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Segments
 6 Months Ended
Jun. 30, 2020
Segments [abstract]  
Segments

2 Segments

Equinor’s operations are managed through the following operating segments (business areas): Development & Production Norway (DPN), Development & Production International (DPI), Development & Production Brazil (DPB), Development & Production USA (DPUSA), Marketing, Midstream & Processing (MMP), New Energy Solutions (NES), Technology, Projects & Drilling (TPD), Exploration (EXP) and Global Strategy & Business Development (GSB).

The reporting segments Exploration & Production Norway (E&P Norway), Exploration & Production USA (E&P USA) and MMP consist of the business areas DPN, DPUSA and MMP respectively. The operating segments DPI and DPB are aggregated into the reporting segment Exploration & Production International (E&P International). The aggregation has its basis in similar economic characteristics, such as similar long-term average gross margins, the assets’ long term and capital-intensive nature and exposure to volatile oil and gas commodity prices, the nature of products, service and production processes, the type and class of customers, the methods of distribution and regulatory environment. The operating segments NES, GSB, TPD, EXP and corporate staffs and support functions are aggregated into the reporting segment “Other” due to the immateriality of these operating segments. The majority of the costs within the operating segments GSB, TPD and EXP are allocated to the E&P Norway, E&P USA, E&P International and MMP reporting segments.

In the second quarter of 2020, Equinor changed its internal reporting to management, impacting the composition of Equinor's operating and reporting segments. Equinor’s upstream activities in the USA will now be reported separately to management, and such information is also considered to be useful to the users of the financial statements, resulted in the exploration and production activities in the USA as of the second quarter of 2020 are considered a separate operating- and reporting segment. Previously these activities were included in the DPI operating segment and presented as part of the E&P International reporting segment.

The eliminations section includes the elimination of inter-segment sales and related unrealised profits, mainly from the sale of crude oil and products. Inter-segment revenues are based upon estimated market prices.

Segment data for the second quarter of 2020 and 2019 is presented below. The reported measure of segment profit is net operating income/(loss). Deferred tax assets, pension assets and non-current financial assets are not allocated to the segments.

The measurement basis for segments is IFRS as applied by the group with the exception of IFRS 16 Leases and the line item Additions to PP&E, intangibles and equity accounted investments. All IFRS 16 leases are presented within the Other segment. The lease costs for the period are allocated to the different segments based on underlying lease payments, with a corresponding credit in the Other segment. Lease costs allocated to licence partners are recognised as other revenues in the Other segment. Additions to PP&E, intangible assets and equity accounted investments in the E&P and MMP segments include the period’s allocated lease costs related to activity being capitalised with a corresponding negative addition in the Other segment. The line item Additions to PP&E, intangibles and equity accounted investments excludes movements related to changes in asset retirement obligations.

Second quarter 2020E&P Norway E&P InternationalE&P USAMMPOtherEliminations Total
(in USD million)
Revenues third party, other revenues and other income1052677,3925007,570
Revenues inter-segment1,649515408881(2,661)0
Net income/(loss) from equity accounted investments0(11)0738033
Total revenues and other income 1,6595554757,48688(2,661)7,603
Purchases [net of inventory variation]0(26)0(5,127)(0)2,403(2,750)
Operating, selling, general and administrative expenses(706)(281)(293)(1,423)125166(2,411)
Depreciation, amortisation and net impairment losses(992)(509)(475)(326)(220)0(2,522)
Exploration expenses(65)(288)(40)000(393)
Total operating expenses(1,762)(1,103)(808)(6,877)(94)2,569(8,075)
Net operating income/(loss)(104)(548)(332)610(6)(92)(472)
Additions to PP&E, intangibles and equity accounted investments1,1184842685138602,307

Second quarter 2019E&P Norway E&P InternationalE&P USAMMPOtherEliminations Total
(in USD million)
(restated)(restated)
Revenues third party, other revenues and other income1574299816,31559017,057
Revenues inter-segment4,2261,1229721271(6,448)0
Net income/(loss) from equity accounted investments 7921110039
Total revenues and other income 4,3901,5591,07116,45470(6,448)17,096
Purchases [net of inventory variation]0140(15,065)(0)6,445(8,606)
Operating, selling, general and administrative expenses(888)(403)(403)(1,073)63202(2,502)
Depreciation, amortisation and net impairment losses(945)(477)(521)(100)(190)0(2,233)
Exploration expenses(79)(142)(14)000(235)
Total operating expenses(1,913)(1,008)(937)(16,238)(127)6,647(13,575)
Net operating income/(loss) 2,478551134216(57)1993,521
Additions to PP&E, intangibles and equity accounted investments1,718991645601903,432

First half 2020E&P Norway E&P InternationalE&P USAMMPOtherEliminations Total
(in USD million)
Revenues third party, other revenue and other income1721820822,08799022,629
Revenues inter-segment5,1791,6801,1521841(8,197)0
Net income/(loss) from equity accounted investments05018820104
Total revenues and other income 5,1961,9031,36022,289182(8,197)22,733
Purchases [net of inventory variation]0(68)0(18,627)(0)8,549(10,146)
Operating, selling, general and administrative expenses(1,341)(779)(664)(2,767)184353(5,014)
Depreciation, amortisation and net impairment losses(2,833)(1,380)(1,711)(607)(429)0(6,959)
Exploration expenses(160)(536)(332)000(1,028)
Total operating expenses(4,333)(2,763)(2,707)(22,001)(245)8,902(23,147)
Net operating income/(loss)863(861)(1,347)288(63)705(414)
Additions to PP&E, intangibles and equity accounted investments2,4071,22569410748904,922
Balance sheet information
Equity accounted investments256309094401,599
Non-current segment assets 30,54719,71515,5574,3504,090074,259
Non-current assets not allocated to segments 10,853
Total non-current assets 86,711

First half 2019E&P Norway E&P InternationalE&P USAMMPOtherEliminations Total
(in USD million)
(restated)(restated)
Revenues third party, other revenue and other income16090721432,050145033,476
Revenues inter-segment9,2052,3321,9662272(13,732)0
Net income/(loss) from equity accounted investments1318316530103
Total revenues and other income 9,3783,2582,18332,293199(13,732)33,578
Purchases [net of inventory variation]1(25)(0)(28,532)(0)13,295(15,261)
Operating, selling, general and administrative expenses(1,624)(1,003)(801)(2,168)62393(5,141)
Depreciation, amortisation and net impairment losses(1,964)(870)(1,029)(193)(364)0(4,421)
Exploration expenses(193)(267)(43)000(503)
Total operating expenses(3,781)(2,165)(1,874)(30,892)(302)13,688(25,326)
Net operating income/(loss)5,5971,0933091,401(103)(44)8,252
Additions to PP&E, intangibles and equity accounted investments2,9411,7791,07854748506,830
Balance sheet information
Equity accounted investments 1,04130682941,34702,870
Non-current segment assets 33,51720,77718,8555,3624,449082,960
Non-current assets not allocated to segments 9,778
Total non-current assets 95,609

In the second quarter of 2020 Equinor recognised net impairment of USD 374 million of which USD 111 million was classified as exploration expenses.

In the E&P International segment the net impairment was USD 146 million of which USD 111 million was classified as exploration expenses and USD 35 million was related to a production asset in North America – conventional other area due to a decrease in estimated production period.

In the MMP segment the impairment was USD 228 million related to a gas processing plant in Norway. The impairment was caused by a decrease in estimated future gas volumes.

Due to the recovery in commodity prices, at the end of the second quarter as compared to the end of the first quarter, MMP has reversed USD 605 million in write-down of inventory included in the line item Purchases [net of inventory variation]. The impact is largely offset by loss on derivatives included in the line item Revenues third party, other revenue and other income.

Most of the renewable assets in Equinor Group are accounted for using equity method and the results are presented in the Other reporting segment.  The net income from the equity accounted investments within the operating segment NES was USD 38 million in the second quarter of 2020 and USD 82 million in the first half of 2020, which compares to USD 10 million in the second quarter of 2019 and USD 53 million in the first half 2019. The effect of high availability and production on all offshore wind assets in the first quarter of 2020 was partly offset by effect of seasonal lower wind and planned maintenance in the second quarter of 2020, and by effect of partial divestment of ownership share in Arkona wind farm in the fourth quarter of 2019.

See also note 8 Impact of the Covid-19 pandemic and oil price decline.

For information regarding acquisition and disposal of interests, see note 3 Acquisitions and disposals.

Revenues from contracts with customers by geographical areas

When attributing the line item Revenues third party, other revenues and other income to the country of the legal entity executing the sale for the second quarter of 2020, Norway constitutes 79% and the US constitutes 16% of such revenues. For the second quarter of 2019, Norway and the US constituted 72% and 22% of such revenues respectively.

For the first half of 2020, Norway constitutes 80% and the US constitutes 15% of such revenues. For the first half of 2019, Norway and the US constituted 74% and 19% of such revenues respectively.

Non-current assets by country
At 30 JuneAt 31 MarchAt 31 DecemberAt 30 June
(in USD million)2020202020192019
Norway36,38332,27440,29240,664
USA16,52416,52417,77619,999
Brazil8,7968,6198,7248,197
UK4,9134,9685,6575,406
Azerbaijan1,6961,6711,5981,497
Canada1,4351,3721,6721,651
Angola1,3311,3201,5641,743
Tanzania964964964963
Denmark887862984883
Algeria866880915950
Other countries2,0642,0511,9863,877
Total non-current assets1)75,85871,50582,13385,830

1) Excluding deferred tax assets, pension assets and non-current financial assets.

Revenues from contracts with customers and other revenues
QuartersFull Year
(in USD million)Q2 2020Q1 2020Q2 20192019
Crude oil 4,018 7,840 9,390 33,505
Natural gas 1,188 2,170 2,637 11,281
- European gas 923 1,767 2,204 9,366
- North American gas 196 290 281 1,359
- Other incl. LNG 68 113 152 556
Refined products 1,258 2,029 2,866 10,652
Natural gas liquids 839 1,449 1,542 5,807
Transportation 286 329 163 967
Other sales 88 136 165 445
Revenues from contracts with customers 7,677 13,954 16,763 62,657
Taxes paid in-kind (9) 47 105 344
Physically settled commodity derivatives 152 99 (306) (1,086)
Gain/(loss) on commodity derivatives (318) 912 276 732
Other revenues 61 52 60 265
Total other revenues (114) 1,110 134 254
Revenues 7,563 15,065 16,898 62,911