilities 79 -155

Deferred tax assets and liabilities include future tax assets

and liabilities arising from temporary differences between

the amounts calculated in accordance with the commer-

cial principles and those calculated in accordance with

fiscal standards.

(9) Net profitThe net profit for 2012 from continuing operations was

EUR 2,360 million, EUR 229 million (11%) higher than

for 2011.


noteS to the conSolidated balance Sheet

(10) Property, plant and equipment

In EUR million totalproduction, transport and storage facilities

drilling reimbursements

capitalisation of decommissioning and storage costs

capital expenditure & wells under construction

balance at 1 January 2011

cost 11,327 5,948 2,625 1,428 631 695

depreciation and amortization 7,763 4,401 1,817 1,177 368 -

carrying amount 3,564 1,547 808 251 263 695

changes in 2011

cost:

- capital expenditure 463 239 49 - - 169

- capital expenditure on exploration drilling 148 - 131 - - 17

- commissioning - 329 245 - - -574

- capitalisation of borrowing costs 1 - - - - 1

- capitalisation of decommissioning and storage costs 675 - - - 675 -

- decommissioning -20 -20 - - - -

- writing off dry wells -28 - - - - -28

depreciation and amortization:

- depreciation and amortization -617 -298 -242 -26 -51 -

- decommissioning 20 20 - - - -

642 270 183 -20 624 -415

balance at 31 December 2011

cost 12,566 6,496 3,050 1,434 1,306 280


carrying amount 4,206 1,817 991 231 887 280

changes in 2012

cost:

- capital expenditure 567 89 177 5 - 296

- capital expenditure on exploration drilling 54 - - - - 54

- commissioning - 55 143 - - -198

- capitalisation of borrowing costs 3 - - - - 3

- capitalisation of decommissioning and storage costs -126 - - - -126 -

- decommissioning - - - - - -

- writing off dry wells -48 - -40 - - -8

depreciation and amortization:

- depreciation and amortization -745 -290 -260 -24 -171 -

- decommissioning - - - - - -

-295 -146 20 -19 -297 147

balance at 31 December 2012

cost 13,016 6,640 3,330 1,439 1,180 427


carrying amount 3,911 1,671 1,011 212 590 427


At EUR 621 million, capital expenditure in 2012 was 2%

higher than in 2011 (EUR 611 million). That expenditure

was split between onshore at EUR 204 million (2011:

EUR 228 million) and offshore at EUR 417 million (2011:

EUR 383 million).

In 2012, the decrease in the capitalisation and amortisation

of the estimated decommissioning and storage costs for

installations amounted to EUR 126 million (2011: plus EUR

675 million). For further information please refer to note 15.

As a result of the application of IAS 23 “Borrowing Costs”,

for the Bergermeer project and Norg gas storage project,

interest is added to the capitalised and amortised amount

at 3.4%, bringing the amount of financing costs capitalised

and amortised up to EUR 3 million (2011: EUR 1 million).

(11) AssociatesEBN defines as associates its 40% participation in GasTerra

B.V., its 45% participation in NOGAT B.V. and a number

of smaller participations, including the 12% participation

in the NGT Extensie. The latter participation is included

under ‘other’. Associates are shown on the basis of the

equity method. The profits are distributed annually, and so

there is no change in the amounts for which the participa-

tions are shown in the balance sheet.

in EUR million GasTerra NOGAT other2012total GasTerra NOGAT other

2011total

balance at 1 January 86 13 14 113 86 13 14 113

share in profit 14 26 7 47 14 32 6 52

dividend received -14 -26 -8 -48 -14 -32 -6 -52

balance at 31 December 86 13 13 112 86 13 14 113

The following table shows summarised financial information on the GasTerra B.V., NOGAT B.V. and NGT Extensie associates

on a 100%-basis.

in EUR million GasTerra NOGATNGT-

Extensie2012total GasTerra NOGAT

NGT-Extensie

2011total

Balance sheet total assets current 3,697 67 - 3,764 4,017 84 - 4,101

non-current 37 52 13 102 33 44 14 91

liabilities current 3,518 11 1 3,530 3,834 7 1 3,842

non-current - - - - - - - -

net sales 23,381 88 95 23,564 21,095 106 78 21,279

net profit 36 58 95 189 36 71 74 181


(12) Inventories


materials 6 5

gas 27 61

condensate and oil 7 2

total 40 68

(13) ReceivablesThese can be specified as follows:


accounts receivable from associates 1,005 873

other trade accounts receivable 22 39

total trade accounts receivable 1,027 912

other receivables and deferred items 52 173

total 1,079 1,085

Receivables fell by EUR 6 million (1%), chiefly as a result

of lower sales volumes in the fourth quarter of 2012 in

relation to the fourth quarter of 2011.

Associates relates to GasTerra B.V., in which EBN has a

40% participation. For information on credit risks please

refer to note 19.

(14) Shareholder’s equity


balance at 1 January 204 174

total profit 2,360 2,131

final dividend previous year -76 -46

interim dividend -2,288 -2,055

balance at 31 December 200 204

Each month EBN pays the (provisional) profit to the share-

holder, the Ministry of Economic Affairs. These periodic

payments largely determine EBN’s balance sheet structure

and result in the comparatively low amount of the company’s

shareholders’ equity. On the other hand, the company has

very substantial cash flow throughout the year.

The authorised, issued and paid up share capital amounted

to EUR 128 million in 2012 (2011: EUR 128 million) and

comprised 284,750 shares (2011: 284,750 shares), each

with a nominal value of EUR 450. The declared dividend

per share amounted to EUR 8,302 (2011:

EUR 7,378).

The proposed final dividend of EUR 72 million (2011:

EUR 76 million) will be paid out once the General Meeting

of Shareholders has adopted the financial statements. This

amount is the balance of the net profit balance at EUR

2,360 million and the interim dividend already paid out at

EUR 2,288 million. The proposed final dividend has not

been deducted from the shareholders’ equity.


(15) ProvisionsProvisions for decommissioning and restoration costs

cover commitments with terms of 1 to 50 years.

Provisions for ground subsidence also cover commitments

with terms of 1 to 50 years.

The provision for decommissioning and storage costs is

based on information from the operators and our own

analysis and is determined by estimating the costs on

the basis of the current price level, without allowing for

inflation, and stated at the present value with an effective

interest rate of 1.2% (2011: 0.3%). The equivalent of the

provision stated at the present value is included in

tangible fixed assets and depreciated on the basis of the

UoP method. The unwinding of discount of the provision

is calculated based on the nominal interest percentage

of 2.3% (2011: 2.0%).

The total for provisions was reduced by EUR 76 million,

which is the balance of the changes shown below:

in EUR millionDecommissioning

and restoration costs

subsidence total

balance at 1 January 2010 1,276 62 1,338

additions - 5 5

withdrawals -9 -1 -10

revision 675 - 675

unwinding of discount 25 - 25

balance at 31 December 2011 1,967 66 2,033

additions - 19 19

withdrawals -13 -1 -14

revision -126 - -126

unwinding of discount 45 - 45

balance at 31 December 2012 1,873 84 1,957

The reduction in the provision for decommissioning and

storage costs at EUR 94 million was primarily caused by

amending the discount rate to an effective interest rate

of 1.2% (2011: 0.3%).

Additionally, the estimated costs for dismantling and

removing installations have been updated by the increase

in the estimated costs and new insight into the dates for

terminating production.


(16) Current and non-current borrowings

in EUR million 2012 2011

total of which current total of which

current

debenture loans 1,893 373 1,871 288

private loans 132 - 150 -

commercial paper - - 425 425

total 2,025 373 2,446 713

Non-current borrowings

Non-current borrowings in the balance sheet comprise the following:


JPY 5.000 mn 1,59% private loan 2004/2014 44 50

CHF 350 mn 1,75% public loan 2005/2012 - 288

CHF 450 mn 2,75% public loan 2006/2013 372 370



JPY 10.000 mn 1,775% private loan 2007/2017 88 100





CHF 235 mn 0,625% public loan 2012/2019 195 -

CHF 125 mn 1,125% public loan 2012/2024 104 -

total 2,025 2,021

In 2012, one debenture loan of CHF 350 million fell due.

Total borrowings decreased by EUR 421 million (-17%).

This decrease is chiefly the result of the strong increase of

net cash from operating activities in 2012 and as a result

thereof not taking out commercial paper and reducing the

debenture loan position. In 2013, a debenture loan with a

nominal value of CHF 450 million will be repaid. This was

shown in 2012 as a short-term loan.

No security has been provided for the outstanding borro-

wings with a total remaining debt at 2012 year-end of EUR

2,025 million. Clauses are included in the agreements for

these loans that limit the security that can be demanded.


Borrowings in foreign currencies and associated interest

charges have been fully converted into euros by means

of cross-currency interest rate swaps. This neutralises

any currency-fluctuation effects, as shown in the table.

The average interest rate on all long-terms borrowings,

including the effects of the cross-currency interest rate

swaps, was 3.3% (2011: 3.4%). All long-term borrowings

have fixed interest rates. All cross-currency swap borro-

wings also have fixed interest rates, with the exception of

the cross-currency interest-rate swap associated with the

JPY 2004/2014 loan and the JPY 2007/2017 loan.

The following table lists the outstanding debenture loans

and private loans in order of their term to maturity.


within 1 year 372 288

within 1 to 2 years 479 370

within 2 to 3 years - 482

within 3 to 4 years 290 -

within 4 to 5 years 88 288

after 5 years 796 593

total 2,025 2,021

More than 50% of the outstanding non-current borrowings

have remaining terms to maturity of more than three years.

Of the borrowings with remaining terms to maturity of

more than 5 years, a total of EUR 195 million will mature

in 2019, EUR 373 million in 2020, EUR 124 million in 2023

and EUR 104 million in 2024.

(17) Other non-current liabilitiesThis item mainly relates to a debt of EUR 17 million (2011:

EUR 17 million) to the State resulting from the GasTerra

B.V. stock dividend. The Dutch State is entitled to part

of EBN’s entitlement to the GasTerra B.V. dividend in the

event of GasTerra B.V. being liquidated.

(18) Other current liabilities This item can be specified as follows:


trade accounts payable 487 251

interest payments 33 32

levies 679 525

other liabilities 90 148

total 1,289 956

The increase in levies is mainly due to a higher outstanding

MOR obligation.


(19) Risk management

General

The main financial risks for EBN are the liquidity risk, the

credit risk and the market risk (consisting of interest rate risk

and currency risk). EBN’s financial policy focuses on limiting

the effects of currency and interest-rate fluctuations on its

profit. EBN uses financial derivatives to manage interest and

currency risks, specifically those relating to the funding of

its operations. The company does not take any speculative

positions with financial derivatives.

Capital management

EBN aims for continuous good access to the money and

capital markets by means of, for example, prudent financing

policy aimed at maintaining the short and long-term credit

ratings at the highest possible levels. Capital expenditure

decisions are evaluated on the basis of the expected return,

considering EBN’s weighted average cost of capital.

Net liabilities In EUR million 2012 2011

borrowings

non-current borrowings 1,652 1,733

current borowings 373 713

total borrowings 2,025 2,446

cash and cash equivalents -366 -9

financial derivatives -224 -310

net liabilities (A) 1,435 2,127

shareholder’s equity (B) 200 204

gearing ratio A/(A+B)*100% 88% 91%

Liquidity risk

EBN has a commercial paper programme of EUR 2,000

million. This is the same as in 2011. At year-end 2012 no

commercial paper was issued.

The following table shows the expected annual cash flows, along with the interest payable on the borrowings and the costs of

redeeming the associated derivatives:

in EUR million 2011 2011 2010

borrowings interest payment at redemption

cash flow from

derivatives

total cash out

total cash out

within 1 year 713 -58 -713 35 -736 -545

within 1 to 2 years 370 -48 -370 58 -360 -272

within 2 to 3 years 482 -36 -482 131 -387 -325

within 3 to 4 years - -22 - - -22 -376

within 4 to 5 years 288 -22 -288 -4 -313 -11

after 5 years 593 -72 -593 92 -574 -430

total 2,446 -258 -2,446 312 -2,392 -1,959

policy to control financial riSKS


Credit risk

The credit risk to which EBN is exposed consists mainly

of the amount it has on deposit at credit institutions,

investments in money market funds and the market value

of outstanding financial derivatives. EBN limits the credit

risk by only doing business with financial institutions with

high creditworthiness and by setting specific credit limits

for each financial institution, based on the institution in

question’s credit rating. For lending money, the minimum

is a P-1 Moody’s or A-1 Standard & Poor’s short-term

rating and an A2 Moody’s or A Standard & Poor’s long-

term rating. A minimum credit rating of Moody’s Aaa and

Standard & Poor’s AAA applies for money market funds.

If derivative transactions are carried out in the context of

long-tem financing this is only done with a counterparty

with a minimum of A2 Moody’s or A Standard & Poor’s

long-term rating. EBN did not suffer any credit losses in

2012.

Credit risk on receivables

In 2012 EBN made 91% (2011: 91%) of its sales to Gas-

Terra B.V. (long term rating S&P AA+), for which the credit

risk is estimated as low. Amounts owed by GasTerra B.V.

account for 93% (2011: 97%) of total receivables.

Interest rate risk

The objective of EBN’s interest rate risk policy is to limit

interest rate risks arising from the company’s funding and

thus to achieve minimal interest charges. A maximum of

60% of the long-term borrowings and financial derivatives

shall have a variable interest rate in accordance with inter-

nal guidelines. At year-end 2012, 94% of the debt position

was at a fixed interest rate.

The following analysis of the sensitivity of borrowings and

the related financial derivatives to interest rate movements

is based on a direct change of 1 percentage point in the

interest rates for all currencies and maturities as at 31

December 2012. All other variables remain unchanged.

A reduction of 1% in interest rates would result in an

estimated decrease of EUR 13 million in net financing

costs, based on the portfolio of financial instruments at

31 December 2012. An increase of 1% in interest rates

would result in an estimated increase of EUR 12 million in

net financing costs. The main reason for these effects is

that a change in the fair value of derivatives as a result of

a change in interest rate is charged directly to profit.

in EUR million 2011 2011 2010

borrowings interest payment at redemption

cash flow from

derivatives

total cash out

total cash out

within 1 year 372 -54 -372 61 -365 -736

within 1 to 2 years 479 -42 -479 113 -408 -360

within 2 to 3 years - -28 - - -28 -387

within 3 to 4 years 290 -28 -290 -1 -319 -22

within 4 to 5 years 88 -21 -88 27 -82 -313

after 5 years 796 -83 -796 55 -824 -574

total 2,025 -256 -2,025 255 -2,026 -2,392


The following table shows the sensitivity of the fair value of the financial instruments to changes in interest rate as at

31 December 2012.

2012 carrying amount fair value change in fair

value +1%change in fair

value -1%

in EUR million

cash and cash equivalents 366 366 -2 2

receivables 1,079 1,079 - -

current borrowings -373 -378 2 -2

other current liabilities -1,289 -1,289 - -

non-current borrowings -1,652 -1,744 88 -95

cross currency swaps positive used for non-current borrowings 257 257 -12 13

cross currency swaps negative used for non-current borrowings -33 -33 - -

forward exchange contracts used for current borrowings - - - -

totaal -1,645 -1,742 76 -82



value -1%

in EUR million

cash and cash equivalents 9 9 - -


current borrowings -713 -716 2 -2

other current liabilities -956 -956 - -

non-current borrowings -1,733 -1,820 83 -89

cross currency swaps positive used for non-current borrowings 314 314 -17 19

cross currency swaps negative used for non-current borrowings -17 -17 - 1

forward exchange contracts used for current borrowings 13 13 - -

total -1,998 -2,088 68 -71

At year-end 2011, sensitivity of financial liabilities to interest rate changes with regard to the fair value of the financial

instruments ranged between a negative amount of EUR 17 million (+1% change in interest rates) and a positive amount of

EUR 19 million (-1% change in interest rates).


Currency risk

EBN fully hedges currency risks arising from sales, purchases and borrowings at the time that the trade receivables or

trade liabilities arise. At year-end 2012, a currency risk of USD 7 million in respect of trade receivables was hedged

(year-end 2011 none).

Currency risks on short-term borrowings in foreign currencies are hedged with forward exchange contracts. At year-end

2012 no forward currency contracts had been concluded relating to short-term loans issued in foreign currencies (at year-

end 2011 USD 550 million). Currency risks on long-term borrowings in foreign currency are hedged with cross currency

interest rate swaps (see note 16).

The following analysis of the sensitivity of the net debt (including financial derivatives) to fluctuations in exchange rates

against the euro is based on a 10% movement in all exchange rates in relation to the euro compared to their levels at

31 December 2012, with all other variables remaining unchanged. A change of +10% means the euro weakens against the

foreign currencies, while a change of -10% means the euro strengthens against the foreign currencies.



value -10%

in EUR million



current borrowings -373 -378 -43 35

other current liabilities -1,289 -1,289 - -

non-current borrowings -1,652 -1,744 -195 159

cross currency swaps used for non-current borrowings 257 257 150 -123

forward exchange contracts used for current borrowings -33 -33 87 -72

forward exchange contracts used for economic hedging - - - -

total -1,645 -1,742 -1 -1




value -10%

in EUR million



current borrowings -713 -713 -80 65

other current liabilities -956 -956 - -

non-current borrowings -1,733 -1,820 -205 168

cross currency swaps used for non-current borrowings 314 314 190 -155

forward exchange contracts used for current borrowings -17 -17 47 -39

forward exchange contracts used for economic hedging 13 13 48 -39

total -1,998 -2,085 - -

Fair value of financial instruments

The table below summarises the carrying amounts and estimated fair values of financial instruments:

in EUR million31 december 2012 31 december 2011

carrying amount fair value carrying amount fair value

assets

associates 112 112 113 113

current receivables 1,079 1,079 1,165 1,165

financial derivatives 257 257 327 327

cash and cash equivalents 366 366 9 9

liabilities

non-current borrowings 1,652 1,744 1,733 1,820

current borrowings 373 378 713 716

financial derivatives 33 33 17 17

other current liabilities 1,399 1,399 1,052 1,052

Fair values of listed non-current borrowings are based on published rate (level 1 according to IFRS), while the other fair

values are calculated on the basis of the market information available (level 2 according to IFRS). All financial assets and

liabilities at fair values with changes in value recognised in comprehensive income of profit are classified at level 2.


Current receivables, cash and cash equivalents and short-term debts are shown at their carrying amounts. In view of the

short term to maturity of these instruments, these amounts approximate their fair values. The following table summarises the

carrying amounts of financial derivatives, specified according to type and objective:

in EUR million assets liabilities total

cross currency interest rate swaps 314 -17 314

forward currency contracts 13 - 13

total financial derivatives in relation to borrowings 327 - 327

balance as at 31 December 2011 327 - 327

cross currency interest rate swaps 257 -33 224

forward currency contracts - - -

total financial derivatives in relation to borrowings 257 -33 224

balance as at 31 December 2012 257 -33 224



other noteS

* This includes the proportional share of sales in the concessions in which EBN does not, itself, receive the gas but is entitled to a proportional share in the proceeds. GasTerra pays the proceeds directly to EBN.

(20) Rights and obligations not shown in the balance sheet

As indicated in the accounting principles with respect to

the valuation of assets and liabilities and the determination

of the profit, EBN participates in numerous joint ventures.

The basis for this is laid down in agreements of coopera-

tion, from which multi-year financial rights and obligations

arise for the future. As an indication, at the balance sheet

date, the remaining obligations at year-end 2012 for three

large investment projects (Bergermeer gas storage, Q13

Amstel, Norg UGS) amounted to EUR 453 million (2011:

EUR 429 million).

Furthermore, as at 31 December 2012, EBN’s (in)direct

share in proven and probable gas reserves in fields in

which EBN participates amounted to 395 billion m3 GE

(2011: 431 billion m3 GE).

In 2013, NAM will conduct an inventory study in the

Groningen Province regarding the vulnerability of buildings

as a result of earthquakes induced by gas production in

the Groningen field. Where necessary, this study will lead

to preventive measures being taken. It is not possible, at

the moment, to give a reliable estimation of the volume

of expenditure entailed in these measures.

(21) Notes on the statement of cash flows

The statement of cash flows was prepared on the basis of

the indirect method with a comparison made between the

opening and closing balances. Movements not resulting in

an inflow or outflow of cash were subsequently eliminated.

Information on movements in the statement of cash flows

can largely be derived from the statements of movements

in the relevant balance sheet items.

(22) Related partiesGasTerra B.V. and EBN are related parties. EBN has a

total of 78 (2011: 79) contracts with GasTerra B.V. Of the

net sales of EUR 8,528 million, EUR 7,798 million was

generated through GasTerra B.V. (2011: EUR 7,103 million

and EUR 6,488 million respectively). In 2012, receivables

included an amount of EUR 1,005 million (2011: EUR 873

million) for supplies to GasTerra B.V.*

The Dutch State, being the shareholder, can be regarded

as an associated party. All levies, corporation taxes and net

profits are paid to the State. More information can be found

in notes 14 and 18 in these Financial Statements.

(23) Key managementIn 2012, the total remuneration, pension and other labour

costs paid to key management (5 team of Directors

and 4 Supervisory Board) amounted to EUR 1.5 million

(2011: EUR 1.0 million; 3 Executive Board members and

4 Supervisory Board). The total labour costs paid to key

management in 2012 can be specified as follows:

in EUR million 2012

short-term employee benefits 1.2

post-employment benefits 0.3

total 1.5

(24) Events after the balance sheet dateThere were no events after the balance sheet date requi-

ring further disclosure.

Utrecht, 20 March 2013

Executive Board Supervisory Board

J.D. Bokhoven R.M.J. van der Meer


G-J. Kramer



company profit and loSS account


income from participations 56 60

other income after tax 2,304 2,071

net profit 2,360 2,131

other comprehensive income - -

total comprehensive income 2,360 2,131


company balance Sheet

in EUR million

assets note year-end 2012

year-end 2011 liabilities note year-end

2012year-end

2011

non-current assets shareholder’s equity 14

property, plant and equipment 10 3,877 4,196 share capital 128 128

associates 11 112 113 retained earnings 72 76

3,989 4,309 200 204

non-current liabilities

provisions 15 1,932 2,033

deferred tax liabilities 8 135 120

borrowings 16 1,652 1,733

other 17 16 16

3,735 3,902

current assets

inventories 12 40 68 current liabilities

receivables 13 1,079 1,085 borrowings 16 373 713

deferred tax credits - 80 tax 110 96

derivatives 19 257 327 other 18 1,261 956

cash and cash equivalents 347 19 derivatives 19 33 17

1,723 1,579 1,777 1,782

total 5,712 5,888 total 5,712 5,888


noteS to the company financial StatementS

General

EBN’s company financial statements are prepared in

accordance with the principles for financial reporting gene-

rally accepted in the Netherlands and the legal stipulations

regarding the financial statements as defined in Part 9,

Book 2 of the Dutch Civil Code.

To the determination of the accounting principles applied

for valuing assets and liabilities and the determination of

the results of the company financial statements, use has

been made of the option presented in article 2:362, para-

graph 8 of the Dutch Civil Code. The principles for the va-

luation of assets and liabilities and determining the result of

the company financial statements are therefore the same

as those used in the consolidated financial statements.

Participations where any significant influence is exerted on

the commercial and financial policy are valued on the basis

of the net asset value.

The consolidated financial statements have been prepared

in accordance with the International Financial Reporting

Standards (IFRS) as accepted within the European Union

(EU-IFRS) and with section 9, Book 2 of the Dutch Civil

Code. For a description of the principles applied, please

refer to pages 56 to 63.

Company profit and loss account

The company profit and loss account has been formulated

in accordance with the limitations permitted pursuant to

article 2:402 of the Dutch Civil Code.

Other notes

The single balance sheet includes the valuation of the

100% participations, which are consolidated in the

consolidated financial statements. In view of the minimal

differences between the other balance sheet items shown

in the consolidated and company financial statements, for

further information on these items, please refer to the no-

tes of explanation to the consolidated financial statements,

which can be found on pages 68 to 85.

Commitments

General guarantees as referred to in section 403, Book 2,

of the Dutch civil code, have been given by EBN on behalf

of EBN Capital B.V.

Fiscal unity

For corporate Income Tax and Value Added Tax, EBN

forms a fiscal unity with EBN Capital B.V. EBN and her

subsidiary form a fiscal unity and are jointly and separately

liable for the liabilities of the fiscal unity.

Fees paid to external auditors

Fees paid to Ernst & Young, which are included in the

operational costs, amounted in 2012 to:

EUR 782,000 for audit services (company and joint

venture audits) (2011: EUR 629,000), EUR 0 for tax

advice (2011: EUR 0) and EUR 32,000 for other services

(2011: EUR 187,000).

Director’s remuneration

As of 2012, EBN’s statutary Executive Board comprises

one person. Consequentially, for the disclosure of the re-

muneration of Directors in 2012, exemption in accordance

with article 2:383 paragraph 1 of the Dutch Civil Code has

been applied. In 2012 remuneration paid to the Supervi-

sory Board members amounted to EUR 0.1 million (2011:

EUR 0.1 million).


other information

Profit appropriation

Profit appropriation takes place in accordance with what is

defined in article 21 of the company’s articles of association.

To the shareholder:

— part of the profit will be distributed annually as a

special profit distribution;

— the remainder of the profit will be distributed as a

dividend.

Events after the balance sheet date

For more information, please refer to note 24 of these

Financial Statements.

Utrecht, 20 March 2013

Executive Board Supervisory Board

J.D. Bokhoven R.M.J. van der Meer


G-J. Kramer



To: the Shareholder of EBN B.V.

Report on the financial statementsWe have audited the accompanying financial statements

2012 of EBN B.V., Utrecht. The financial statements

include the consolidated financial statements and the

company financial statements. The consolidated financial

statements comprise the consolidated balance sheet as

at 31 December 2012, the consolidated statements of

comprehensive income, summary of changes in sharehol-

der’s equity and statement of cash flows for the year then

ended, and notes, comprising a summary of the significant

accounting policies and other explanatory information.

The company financial statements comprise the company

balance sheet as at 31 December 2012, the company

income statement for the year then ended and the notes,

comprising a summary of the accounting policies and

other explanatory information.

Executive Board’s responsibilityThe Executive Board is responsible for the preparation and

fair presentation of these financial statements in accor-

dance with International Financial Reporting Standards as

adopted by the European Union and with Part 9 of Book

2 of the Dutch Civil Code, and for the preparation of the

report by the Executive Board in accordance with Part

9 of Book 2 of the Dutch Civil Code. Furthermore, the

Executive Board is responsible for such internal control as

it determines is necessary to enable the preparation of the

financial statements that are free from material misstate-

ment, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these finan-

cial statements based on our audit. We conducted our

audit in accordance with Dutch law, including the Dutch

Standards on Auditing. This requires that we comply with

ethical requirements and plan and perform the audit to

obtain reasonable assurance about whether the financial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on

the auditor’s judgment, including the assessment of the

risks of material misstatement of the financial statements,

whether due to fraud or error.

In making those risk assessments, the auditor considers

internal control relevant to the entity’s preparation and fair

presentation of the financial statements in order to design

audit procedures that are appropriate in the circumstan-

ces, but not for the purpose of expressing an opinion on

the effectiveness of the entity’s internal control. An audit

also includes evaluating the appropriateness of accounting

policies used and the reasonableness of accounting esti-

mates made by the Executive Board, as well as evaluating

the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our audit

opinion.

Opinion with respect to the consolidated

financial statements

In our opinion, the consolidated financial statements give

a true and fair view of the financial position of EBN B.V. as

at 31 December 2012 its result and its cash flows for the

year then ended in accordance with International Financial

Reporting Standards as adopted by the European Union

and with Part 9 of Book 2 of the Dutch Civil Code.

independent auditor’S report


Opinion with respect to the company

financial statements

In our opinion, the company financial statements give a

true and fair view of the financial position of EBN B.V. as

at 31 December 2012 and of its result for the year then

ended in accordance with Part 9 of Book 2 of the Dutch

Civil Code.

Report on other legal and regulatory requirementsPursuant to the legal requirement under Section 2:393 sub

5 at e and f of the Dutch Civil Code, we have no defici-

encies to report as a result of our examination whether

the report by the Executive Board, to the extent we can

assess, has been prepared in accordance with Part 9

of Book 2 of this Code, and whether the information as

required under Section 2:392 sub 1 at b-h has been

annexed. Further we report that the report by the Executive

Board, to the extent we can assess, is consistent with the

financial statements as required by Section 2:391 sub 4

of the Dutch Civil Code.

Amsterdam, 20 March 2013

Ernst & Young Accountants LLP

Signed by J.J. Vernooij


2012


Key figureS

in EUR million IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS

2012 2011 2010 2009 2008 2007 2006 2005 2005 2004 2003

number of EBN participations in joint ventures:

- production licences onshore 27 24 23 22 21 20 14 14 14 14 14

- production licences offshore 101 101 103 103 100 95 85 85 85 77 77

- exploration licences 48 47 48 45 41 26 17 19 19 22 26

sales (billion m³, 100%) 73 72 80 70 73 64 66 67 67 72 63

change in % compared to previous year (100%) +1 -10 +14 -5 +11 -3 -1 -7 -7 +15 -4

- sales Groningen (billion m³, EBN share) 19 18 20 15 16 12 13 13 13 13 11

- sales small fields (billion m³, EBN share) 11 12 13 14 15 15 15 15 15 18 15

total sales (billion m³, EBN share) 30 30 33 29 30 27 28 28 28 30 26

average selling price of gas

(€-cents per m³, 35.17 MJ/m³) 26,76 22,63 18,58 20,72 26,91 20,67 21,52 16,46 16,46 13,17 13,88

sales from:

- continuing operations 8,528 7,103 6,486 6,387 8,698 6,090 6,264 4,883 4,883 4,230 3,872

- discontinued operations 3,384 3,384

total sales 8,528 7,103 6,486 6,387 8,698 6,090 6,264 8,267 8,267 4,230 3,872

change from continuing operations in % compared

to previous year 20 10 2 -27 +43 -3 +28 +15 +15 +9 +7

net profit from:

- continuing operations 2,360 2,131 2,076 2,211 3,269 2,367 2,378 1,673 1,637 1,534 1,380

- discontinued operations 2,154 2,154

total net profit 2,360 2,131 2,076 2,211 3,269 2,367 2,378 3,827 3,791 1,534 1,380

net profit from continuing operations

in % of sales 28 30 32 35 38 39 38 34 34 36 36

property, plant and equipment:

- capital expenditure onshore 202 228 224 238 129 277 146 121 121 143 138

- capital expenditure offshore 419 383 383 475 447 405 478 446 446 207 316

- decommissioning and restoration -126 675 57 -163 93 137 273 149

total capital expenditure 495 1,286 664 550 669 819 896 716 567 350 454

depreciation and amortization 745 617 499 462 501 494 403 374 376 337 344

shareholders’ equity 200 204 174 158 160 162 290 237 437 348 329

gearing ratio (%) 88 91 91 93 91 93 86

outside capital 5,565 5,684 5,146 4,520 5,386 4,664 3,902 3,437 2,977 2,730 2,592


Bcm Billion cubic metres.

BOE Barrel of oil equivalent

CCS Carbon capture and storage.

Cluster Location from which multiple wells can be drilled.

Corporate Governance Code (old) Code of Conduct for Companies listed on the stock exchange.

Corporate Governance Code (new) The Dutch Corporate Governance Code of the Corporate Governance Code

Monitoring Committee.

COSO The Committee of Sponsoring Organizations of the Treadway Commission.

CSR Corporate Social Responsibility

Cushion gas Gas that has to be present in a field or storage facility to maintain the pressure.

Dashboard Review of company-specific performance indicators.

Energy mix Proportion of energy used in the Netherlands from different sources of energy.

End-of-field-life Gas or oil field in the final phase of production.

E&P Exploration and production.

EZ Ministry of Economic Affairs.

Fallow Acreage Convenant Covenant, signed on 31 August 2010, for stimulating the exploration for and

production of oil and gas reserves and the storage of minerals in the Dutch part

of the continental shelf, as agreed between the Minister of Economic Affairs,

Agriculture and Innovation and mining companies with operations on the conti-

nental shelf.

Fracking Technique by which fluid is injected under high pressure into stone containing

gas, ‘breaking’ the stone so the gas can be extracted.

Fuel mix Percentage of each fuel source in the total fuels used to generate energy.

Gasgebouw Public-private cooperation in the Groningen Partnership and GasTerra.

Gas Hub European gas-market centre.

Gas Hub Discussion Platform Discussion forum of the Dutch government, the gas industry and knowledge

infrastructure organisations to discuss new initiatives and strategic issues con-

cerning the physical national and international gas-hub infrastructure

Gas deposit Subsurface accumulation of producible gas.

GE Groningen equivalent (m3 gas with a combustion value of 35.17 MJ at 0 degrees

Celsius and 101.325 kPa).

Geothermal energy Thermal energy generated and stored in the Earth.

HR Human Resources.

ICT Information and Communication Technologies.

IFRIC International Financial Reporting Interpretations Committee.

IFRS International Financial Reporting Standards.

gloSSary


IMS Integral Management System.

JIP Joint Industry Project

LNG Liquefied natural gas.

Mining Act Dutch Act containing regulations governing the exploration for and production

and storage of minerals.

NAM Nederlandse Aardolie Maatschappij (Dutch oil company in which Royal Dutch

Shell and Exxon Mobil have equal shares).

Near-field exploration Exploration for gas close to existing production locations.

NOGEPA Netherlands Oil and Gas Exploration and Production Association.

NOV management Non-operated venture management

Offshore At sea.

Operating partner See operator.

Operator Party in the production process that carries out production activities on behalf of

the partners.

Permeability The degree to which a solid substance can be pervaded by other substances.

PRMS Petroleum Resources Management System: international classification system

describing the status and volumes of oil and gas resources.

ROAD Rotterdam Storage and Capture Demonstration Project.

Scorecard Review of department-specific performance indicators.

Shale gas Gas held in tight reservoirs in shales that have insufficient permeability for the

gas to flow easily to the well bore.

Shallow gas Gas produced from relatively shallow reservoirs (< 800 m depth, mostly uncon-

solidated).

SodM State Supervision of Mines.

Spot market Public financial market, in which surpluses are traded and shortages made up

for immediate delivery and payment in the very short term.

State participation Shareholder status of the Dutch State.

Stranded reserves or fields Natural gas deposits that are technically or economically impractical to develop

and produce at a particular time.

Tight gas Gas produced from tight reservoirs in sandstones that have insufficient permea-

bility for the gas to flow easily to the well bore.

TNO Netherlands Organisation for Applied Science TNO.

Treasury Management of a company’s cash and cash equivalents.


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