XML 117 R17.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Property, plant and equipment | 12 Months Ended
--- | ---
Dec. 31, 2021
Property, plant and equipment [abstract] |
Disclosure of property, plant and equipment [text block] | 11 Property, plant and equipment (in USD million) Machinery, equipment and transportation equipment Production plants and oil and gas assets Refining and manufacturing plants Buildings and land Assets under development Right of use assets 4) Total Cost at 31 December 2020 as reported 2,806 180,355 9,238 929 13,053 6,370 212,751 Impact of policy change 5) - 2,726 - - 110 - 2,836 Cost at 31 December 2020 as restated 2,806 183,082 9,238 929 13,163 6,370 215,587 Additions through business combinations 0 2 0 0 1 0 4 Additions and transfers 39 7,311 95 27 (396) 148 7,225 Disposals at cost (1,496) (1,975) (70) (353) (25) (501) (4,420) Assets reclassified to held for sale 0 (1,010) (563) 0 0 (91) (1,664) Foreign currency translation effects (13) (4,052) (220) (6) (130) (77) (4,497) Cost at 31 December 2021 1,335 183,358 8,481 596 12,614 5,850 212,234 Accumulated depreciation and impairment losses at 31 December 2020 (2,596) (132,427) (8,005) (524) (1,275) (2,251) (147,079) Depreciation (68) (9,136) (232) (42) 0 (930) (10,408) Impairment losses (42) (2,092) (401) (21) (390) (17) (2,962) Reversal of impairment losses 0 1,675 0 0 0 2 1,677 Transfers 61 (1,319) 0 (61) 1,319 (11) (11) Accumulated depreciation and impairment on disposed assets 1,448 1,785 59 326 21 480 4,118 Accumulated depreciation and impairment assets classified as held for sale 0 825 461 0 0 82 1,367 Foreign currency translation effects 9 2,926 192 2 (18) 27 3,138 Accumulated depreciation and impairment losses at 31 December 2021 (1,188) (137,763) (7,926) (320) (344) (2,619) (150,159) Carrying amount at 31 December 2021 147 45,595 555 276 12,270 3,231 62,075 Estimated useful lives (years) 3 - 20 UoP 1) 15 - 20 10 - 33 2) 1 - 20 3) (in USD million) Machinery, equipment and transportation equipment Production plants and oil and gas assets Refining and manufacturing plants Buildings and land Assets under development Right of use assets 4) Total Cost at 31 December 2019 as reported 2,818 179,063 8,920 909 10,371 5,339 207,422 Impact of policy change 5) - 1,762 - - 37 - 1,799 Cost at 31 December 2019 as restated 2,818 180,825 8,920 909 10,408 5,339 209,221 Additions and transfers 68 7,782 110 27 2,478 968 11,433 Disposals at cost (28) (243) (7) 0 (5) (13) (295) Assets reclassified to held for sale (66) (9,095) 0 (15) (159) 0 (9,335) Foreign currency translation effects 13 3,812 214 7 441 75 4,563 Cost at 31 December 2020 2,806 183,082 9,238 929 13,163 6,370 215,587 Accumulated depreciation and impairment losses at 31 December 2019 (2,395) (125,327) (7,051) (475) (892) (1,329) (137,469) Depreciation (102) (8,240) (248) (23) 0 (874) (9,488) Impairment losses (201) (4,667) (516) (36) (445) (25) (5,889) Reversal of impairment losses 0 218 0 0 0 0 218 Transfers 18 (68) (1) 0 41 0 (10) Accumulated depreciation and impairment on disposed assets 27 231 7 0 1 11 278 Accumulated depreciation and impairment assets classified as held for sale 65 8,373 0 12 75 0 8,525 Foreign currency translation effects (9) (2,947) (196) (3) (56) (35) (3,244) Accumulated depreciation and impairment losses at 31 December 2020 (2,596) (132,427) (8,005) (524) (1,275) (2,251) (147,079) Carrying amount at 31 December 2020 209 50,654 1,232 405 11,888 4,119 68,508 Estimated useful lives (years) 3 - 20 UoP 1) 15 - 20 20 - 33 2) 1 - 19 3) Depreciation according to unit of production method (UoP), see note 2 Significant accounting policies . 2) Land is not depreciated . Buildings include leasehold improvements. 3) Depreciation linearly over contract period. 4) See note 23 Leases. 5) See note 2 Significant accounting policies and note 21 Provisions and other liabilities. For 2020 table, additions and currency lines are also impacted by the policy change. The carrying amount of assets transferred to Property plant and equipment from Intangible assets in 2021 and 2020 amounted to USD 1.730 billion and USD 0.089 billion, respectively. For assets reclassified to held for sale, see note 5 Acquisitions and disposals. Net impairments/(reversal) of impairments Full year Property, plant and equipment Intangible assets 3) Total (in USD million) 2021 2020 2019 2021 2020 2019 2021 2020 2019 Producing and development assets 1) 1,285 5,671 3,230 (2) 680 608 1,283 6,351 3,838 Goodwill 1) 1 42 164 1 42 164 Other intangible assets 1) 0 8 41 0 8 41 Acquisition costs related to oil and gas prospects 2) 154 657 49 154 657 49 Total net impairment loss/(reversal) recognised 1,285 5,671 3,230 154 1,386 863 1,439 7,057 4,093 Producing and development assets, refining and manufacturing plants, goodwill and other intangible assets are subject to impairment assessment under IAS 36. The total net impairment losses recognised under IAS 36 in 2021 amount to USD 1.285 billion, compared to 2020 when the net impairment amounted to USD 6.401 billion, including impairment of acquisition costs - oil and gas prospects (intangible assets). 2) Acquisition costs related to exploration activities, subject to impairment assessment under the successful efforts method (IFRS 6). 3) See note 12 Intangible assets . For impairment purposes, the asset's carrying amount is compared to its recoverable amount. The recoverable amount is the higher of fair value less cost of disposal (FVLCOD) and estimated value in use (VIU). The base discount rate for VIU calculations is 5.0 % real after tax. The discount rate is derived from Equinor's weighted average cost of capital. For projects, mainly within the REN segment, in periods with fixed low risk income a lower discount rate will be considered. A derived pre-tax discount is in the range of 18 - 32 % for E&P Norway, 5 - 9 % for E&P International, 6 - 7 % for E&P USA and 7 % for MMP depending on asset specific characteristics, such as specific tax treatments, cash flow profiles and economic life. See note 2 Significant accounting policies to the Consolidated financial statements for further information regarding impairment on property, plant and equipment. The table below describes, per area, the Producing and development assets being impaired/(reversed) and the valuation method used to determine the recoverable amount; the net impairment/(reversal), and the carrying amount after impairment. At 31 December 2021 At 31 December 2020 (in USD million) Valuation method Carrying amount after impairment Net impairment loss/ (reversal) Carrying amount after impairment Net impairment loss/ (reversal) Exploration & Production Norway VIU 5,379 (1,102) 7,042 1,219 Exploration & Production USA - onshore VIU 1,979 8 4,676 (19) FVLCOD 0 40 1,122 2,331 Exploration & Production USA - offshore Gulf of Mexico VIU 798 18 2,808 305 North America - offshore other areas VIU 0 0 53 146 FVLCOD 0 (22) 0 0 Europe and Asia VIU 1,566 1,609 3,687 1,280 Marketing, Midstream & Processing VIU 632 486 1,297 824 FVLCOD 236 230 668 228 Right of use assets/Other VIU 16 (2) 265 36 FVLCOD 4 17 0 0 Total 10,610 1,282 21,619 6,351 Exploration & Production Norway In 2021, the impairment reversals were USD 1.102 billion, caused by increased price estimates and upward reserve revision. In 2020, the impairments were USD 1.219 billion, mainly because of reduction in future price estimates. Negative reserve revisions and increased cost estimates added to the impairment losses. Exploration & Production USA - onshore In 2021, the net impairment was USD 48 million of which net reversal of USD 2 million was classified as exploration expenses. The impairments were USD 108 million of which USD 20 million classified as exploration expensed were caused by downward reserve revision and sale of an asset. The reversal of USD 60 million of which USD 22 million was classified as exploration expenses was caused by upward reserve revision. In 2020, the net impairment was USD 2.313 billion of which USD 0.680 billion was classified as exploration expenses. The impairment losses of USD 2.547 billion of which USD 0.743 billion classified as exploration expenses, were caused by decreased price assumptions and a change to fair value less cost of disposal valuation in relation to held for sale classification. The impairment reversals of USD 0.234 billion in 2020 were caused by improved production profile. Exploration & Production USA - offshore Gulf of Mexico In 2021, the impairment was USD 18 million caused by downward reserve revision. In 2020, the impairments were USD 305 million caused by decreased price assumptions. Exploration & Production International – North America offshore other areas In 2021, the impairment reversal was USD 22 million related to sale of an asset. In 2020, the impairment was USD 146 million due to operational issues. Exploration & Production International – Europe and Asia In 2021, the net impairment was USD 1.609 billion. Impairments were USD 1.786 billion mainly caused by downward reserve revisions. The reversal of USD 0.177 billion was caused by higher prices In 2020, the impairments were USD 1.280 billion due to decreased price assumptions and negative reserve revisions. Marketing, Midstream & Processing In 2021, the impairment losses were USD 716 million mainly caused by increased CO 2 fees and – quotas on a refinery and change to fair value less cost of disposal valuation in connection with a held for sale classification. In 2020, the impairment losses were USD 1.052 billion mainly due to reduced refinery margin estimates and increased cost estimates. Reduced volume-estimates from processing added to the impairment loss. Accounting assumptions Management’s future commodity price assumptions and currency assumptions are used for value in use impairment testing. The same assumptions are also used for evaluating investment opportunities, together with other relevant criteria, including among others robustness targets (value creation in lower commodity price scenarios). While there are inherent uncertainties in the assumptions, the commodity price assumptions as well as currency assumptions reflect management’s best estimate of the price and currency development over the life of the Group’s assets based on its view of relevant current circumstances and the likely future development of such circumstances, including energy demand development, energy and climate change policies as well as the speed of the energy transition, population and economic growth, geopolitical risks, technology and cost development and other factors. Management’s best estimate also takes into consideration a range of external forecasts. Equinor has performed a thorough and broad analysis of the expected development in drivers for the different commodity markets and exchange rates. Significant uncertainty exists regarding future commodity price development due to the transition to a lower carbon economy, future supply actions by OPEC+ and other factors. The management’s analysis of the expected development in drivers for the different commodity markets and exchange rates resulted in changes in the long-term price assumptions with effect from the third quarter of 2021. The following price assumptions have been the basis for the impairment assessments. All commodity prices are on a real 2021 basis, and comparable prices as per the fourth quarter of 2020 and up to the third quarter of 2021 are given in brackets. For Brent blend, Equinor expects a price of 65 USD/bbl in 2025 ( 67 USD/bbl) then gradually an increase to a peak in 2030 before declining to 64 USD/bbl in 2040 ( 66 USD/bbl), and further down to below 60 USD/bbl in the 2050s. Price assumptions from 2025 are unchanged compared to year-end 2020, with the exception that the real year has been changed from 2020 to 2021. For natural gas in the UK (NBP), we expect some volatility, where the trend is a decrease to 6.4 USD/mmbtu in 2030 ( 6.7 USD/mmbtu). From 2030, a flatter price-curve is expected, with the price gradually increasing to 7.7 USD/mmbtu in 2040 ( 8.0 USD/mmbtu). Beyond 2040, a declining price trend is foreseen as the energy transition is expected to impact the demand side. For 2050, the price is expected to be at the pre-2035 level of 7.0 USD/mmbtu ( 7.7 USD/mmbtu). Henry Hub is expected to decrease to 3.2 USD/mmBtu in 2030 ( 3.3 USD/mmbtu) and 3.3 USD/mmbtu in 2040 ( 3.8 USD/mmbtu), a level that is expected to continue through the 2040s. The electricity prices are expected to increase significantly in the future. Due to the increasing gas and CO 2 prices the electricity prices in Germany are by the end of fourth quarter expected to be 157 EUR/MWh in 2022 ( 61 EUR/MWh), the expectation for 2022 by the end of the third quarter was 77 EUR/MWh. In 2030 the prices are expected to be 58 EUR/MWh ( 43 EUR/MWh) and then rather flat towards 2050. Climate considerations are included in the impairment calculations directly by estimating the CO 2 taxes in the cash flows. Indirectly, the expected effect of climate change is also included in the estimated commodity prices where supply and demand are considered. The prices also have effect on the estimated production profiles and economic cut-off of the projects. Furthermore, climate considerations are a part of the investment decisions following Equinor’s strategy and commitments to the energy transition. The EU ETS price has increased significantly from 56 EUR/tonne since the third quarter assessment and is expected to remain high, in the region of 80 EUR/tonne for the next few years. Then the price is expected to be 65 EUR/tonne ( 27.5 EUR/tonne) in 2030 and thereafter increasing to 100 EUR/tonne ( 41 EUR/tonne) in 2050 (assumptions used in 2020 in brackets). Norway’s Climate Action Plan for the period 2021-2030 (Meld. St 13 (2020-2021)) which assumes a gradually increased CO 2 tax (the total of EU ETS + Norwegian CO 2 tax) in Norway to 2,000 NOK/tonne in 2030 is used for impairment calculations of Norwegian upstream assets. Impairment calculations are based on what is considered to be best estimate. To reflect that carbon will have a cost for all our assets the current best estimate is considered to be EU ETS for countries outside EU where carbon is not already subject to taxation or where Equinor has not established specific estimates. The long-term NOK currency exchange rates are expected to be unchanged. The NOK/USD rate from 2024 and onwards is kept at 8.50 , the NOK/EUR at 10.0 and the USD/GBP rate at 1.35 . The Weighted Average Cost of Capital (WACC) rate is 5 %. This rate is basically the interest rate used for upstream activities. For other business areas the discount rate will be determined based on a risk assessment. Typically, the rate will decrease for assets/projects where the revenue is secured by fixed fees or government grants. Sensitivities Commodity prices have historically been volatile. Significant downward adjustments of Equinor’s commodity price assumptions would result in impairment losses on certain producing and development assets in Equinor’s portfolio including intangible assets that are subject to impairment assessment, while an opposite adjustment could lead to impairment-reversals. If a decline in commodity price forecasts over the lifetime of the assets were 30 %, considered to represent a reasonably possible change, the impairment amount to be recognised could illustratively be in the region of USD 9 billion before tax effects. See note 3 Consequences of initiatives to limit climate changes for possible effect of using the prices in a 1.5 o C compatible Net Zero Emission by 2050 scenario as estimated by the International Energy Agency (IEA) These illustrative impairment sensitivities, both based on a simplified method, assumes no changes to input factors other than prices; however, a price reduction of 30 % or those representing Net Zero Emission scenario is likely to result in changes in business plans as well as other factors used when estimating an asset’s recoverable amount. These associated changes reduce the stand-alone impact on the price sensitivities. Changes in such input factors would likely include a reduction in the cost level in the oil and gas industry as well as offsetting foreign currency effects, both of which have historically occurred following significant changes in commodity prices. The illustrative sensitivities are therefore not considered to represent a best estimate of an expected impairment impact, nor an estimated impact on revenues or operating income in such a scenario. In comparison, following the amended assumptions described above in the accounting assumptions section and the decline in commodity prices, the impairment impact recognised is considerably lower. A significant and prolonged reduction in oil and gas prices would also result in mitigating actions by Equinor and its licence partners, as a reduction of oil and gas prices would impact drilling plans and production profiles for new and existing assets. Quantifying such impacts is considered impracticable, as it requires detailed technical, geological and economical evaluations based on hypothetical scenarios and not based on existing business or development plans.

X
- Definition The entire disclosure for property, plant and equipment. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Name IAS -Number 16 -IssueDate 2021-01-01 -Section Disclosure -URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IAS&num=16&code=ifrs-tx-2021-en-r&doctype=Standard&dita_xref=IAS16_g73-79_TI -URIDate 2021-03-24 + Details
Name: | ifrs-full_DisclosureOfPropertyPlantAndEquipmentExplanatory
Namespace Prefix: | ifrs-full_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | ifrs-full_PropertyPlantAndEquipmentAbstract
Namespace Prefix: | ifrs-full_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration