##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 20-F

|  |  |                                                                                                 
|- |  | ------------------------------------------------------------------------------------------------
|o |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE
ACT OF 1934

OR

|  |  |                                                                                     
|- |  | ------------------------------------------------------------------------------------
|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Fiscal Year Ended December 31, 2002

OR

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to __________________

Commission file number: 1-9159

NORSK HYDRO ASA

(Exact name of Registrant as specified in its charter)
Kingdom of Norway
(Jurisdiction of incorporation or organization)
Bygdøy allé 2
N-0240 OSLO 2
Norway
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

|                                            |  |                                          
|------------------------------------------- |  | -----------------------------------------
|Title of each class                         |  | Name of each exchange on which registered
|                                            |  |                                          
|American Depositary Shares                  |  | New York Stock Exchange                  
|Ordinary Shares, par value NOK 20 per share |  | New York Stock Exchange*                 



|* |  | Not for trading, but only in connection with the registration of the American Depositary
Shares, pursuant to the requirements of the Securities and Exchange Commission.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Ordinary Shares, par value NOK 20 per share.

Indicate the number of outstanding shares of each of the issuers classes of capital or common
stock as of the close of the period covered by the annual report.

257,960,532 Ordinary Shares, par value NOK 20 per share

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

|      |  |     
|----- |  | ----
|Yes x |  | No o

Indicate by check mark which financial statement item the registrant has elected to follow.

|          |  |          
|--------- |  | ---------
|Item 17 o |  | Item 18 x





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TABLE OF CONTENTS

|        |  |                                                       |     |                                                                   |      | 
|------- |  | ----------------------------------------------------- | --- | ----------------------------------------------------------------- | ---- | 
|ITEM    |  |                                                       |     |                                                                   | PAGE
|       
|        |  |                                                       |     |                                                                   |      | 
|        |  | Exchange Rates                                        | 4  
|PART I 
|        |  |                                                       |     |                                                                   |      | 
|Item 1. |  | Identity of Directors, Senior Management and Advisers | 5  
|        |  |                                                       |     |                                                                   |      | 
|Item 2. |  | Offer Statistics and Expected Timetable               | 5  
|        |  |                                                       |     |                                                                   |      | 
|Item 3. |  | Key Information                                       | 5  
|        |  | A.                                                    |     | Selected Consolidated Financial Data                              | 5   
|        |  | B.                                                    |     | Capitalization and Indebtedness                                   | 9   
|        |  | C.                                                    |     | Reasons for the Offer and Use of Proceeds                         | 9   
|        |  | D.                                                    |     | Risk Factors                                                      | 9   
|        |  |                                                       |     |                                                                   |      | 
|Item 4. |  | Information on the Company                            | 17 
|        |  | A.                                                    |     | History and Development of the Company                            | 17  
|        |  | B.                                                    |     | Business Overview                                                 | 17  
|        |  | C.                                                    |     | Organizational Structure                                          | 87  
|        |  | D.                                                    |     | Property, Plants and Equipment                                    | 87  
|        |  |                                                       |     |                                                                   |      | 
|Item 5. |  | Operating and Financial Review and Prospects          | 88 
|        |  |                                                       |     |                                                                   |      | 
|Item 6. |  | Directors, Senior Managers and Employees              | 93 
|        |  | A.                                                    |     | Directors and Corporate Management Board                          | 93  
|        |  | B.                                                    |     | Compensation                                                      | 97  
|        |  | C.                                                    |     | Board Practices                                                   | 98  
|        |  | D.                                                    |     | Employees                                                         | 100 
|        |  | E.                                                    |     | Share Ownership                                                   | 101 
|        |  |                                                       |     |                                                                   |      | 
|Item 7. |  | Major Shareholders and Related Party Transactions     | 102
|        |  | A.                                                    |     | Major Shareholders                                                | 102 
|        |  | B.                                                    |     | Related Party Transactions                                        | 102 
|        |  | C.                                                    |     | Interests of Experts and Counsel                                  | 103 
|        |  |                                                       |     |                                                                   |      | 
|Item 8. |  | Financial Information                                 | 104
|        |  | A.                                                    |     | Consolidated Financial Statements and Other Financial Information | 104 
|        |  | B.                                                    |     | Significant Changes                                               | 105 
|        |  |                                                       |     |                                                                   |      | 
|Item 9. |  | The Offer and Listing                                 | 106
|        |  | A.                                                    |     | Offer and Listing Details                                         | 106 
|        |  | B.                                                    |     | Plan of Distribution                                              | 107 
|        |  | C.                                                    |     | Markets                                                           | 107 
|        |  | D.                                                    |     | Selling Shareholders                                              | 107 
|        |  | E.                                                    |     | Dilution                                                          | 107 
|        |  | F.                                                    |     | Expenses of the Issue                                             | 107 

2



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##### 



|          |  |                                                                              |     |                             |     | 
|--------- |  | ---------------------------------------------------------------------------- | --- | --------------------------- | --- | 
|Item 10.  |  | Additional Information                                                       | 108
|          |  | A.                                                                           |     | Share Capital               | 108
|          |  | B.                                                                           |     | Articles of Association     | 108
|          |  | C.                                                                           |     | Material Contracts          | 120
|          |  | D.                                                                           |     | Exchange Controls           | 120
|          |  | E.                                                                           |     | Taxation                    | 121
|          |  | F.                                                                           |     | Dividends and Paying Agents | 124
|          |  | G.                                                                           |     | Statement by Experts        | 125
|          |  | H.                                                                           |     | Documents on Display        | 125
|          |  | I.                                                                           |     | Subsidiary Information      | 125
|          |  |                                                                              |     |                             |     | 
|Item 11.  |  | Quantitative and Qualitative Disclosure About Market Risk                    | 125
|          |  |                                                                              |     |                             |     | 
|Item 12.  |  | Description of Securities Other Than Equity Securities                       | 125
|          |  |                                                                              |     |                             |     | 
|          |  |                                                                              |     | PART II                     |     | 
|          |  |                                                                              |     |                             |     | 
|Item 13.  |  | Defaults, Dividend Arrearages and Delinquencies                              | 125
|          |  |                                                                              |     |                             |     | 
|Item 14.  |  | Material Modifications to the Rights of Security Holders and Use of Proceeds | 125
|          |  |                                                                              |     |                             |     | 
|Item 15.  |  | Controls and Procedures; CEO and CFO Certifications                          | 126
|          |  |                                                                              |     |                             |     | 
|Item 16A. |  | Audit Committee Financial Expert                                             | 127
|          |  |                                                                              |     |                             |     | 
|Item 16B. |  | Code of Ethics                                                               | 128
|          |  |                                                                              |     |                             |     | 
|Item 16C. |  | Principal Accountant Fees and Services                                       | 128
|          |  |                                                                              |     |                             |     | 
|          |  |                                                                              |     | PART III                    |     | 
|          |  |                                                                              |     |                             |     | 
|Item 17.  |  | Financial Statements                                                         | 128
|          |  |                                                                              |     |                             |     | 
|Item 18.  |  | Financial Statements                                                         | 128
|          |  |                                                                              |     |                             |     | 
|Item 19.  |  | Financial Statements and Exhibits                                            | 128

3



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In this Annual Report on Form 20-F, references to the Company are to Norsk
Hydro ASA. References to Hydro or the Group are to the Company and its
consolidated subsidiaries. References to the Kingdom are to the Kingdom of
Norway. See Item 4.B. Information on the Company  Business Overview -
Exploration and Production  Appendix Afor the definitions of key oil
and gas terms used in this Annual Report and the glossary at the end of this
Annual Report for the definitions of certain other terms used throughout this
Annual Report.

EXCHANGE RATES

The Company publishes its consolidated financial statements in Norwegian
kroner (NOK). In this Annual Report, references to US dollar, US
dollars, USD or $ are to United States dollars. The following tables set
forth, for the periods indicated, certain information concerning the exchange
rate of Norwegian kroner for USD 1.00, based on the noon buying rate in the
City of New York for cable transfers in foreign currencies as certified for
customs purposes by the Federal Reserve Bank of New York (the Noon Buying
Rate"):

|                     |  |                              |      | 
|-------------------- |  | ---------------------------- | ---- | 
|                    
|Calendar Year Period |  | Average Noon Buying Rate (1)
|                    
|1998                 |  |                              | 7.56 | 
|1999                 |  |                              | 7.84 | 
|2000                 |  |                              | 8.83 | 
|2001                 |  |                              | 9.00 | 
|2002                 |  |                              | 7.93 | 
|                    

|                        |                |      |  |                  |  |  |  |      |  | 
|----------------------- | -------------- | ---- |  | ---------------- |  |  |  | ---- |  | 
|                       
|                        |                |      |  | Noon Buying Rate
|                        |                |     
|Calendar Monthly Period |                | High |  | Low             
|                       
|                        | September 2002 |      |  | 7.60             |  |  |  | 7.41 | 
|                        | October 2002   |      |  | 7.65             |  |  |  | 7.39 | 
|                        | November 2002  |      |  | 7.40             |  |  |  | 7.22 | 
|                        | December 2002  |      |  | 7.31             |  |  |  | 6.94 | 
|                        | January 2003   |      |  | 7.00             |  |  |  | 6.83 | 
|                        | February 2003  |      |  | 7.20             |  |  |  | 6.91 | 
|                       



| | (1) |  | The average of the Noon Buying Rates on the last business day of
each calendar month during the year indicated.
| | --- |  | ---------------------------------------------------------------------------------------------------------------

The Noon Buying Rate on February 26, 2003 was NOK 7.08 = $1.00.

Fluctuations in the exchange rate between the Norwegian kroner and the US
dollar will affect the US dollar equivalent of the Norwegian kroner price of
the Companys ordinary shares on the Oslo Stock Exchange and, as a result, are
likely to affect the market price of the Companys ordinary shares represented
by American depositary shares (ADSs") in the United States. Such fluctuations
could also affect the US dollar amounts received by holders of ADSs on
conversion of cash dividends, paid by the Company in Norwegian kroner, on the
ordinary shares represented by the ADSs. See Item 3.A. Selected Consolidated
Financial Dataand Item 10.B. Articles of Association  Description of
American Depositary Receipts  Dividends and Other Distributions.

4



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##### 



PART I

ITEM 1.      IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

In accordance with the instructions to Form 20-F, the Company does not
need to provide the information called for by Item 1 if, as is the case in this
instance, the Form 20-F is being filed as an annual report under the Securities
Exchange Act of 1934, as amended (the Exchange Act).

ITEM 2.      OFFER STATISTICS AND EXPECTED TIMETABLE

In accordance with the instructions to Form 20-F, the Company does not
need to provide the information called for by Item 2 if, as is the case in this
instance, the Form 20-F is being filed as an annual report under the Exchange
Act.

ITEM 3.      KEY INFORMATION

ITEM 3.A.      SELECTED CONSOLIDATED FINANCIAL DATA

The following financial information with respect to the five years ended
December 31, 2002, and as of December 31, 2001, 2000, 1999, and 1998 has been
derived from Hydros audited consolidated financial statements prepared in
accordance with United States generally accepted accounting principles
(USGAAP). The financial information for the three years ended December 31,
2002, and as of December 31, 2001 and 2000, should be read in conjunction with
and is qualified in its entirety by reference to the consolidated financial
statements and notes included in the Companys annual report to shareholders
for the year ended December 31, 2002 (the Consolidated Financial Statements),
incorporated by reference into this Annual Report on Form 20-F.

5



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Income Statement Data (1)

|                                                                                             
|---------------------------------------------------------------------------------------------
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Operating revenues (2)                                                                       
|Operating costs and expenses excluding
depreciation, impairment
and restructuring charges (2)
|Depreciation                                                                                 
|Restructuring charges                                                                        
|                                                                                             
|Operating income before financial
and other items                                            
|Financial and other income (expense) (3)                                                     
|                                                                                             
|Earnings before interest expense
and taxes (EBIT)                                            
|Interest expense and foreign exchange gain
(loss)                                            
|                                                                                             
|Income before taxes and minority interest                                                    
|                                                                                             
|                                                                                             
|                                                                                             
|Income (loss) before cumulative effect of
accounting changes                                 
|Cumulative effect of accounting change for:                                                  
|                                                                                             
|Net income (loss)                                                                            
|                                                                                             
|Earnings (loss) per share:                                                                   
|                                                                                             
|                                                                                             
|                                                                                             
|Earnings (loss) per share:                                                                   
|                                                                                             
|Avg. number of outstanding ordinary shares                                                   
|                                                                                             
|Cash dividends paid per share during period:                                                 
|NOK per share (4)                                                                            
|Converted into USD per share (4)                                                             
|                                                                                             
|                                                                                             

| | (1) |  | See Note 2 to the Consolidated Financial Statements for a discussion
of significant business acquisitions and dispositions during the
three-year period ended December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) |  | As of fiscal year 2000, operating revenues for certain trading
activities have been presented on a gross basis in the income statement.
Prior years amounts have been restated to reflect the change. As a
result, operating revenues and operating costs have increased by NOK
9,522 million in 1999 and NOK 8,316 million in 1998. As of fiscal year
1998, operating revenues and operating costs related to some of Hydros
aluminum remelt activities have been presented on a gross basis in the
income statement. In prior years, such revenues and costs were
presented on a net basis in the income statement and included in
operating revenues. Prior years amounts have been restated to reflect
the change.
| | (3) |  | Equity in net income of non-consolidated investees is included
under Financial and other income (expense).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (4) |  | Cash dividends paid during the period represent payments of dividends
with respect to the previous year. Amounts paid in Norwegian kroner
have been converted at prevailing exchange rates on the date of such
payments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

6



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Balance Sheet Data (1)

|                                              
|----------------------------------------------
|                                              
|                                              
|                                              
|                                              
|Cash, cash equivalents
and other liquid assets
|Total assets                                  
|Short-term debt                               
|Long-term debt                                
|Deferred tax liabilities                      
|Ordinary shares and
additional paid-in capital
|Total shareholders equity                    
|                                              
|                                              

| | (1) |  | See Note 2 to the Consolidated Financial Statements for a discussion of
significant business acquisitions and dispositions during the three-year
period ended December 31, 2002.
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7



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Segment Data

The following table indicates the Groups operating revenues, sales to
unaffiliated customers and operating income (after eliminating intersegment
sales) by business segment for each of the three fiscal years in the period
ended December 31, 2002.

|                              |  |                    |         |                                 |  |                       |         |      |  |      |         |      |  |      |         |      |  |      |         |  |  |  |         |  |  |                         |        |   |  |  |        |   |  |  |        |  
|----------------------------- |  | ------------------ | ------- | ------------------------------- |  | --------------------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  |  | ------- |  |  | ----------------------- | ------ | - |  |  | ------ | - |  |  | ------ | -
|                             
|                              |  |                    |         |                                 |  |                       |         |      |  |      |         |      |  |      |         |      |  |      |         |  |  |  |         |  |  | Operating Income/(loss)
|                              |  | Operating Revenues |         | Sales to Unaffiliated Customers |  | before fin. and other
|                              |  |                    |         |                                 |  |                       |         |      |  |      |         |      |  |      |         |      |  |      |         |  |  |  |         |  |  | income                  |        |   |  | 
|                             
|Year ended December 31        |  | 2002               |         | 2001                            |  | 2000                  |         | 2002 |  | 2001 |         | 2000 |  | 2002 |         | 2001 |  | 2000
|Business Segment (1)          | 
|                             
|Exploration and Production    |  |                    | 34,009  |                                 |  |                       | 33,282  |      |  |      | 35,494  |      |  |      | 11,175  |      |  |      | 7,848   |  |  |  | 9,436   |  |  |                         | 14,329 |   |  |  | 17,813 |   |  |  | 20,108 |  
|Energy and Oil Marketing (2)  |  |                    | 39,780  |                                 |  |                       | 43,959  |      |  |      | 45,500  |      |  |      | 35,795  |      |  |      | 39,450  |  |  |  | 40,837  |  |  |                         | 1,592  |   |  |  | 1,365  |   |  |  | 1,669  |  
|Eliminations                  |  |                    | (22,048 | )                               |  |                       | (25,225 | )    |  |      | (25,871 | )    |  |      | 26      |      |  |      |        |  |  |  |        |  |  |                         | 26     |   |  |  |       |   |  |  | 27     |  
|                             
|Hydro Oil and Energy          |  |                    | 51,741  |                                 |  |                       | 52,016  |      |  |      | 55,123  |      |  |      | 46,996  |      |  |      | 47,298  |  |  |  | 50,273  |  |  |                         | 15,947 |   |  |  | 19,178 |   |  |  | 21,804 |  
|                             
|Metals (2)                    |  |                    | 39,646  |                                 |  |                       | 31,475  |      |  |      | 30,483  |      |  |      | 26,025  |      |  |      | 24,961  |  |  |  | 24,177  |  |  |                         | 1,690  |   |  |  | 372    |   |  |  | 2,690  |  
|Rolled Products               |  |                    | 14,790  |                                 |  |                       | 4,228   |      |  |      | 4,221   |      |  |      | 14,135  |      |  |      | 4,126   |  |  |  | 4,122   |  |  |                         | (295   | ) |  |  | 58     |   |  |  | (3     | )
|Extrusion and Automotive      |  |                    | 24,245  |                                 |  |                       | 22,487  |      |  |      | 23,031  |      |  |      | 24,186  |      |  |      | 21,854  |  |  |  | 22,491  |  |  |                         | 14     |   |  |  | (228   | ) |  |  | 650    |  
|Other and Eliminations (3)    |  |                    | (13,630 | )                               |  |                       | (7,107  | )    |  |      | (6,605  | )    |  |      | 162     |      |  |      | 1       |  |  |  | 17      |  |  |                         | 289    |   |  |  | (17    | ) |  |  | (1     | )
|                             
|Hydro Aluminium               |  |                    | 65,051  |                                 |  |                       | 51,083  |      |  |      | 51,130  |      |  |      | 64,508  |      |  |      | 50,942  |  |  |  | 50,807  |  |  |                         | 1,698  |   |  |  | 185    |   |  |  | 3,336  |  
|                             
|Hydro Agri                    |  |                    | 33,348  |                                 |  |                       | 37,407  |      |  |      | 36,607  |      |  |      | 32,818  |      |  |      | 36,809  |  |  |  | 35,756  |  |  |                         | 2,207  |   |  |  | 2,114  |   |  |  | 1,303  |  
|                             
|Other Activities (4)          |  |                    | 21,769  |                                 |  |                       | 22,361  |      |  |      | 24,749  |      |  |      | 17,988  |      |  |      | 17,713  |  |  |  | 19,911  |  |  |                         | 13     |   |  |  | (341   | ) |  |  | 208    |  
|Corporate and Eliminations(5) |  |                    | (8,973  | )                               |  |                       | (10,032 | )    |  |      | (10,748 | )    |  |      | 626     |      |  |      | 73      |  |  |  | 114     |  |  |                         | (24    | ) |  |  | (53    | ) |  |  | 1,815  |  
|                             
|Total                         |  |                    | 162,936 |                                 |  |                       | 152,835 |      |  |      | 156,861 |      |  |      | 162,936 |      |  |      | 152,835 |  |  |  | 156,861 |  |  |                         | 19,841 |   |  |  | 21,083 |   |  |  | 28,466 |  
|                             



| | (1) |  | See Note 2 to the Consolidated Financial Statements for a discussion of
significant business acquisitions and dispositions during the three-year
period ended December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) |  | Presentation of income from certain trading activities was in 2000
changed from net presentation of margin to gross presentation as
operating revenues and raw materials. This included metal trading within
Metals and trading of petroleum products within Energy. Prior periods
have been reclassified to be presented on a consistent basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (3) |  | Other and Eliminations includes unrealized gains and losses related
to London Metal Exchange (LME) contracts with a gain of NOK 266 million
in 2002, a loss of NOK 50 million in 2001 and a gain of NOK 31 million
in 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (4) |  | Other Activities consists of the following: Petrochemicals, Treka
AS (previously A/S Korn- og Foderstof Kompagniet, or KFK), Flexible
Packaging, Pronova, the industrial insurance company,
Industriforsikring, Hydro Business Partner and Seafood.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (5) |  | Corporate and Eliminations operating income (loss) includes net
periodic pension credits of NOK 312 million for 2002, and a credit of
NOK 421 million and NOK 2,263 million in 2001 and 2000, respectively.
In 2000, Hydro changed the way it allocates pension costs to its
Norwegian operations. Previously, costs were determined based on the
number of years of service resulting in a concentration of the total
costs towards the end of the service period. The change resulted in
non-recurring charges to the segments with a corresponding credit of NOK
2,007 million reflected in Corporate results, which is part of the net
periodic pension credit. Part of these pension costs has been charged
to external parties resulting in a positive effect to the Companys
operating income of NOK 470 million in 2000. Corporate and
Eliminations in 2002 included elimination of unrealized loss on power
contracts between Energy and other units in Hydro in the amount of NOK
588 million. In addition, NOK 26 million was eliminated within the Oil
and Energy area.

8



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##### 



ITEM 3.B.      CAPITALIZATION AND INDEBTEDNESS

In accordance with the instructions to Form 20-F, the Company does not
need to provide the information called for by Item 3.B. if, as is the case in
this instance, the Form 20-F is being filed as an annual report under the
Exchange Act.

ITEM 3.C.      REASONS FOR THE OFFER AND USE OF PROCEEDS

In accordance with the instructions to Form 20-F, the Company does not
need to provide the information called for by Item 3.C. if, as is the case in
this instance, the Form 20-F is being filed as an annual report under the
Exchange Act.

ITEM 3.D.      RISK FACTORS

In order to utilize the safe harbor provisions of the United States
Private Securities Litigation Reform Act of 1995, Hydro is providing the
following cautionary statement:

This Annual Report contains (and oral communications made by or on behalf
of Hydro may contain) forecasts, projections, estimates, statements of
managements plans, objectives and strategies for Hydro, such as planned
expansions, investments or other projects, targeted production volumes,
capacities or rates, start-up costs, cost reductions, profit objectives, and
various expectations about future developments in Hydros markets (particularly
prices, supply and demand, and competition), results of operations, margins,
risk management and so forth.

These forward-looking statements are based on a number of assumptions and
forecasts, including world economic growth and other economic indicators
(including rates of inflation and industrial production), trends in Hydros key
markets, and global oil and gas, aluminum and fertilizer supply and demand
conditions. Unless Hydro is required by law to update these statements, Hydro
will not necessarily update any of these statements after the date of this
Annual Report, either to conform them to actual results or events, or to
communicate changes in expectations.

By their nature, forward-looking statements involve risk and uncertainty
and various factors could cause Hydros actual results to differ materially
from those projected in a forward-looking statement or affect the extent to
which a particular projection is realized. Readers are cautioned not to place
undue reliance on these forward-looking statements.

The following paragraphs include important factors, although not
exhaustive, that may cause actual results or developments to differ materially
from those expressed or implied by the forward-looking statements.

Risks Pertaining to All of Hydros Principal Businesses



| |  | Hydros commodity-based businesses are subject to fluctuations in prices
which may reduce operating results
| |  | -----------------------------------------------------------------------------------------------------------

In the normal course of business, Hydro is exposed to fluctuations in
supply and demand, which can have significant effects on commodity prices
across essentially all of its core business areas and products  oil and gas,
electricity, aluminum, magnesium, fertilizer products and petrochemicals  and,
in turn, Hydros operating results and profitability. At various times in
recent years, including in 2002, markets for one or more of Hydros main
products have been characterized by falling prices, weaker global demand and
rising inventories.

Prices for oil and gas are subject to wide fluctuations in response to
changes in general economic conditions, changes in the supply of and demand for
oil and natural gas, market uncertainty and other factors that are beyond
Hydros control. These factors include political conditions in oil

9



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producing regions, particularly the Middle East as well as the ability of the
members of the Organization of Petroleum Exporting Countries (OPEC) to agree
and maintain oil price and production controls. The ongoing liberalization
process in the European energy market and the emerging short-term market for
natural gas in Europe may influence prices and other terms and conditions
underlying Hydros long-term natural gas contracts.

The prices of aluminum, magnesium, fertilizer products and petrochemical
products similarly, depend on a number of factors, including general economic
conditions, cyclical trends in end-user markets and supply and demand
imbalances. A decrease or stagnation in consumption or an increase in overall
worldwide production capacity above increases in consumption may lead to an
oversupply situation. Oversupply may exist for an extended period because the
manufacturing processes are characterized by continuous operations with high
fixed costs and therefore are not easily adjusted to lower demand.



| |  | Hydros expansion of business activities in emerging and transitioning
markets presents a higher degree of risk
| |  | ---------------------------------------------------------------------------------------------------------------

Hydro is exposed to general financial, political, economic and business
risks in connection with its worldwide operations. In recent years, Hydro has
made investments and commenced activities in various emerging markets,
including Angola and Brazil. In addition to emerging markets, Hydro has
increasing business in transitioning markets including Russia and China. While
emerging and transitioning markets offer strong growth potential, they also
present a higher degree of risk than more developed markets. In addition to
the business risks inherent in developing and servicing new markets, economic
conditions may be more volatile, legal systems less developed and predictable,
and the possibility of various types of adverse governmental action more
pronounced.

Hydro, like other international companies, attempts to conduct its
business and financial affairs in emerging and transitioning markets to protect
against such political and economic risks. However, unexpected or
uncontrollable events or circumstances could have a material adverse effect on
Hydros operations and financial results.



| |  | Hydro is exposed to market and credit risk in its general business
operations
| |  | -----------------------------------------------------------------------------

All of Hydros operating activities extend credit in the normal course of
business operations. In addition, Hydro engages in hedging activities in order
to reduce exposure to short term swings in the prices of its commodity-based
businesses or to hedge its exposure to fluctuations in currencies and interest
rates (Please refer to Item 11. Quantitative and Qualitative Disclosures about
Market Risk for further discussion of these matters). Hydro also enters into
long term contracts to secure the price and availability of raw materials and
energy for its manufacturing operations. All of these activities contain the
risk that one or more counter parties will default on their obligation to Hydro
resulting in direct financial losses, unexpected increased market exposures or
higher operating costs. Poor or deteriorating economic conditions on a global,
regional or industry sector level increase the risk of counter party default.



| |  | Hydro is exposed to the effects of dumping of products by competitors and
anti-dumping and countervailing measures applied to the Companys products
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

Hydro is
subject to the disruptive effects of dumped or subsidized products in
markets by producers engaging in unfair competition. Such activities may not result in the
application of anti-dumping or countervailing duties and any such
duties imposed may be insufficient to eliminate all of the potential
negative effects of such practices. In addition, Hydros
shipments to certain markets may be subjected to
anti-dumping and/or countervailing duties that could negatively
impact Hydros competitive position.

10



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| |  | Hydro may incur material costs to comply with, or as a result of, health,
safety and environmental laws and regulations
| |  | -----------------------------------------------------------------------------------------------------------------------

Hydros operations are subject to complex environmental laws and
regulations adopted by the various jurisdictions in which Hydro operates. Hydro
could incur liability to governments or third parties for an unlawful discharge
of oil, gas or other pollutants into the air, soil or water, including
responsibility for remedial costs. Because the requirements imposed by laws and
regulations are subject to change, Hydro cannot provide assurance that the laws
and regulations enacted in the future, including changes to existing laws and
regulations, will not adversely affect its business.

Green house gas regulations or energy taxes in different forms, could
affect Hydros businesses by potentially changing the competitive position of
companies in different geographic regions depending on implementation decisions
taken by various governments.

In Hydros capacity as a holder of licenses on the NCS under the Norwegian
Petroleum Act of November 29, 1996, Hydro is subject to strict statutory
liability in respect of losses or damages suffered as a result of pollution
caused by spills or discharges of petroleum facilities covered by such
licenses. This means that anyone who suffers losses or damages as a result of
pollution caused by operations at any of Hydros NCS license areas can assert a
claim for compensation from Hydro without needing to demonstrate that the
damage is due to any fault on Hydros part. If the pollution is caused by an
act beyond Hydros control, however, a Norwegian court may reduce the level of
damages to the extent it considers reasonable. In addition, Hydros operations
in Canada and Angola subject the Company to liability in respect of damages
caused by spills or discharges including shipping operations.

In its petrochemicals business, Hydro is a major producer of polyvinyl
chloride (PVC). PVC has been the focus of environmental groups due to alleged
negative health and environmental effects arising from the production, use and
disposal of PVC. Because the requirements imposed by laws and regulations are
frequently changed, Hydro cannot provide assurance that the laws and
regulations enacted in the future, including changes to existing laws and
regulations, will not adversely affect its business.

In addition to environmental laws and regulations affecting its
manufacturing operations, Hydros fertilizer business can be subject to
commercial and legislative pressure aimed at reducing the use of mineral
fertilizers.



| |  | Fluctuations in currency exchange rates may cause Hydros financial
results to decline
| |  | --------------------------------------------------------------------------------------

Hydros reports its consolidated results and financial position in
Norwegian Kroner (NOK) but revenues and costs are denominated in several
currencies. Hydro has exposure to changes in currency rates primarily
resulting from having net cash inflows (income) denominated in US dollars (or
influenced by the US dollar exchange rate) and net cash outflows (primarily
fixed costs) in Euro, NOK and several others currencies. This implies that
exchange rate fluctuations may negatively affect the competitiveness of
activities in countries experiencing appreciation of their currency against the
US dollar. To reduce the economic effects of adverse currency changes, Hydro
maintains a significant portion of its debt in US dollars. Hydro also has loans
in other currencies for similar purposes. If the US dollar declines relative to
the NOK, Euro, etc., the value of Hydros net cash inflow will be reduced. At
the same time, the value of the US dollar denominated debt will decline.
However, the positive effects of the reduction in debt may be reflected in the
accounting results in different time periods.



| |  | Recession, acts of war or terrorism could negatively impact Hydros business
| |  | ----------------------------------------------------------------------------

11



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The consequences of a prolonged recession and adverse market conditions
may include the continued uncertainty of energy prices and the capital and
commodity markets and could have a material adverse effect on Hydros financial
condition and results of operations.

Any military strikes or sustained military campaign may affect Hydros
operations in unpredictable ways, and may cause changes in the insurance
markets, force the Company to increase security measures and cause disruptions
of supplies and markets. The possibility that infrastructure facilities, such
as electric generation, transmission and distribution facilities, would be
direct targets of, or indirect casualties of, an act of war may affect Hydros
operations. War and the possibility of war may have an adverse impact on the
global economy in general. A lower level of economic activity might result in
a decline in consumption, which may adversely affect Hydros revenues and
future growth. Instability in the financial markets as a result of war may
also affect the Companys ability to raise capital or significantly effect
foreign exchange markets.

Further, like other operators of major industrial facilities, Hydros
plants and ancillary facilities may be targets of terrorist activities that
could result in disruption of Hydros ability to produce or distribute the
Companys products. Any such disruption could result in a significant decrease
in revenues and significant additional costs to repair and insure the Companys
assets, which could have a material adverse impact on Hydros financial
condition and results of operation.



| |  | Hydro is not insured against all potential losses and could be seriously
harmed by natural disasters, operational catastrophes or deliberate
sabotage
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

All of Hydros business activities are characterized by substantial
investment in complex production facilities, manufacturing and transportation
equipment. Many of the production processes, raw materials and certain finished
products are potentially destructive and dangerous in uncontrolled or
catastrophic circumstances including fires, explosions, accidents, major
equipment failures, etc. Hydros offshore operations (and certain
transportation operations) are subject to marine perils, including severe
storms and other adverse weather conditions. Production or other facilities
could be targeted for terrorist attacks aimed at incurring substantial
ancillary damage. Hydro could incur uninsured losses and liabilities arising
from such events and/or suffer substantial losses in operational capacity which
could have a material adverse effect on Hydros operations or financial
condition.

Additional Risks Relating to Hydros Oil and Energy Business



| |  | Hydros future performance depends on the ability to develop additional oil
and gas reserves that are economically recoverable
| |  | ------------------------------------------------------------------------------------------------------------------------------

The majority of Hydros proved reserves are currently located on the
Norwegian Continental Shelf (NCS). Norway is currently the worlds third
largest oil exporter after Saudi Arabia and Russia, but the southern part of
the NCS (the location of the most easily accessible and exploitable fields
offshore Norway) is a maturing resource province from which reserve additions
have been low in recent years. A decision by the Norwegian government as to
whether to allow offshore oil and gas exploration in sensitive areas along
Norways northern coastline and in the Barents Sea is not expected until, at
the earliest, 2004, and is dependent upon an environmental impact study to be
completed in 2003. In December 2002, the Director of Norways Petroleum
Directorate announced that the Directorate may lower its estimate of total
petroleum resources on the NCS for the first time in history upon consideration
of recent disappointing results of various drilling activity on the NCS.



| |  | Exploratory drilling involves numerous business and financial risks,
including the risk that Hydro will encounter no commercially productive oil
or natural gas reservoirs, which could materially adversely affect Hydros
operating results
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12



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Exploration and development for oil and gas involves a high degree of risk
that hydrocarbons will not be found or that they will not be found in
commercial quantities. The 3-D seismic data and other appraisal technologies
Hydro uses do not allow it to know conclusively prior to drilling a well that
oil or gas is present or economically feasible to extract. The cost of
drilling, completing and operating a well is often uncertain, especially when
drilling offshore, and cost factors can adversely affect the economics of a
project. Drilling operations may be curtailed, delayed or canceled as a result
of factors outside of Hydros control. Further, completion of a well does not
guarantee that it will be profitable or even that it will result in recovery of
drilling, completion and operating costs. In addition, offshore drilling in
deep water is extremely expensive and long term in nature.



| |  | Hydros development projects involve many uncertainties and operating risks that can prevent Hydro from realizing profits and can cause substantial
losses
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------

Hydros development projects are often in remote locations with limited
predictability due to limited operational history. Projects may be delayed or
unsuccessful for many reasons, including cost overruns, lower oil and gas
prices, equipment shortages, mechanical and technical difficulties and
industrial action. Certain projects may require the use of new and
advanced
technologies, which can be expensive to develop, purchase and implement, and
may not function as expected. In addition, some of Hydros development
projects are or will be located in deepwater or other hostile environments,
such as the NCS, Gulf of Mexico and Angola, or produced from challenging
reservoirs. Planning and development of the Ormen Lange field, for example,
has been described as one of the most challenging assignments any oil company
has tackled, not just in Norway but in a global context, given the combination
of deep water, harsh weather conditions, freezing water temperatures and a
very uneven seabed.



| |  | Estimates of Hydros oil and gas reserves are uncertain and may prove inaccurate
| |  | --------------------------------------------------------------------------------

There are numerous uncertainties inherent in estimating quantities of
proved reserves and their values, including many factors beyond the control of
the producer. The reserve data included in this Annual Report represents only
estimates. Reservoir engineering is a subjective and inexact process of
estimating underground accumulations of oil and gas that cannot be measured in
an exact manner. Further, evaluating properties for their recoverable reserves
of oil and natural gas entails the assessment of geological, engineering and
production data, some or all of which may prove to be unreliable.

Accordingly, reserve estimates may be subject to downward or upward
adjustment. Actual production, revenues and expenditures with respect to
Hydros reserves will likely vary from estimates and those variances may be
material. Any downward adjustment in Hydros reserve data could lead to lower
future production and could adversely affect Hydros financial condition,
future prospects and market value.



| |  | Hydro faces competition from other oil and natural gas companies in all
areas of its operations, including the acquisition of licenses, exploratory
prospects and producing properties
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The oil and gas industry is extremely competitive, especially with regard
to exploration for, and exploitation and development of new sources of oil and
natural gas. Many of Hydros competitors are much larger, well-established
companies with substantially greater resources. These larger companies,
including those created by mergers in the past few years, have a number of
competitive advantages, such as greater geographic diversification of
exploration and production activity; greater financial resources, providing
additional flexibility with respect to the number and range of properties and
prospects that can be considered; and cost efficiencies made possible by the
greater scale of operations and infrastructure.

13



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| |  | Hydros oil and gas operations are subject to higher effective tax rates than its other business activities
| |  | -----------------------------------------------------------------------------------------------------------

Hydro derived approximately 80 percent, 91 percent and 77 percent of its
overall operating income from its Oil and Energy business segment in 2002, 2001
and 2000, respectively. Hydros profits from domestic (Norwegian) oil and gas
production are subject to Norwegian income taxes at a marginal rate of 78
percent. Accordingly, to the extent Hydros operating revenues and earnings
from its domestic oil and gas activities represent a higher percentage of its
overall operating revenues and earnings, Hydros effective tax rate will likely
be higher.



| |  | Hydro may be subject to the imposition of sanctions by the US government in connection with its activities in Iran and/or Libya
| |  | -------------------------------------------------------------------------------------------------------------------------------

Hydro is engaged in certain activities in Iran and has an interest in oil
and gas exploration licenses in Libya, where exploratory and appraisal wells
are in the process of being drilled.

In August 1996, the United States adopted the Iran and Libya Sanctions Act
of 1996 (the Sanctions Act) with the objective of denying Iran and Libya the
ability to support acts of international terrorism and fund the development and
acquisition of weapons of mass destruction. The Sanctions Act provides that
the President of the US is to impose two or more sanctions against any person,
regardless of nationality, if the President determines that such person, with
actual knowledge:



| |  |  | made an investment(s) of USD 20 million or more (in the case of
Libya, USD 40 million or more for investments made prior to June 13,
2001) in any 12-month period in either Iran or Libya that directly and
significantly contributed to the enhancement of Irans or Libyas
ability to develop its petroleum resources; or
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | exported, transferred or otherwise provided to Libya any goods,
services, technology or other items prohibited under United Nations
Resolutions 748 or 883, if providing such items significantly and
materially contributed to Libyas ability to develop its petroleum
resources.                                           

The Sanctions Act, which was due to expire on August 5, 2001, was amended at
that time to provide for, among other things, a five-year extension of the law
and to reduce the investment threshold for Libya from USD 40 million to USD 20
million.

If the US government were to determine that a persons activities in Iran
or Libya are covered by the Sanctions Act, the Act grants the President
discretion in determining which sanctions to apply, which may include: a ban on
any license to exports goods or technology to a sanctioned person; the
prohibition of loans or extensions of credit by U.S. financial institutions in
an amount greater than USD 10 million in any 12-month period to the sanctioned
person; and restrictions on imports from a sanctioned person. The President
also has the authority to grant country-specific and project-specific waivers
under certain circumstances.

For a number of reasons, it is difficult for Hydro to predict whether the
US government could determine that Hydros present or future activities and/or
the level of its investment in Iran or Libya is or may be covered by the
Sanctions Act, and how the US government would implement any such
determination. To date, there have not been any sanctions imposed under the
Sanctions Act. Further, the Sanctions Act does not specify how the value of an
investment is to be calculated. Also, in 1999 the United Nations suspended
the UN sanctions against Libya.

Additional Risks Relating to Hydro Aluminiums Business



| |  | The aluminum industry faces challenges in adjusting to rapid changes in
market balances
| |  | ---------------------------------------------------------------------------------------

14



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The current global recession and the generally weak demand for aluminum
has contributed to the current global overcapacity/production, as reflected in
the historically high inventory levels and weak aluminum prices. But there are
a number of variables, apart from global economic development, that may affect
the market balance for aluminum in the next several years, including:



| |  |  | the level of exports from China, which is expected to continue its
rapid expansion of aluminum production (creating the potential for
production to outstrip the growth in consumption for the next several
years);                                  
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the currently idled, significant smelting capacity in the U.S.
Pacific Northwest;                                                                                                                                                                    
|
| |  |  | the absence of any signs of production or capacity growth abating
in other major aluminum production areas, such as Russia (where Russian
Aluminum has announced its intention to be the largest producer of
aluminum in the next five to six years).



| |  | Hydro Aluminiums operating results may be materially affected by the price and availability of electricity, a vital raw material in the production of
primary aluminum
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Hydros Aluminium business consumes large volumes of energy, mainly
electricity, in producing primary aluminum. Hydro has long-term electricity
supply contracts for its smelters in Norway, Canada and Australia. The
electricity supply contracts for the Companys German smelters expire at the
end of 2005. Liberalization of electricity markets in Europe continues at
varying rates of progress from country to country. In addition, there is a
possibility of new environmental taxes for electricity producers. If
electricity costs rise as a result of market or other factors such as new
taxes, or if electricity supplies or supply arrangements are disturbed, Hydros
operating results could be adversely affected.



| |  | Hydro Aluminiums short strategy with respect to alumina, another vital
raw material in the production of primary aluminum, exposes the segment to
a possible global alumina shortage
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The principal raw material used in the production of aluminum is alumina.
Hydro Aluminium has secured roughly 40 percent of its long-term alumina supply
requirements through equity investments and supplements its own equity
alumina production through medium- to longer-term contractual arrangements with
third parties. Nonetheless, Hydro Aluminium has an overall short strategy,
reflective of it view that new alumina production capacity will materialize to
support the growth in global alumina consumption. Industry analysts have
expressed concerns about whether the alumina greenfield and expansion projects
will be adequate to meet the projected growth in demand over the next several
years. Even if Hydro is able to secure an adequate supply of alumina to meet
its future requirements, the possibility of worldwide demand exceeding supply,
together with the concentration of the alumina production industry, creates the
potential for a material increase in the price of alumina. Hydro may not be
able to pass on the entire cost of an increase in alumina to its customers,
which may result in declining margins and reduced profitability.

Additional Risks Relating to Hydro Agri Business



| |  | Exports from the former Soviet Union and certain Central and Eastern
European countries could destabilize Western European markets
| |  | ----------------------------------------------------------------------------------------------------------------------------------

The collapse of agriculture in most parts of the former Soviet Union (FSU)
and much of Central and Eastern Europe has in the past resulted in increased pressure from
imports into western Europe. The price of natural gas to Russian producers, an important raw
material for the manufacture of fertilizer, is approximately one fifth of that
paid by major European producers as a result of government intervention.
Existing anti-dumping measures currently enforced by the European Union only
apply to EU borders and do not address the source of the problems. In
addition, anti-dumping

15



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instruments are subject to trade rules and negotiations which are subject to
change and the outcome of future developments is uncertain.



| |  | The expansion of the European Union could lead to decreased subsidies to
the Western European agricultural sector
| |  | -----------------------------------------------------------------------------------------------------------------

Since 1999, changes in the European Common Agricultural Policy (CAP) have
led to reduced price supports to the EU agricultural sector. The expansion of the EU could
result in further reductions in subsidies to western European agriculture.
Reduced supports, in turn, may lead to a reduction in agricultural input factors such as fertilizer. Further developments within the
CAP as a result of the expansion of the EU and ongoing developments within the World Trade Organization are uncertain.

Legal and Securities-Related Risks



| |  | The ability of US shareholders to initiate legal action against the Company
may be limited under Norwegian law
| |  | --------------------------------------------------------------------------------------------------------------

The Company is a public limited company incorporated under the laws of
Norway. The rights of holders of the Companys ordinary shares, including
ordinary shares underlying American Depositary Shares, are governed by
Norwegian law and by the Companys articles of association. These rights
differ from the rights commonly possessed by shareholders of US corporations.
In particular, Norwegian law limits the circumstances under which shareholders
of Norwegian companies may bring derivative actions. Under Norwegian law, any
action brought by the Company in respect of wrongful acts committed against the
Company would take priority over actions brought by shareholders in respect of
such acts. In addition, it may be difficult for shareholders to prevail in a
claim against the Company under, or to enforce liabilities predicated upon, US
securities laws.



| |  | The trading prices of the Companys ADSs depend in part on the US dollar
exchange rate
| |  | --------------------------------------------------------------------------------------

The Companys ordinary shares trade in Norwegian kroner (NOK) and its ADSs
trade in US dollars. Any dividends declared are also denominated in NOK. As a
result, the trading prices of the Companys ADSs in US dollars may fluctuate as
the US dollar/NOK exchange rate fluctuates, and any material decrease in the
value of the NOK in relation to the US dollar may cause the trading prices of
our ADSs to decline.

16



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ITEM 4.          INFORMATION ON THE COMPANY

ITEM 4.A.      HISTORY AND DEVELOPMENT OF THE COMPANY

Norsk Hydro ASA was organized under Norwegian law as a public company in
1905 to utilize Norways large hydroelectric energy resources for the
industrial production of nitrogen fertilizers. Energy, in the form of
hydroelectric power, natural gas and petroleum, has been the basis for Hydros
growth and is the common link among its core business activities. Hydros
operating segments consist of the three core business areas: Oil and Energy,
Aluminium and Agri. The business areas and their sub-segments, if
any, are as follows:

|               |  |                                                                                   
|-------------- |  | ----------------------------------------------------------------------------------
|Business Area  |  | Segments                                                                          
|               |  |                                                                                   
|Oil and Energy |  | Exploration and Production, Energy and Oil Marketing                              
|Aluminium      |  | Metals, Rolled Products, Extrusion and Automotive
(including North America sector)
|Agri           |  |                                                                                   

In addition, Hydro is in the petrochemicals business and is engaged in other
activities described in Item 4.B.

As a public company organized under Norwegian law, the Company is subject
to the provisions of the Norwegian act relating to public limited liability
companies (the Norwegian Public Limited Companies Act). See the disclosure
under Item 10.B. Additional Information  Articles of Association -
Description of Ordinary Sharesfor a more complete discussion of certain
provisions of the Norwegian Public Limited Companies Act.

The Companys principal executive offices are located at Bygdøy allé 2,
N-0240 Oslo, Norway; telephone number: 47-22-53-81-00. The Companys
registered agent in the United States is Kendrick T. Wallace, Esq., whose
address is c/o Norsk Hydro Americas, Inc., 100 North Tampa Street, Suite 3300,
Tampa, Florida 33802; telephone number: (813) 222-5700. The Companys internet
site is www.hydro.com.

Over the three-year period ending December 31, 2002, Hydros most
significant capital expenditure was the acquisition of all outstanding shares
of the German group, VAW Aluminium AG, a major producer of primary aluminium,
rolled products, and other fabricated aluminium products headquartered in
Germany. The acquisition was completed on March 15, 2002. The total purchase
price paid by Hydro for the VAW shares, including direct acquisition costs,
amounted to EUR 1,911 million (NOK 14.8 billion). In addition, interest bearing
debt of EUR 703 million (NOK 5.5 billion) and pension commitments of
approximately EUR 410 million (NOK 3.2 billion) were assumed.

On March 19, 2002 Hydro entered into an agreement with the Norwegian state
to purchase interest in eight oil and gas licenses on the Norwegian Continental
Shelf. This acquisition increased Hydros interests in the Oseberg, Tune, and
Grane fields, where Hydro is an operator. Hydro paid NOK 3.45 billion for the
license interests.

On January 25, 2002 Hydro acquired the French building systems company,
Technal that was integrated into the Extrusion and Automotive sub-segment of
Hydro Aluminium on the same date. The purchase price was EUR 73 million (NOK
580 million) and NOK 307 million in debt was assumed.

For additional information concerning Hydros principal capital
expenditures, see the discussions with respect to each of the business segments
under Item 4.Bof this Annual Report, as well as the information incorporated
by reference to the Financial Review section (pages 52 to 85) of the
Companys 2002 annual report to shareholders, which has been filed as an
exhibit to this Annual Report.

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ITEM
4.B.     BUSINESS OVERVIEW

OIL AND ENERGY

Hydro Oil and Energy consists of two sub-segments: Exploration and
Production and Energy and Oil Marketing.



| |  |  | Exploration and Productionconsists of Hydros oil
and gas exploration activities, field development activities and
operation of production and transportation facilities.                                                                                                    
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Energy and Oil Marketingconsists of Hydros
commercial operations in the oil, natural gas and power sectors;
the operation of Hydros power stations and marketing and sales
activities of refined petroleum products (gasoline, diesel and
heating oil) to retail customers.

Hydros strategic focus for the Oil and Energy business area follows two
main directions:



| |  |  | To position Hydro as an important player in the
upstream oil and gas business based on North Sea technological
competence and experience.                                                           
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | To enhance Hydros position in the European energy
market, based on increasing gas production and commercial
competence gained from the European gas market and the
liberalized Nordic power market.

These strategic directions are described in more detail below.

Definitions of key oil and gas terms used throughout the Oil and Energy
business description are provided in Appendix A on pages 40 and
41 of this report. Key
terms are defined as described in the appendix unless otherwise indicated.

Exploration and Production

Exploration and Production is comprised of Hydros oil and gas exploration
activities, field development activities and operation of production and
transportation facilities. Activities are grouped within the following sectors:
Exploration and Development Norway, Operations and Production Norway,
Exploration and Production International and Technology and Projects.

Hydro normally participates in exploration and production activities with
other parties including private and state-owned oil and gas companies and other
government entities. Contractual arrangements among partners are generally
governed by an operating agreement, which provides that costs, production
entitlements and liabilities are allocated according to each partners
respective percentage interest in a particular field or license area.
(Production sharing agreements follow different principles as described more
fully below.) Normally, one party is appointed as operator. Field activities
are conducted under the overall supervision and control of an operating
committee consisting of representatives from each participant in the field.
This enables each of the non-operator partners to be involved in field
development and operations.

Exploration and production licenses are issued by governmental authorities
to authorize exploration and production activities. Such licenses generally
provide that partners are jointly
and severally liable for their obligations to the government authorities under
the applicable license.

As of January 1, 2003, Hydro had interests in 105 licenses on the
Norwegian Continental Shelf (NCS). On January 1, 2003, Hydro transferred the
operatorship of licenses and fields in the Tampen area on the NCS, including
the Snorre, Visund, Tordis and Vigdis fields, to Statoil. After this transfer,

18



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Hydro operates 44 licenses covering 11 fields. Internationally, Hydro is
involved in exploration and production activities in several countries,
including Angola, Canada, Libya, Russia, Iran and the USA (Gulf of Mexico).

The total average daily production in 2002 from Hydro operated fields was
approximately 1.3 million barrels of oil equivalents (boe). Hydros average
daily production of oil and gas in 2002 was approximately 480,000 boe.
Information about Hydros interest, the field operator, the timing of
production start-up, production and reserves, for Hydros most important fields
is presented in the tables located on pages 135 and 136 of the Companys 2002
annual report to shareholders.

POWERPOINT SLIDE #3

Strategy

Hydro will focus its exploration and production strategy for the coming years on:



| |  |  | growing Hydros exploration and production activities;                                                                                                                          
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | balancing Hydros portfolio of interests in oil and gas fields, both
geographically (i.e., between the NCS and international locations) and
in terms of cost of development; and
|
| |  |  | cost improvements to improve profitability.                                                                                                                                     

Growing Exploration and Production Activities

Hydro believes that scale is important to ensure cost-efficient operations
and to enable successful exploitation of new areas. Accordingly, an important
element of Hydros growth strategy is to concentrate its efforts and ensure
that the new areas Hydro enters into have sufficient production potential and
can be pursued aggressively.

From 1998 to 2002 Hydro increased its total production of oil and gas by
more than 75 percent. The increase reflects organic growth on the NCS,
start-up of production from the Companys international activities and the
acquisition in 1999 of the Norwegian-based oil company, Saga Petroleum. In
addition, in 2002 Hydro acquired increased interests in Hydro-operated fields
on the NCS (Oseberg, Tune and Grane) formerly owned by the Norwegian State (the
so-called States Direct Financial Interest or SDFI). The acquisition of SDFI
assets increased Hydros proved reserves by approximately 187 million boe, and
2002 production by 24,000 boe/day.

19



---



##### 



Hydro has earlier announced a target compound annual growth rate in
production of 8 percent for the 2001-2006 period (including the effect of the
SDFI asset acquisition). Hydro expects that the production growth will be
achieved within its existing portfolio based on producing fields and
development projects. Total oil and gas production in 2002 was 480,000 boed,
an increase of 14 percent from 2001. Hydro anticipates a total production of
510,000 boed in 2003, an increase of 6 percent.

POWERPOINT SLIDE #5

In light of the maturity of the NCS (see Industry Trends  Maturity of
the NCS), Hydro has increased its focus on international exploration
opportunities during the past several years. In 2001 Hydros international
exploration activity was, for the first time, higher than on the NCS. Hydros
international exploration activity in 2002 represented 74 percent of the total
exploration activity. Hydro plans a similar relative share of international
exploration activity in 2003. Technological competence, including the
application of leading-edge reservoir and development solutions developed as a
major operator of oil and gas producing fields in the hostile Norwegian
offshore environment, has provided a solid basis for international expansion.

POWERPOINT SLIDE #8

20



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##### 



Hydros international expansion has been based on alliances with regional
players with a focus mainly on oil prospects. An extensive international
exploration drilling program was underway during 2002 and will continue in
2003. Although disappointing drilling results were experienced in Block 34 in
Angola and the initial wells drilled in the Gulf of Mexico, new discoveries
were made both in Block 17 in Angola and in Libya. In addition, further
delineation drilling on the Grand Banks in Canada proved successful. Also,
results from the first deep water well offshore Nova Scotia were encouraging,
although further delineation drilling is planned. In 2003, Hydro anticipates
that the major part of its international exploration activities will be
allocated to Angola, Iran, Canada and the Gulf of Mexico. Other areas of
activity include Libya and Russia. Hydro will perform an evaluation of its
international exploration entry strategy on completion of the drilling program
described above before entering into new commitments.

Balancing the Portfolio

Hydro is actively seeking to concentrate its activities on the NCS by
increasing ownership interests in core areas and by selling interests in
licenses in non-core areas. Hydros purchase of SDFI assets in 2002
strengthened the Companys position in core assets (i.e., the Oseberg, Tune and
Grane fields). In recent years Hydro has divested non-core assets on the NCS,
and is currently offering for sale all or part of its share in an additional 22
non-core offshore licenses in four regions on the NCS.

As described above, Hydro is working to develop an international portfolio
to complement the NCS portfolio. The Company will continue to focus its
international exploration and production activities in four to six core areas,
each with a potential to reach a sustainable production level. Hydro aspires
to build a portfolio, which, in addition to deep water, offshore activities,
includes onshore activities requiring low investment, in order to achieve a
portfolio balanced with respect to geological and economic risk.

In 2002, approximately 10 percent of Hydros total oil and gas production
came from outside the NCS, compared to 4 percent in 2001. The increase
reflects the start up of production from the Terra Nova field in Canada and the
Girassol field in Angola. Production from
international activities is expected to increase in the coming years and
is estimated to reach 14 percent of Hydros total production by 2006 based on
the current portfolio.

Cost Improvements

Hydro continues to pursue cost improvements in its exploration and
production activities. As fields on the NCS mature and demonstrate a decline in
production, cost focus and measures to increase production on existing fields
are given highest priority. An independent benchmarking of operators in the
Central North Sea measured by unit cost of production ranked Hydro, as an
operator, in the top quartile.

Cost improvements are achieved through different measures. Consolidating
the operatorship of fields in a given area reduces cost. This was the
underlying rationale for the transfer of operatorship from Hydro to Statoil
relating to fields on the Tampen area on the NCS, which was agreed between
Hydro and Statoil at the time of the Saga acquisition. The cost performance of
the Snorre and Vigdis fields improved after transfer of operatorship to Hydro
after the Saga acquisition, however, there is potential for further improvement
by consolidating operations for all fields in this area.

Costs can also be reduced by portfolio optimization including divestment
of fields nearing the end of their economic lives. For example, in August 2002
Hydro divested its interest in the license covering the Varg field.

21



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In addition, in January 2003, Hydro announced organizational adjustments
as a result of fewer prospective development tasks and the transfer of
operatorship of the fields in the Tampen area referred to above. The
adjustments will include a reduction of approximately 300 man-years
comprised of consultants and permanent employees. This comes in addition to
the 535 employees that were transferred to Statoil as part of the transfer of
operatorship. Associated costs will be included in Hydros results for 2003
while cost savings are expected beginning 2004.

Hydros objective is to maintain its position as an efficient operator on
the NCS and to maintain its operating cost1 at approximately the same level as
2002.

Finding and development costs (F&D costs) represent the cost to add one
barrel of oil equivalent (boe) of proved reserves to Hydros reserve portfolio.
The Companys goal is to reduce its three-year average F&D costs (excluding
acquisitions and disposals) to USD 5 per barrel of added proved reserves. Hydro
will seek to achieve this goal through a combination of measures, including
more focused exploration activities and a reduced time period between discovery
and start up of development. In 2002 Hydros three-year average F&D costs
increased from USD 5.9 to 7.2 per barrel of reserves added. However, the
Company expects to make progress toward its target during 2003 as the Plan for
Development and Operation of the large Ormen Lange field is expected to be
submitted to the Norwegian authorities for approval in the fourth quarter of
2003 and as a result, the reserves of this field will be included in the
reserve estimate.

(Slide)



---

| |  | 1 Defined as the sum of field production cost (including insurance and
transportation system costs), depreciation and abandonment, net tariffs and
other income/cost, but excluding exploration
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

22



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##### 



Industry Trends

Reduced exploration results internationally

In the last few years, worldwide exploration activities generally
indicate reduced findings despite increased drilling efforts. According to
industry sources, there was an increase in the number of wildcat exploration
wells in the world (exclusive of North America) from 895 in 2000 to 968 in 2001. However, despite
this increased drilling effort, the number of discoveries fell by approximately
14 percent over the same time period. In particular, within the area of the
Atlantic Ocean Margins, discovery trends appear in general to be declining due
to the maturing of many basins and shelves notwithstanding that some areas,
such as Nigeria and Gulf of Mexico still yield good results. In these mature
areas, exploration activities have shifted towards the deep water sections of
established basins, as seen in Gulf of Mexico and Angola. However, in other
parts of the world  such as the Middle East, Australia, and Russia -
exploration has yielded increasing amounts of new technical resources in the
last few years. This is illustrated by the fact that six major discoveries
(larger than 500 million boe) were discovered in this part of the world in
2001,
while only 2 such discoveries were discovered in the Atlantic region. A
challenge for western oil companies in certain of these countries is to get
access to exploration areas on attractive terms.

Maturity of the NCS

The NCS is maturing and reserve additions have been low in the recent
years. In the 15th licensing round the major discovery was the Hydro operated
Ormen Lange field made in 1997. The 16th licensing round has so far yielded
disappointing results with no commercial discoveries made related to major
prospects. This overall negative trend is reflected in an even lower planned
exploration level on NCS for 2003. Hydros NCS exploration profile is
influenced by an increase in the perceived risk/reward level of real
exploration opportunities. On the prospective resource side, Hydro still
believes that there is interesting remaining exploration potential on the NCS;
primarily divided into four different opportunity options. Areas around
existing infrastructure in the North Sea offers interesting oil and gas
potential in terms of satellite tie-ins to increase the economic life of
current installations. In addition, this area still offers some standalone
possibilities. The Norwegian Sea still offers interesting potential in
particular on larger gas prospects, although the results from the 16th
licensing round have increased Hydros perceived risk in this area. The
northern part of the NCS, including the Barents Sea, has a potential both in
terms of oil and gas prospects while the perceived risk is high. Activity in
this region is halted at present pending completion of the regional
environmental impact assessment study currently being undertaken by the
Norwegian government. This issue, combined with fiscal incentives and other
factors determine the risk/reward ratio for the industry and are important to
address by the industry as well as the authorities to ensure that the NCS
remains competitive for the oil companies.

23



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##### 



Competitive Strengths

Strong position on the NCS

In terms of equity production and reserves, Hydro is the third-largest
interest holder on the NCS, following Petoro (which handles the Norwegian
states direct ownership) and Statoil.

Hydros position on the NCS was strengthened in 2002 with the acquisition
of increased interest in the Oseberg, Tune and Grane fields from the Norwegian
state. Hydros total production on the NCS increased in 2002 to a record level
of 432,000 boed.

In 2003 Hydros position will be further strengthened with, among other
things, the start up of the Grane field, which is the largest oil field on the
NCS under development and where Hydro has an ownership share of 38 percent.
Furthermore, Hydro expects that the plan for development and operation for the
large Ormen Lange gas field will be submitted in the fourth quarter of 2003 for
approval by the Norwegian governmental authorities. This field, which is the
second largest gas field on the NCS, is planned for production start-up in
2007.

Interesting International Positions

Hydros main international positions are in Angola, Canada, Russia, Libya,
Iran, and in the US Gulf of Mexico.

Angola: Over the past several years, Angola has become one of the worlds
leading deep-water exploration areas with large oil discoveries, resulting in a
significant increase in the long-term production forecast for Angola offshore.
Hydro has participated in Angolas oil and gas industry since 1991. Hydro holds
a 10 percent interest in the very prolific Block 17, where the Girassol field
had steady production throughout 2002 and where the Dalia field and other
projects are being launched. In 2001 Hydro signed a production sharing
agreement (PSA) with the Angolan governmental authorities, acquiring a 30
percent interest in the ultra-deep water Block 34 and with a technical
assistance agreement entered into with Sonangol, the Angolan state-owned oil
company. Hydro holds a 20 percent interest in Block 25 and is evaluating the
Angola LNG project together with the major oil companies in Angola.

Canada: Hydro entered into a strategic alliance with Petro-Canada in 1996
that entailed a swap of certain Hydro interests in licenses on the NCS in
exchange for the right to participate in oil production from proven fields and
actively explore for further oil discoveries on the Grand Banks. Hydro has
ownership in two producing fields, Hibernia and Terra Nova. Hydro has since
expanded the exploration effort to include the Scotian Shelf on Canadas east
coast.

Russia: Hydros oil and gas business development in Russia has been
ongoing since 1990 and has focused on proven resources in the Northwest region
of Russia. Hydro participates in the Kharyaga oil project, which has been in production since October 1999. Expansion of the
project is expected to be completed in early 2003. Hydro has worked on the
Shtokman gas project in the Barents Sea since 1990, and continues to seek an
ownership position in this field. Business development activities in other
regions in Russia expanded in 2002, focusing on proven oil projects. In
February 2003 Hydro signed a protocol of intent with the Russian oil company
OAO Lukoil for cooperation in joint projects.

Libya:In Libya, Hydro has non-operator positions in one producing field
(Mabruk West) and three exploration licenses in the Murzuq basin where the
first field  Murzuq A  is under development and the second field  Murzuq D -
is expected to be approved for development by the authorities in 2003.

24



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##### 



Iran:Hydro established an office in Tehran, Iran during November 1999.
In April 2000, Hydro entered into a contract with the National Iranian Oil
Company (NIOC) for the exploration of the Anaran Block covering an area of
3,260 square kilometers and containing the Changuleh discovery. The contract
has a term of 4.5 years, providing Hydro with the right to negotiate a buy-back
agreement to develop reserves in the event of a commercial discovery. Drilling
is expected to be initiated in the beginning of 2003. In February 2003 Hydro
signed an agreement with Lukoil Overseas Anaran Ltd., transferring 25 percent
of Hydros 100 percent interest in the Anaran Block. This agreement has yet to
be approved by the Iranian authorities.

USA:In September 2001, Hydro entered into a joint venture with
ConocoPhillips in deepwater Gulf of Mexico. Hydro was assigned a 25 percent
title interest in 55 leases. In addition to five firm and three contingent
exploration wells, Hydro has options to participate in future exploration wells
resulting from further mapping of leases in ConocoPhillips portfolio through
2005.

25



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##### 



Reserve Information

At the end of 2002, Hydros share of proved developed reserves of oil and
gas was estimated to be 1,432 million boe. Hydros share of proved undeveloped
reserves accounted for an additional 793 million boe. Total developed and
undeveloped reserves amounted to 2,225 million boe, of which gas reserves
accounted for approximately 53 percent.

Reserve life, defined as the number of years of production from proved
reserves at the present production level, was approximately 13 years at the end
of 2002, with approximately 8 years for oil and approximately 29 years for gas.

The following table summarizes Hydros net quantities of proved oil and
gas reserves as of December 31, 2002, 2001 and 2000.

Oil and Gas Reserves

|                                                                            |  |        |       |           |  |       |     |        |  |       |       |       |  |        |       |       |  |       |     |  |  |  |       |  |  |  |       |  |  |  |     |  |  |  |       | 
|--------------------------------------------------------------------------- |  | ------ | ----- | --------- |  | ----- | --- | ------ |  | ----- | ----- | ----- |  | ------ | ----- | ----- |  | ----- | --- |  |  |  | ----- |  |  |  | ----- |  |  |  | --- |  |  |  | ----- | 
|                                                                            |  | 2002   |       | 2001      |  | 2000 
|Oil in millions of boe                                                      |  |        |       |           |  |      
|Gas in billions of cubic feet (bcf)                                         |  | Norway |       | Int'l (1) |  | Total |     | Norway |  | Int'l |       | Total |  | Norway |       | Int'l |  | Total
|                                                                            |  |        |       |           |  |       |     |        |  |       |       |       |  |        |       |       |  |      
|Proved oil reserves, developed and
undeveloped (2)                          |  |        | 883   |           |  |       | 172 |        |  |       | 1055  |       |  |        | 825   |       |  |       | 193 |  |  |  | 1,018 |  |  |  | 820   |  |  |  | 156 |  |  |  | 976   | 
|Of which developed                                                          |  |        | 559   |           |  |       | 93  |        |  |       | 652   |       |  |        | 564   |       |  |       | 62  |  |  |  | 626   |  |  |  | 555   |  |  |  | 33  |  |  |  | 588   | 
|                                                                            |  |        |       |           |  |       |     |        |  |       |       |       |  |        |       |       |  |       |     |  |  |  |       |  |  |  |       |  |  |  |     |  |  |  |       | 
|Proved gas reserves, developed and
undeveloped                              |  |        | 6,629 |           |  |       |    |        |  |       | 6,629 |       |  |        | 5,986 |       |  |       |     |  |  |  | 5,986 |  |  |  | 6,004 |  |  |  |    |  |  |  | 6,004 | 
|Of which developed                                                          |  |        | 4,416 |           |  |       |    |        |  |       | 4,416 |       |  |        | 3,669 |       |  |       |     |  |  |  | 3,669 |  |  |  | 3,644 |  |  |  |    |  |  |  | 3,644 | 
|                                                                            |  |        |       |           |  |       |     |        |  |       |       |       |  |        |       |       |  |       |     |  |  |  |       |  |  |  |       |  |  |  |     |  |  |  |       | 
|Proved oil and gas reserves,
developed and undeveloped
(in millions of boe) |  |        | 2,053 |           |  |       | 172 |        |  |       | 2,225 |       |  |        | 1,880 |       |  |       | 193 |  |  |  | 2,073 |  |  |  | 1,884 |  |  |  | 156 |  |  |  | 2,040 | 
|Of which developed                                                          |  |        | 1,339 |           |  |       | 93  |        |  |       | 1,432 |       |  |        | 1,211 |       |  |       | 62  |  |  |  | 1,273 |  |  |  | 1,201 |  |  |  | 33  |  |  |  | 1,234 | 
|                                                                            |  |        |       |           |  |       |     |        |  |       |       |       |  |        |       |       |  |       |     |  |  |  |       |  |  |  |       |  |  |  |     |  |  |  |       | 



| | 
| | 
|

|(1) |  | Reserves under international activity are shown net of Royalties and Governments share of
Profit Oil.                                    
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | For the definition of proved, developed and undeveloped reserves,
see Oil and Gas Terms in Appendix A on pages 40 and
41 of this report.





Hydros reserve replacement ratio in 2002 including purchase and sale of
reserves and the effect of production sharing agreements (PSA) on some
international fields was 187 percent. Excluding purchase and sale and the
effect of PSA, the ratio was approximately 98 percent. Positive developments in
the reserve replacement ratio resulted from the maturing of technical resources
into proved reserves, primarily in Norway and Angola, and revisions to
recoverable reserve estimates for other fields in the portfolio.

Proved
reserves are estimates and are expected to be revised as oil and gas
are produced and additional data becomes available. Accordingly,
recoverable reserves are subject to upward or downward adjustments.

An analysis of changes to proved developed and undeveloped reserves of oil
and gas as of and for the three years ended December 31, 2002, 2001 and 2000 is
incorporated by reference to the table in Note 26 to the Consolidated Financial
Statements found on page 120 of the Companys 2002 annual report to
shareholders. Information relating to the various fields comprising proved
reserves as of December 31, 2002 and production of oil and gas for 2002 is
incorporated by reference to the tables of proved reserves and production of
oil and gas included
in the section on operational data on pages 135 and 136 of the Companys 2002
annual report to shareholders.

26



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Exploration

The following tables reflect the number of exploratory oil and gas wells
drilled by Hydro as of December 31, 2002. The first table represents all the
exploratory wells drilled and completed during the years indicated but excludes
wells that are under evaluation, and the second table represents the
exploratory wells in the process of being drilled or evaluated as of year-end
2002. A total of 31 wells were drilled in 2002 of which 2 wells remained under
evaluation. In addition, one well, which did not result in a commercial
discovery, was in the process of being drilled at year-end.

Drilling Activity

|                            |  |                |  |               |   |               |  |       |    |      |  |      |   |      |  |      |    |      |  |      |   |  |  |  |   |  |  |  |    |  |  |  |    |  |  |  |    | 
|--------------------------- |  | -------------- |  | ------------- | - | ------------- |  | ----- | -- | ---- |  | ---- | - | ---- |  | ---- | -- | ---- |  | ---- | - |  |  |  | - |  |  |  | -- |  |  |  | -- |  |  |  | -- | 
|                            |  |                |  | Norway        |   | International |  | Total
|                            |  |                |  |               |   |               |  |      
|                            |  |                |  | 2002          |   | 2001          |  | 2000  |    | 2002 |  | 2001 |   | 2000 |  | 2002 |    | 2001 |  | 2000
|                            |  |                |  |               |   |               |  |       |    |      |  |      |   |      |  |      |    |      |  |     
|Exploratory                 |  | productive (1) |  |               | 6 |               |  |       | 8  |      |  |      | 6 |      |  |      | 6  |      |  |      | 7 |  |  |  | 6 |  |  |  | 12 |  |  |  | 15 |  |  |  | 12 | 
|                            |  | dry (2)        |  |               | 5 |               |  |       | 10 |      |  |      | 8 |      |  |      | 12 |      |  |      | 4 |  |  |  | 7 |  |  |  | 17 |  |  |  | 14 |  |  |  | 15 | 
|                           
|Present Drilling
Activities
|                           
|As of December 31, 2002     |  | Norway         |  | International |   | Total        
|                            |  |                |  |               |   |              
|Exploratory                 |  | gross (3)      |  |               |   |               |  |       | 0  |      |  |      |   |      |  |      |    |      |  |      | 3 |  |  |  |   |  |  |  |    |  |  |  | 3  | 
|                            |  | net (4)        |  |               |   |               |  |       | 0  |      |  |      |   |      |  |      |    |      |  |      | 0 |  |  |  |   |  |  |  |    |  |  |  | 0  | 



| | 
| | 
|

|(1) |  | Productive well: an exploratory well deemed to be commercially viable.                                                                                  
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | Dry well: an exploratory well found to be incapable of producing
either oil or gas in sufficient quantities to justify completion as an
oil or gas well.
|(3) |  | Gross well: a well in which a whole or fractional working interest is
owned.                                                                            
|(4) |  | Net well: the sum of the whole fractional working interests in gross
wells which equal 1.                                                               





Norway

Hydro participated in nine exploratory and two appraisal wells that were
completed during 2002. Commercial discoveries were made by four of the
exploration wells and the two appraisal wells confirmed the expectations made
by previous discoveries. Hydros last obligatory exploration well from the 16th
licensing round, drilled at a record depth on the NCS of 1,725 meters, turned
out to be dry.

During 2002 the Norwegian government awarded new licenses through the 2001
North Sea application round, and through the 17th concession round covering the
Norwegian Sea. Hydro was awarded operatorships in two licenses in each round
and participation as partner in one more license in each round.

In October 2002 the Norwegian authorities announced 109 blocks located in
the North Sea area (the 2002 North Sea round). The target date for submitting
applications was January 28, 2003 and awards are anticipated to take place in
the beginning of the second quarter of 2003. Norsk Hydro was among the nine oil
companies submitting applications.

In 2003, Hydro plans to participate in 5 exploratory wells on the NCS, of
which 2 wells will be drilled with Hydro as operator.

The Ormen Lange partnership agreed in December 2002 that the development
application to the authorities for the field will be based on a sub-sea
development with an onshore gas processing

27



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##### 



plant located at Aukra in Northwest Norway. The Plan for Development and
Operation is planned to be submitted to the authorities in the fourth quarter
of 2003 together with the Plan for Installation and Operation of the export
pipeline system to the UK. Ormen Lange is the largest undeveloped gas field
on the NCS, at a water depth of 1,000 meters. Production is scheduled to begin
in 2007. Hydro will be the operator for the
development of the field.

International

In 2002 Hydros international exploration activities encompassed Angola,
Canada, Russia, Libya, Iran, Trinidad, Denmark and the US (Gulf of Mexico).
Hydro participated in the drilling of twenty, exploratory and appraisal wells
that were completed during 2002 of which two still are under evaluation. In
addition one well was in the process of being drilled at year-end. Six
discoveries were made, all expected to have a commercial potential.

In Angola, Hydro has a 10 percent interest in Block 17 where the promising
Zinia discovery made in 2002 represents the thirteenth oil discovery on this
deepwater offshore block in Angola. This positive result will be followed by
further geological and engineering studies in order to appraise the newly
discovered structure. The remaining two exploration wells were drilled in
November and December of 2002 and are presently under evaluation. The first
well drilled in April 2002 on Block 34, where Hydro holds a 30 percent
interest, did not encounter hydrocarbons. However, Block 34 is a large block
and the contractor group is now working to define new prospects as a basis for
further drilling. During 2002, Hydro has increased its participating interest
in Block 25 from 10 to 20 percent. The well drilled in 2002 on Block 25 did not
encounter hydrocarbons. Exploratory wells for both Blocks 34 and 25 are
scheduled to be drilled in 2003. Following completion of the minimum
exploration program on Blocks 5 and 9 without proving hydrocarbons, both blocks
have been relinquished to the concessionaire.

In Canada, Hydro has developed a substantial license portfolio following
its entering into a strategic alliance with Petro-Canada in 1996. Hydro
participated in the drilling of three wells during 2002. The Annapolis well,
offshore Nova Scotia, discovered natural gas, however further delineation is
required to determine possible development solutions. The partners decided in
2002 to discontinue the joint evaluation of the Hebron project due to the
complexity of the project. However it is Hydros view that the resource base of
Hebron is good and that the field may have longer range development potential.

In Northwest Russia, Hydro is involved in the early phases of several
projects, which aim to explore and develop oil reserves in the Pechora Sea and
in the onshore Timan Pechora area. Hydro is also part of a group that has been
engaged in the technical and commercial evaluation of the Shtokman gas field in
the Barents Sea.

In Libya, Hydro has a non-operating interest in the Murzuq exploration
licenses NC186, NC187 and NC 190. By the end of 2002, ten exploratory wells
and three appraisal wells had been drilled on the three licenses with four
discoveries and three successful appraisal wells. The exploration and appraisal
program in Libya will continue in 2003 with the drilling of 4-6 wells.

In Iran, during 2002 Hydro has carried out an operation in clearing
minefields and doing necessary fieldwork to allow for the collection of seismic
data. Procedures and work methods had to be designed to allow for a safe
operation in the field. The seismic operation is now underway and the first
well is scheduled to be spudded in 2003.

In Trinidad and Tobago, where Hydro has a 19 percent interest in the deep
water Block 27, the Catfish-1 exploratory well was completed in April 2002.
Catfish-1 did not result in a commercial

28



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##### 



discovery. Further evaluation of the exploration potential offshore Trinidad
and Tobago is scheduled for 2003.

In Denmark, Hydro participated in an exploration well in the Danish
offshore license DK 4/98. The well tested a technical gas discovery but
preliminary post-test analyses resulted in a negative conclusion regarding
productivity and possible commerciality of the discovery. The Danish Energy
Agency (DEA) has, upon request from the operator ConocoPhillips and the license
group, postponed the license period for 2 years and removed the spud deadline
for the second commitment well in the license. This is done in order to allow
for a proper evaluation of all exploration possibilities within the license.
Should no such possibilities materialize into a drillable prospect the DEA has
expressed a willingness to re-consider the issue of relocation of the
commitment well.

In the US Gulf of Mexico, Hydro entered into a farm-in agreement with
ConocoPhillips in September 2001, which provided Hydro with a 25 percent
working interest in five firm and three contingent exploratory wells. Of the
five firm wells, four wells have so far been drilled without any commercial
discoveries. This includes the Voss well which was under drilling as of
year-end 2002. It is expected that the remaining well will be completed in
2003. Evaluation of prospects on leases in ConocoPhillips portfolio that Hydro
has options to participate in will continue in 2003. Hydro will in 2003 also be
evaluating other opportunities available in deepwater Gulf of Mexico.

29



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##### 



Development

In 2002, Hydro invested NOK 8,222 million in the development of new and
existing fields and transportation systems compared to NOK 7,763 million and
NOK 7,926 million in 2001 and 2000, respectively. Grane and Tune, were the two
most important development projects for Exploration and Production in 2002.

A summary of the fields under development as of December 31, 2002 is set
forth in the following table:

Development(1)

|              |                      |          |                |             |                |              |                |               |                 |       |            |         |  |     |                |     |  |      |                  |     |  |  |  |  | 
|------------- | -------------------- | -------- | -------------- | ----------- | -------------- | ------------ | -------------- | ------------- | --------------- | ----- | ---------- | ------- |  | --- | -------------- | --- |  | ---- | ---------------- | --- |  |  |  |  | 
|              |                      |          |                |             |                |              |                |               |                 |       |            |         |  |     |                |     |  |      | Hydros share of
|              |                      |          |                |             |                |              |                |               |                 |       |            |         |  |     |                |     |  |      |                 
|              |                      |          |                |             |                |              |                |               |                 |       | Production |         |  |     |                |     |  |      |                  |     |  |  | 
|              |                      |          | Type           |             | Approved for   |              | Scheduled      |               | Total Estimated |       |            |         |  |     | Incurred      
|Field         |                      | of Field |                | Development |                | to Commence  |                | Investment    |                 | Total |            | to date
|              |                      |          |                |             |                |              |                |               |                 |       |            |        
|              |                      |          |                |             |                |              |                |               |                 |       |            |         |  |     | in NOK billion
|              |                      |          |                |             |                |              |                |               |                 |       |            |         |  |     |               
|Norway        |                      |          |                |             |                |              |                |               |                 |       |            |         |  |     |                |     |  |      |                  |     |  |  |  | 
|              | Kvitebjørn           |          | Gas/Condensate |             | July 2000      |              | October 2004   |               |                 | 10.5  |            |         |  | 1.8 |                |     |  | 0.9  |                 
|              | Grane(2)             |          | Oil/Gas        |             | June 2000      |              | October 2003   |               |                 | 15.6  |            |         |  | 5.7 |                |     |  | 3.4  |                 
|              | Fram Vest            |          | Oil/Gas        |             | March 2001     |              | October 2003   |               |                 | 4.3   |            |         |  | 1.2 |                |     |  | 0.5  |                 
|              | Mikkel               |          | Gas/Condensate |             | September 2001 |              | October 2003   |               |                 | 2.4   |            |         |  | 0.3 |                |     |  | 0.2  |                 
|              | Kristin              |          | Oil/Gas        |             | December  2001 |              | October 2005   |               |                 | 18.2  |            |         |  | 2.5 |                |     |  | 0.2  |                 
|              | Snøhvit              |          | Gas/Condensate |             | March 2002     |              | October 2006   |               |                 | 46.9  |            |         |  | 5.1 |                |     |  | 0.3  |                 
|              | Visund Gass          |          | Gas            |             | October 2002   |              | October 2005   |               |                 | 2.3   |            |         |  | 0.5 |                |     |  | 0.01 |                 
|              | Vigdis extension     |          | Oil/gas        |             | December 2002  |              | December 2003  |               |                 | 2.8   |            |         |  | 0.4 |                |     |  | 0.04 |                 
|              | Byggve/Skirne        |          | Gas/Condensate |             | July  2002     |              | March 2004     |               |                 | 2.5   |            |         |  | 0.3 |                |     |  | 0.1  |                 
|International |                      |          |                |             |                |              |                |               |                 |       |            |         |  |     |                |     |  |      |                  |     |  |  |  | 
|              | Kharyaga phase 1 & 2 |          | Oil            |             | October 1997/  |              | October 1999 / |               |                 | 3.2   |            |         |  | 1.3 |                |     |  | 1.1  |                 
|              |                      |          |                |             |                | October 2000 |                | December 2003 |                 |       |            |         |  |     |                |     |  |      |                  |    
|              | Murzuq A-field       |          | Oil            |             | July 2002      |              | October 2004   |               |                 | 1.7   |            |         |  | 0.2 |                |     |  | 0.01 |                 
|              | Jasmim               |          | Oil            |             | September 2001 |              | October 2003   |               |                 | 3.9   |            |         |  | 0.4 |                |     |  | 0.1  |                 
|              | Dalia                |          | Oil            |             |                | 2003         | (3)            |               | October 2006    |       |            | 42.3    |  |     |                | 4.6 |  |      |                  | 0.1 | 



| | 
| | 
| | 

|(1) |  | The table excludes the Rosa Liriofield in Angola as it was not
sanctioned by year-end 2002.                                                                                                              
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | The Grane development is exclusive
of the gas phase. The table does not include cost related to purchase of assets on
the Grane field from SDFI.                                                         
|(3) |  | The development of the Dalia field in Angola was accepted by the
Companys Board of Directors in February 2003, and is expected to be
approved by the partnership and Sonangol in the first half of 2003.

Norway

Gas and condensate from the Kvitebjørnfield will be exported to the
Kollsnes gas terminal and the Mongstad terminal, respectively. Production is
scheduled to commence in October 2004.

Pre-drilling of development wells for the Granefield commenced in August
2001 and the project is proceeding according to plan. Production is scheduled
to begin in October 2003. Oil from the field will be exported in a new
pipeline from the Grane platform to the Sture terminal in Øygarden, Norway.
Gas will be imported from the Heimdal Gas Center, which is located in the
vicinity of the Grane field, for injection to ensure optimum production of oil.

Oil and associated gas from the Fram Vestfield will be produced by four
sub-sea wells with production scheduled to commence in October 2003. The well
stream will be piped to the Troll C platform for processing. Processed oil
will be transported to the Mongstad terminal while gas will

30



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##### 



be returned for reinjection for a period of approximately six years to
facilitate oil recovery. After this period, gas will be transported to the
Kollsnes gas terminal. Predrilling of production wells commenced in July 2002
and the project is proceeding according to plan.

The development concept for the Mikkelfield consists of four production
wells from two sub-sea templates linked to the Åsgard B platform for
processing. The Mikkel condensate will be exported from Åsgard C for offshore
loading. The Mikkel gas will be transported to the Kårstø terminal through the
Åsgard transport system. Production is scheduled to begin in October 2003.

The development concept for the Kristinfield consists of twelve
production wells from three sub-sea frames linked to a dedicated floating
production unit for processing. Gas will be exported through the Åsgard
Transport pipeline while condensate will be loaded offshore from Åsgard C.
Production from the field is expected to commence in October 2005.

The Norwegian authorities approved the development concept for the Snøhvit
field in March 2002. The development consists of nine wells from three sub-sea
templates and the well stream will be transported through a 26'' pipeline to the
LNG plant at Melkøya close to Hammerfest for processing. Final products of
LNG, LPG and Condensate will be shipped to the markets by boat. Statoil, the
operator of Snøhvit announced in December 2002 that the development of the
field and terminal would be NOK 5.8 billion higher than the estimate used in
the plan for development and operation due to underestimation of the weight of
the LNG plant, change of the LNG plant design basis, and delayed approval by
the EFTA Surveillance Authority of the projects tax conditions which allows
for depreciation of investments over a 3 year period compared to 6 years for
other petroleum installations. Hydro has announced its interest in selling its
ownership interest in the field.

The Skirneand Byggvegas and condensate fields will be developed with one
sub sea well at each field tied to the Heimdal Gas Center. Drilling of the
wells will start in the first quarter of 2003 and the production start is
currently planned for the first quarter of 2004.

International

Angola, Block 17:The Jasmimfield is a satellite to the Girassol field.
The field was declared commercial in the middle of 2001. The development
concept comprises a sub-sea tie-in to the Girassol floating production and
storage-offloading (FPSO) unit. The partnership approved the project in 2001
and the main development contracts were placed in early 2002. Production from
Jasmim is expected to begin in second half of 2003. The development concept for
the Daliafield comprises a sub-sea production system linked to a FPSO having a
production capacity of approximately 225,000 boed. Dalia is expected to be
finally sanctioned in the first half of 2003 and production is expected to
begin in 2006. The development concept for the Rosa Liriofield is a sub-sea
solution with tieback to the Girassol field. Rosa Lirio is anticipated to be
sanctioned in 2003.

Northwest Russia:The first phase of the Kharyagafield began production
in 1999. Phase 2 is now under development and production is expected to
commence in 2003.

Libya: The Libyan authorities approved the field development plan for the
Murzuq A-field in 2002. The field development plan for the Murzuq D-field was
submitted for approval to the Libyan authorities in October 2002.

The following table shows the number of development wells in which Hydro
had interests as of December 31, 2002. These wells were drilled in 2002 in the
fields listed in the above table summarizing fields under development.

|                  |  |        |    |               |  |       |   |  |  |  |    | 
|----------------- |  | ------ | -- | ------------- |  | ----- | - |  |  |  | -- | 
|Development wells |  | Norway |    | International |  | Total
|                  |  |        |    |               |  |      
|Number of wells   |  |        | 13 |               |  |       | 0 |  |  |  | 13 | 
|                  |  |        |    |               |  |       |   |  |  |  |    | 

31



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Production

The following table shows the number of gross and net productive oil and
gas wells in which Hydro had interests as of December 31, 2002. A gross well
is one in which a whole or fractional working interest is owned. The number of
net wells is the sum of the whole or fractional working interests in gross
wells. Productive wells are producing wells or those capable of production and
deemed commercially viable.

|             |  |       |  |           |     |                  |  |       |    |  |  |  |     |  |  | 
|------------ |  | ----- |  | --------- | --- | ---------------- |  | ----- | -- |  |  |  | --- |  |  | 
|             |  |       |  |           |     | Productive Wells |  |       |    |  |  |  |     | 
|Type of well |  |       |  | Norway(1) |     | International    |  | Total
|             |  |       |  |           |     |                  |  |      
|Crude oil    |  | gross |  |           | 513 |                  |  |       | 82 |  |  |  | 595 | 
|             |  | net   |  |           | 67  |                  |  |       | 15 |  |  |  | 83  | 
|Natural gas  |  | gross |  |           | 83  |                  |  |       | 0  |  |  |  | 83  | 
|             |  | net   |  |           | 10  |                  |  |       | 0  |  |  |  | 10  | 



| | 
| | 
| | 

|(1) |  | Twenty wells with multiple completions (i.e., more than one formation
producing into the same well bore). If one of the multiple completions in a
well is an oil completion, the well is classified as an oil well.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

32



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##### 



Production of Oil and Gas

The following table sets forth Hydros share of average daily production
of oil and gas for calendar year 2002 and 2001. All volumes are calculated
based on the Norwegian Petroleum Directorates current conversion factors. The
conversion factor for NGL is 1 ton equal to 11,951 boe.

Hydros Share of Average Daily Production(1)

|                    |  |                                |       |                                |  |             |       |           |  |           |       |             |  |  |       |  |  |  |       |  |  |  |       | 
|------------------- |  | ------------------------------ | ----- | ------------------------------ |  | ----------- | ----- | --------- |  | --------- | ----- | ----------- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                    |  | Hydros
share of average daily |       | Hydros share of average daily
|                    |  | production in 2002             |       | production in 2001            
|                    |  |                                |       |                               
|                    |  | Total in                       |       | Oil in                         |  | Gas in      |       | Total in  |  | Oil in    |       | Gas in     
|                    |  | thousands                      |       | thousands                      |  | millions of |       | thousands |  | thousands |       | millions of
|Field               |  | of boe                         |       | of boe(1)                      |  | cubic feet  |       | of boe    |  | of boe    |       | cubic feet 
|                    |  |                                |       |                                |  |             |       |           |  |           |       |            
|Norway              |  |                                |       |                                |  |             |       |           |  |           |       |             |  |  |       |  |  |  |       |  |  |  |       | 
|Oseberg fields      |  |                                | 114.9 |                                |  |             | 97.8  |           |  |           | 90.9  |             |  |  | 99.0  |  |  |  | 83.5  |  |  |  | 84.1  | 
|Troll               |  |                                | 79.7  |                                |  |             | 37.7  |           |  |           | 242.5 |             |  |  | 69.7  |  |  |  | 34.5  |  |  |  | 203.3 | 
|Snorre fields (2)   |  |                                | 66.4  |                                |  |             | 63.6  |           |  |           | 14.6  |             |  |  | 67.4  |  |  |  | 64.1  |  |  |  | 16.9  | 
|Sleipner fields (3) |  |                                | 34.1  |                                |  |             | 11.8  |           |  |           | 122.3 |             |  |  | 32.1  |  |  |  | 13.1  |  |  |  | 106.8 | 
|Åsgard              |  |                                | 33.5  |                                |  |             | 21.5  |           |  |           | 67.4  |             |  |  | 23.2  |  |  |  | 16.5  |  |  |  | 37.6  | 
|Ekofisk fields      |  |                                | 28.6  |                                |  |             | 24.0  |           |  |           | 24.9  |             |  |  | 27.4  |  |  |  | 22.9  |  |  |  | 24.1  | 
|Gullfaks fields     |  |                                | 24.9  |                                |  |             | 21.0  |           |  |           | 22.3  |             |  |  | 25.0  |  |  |  | 22.8  |  |  |  | 12.9  | 
|Norne               |  |                                | 15.6  |                                |  |             | 14.6  |           |  |           | 5.9   |             |  |  | 17.6  |  |  |  | 16.1  |  |  |  | 8.4   | 
|Brage               |  |                                | 9.9   |                                |  |             | 9.4   |           |  |           | 2.3   |             |  |  | 10.6  |  |  |  | 9.9   |  |  |  | 4.0   | 
|Visund              |  |                                | 8.2   |                                |  |             | 8.2   |           |  |           |      |             |  |  | 8.9   |  |  |  | 8.9   |  |  |  |      | 
|Njord               |  |                                | 7.2   |                                |  |             | 7.2   |           |  |           |      |             |  |  | 11.4  |  |  |  | 11.4  |  |  |  |      | 
|Frigg               |  |                                | 4.0   |                                |  |             |      |           |  |           | 23.1  |             |  |  | 4.2   |  |  |  |      |  |  |  | 24.2  | 
|Varg                |  |                                | 3.5   |                                |  |             | 3.5   |           |  |           |      |             |  |  | 8.6   |  |  |  | 8.6   |  |  |  |      | 
|Heimdal             |  |                                | 1.2   |                                |  |             | 0.3   |           |  |           | 5.3   |             |  |  | 0.5   |  |  |  | 0.1   |  |  |  | 2.1   | 
|Vale                |  |                                | 0.5   |                                |  |             | 0.2   |           |  |           | 1.2   |             |  |  |      |  |  |  |      |  |  |  |      | 
|Yme                 |  |                                |      |                                |  |             |      |           |  |           |      |             |  |  | 0.5   |  |  |  | 0.5   |  |  |  |      | 
|                    |  |                                |       |                                |  |             |       |           |  |           |       |             |  |  |       |  |  |  |       |  |  |  |       | 
|Total Norway        |  |                                | 432.2 |                                |  |             | 320.8 |           |  |           | 622.7 |             |  |  | 406.1 |  |  |  | 312.9 |  |  |  | 524.4 | 
|International       |  |                                |       |                                |  |             |       |           |  |           |       |             |  |  |       |  |  |  |       |  |  |  |       | 
|Girassol            |  |                                | 17.6  |                                |  |             | 17.6  |           |  |           |      |             |  |  | 0.4   |  |  |  | 0.4   |  |  |  |      | 
|Terra Nova          |  |                                | 15.8  |                                |  |             | 15.8  |           |  |           |      |             |  |  |      |  |  |  |      |  |  |  |      | 
|Hibernia            |  |                                | 9.0   |                                |  |             | 9.0   |           |  |           |      |             |  |  | 7.4   |  |  |  | 7.4   |  |  |  |      | 
|Kharyaga            |  |                                | 3.4   |                                |  |             | 3.4   |           |  |           |      |             |  |  | 4.4   |  |  |  | 4.4   |  |  |  |      | 
|Mabruk              |  |                                | 2.4   |                                |  |             | 2.4   |           |  |           |      |             |  |  | 2.6   |  |  |  | 2.6   |  |  |  |      | 
|                    |  |                                |       |                                |  |             |       |           |  |           |       |             |  |  |       |  |  |  |       |  |  |  |       | 
|Total International |  |                                | 48.2  |                                |  |             | 48.2  |           |  |           |      |             |  |  | 14.8  |  |  |  | 14.8  |  |  |  | 0.0   | 
|                    |  |                                |       |                                |  |             |       |           |  |           |       |             |  |  |       |  |  |  |       |  |  |  |       | 
|Total               |  |                                | 480.4 |                                |  |             | 369.0 |           |  |           | 622.7 |             |  |  | 420.9 |  |  |  | 327.7 |  |  |  | 524.4 | 
|                    |  |                                |       |                                |  |             |       |           |  |           |       |             |  |  |       |  |  |  |       |  |  |  |       | 



| | 
| | 
|

|(1) |  | Includes crude oil and NGL/condensate.                                                        
|--- |  | ----------------------------------------------------------------------------------------------
|(2) |  | Includes Snorre, Tordis, Tordis Southeast, Tordis East, Borg, Statfjord
East and Sygna fields.
|(3) |  | Includes Sleipner West, Sleipner East, Gungne and Sigyn fields.                               



33



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##### 





Norway

Oseberg Fields. The Oseberg Fields consist of the Oseberg Field Center,
Oseberg C and the two satellites, Oseberg Øst and Oseberg Sør. Oil and gas from
the satellites are piped to the Oseberg Field Center for processing and
transportation. Oil from Oseberg Field Center is brought ashore by the Oseberg
Transport System pipeline to the Sture terminal in Norway. Oil production from
the Oseberg Field Center and the Oseberg C platform are currently in the
decline phase. Gas export from the Oseberg Field Center and the satellites
began in 2000 and 2001, respectively. Tune, a sub-sea well template, came on
stream in November 2002. The template is tied in to the Oseberg Field Center.
The rich Tune gas arriving at Oseberg Field Center is processed and routed in
the Oseberg Gas Transport pipeline to the Heimdal terminal and further to
continental Europe. In February 2003, a revised PDO for the development of the
Oseberg Sør field was sent to the authorities for approval. The revised PDO
covers the J-structure which now is planned to be developed with a separate
sub-sea installation with production start up in October 2004.

Troll Field.The Troll operations consist of two floating production
units linked by oil pipeline to the Mongstad terminal in Norway and a gas
platform linked by pipeline to treatment facilities located at the Kollsnes gas
terminal in Norway. Gas from the Troll field represents a major part of
Hydros current developed gas reserves and gas production.

Snorre Fields.The Snorre fields include the Snorre, Tordis, Vigdis,
Statfjord Øst and Sygna fields. Production of oil and associated gas from the
Snorre fieldbegan in 1992. Snorre B came on stream in June 2001. Oil and gas
from the Snorre field is piped to the Statfjord field for processing, storage
and transportation. Production of oil and gas from the Tordis fieldbegan in
1994. Oil from the Tordis field is processed on the Gullfaks C platform.
Production from the field peaked in 1996 and is currently in the decline phase.
Since the Tordis field started declining, several satellite structures have
been connected to the field, Tordis Øst (1998), Borg (1999) and Tordis Sørøst
(2001). In 1999, water injection was implemented to increase the recoverable
reserves from the field. Production of oil and gas from the Vigdis fieldbegan
in early 1997. The Vigdis field production started declining in 2000. To
maintain production, a plan for development and operation for the Vigdis
Extension was submitted to and approved by the government in 2002. Production
start-up is expected in December 2003. Oil from the Vigdis field is processed
on the Snorre platform and piped to Gullfaks A for storage and transportation.
The Statfjord Østand Sygnafields started production in 1994 and 2000,
respectively. Both fields are linked to the Statfjord C platform.

Sleipner Fields.Production of gas and condensate began at Sleipner Øst
in late 1993 and from Sleipner Vestin the middle of 1996. Production from the
satellite fields, Gungne, Loke Triasand Sigynbegan in 1996, 1999 and 2002,
respectively. Gas from Sleipner is exported through Gassled and the condensate
is transported to the Kårstø facilities. A decision was taken in 2002 to
develop the northern part of the Sleipner Vest field with 3 sub sea-wells.
These wells will come on stream during the second half of 2004.

Gullfaks Fields. The Gullfaks complex consists of three integrated
platforms where production started in 1986. The satellite fields Gullfaks Vest,
Gullveig, Rimfaksand Gullfaks Sørare linked to the field. Oil is transported
by tankers from the fields while gas is transported by pipeline to the Kårstø
terminal in Norway.

Ekofisk Fields.Ekofisk is the oldest operating field complex within
Hydros portfolio, having commenced production in 1971. In 1984, subsidence of
the seabed around the complex was observed as a result of gradually decreasing
reservoir pressure. In 1987 and 1989, measures were taken to safeguard
recovery, including water injection, raising the oil platform and reinforcing
storage facilities. In 1998 the original platforms were shut down and replaced
by new facilities (Ekofisk II). Start up problems relating to gas processing
equipment have affected and continue to affect production efficiency relating
to gas output. However, oil output has gradually increased each year.

34



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##### 



Abandonment of the satellite platforms has started and alternatives are being
discussed for extending the lifetime of the centrally located Ekofisk I and
Eldfisk platforms so as to increase both well potential and production
capacities. The Ekofisk Area Growth project aims at installing a new wellhead
platform tied in to the Ekofisk II process platform. The decision for this
project is planned for spring 2003, with potential first production in 2005.

Njord Field.Production at the Njord field began in late 1997. The
installation consists of a floating production unit combined with a tanker for
storage and loading of oil. Gas produced is reinjected into the field to
maintain reservoir pressure. An agreement related to the sale and lease back
of the Njord B ship was entered into in January 2002. In 2002 Hydro entered
into an agreement with OER Oil AS to reduce its ownership in Njord to 20
percent.

Norne Field.Oil production at Norne started in late 1997. The
installation consists of a combined production and storage vessel including gas
handling facilities and a gas transportation pipeline. Gas production from the
field began in February 2001. The gas is transported via the Åsgard to the
Kårstø gas terminal in Norway.

Åsgard Unit.The Åsgard Unit infrastructure covers the three fields,
Midgard, Smørbukk and Smørbukk Sør. Oil production started from Åsgard in May
1999 and gas export from Åsgard B commenced in October 2000. Since the
commencement of production, average gas export from Åsgard B has varied due to
considerable technical problems. Beginning in the fourth quarter of 2000,
Åsgard B experienced unforeseen technical problems resulting in substantially
lower than expected production. In August 2001, the Åsgard B platform was shut
down for repairs. Production at a lower rate commenced in January 2002. The
repair work was completed by October 2002. Regularity arrangements were
entered into with several fields to fulfill Hydros delivery commitments and
redelivery of the gas was fulfilled by end of 2002. In the early part of 2003
Åsgard Gas export has been shut down in 21 days due to technical problems, but
these problems are now considered solved.

Brage Field.Production from the Brage field began in late 1993. Oil
from Brage is transported to the Sture terminal via the Oseberg Field Center.
Production from the field is currently in the decline phase. In 2002, Hydro
entered into an agreement with OER Oil AS to reduce its ownership in Brage to
20 percent.

Varg Field.Varg is a minor field and nearly depleted. Hydro has sold its
ownership share in the production license covering the field to Pertra
effective August 1, 2002.

Visund Field.The Visund field floating production unit came on stream in
early 1999. Oil produced from Visund is stored in and shipped from Gullfaks A.
A sub-sea installation for developing the northern reservoir of Visund was put
on stream early 2002. In October 2002 the authorities approved the plan for
development and operation of the Visund Gas volumes. The project with start of
export late 2005, includes increased gas treating and injection capacity, and
export pipe via Kvitebjørn to Kollsnes.

Frigg Field.It is currently anticipated that the reserves from the
Frigg gas field will be fully depleted between 2003 and 2004. Future
production will be insignificant. The full carrying value of Hydros
investment in the Frigg fields has been written down in prior years due to low
remaining production and high operating costs.

Heimdal Field. Heimdal is currently operated as a gas processing and
distribution center for several operators after reconstruction of the platform
in 2000 and 2001. Production of remaining reserves began in August 2001 after
a temporary shut down during the construction period. This tail end production
is expected to last until December 2003. The Valefield is developed by one
satellite well that is tied to the Heimdal Gas Center. Production started in
May 2002.

35



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##### 



International

Hibernia Field. The Hibernia field is located in the Grand Banks area off
the east coast of Newfoundland in Canada. Oil production came on stream in
November 1997 Hydro has a 5 percent interest in the field.

Terra Nova Field. The Terra Nova field is also located in the Grand Banks
area offshore Newfoundland and started production in January 2002. Hydro has a
working interest of 15 percent.

Kharyaga Field. The Kharyaga field is located in Northwest Russia. The
Russian authorities entered into a PSA under which production commenced in
October 1999. Hydros share in the PSA is 40 percent. However, in 2000 Hydro
entered into a farm-out agreement with Lukoil that will reduce Hydros share in
the project to 30 percent. Approval of the agreement by Russian authorities was
received in 2002 and the change will be reflected as soon as formalities have
been solved. Phase 2 of the project is scheduled to start production in 2003.

Mabruk West Field. The Mabruk West field is located in Libya. Production
started in 1995. Hydro became owner of a 25 percent interest in the license
through the acquisition of Saga in 1999.

Girassol Field.The Girassol field is located in Angola. Oil production
from Girassol started in December 2001. The installation consists of a FPSO
vessel that is the largest of its type ever built. The processing capacity is
above 200,000 boed and the storage capacity is 2 million
barrels. Hydro has a working interest of 10 percent.

Marketing of Production

Energy and Oil Marketing buys and/or markets almost all oil and gas
production from Exploration and Production (See the business description for
Energy and Oil Marketing below).

Transportation of Oil and Gas

Norway

Effective January 1, 2003, the major gas transportation pipelines on the NCS
merged into a new joint venture named Gassled. This is described more in
detail in the business description for Energy and Oil Marketing below.

The information that follows reflects Hydros interest in the major pipelines
for the transportation of oil and gas from the NCS and in the corresponding
land terminals as of January 1, 2003.

|                                     |           |                             |           |                 |     |        |                  |     |       |  |  |  |  |  |  | 
|------------------------------------ | --------- | --------------------------- | --------- | --------------- | --- | ------ | ---------------- | --- | ----- |  |  |  |  |  |  | 
|                                     |           |                             |           |                 |     | Length | Hydros interest
|Pipeline                             | End Point | (km)                        | (percent)
|                                     |           |                             |           |                 |     |       
|Gassled                              |           | From the NCS to Germany,    |           |                 |     |        |                  |     |       | 
|                                     |           | Belgium, France and the U.K |           | More than 6,000 |     |        | 11.134           | (1)
|Norpipe Oil A/S (oil)                |           | Ekofisk - Teesside (U.K.)   |           |                 | 354 |        |                  |     | 3.50  | 
|Oseberg Transport System (OTS)
(oil) |           | Oseberg - Sture (Norway)    |           |                 | 115 |        |                  |     | 22.23 | 
|Frostpipe (oil)                      |           | Frigg - Oseberg (Norway)    |           |                 | 82  |        |                  |     | 13.75 | 
|Sleipner Øst NGL pipeline (NGL)      |           | Sleipner - Kårstø (Norway)  |           |                 | 245 |        |                  |     | 10.00 | 
|Troll Oil 1 & 2 (oil)                |           | Troll - Mongstad (Norway)   |           |                 | 165 |        |                  |     | 9.73  | 
|Norne Transport (gas)                |           | Norne- Åsgard (Norway)      |           |                 | 130 |        |                  |     | 8.10  | 



---

| |  | (1) Hydros interest will be 9.386 effective January 1, 2011
| |  | ------------------------------------------------------------

36



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The Stureterminal includes facilities for further processing of crude oil
from the Oseberg fields and production of a propane and butane mix (LPG).
Three groups own these facilities (the SCUP facilities): OTS, Hydro (as 100
percent owner of the LPG facilities) and Vestprosess DA . Hydro owns a 17
percent interest in Vestprosess, a transportation system for condensate and NGL
from Kollsnes and Sture to Mongstad, and a fractioning plant for refining of
these products at the Mongstad plant. Vestprosess transports and processes
products as produced from the Troll facilities at Kollsnes, from OTS, the
SCUP facilities at Sture and from the Mongstad refinery. In 2002 there has been
expansion work at the Sture terminal, preparing for the Grane oil in 2003.

International

Crude oil from the Hibernia and Terra Nova fields in Canada is transported
from the field in dedicated offshore loading tankers directly to market or to a
terminal located at Whiffen Head, Newfoundland. Hydro has an ownership
interest in two of the tankers of 14.9 percent and 12.7 percent, respectively,
and a 5 percent interest in the terminal. In addition, Hydro has long-term
contracts for use of storage capacity at the terminal. The terminal has been
expanded to accommodate the commencement of production at Terra Nova.

Government Regulation

The exploration and production activities of Hydro, as is the case for
other oil and gas companies, are subject to government regulations of various
kinds in different countries. In Norway, the oil and gas industry is governed
by laws defining the rights of the government and license holders. The
Norwegian governments participation in new licenses may vary from license to
license. No maximum level has been indicated. In the 16th and 17th licensing
rounds, the maximum government participation was 45 and 20 percent,
respectively.

For licenses granted after July 1, 1985, the Norwegian governmental
authorities can delay development of a field indefinitely under the Norwegian
Petroleum Act. Should development be delayed, licensees can apply for an
automatic extension of the license term corresponding to the delay period. For
licenses granted before July 1, 1985, the conditions in the specific license
apply.

Under the Norwegian Petroleum Act, the Norwegian government may, if vital
national interests are at stake, direct the oil companies with interests on the
NCS to reduce petroleum production. Due regard must be given to long-term gas
supply agreements. The Norwegian government exercised its right under the Act
in the period from 1987 to 1990, from May 1, 1998 until July 1, 2000 and for
the first half of 2002.

The Norwegian government can require that licensees participate in the
removal of offshore oil and gas installations (platforms, pipelines etc.) on
the NCS when production ceases or at the expiration of the concessions,
whichever occurs first. Under Norwegian law, dismantlement and removal costs
are presently not tax deductible. However, a change in tax regulation related
to this is expected in 2003. Under the current regulation the Norwegian
government is required to reimburse participants for a portion of these costs.
Costs are reimbursed in the same proportion as the accumulated petroleum taxes
paid by each company over the time the installations have been in use in
relation to the accumulated petroleum tax base for the same period. Hence,
with the tax regime applicable to the petroleum industry, the Norwegian
government would carry the larger part of such costs. The cost of any
dismantlement and removal will vary depending on the type of installation and
the decision of the authorities regarding the timing, type and degree of
removal. Licensees are responsible for closure of individual wells and all
costs related to the decommissioning of installations on the NCS. These costs
are treated as deductible expense for both ordinary tax and special petroleum
tax purposes. As indicated above the tax regime regarding the treatment and
reimbursement of dismantlement and

37



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removal costs is presently under evaluation. It is expected that the new
regulation will allow for full deductibility for dismantlement and removal cost
instead of a calculated reimbursement for the Norwegian government.

The Norwegian government has the option to take ownership of an
installation at no cost to it at the end of the applicable concession period.
In such case, the Norwegian government would assume total responsibility for
any well closure and decommissioning costs after this time, and removal costs
of the installation. As a basis for estimating Hydros future liabilities
related to well closures, decommissioning and removal costs of the
installation, management evaluates Norwegian and international laws, treaties
and practices, and the estimated value of recoverable oil and gas reserves that
are expected to exist at the end of the various concession periods.

Taxation in Norway

Ordinary Taxes.Profits from Norwegian oil production are subject to
Norwegian income taxes at the rate of 28 percent. Investments in oil and gas
production facilities are depreciated over six years using a straight-line
method of depreciation (i.e., 16 2/3 percent per year). According to a law
introduced in 2001 such investments are depreciated over three years (i.e. 33
1/3 percent per year) if the purpose according to the development and operation
plan is to liquidate the gas in a large-scale liquefaction facility.
Depreciation starts when expenditures are incurred. Deductions for exploration
and other costs can be taken in the year such costs are incurred. Revenue for
tax purposes is based on market norm prices (as determined by a
government-appointed board normally on a quarterly basis, but in recent years
with large price fluctuations on a monthly basis) for crude oil and on realized
prices for gas and other primary products. The taxation of a companys income
associated with its exploration and production activities on the NCS is
assessed on a consolidated basis.

Special Petroleum Tax.A special petroleum tax is levied on net income
from oil and gas activities on the NCS less an uplift deduction at a rate of
50 percent. For capital expenditures incurred after January 1, 1992, the
uplift is equivalent to five percent per year of the original amount of the
capital expenditure for a six-year period starting when the expenditure occurs.
Any uplift in excess of the net income can be carried forward indefinitely.
Deficits relating to NCS exploration and production activities can be carried
forward indefinitely, both for ordinary and special petroleum tax purposes.
Deficits incurred in 2002 can be carried forward with interest. The Ministry of
Finance is authorized to give guidelines on the interest rate.

Thin Capitalization Rules/Allocation of Financial Costs.Net financial
costs previously have been allocated between offshore-related activities and
other activities based on the relative net income from such activities. As of
January 1, 2002, the allocation is based on the net tax values of the
respective assets. Under the thin capitalization rules, the portion of
interest expense, which is deductible for ordinary and special petroleum taxes,
will be adjusted to reflect a debt-to-total capital ratio of 80 percent.

Carbon Dioxide Emissions Tax.Beginning January 1, 1991, the Norwegian
government introduced a tax on carbon dioxide (CO2) emissions from platforms.
In 2003 the tax has been set at NOK 0.75 per standard cubic meter of gas. The
CO2 tax, which is treated as part of operating costs, is a deductible expense
for both ordinary and special petroleum taxes.

Royalty.As of today, only two oil fields in which Hydro has an interest,
Oseberg and Gullfaks, are subject to Norwegian government royalty levied on
production. The royalty is being phased out and will be eliminated at the end
of 2005.

Area Fee.The area fee is a fee per square kilometer of license area.
The rates increase over time, beginning with the award of the license. The
rate structure was modified and the rate level reduced in 1998. As of January
1, 1999, the area fee is not applied during the first year after the

38



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license is awarded. The rate then increases to a maximum of NOK 70,000 per
square kilometer per year approximately 16 years after the award of the
exploration license.

Taxation Outside Norway

Hydros international oil and gas exploration activities are covered by
the tax legislation of the respective countries where it is involved, and is
also to a large extent regulated by production sharing agreements (PSAs). The
PSAs are normally negotiable, and the terms are unique for each project. Under
a PSA, a host government typically retains the title to the hydrocarbons in
place. When a discovery is made, the PSA typically allows the contracting
company to recover all its exploration, development and operating costs and
receive a share of profit, subject to certain limits. Normally, contractors
carry exploration costs and risk prior to a commercial discovery. The fiscal
and contractual conditions vary. A short description of the fiscal/contractual
regimes in countries where Hydro has production of hydrocarbons follows:

Canada.The fiscal regime consists of both royalty and provincial/federal
tax systems. Hibernia and Terra Nova have unique royalty systems, and there are
also generic royalty regimes for the Grand Banks and Scotian Shelf areas. East
Coast royalty regimes are project-specific and a resource allowance of 25
percent of operating income is deductible for income tax purposes in lieu of
royalty paid. The East Coast royalty regimes are progressive with gradually
increasing gross royalty prior to project payout, and net royalty tiers payable
subject to payout tests on cumulative net revenue after deduction of uplifted
costs. Tax depreciation of facilities is 25 percent per year based on a
declining balance method of depreciation. Exploration expenses may be fully
written off. The combined Canadian federal and provincial taxes are
approximately 43 percent. Consolidation for tax purposes across all Canadian
income is allowed within one legal entity (corporation), however it is not
allowed between separate legal entities.

Russia.The Kharyaga field is taxed based on a PSA. The gross revenues
after royalty are split on a cost oil share for cost recovery and a profit
oil share for allocation between the State and the contractors. Unrecovered
costs in a given year can be carried forward for later recovery. The share of
the profit oil to the State is derived from a sliding scale that is both
triggered and directly related to the projects accumulated internal rate of
return. Thereafter, an additional 35 percent tax will be charges to the profit
oil that was allocated to the contractor.

Libya.The Mabruk field is taxed based on a Development Production
Sharing Agreement. A royalty share of the gross revenue is allocated directly
to the State. The remaining gross income after royalty is split between a
cost oil share to recover cost and a profit oil share allocated between the
State and the contractors. Unrecovered costs in a given year can be carried
forward until full recovery. The share of the profit oil to the State is
derived from a sliding scale that is both triggered and directly related to the
daily production rate and a payback factor. Thereafter, no additional tax is
charged to the profit oil allocated to the contractor.

Angola.The producing field, Girassol, is taxed according to the PSA for
Block 17 in Angola. A ring fence around each development area in the block
applies for tax purposes. The State takes no direct participation in this
block. The gross revenues are split between a cost oil share for cost
recovery and a profit oil share for allocation of profit between the State
and the contractors. Development costs are uplifted by a set percentage, and
recoverable in yearly installments normally over a four-year period.
Unrecovered costs in a given year can be carried forward for later recovery.
Profit oil is split between the State and the contractors according to a
sliding scale. As the internal rate of return of the accumulative net cash flow
after tax increases, the profit oil split becomes more favorable to the State.
Petroleum income tax is levied at a rate of 50 percent of the contractors
share of profit oil.

39



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Appendix A

|                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  | 
|----------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Term                          |  | Definition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |  |  | 
|                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  | 
|bcm                           |  | Billion cubic meters (Sm3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|boe                           |  | Barrels of oil equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|boed                        |  | Barrels of oil equivalents per day.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|bcf                         |  | Billion cubic feet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|cf                          |  | Cubic feet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|condensate                  |  | Light hydrocarbon substances produced with
natural gas which condense into liquid at
normal temperatures and pressures associated
with surface production equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|LNG                         |  | Liquified natural gas. A liquid composed
chiefly of natural gas (i.e., mostly methane).
Natural gas is liquefied to make it easy to
transport if a pipeline is not feasible (as
across a body of water). Not as easily
liquefied as LPG, LNG must be put under low
temperature and high pressure or under
extremely low (cryogenic) temperature and
close to atmospheric pressure to become liquefied.                                                                                                                                                                                                                                                                                                                                                                                        
|LPG                         |  | Liquefied petroleum gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|NGLs                        |  | Oil and gas condensate and natural gas liquids.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|proved reserves             |  | The estimated quantities of crude oil, natural
gas and natural gas liquids which geological
and engineering data demonstrate with
reasonable certainty to be recoverable in
future years from known reservoirs under
existing economic and operating conditions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|proved developed reserves   |  | Reserves that can be expected to be recovered
through existing wells with existing equipment
and operating methods. Additional oil and gas
expected to be obtained through the
application of fluid injection or other
improved recovery techniques for supplementing
natural forces and mechanisms or primary
recovery are included as proved developed
reserves only after testing by a pilot
project or after the operation of an installed
program has confirmed through production
response that increased recovery will be
achieved.                                                                                                                                                                                                                                                  
|proved undeveloped
reserves |  | Reserves that are expected to be recovered
from new wells on undrilled acreage, or from
existing wells where a relatively major
expenditure is required for recompletion, but
does not include reserves attributable to any
acreage for which an application of fluid
injection or other improved recovery
techniques is contemplated, unless such
techniques have been proved effective by
actual tests in the area and in the same
reservoir. Reserves on undrilled acreage are
limited to those drilling units offsetting
productive units that are reasonably certain
of production when drilled. Proved reserves
for other undrilled units can be claimed only
where it can be demonstrated with certainty
that there is continuity of production from
the existing productive formation.

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|                   |  |                                                                                                                                                                                                                      |  |  |  | 
|------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Term               |  | Definition                                                                                                                                                                                                           |  |  |  | 
|                   |  |                                                                                                                                                                                                                      |  |  |  | 
|Sm3              |  | Standard cubic meters. For purposes of
converting quantities of natural gas cited in
this Annual Report, 1 Sm3 = 35.3147 cubic
feet.                                                                                
|development well |  | A well drilled within the proved area of an
oil or gas reservoir to the depth of a
stratigraphic horizon known to be productive.                                                                                    
|exploratory well |  | A well drilled to find and produce oil or gas
in an unproved area, to find a new reservoir
in a field previously found to be productive
of oil or gas in another reservoir, or to
extend a known reservoir.         
|field            |  | An area consisting of a single reservoir or
multiple reservoirs all grouped on or related
to the same individual geological structural
feature and/or stratigraphic condition.                                      
|reservoir        |  | A porous and permeable underground formation
containing a natural accumulation of
producible oil or gas that is confined by
impermeable rock or water barriers and is
individual and separate from other reservoirs.

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Energy and Oil Marketing

Business information relating to Hydros Energy activities and Oil Marketing
operations are described separately below.

Energy

Energys business activities include:



| |  |  | marketing Hydros equity oil production, including gas liquids                                                                                                                                                 
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | marketing Hydros gas production as well as third party gas to
customers primarily on the European continent;                                                                                                  
|
| |  |  | Hydros refinery operations;                                                                                                                                                                                   
|
| |  |  | managing Hydros sea borne transportation of crude oil, natural gas
liquids (NGLs) and other petroleum products and Hydros interest in the
gas transportation system on the Norwegian Continental Shelf (NCS);
|
| |  |  | production and sale of electricity generated at hydroelectric power
plants in Norway;                                                                                                                          
|
| |  |  | sourcing Hydros natural gas and power requirements for its Norwegian
and European industrial facilities; and                                                                                                  
|
| |  |  | developing Hydros hydrogen and renewable energy business activities.                                                                                                                                          

Strategy

As described above, one of the strategic directions for Hydros Oil
and Energy segment is to further enhance Hydros position in the European
energy market based on increasing gas production and commercial competence
gained from the European gas market and the liberalized Nordic power market.
Focusing on northwest Europe, Hydro is targeting the midstream market,
including larger industrial customers and local distribution companies.

Focus areas comprise:



| |  |  | enhancing the value of Hydros Norwegian and international crude oil portfolio                              
| | - |  | ------------------------------------------------------------------------------------------------------------
|
| |  |  | enhancing the value of Hydros gas portfolio                                                                
|
| |  |  | selective growth of Hydros power sector business in the Nordic
Region and continental European markets; and
|
| |  |  | pursuing hydrogen and renewable energy opportunities.                                                       

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Enhancing the Value of Hydros Norwegian and International Crude Oil Portfolio

The focus of Energys marketing efforts with respect to Hydros North Sea
and international crude oil production is to achieve optimal prices by
marketing fewer grades of crude, in larger volumes, while minimizing logistical
costs. Swap arrangements result in savings in logistical costs, particularly
with respect to production from Hydros international crude oil portfolio.

Enhancing the Value of Hydros Natural Gas Portfolio

A major focus for Hydro in 2003 will be to increase the value of Hydros
natural gas portfolio through, among other things, more optimal utilization of
Hydros production and transportation capacity. Hydro will also work to
increase its market share in the developing liberalized European gas market,
particularly Northwest Europe growing both by increased access to gas from
fields in which Hydro has an equity interest and by sourcing gas in the market.
For a more detailed description of the liberalization process of the energy
markets in Europe, see Industry Trends  Liberalization of European Energy
Markets.

In 2001, the Norwegian government decided to dismantle the system of
collective Norwegian gas sales administered by the Gas Negotiating Committee
(GNC). As a result, individual companies are now responsible for disposing of
their own gas production. The new company-based gas sales system will allow
Hydro to supply gas under new contracts from any part of its gas portfolio
(rather than from specific fields), creating greater commercial flexibility.

The degree of implementation of the EU gas directive varies from country
to country and, accordingly, the full effects of the liberalization process are
not yet evident. However, more gas is available on the European continental
short term market and liquidity is increasing at new hubs, complementing the
existing long-term, bilateral agreements between producers and large end users
and distributors. Hydro intends to evolve its trading activities reflecting
the new regulatory regime, which is characterized by more flexible and liquid
markets, new participants and a wider range of products being traded. Such
market developments have been evident in the UK for some time and similar
developments are under way on the European continent, most notably around the
market hub in Zeebrugge in Belgium. Because of the increasing liquidity of
the European gas market, Hydro no longer views having new long-term gas
sales contracts in place as a prerequisite for making investment decisions for
new gas fields  such as the Ormen Lange field.

Selective Growth of Hydros Power Sector

Since the liberalization of the Norwegian electricity market in 1991,
Hydro has developed trading and marketing activities, along with analysis,
portfolio and risk management systems. Hydros Nordic electricity portfolio
includes owned generation facilities, long-term supply contracts, internal and
external sales contracts and short-term optimization contracts. Hydro has more
recently begun to build a continental European electricity portfolio based upon
optimization of supply to Hydros larger consuming plants. Hydro is providing
Nordic and continental European customers structured energy products and
energy services ranging from physical power supply to advanced hydro-power
optimization, pricing services and portfolio management, including market
analysis, price forecasting and risk management/trading.

In 2003, Hydro will continue to pursue a selective growth strategy, with
expansion into new markets and growth of Hydros Nordic and continental
European power portfolios based on demonstrated profitability. Hydro will
endeavor to strengthen its systems, business model and control infrastructure
to enable increased trading activities without increasing risk, and to
expand its business in structured products and energy market services.

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Pursuit of Hydrogen and Renewable Energy Opportunities

There is an increasing interest in renewable energy projects and the
utilization of hydrogen in the energy market in developed economies throughout
the world. The major political drive  and basis for a number of public support
schemes  has its roots in the concerns about the security of energy supply and
environmental considerations. Hydro has extensive experience within the
traditional industrial hydrogen markets as well as with renewable hydroelectric
energy production. Hydro is combining this experience with the new developments
to establish the Company as a player in renewable energy projects and new
energy markets for hydrogen.

Hydro is involved in several hydrogen projects targeting the
transportation market and renewable hydrogen energy systems. The hydrogen
generation solutions produced by Hydros wholly owned subsidiary, Norsk Hydro
Electrolysers, a world leading company within alkaline electrolysers, is one
element of Hydros strategy.

Hydro considers wind generation as a promising part of the renewable
energy market and is making selective investments in this market. In 2002,
Hydro completed the Havøygavlen wind park, located in Northern Norway, where
Hydro holds a 41.5 percent interest. Havøygavlen is one of the largest wind
power projects in Norway with an expected annual output of 118 GWh.

Industry Trends

Oil and Refining Markets

By historical standards crude oil prices have been high over the past
three years. However, in real terms crude oil prices have trended downward
since 1986, primarily as a result of lower production costs outside of OPEC due
to technological progress. This trend is expected to continue. OPEC aims to
function as a stabilizing force in the market, with varying levels of success.
Its long-term price target is still considered to be approximately USD 25 per
barrel, significantly above the marginal cost of new production outside OPEC.
This makes the price target unrealistic in the long term and results in
cyclical periods of high and low prices from the interplay between market
forces and actions taken by the cartel.

The global oil market in 2003 will continue to be heavily influenced by
the OPEC cartel and the world economy. In addition to these factors the market
faces a possible war in Iraq and political unrest in Venezuela. Market
management by OPEC, together with tension in Iraq and Venezuela is expected to
keep the forward Brent Blend market at levels well above the average price for
2002 during 2003. The forward market is currently close to the average price
for 2002 for the second half of 2003, as the market expects reduced world
political tension later in the year.

In the long term, refinery margins are expected to gradually improve as a
result of a strong political drive to tighten product specifications on
transportation fuels as a result of environmental concerns. This will require
investment to upgrade refineries and will simultaneously lead to increased
operating costs at refineries.

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(SLIDE 5 OF OE.PPT)

Liberalization of European Energy Markets

Both the gas and electricity markets are undergoing liberalization as a
result of EU policy. The European Union (EU) gas directive of 1998 required
owners of gas pipelines to open up their transport systems, including systems
within domestic markets, to third parties, such as distribution companies and
large industrial customers, in order to bring greater competition to the
European gas markets. In June 2002, the Norwegian parliament (Stortinget)
agreed to incorporate the EU gas directive into its legislation as part of the
European Economic Area (EEA) agreement.

Since adoption of the EU gas directive, the European Commission has
launched proposals for accelerating the liberalization process. An agreement
was reached in the EU Council on November 25, 2002 on proposed amendments to
the gas directive which was presented to the EU Parliament for a second review
in early February 2003. The proposed amendments contemplate a fully open market
for nonresidential customers by July 1, 2004 and for all customers (including
residential customers) by no later than July 1, 2007.

Liberalization of electricity markets in Europe continues at varying rates
of progress from country to country. Implementation of the deregulation
process required by the EU electricity liberalization directive of 1996 was, to
a large extent, left to the EU member states. As a result each country
designed its own national market structure which are, to some extent, not
compatible. The European Commission has acknowledged these deficiencies on a
number of occasions, indicating that action will be taken to remedy the
situation. Amendment proposals for the electricity directive have been
developed.

Growth in European Natural Gas Demand; Market for Norwegian Gas in the UK

The demand for natural gas in Europe is, by some estimates, expected to
grow significantly from the level of 480 billion cubic meters in 2001, fueled
in large part by demand from the electric power industry. However, there are
uncertainties regarding the timing of further increase in the gas consumption
in the electricity sector. Norways share of European gas markets is
approximately 12

45



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percent. However, it is expected that this percentage will rise in future
years based on existing contract commitments and remaining reserves.

The UK, in particular, is an interesting market for new Norwegian gas
due to an expected decline of production as a result of maturing UK North Sea
fields by 2005. Given its close proximity, Norway is considered a
competitive source for new deliveries. Norwegian fields are presently linked
to the UK through the Vesterled pipeline to St. Fergus, which can handle 11-12
billion cubic meters per year. Necessary additional pipelines are being
evaluated as part of development plans for new gas fields such as the Ormen
Lange field.

Development of Gas for Power

Growth in power consumption in Europe is expected to be approximately 1
percent per year for the foreseeable future. Demand for gas for power
production in Europe is expected to grow substantially during the next 20
years. Several factors influence this trend, including the ongoing
liberalization of electricity markets, implementation of environmental
restrictions relating to CO2 emissions and developments in oil and coal prices.
Current market conditions in continental Europe appear not to justify
investment in new gas for power facilities. However, the Nordic region is
experiencing a change towards much tighter electricity supply, as experienced
during the winter of 2002/03 and gas for power production may become economic
sooner in this area.

Integration of Energy Markets

Along with the liberalization of the energy markets in Europe there is a
trend towards integration of the electricity and gas markets because the
business models are, to a large degree, based on the same competence, types
of customers and similar risk management systems. The restructuring among
industry participants reflects a trend toward integrated European energy
companies, both upstream and downstream in the value chain.

(SLIDE 6 OF OE.PPT)

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Energy Trading

After the withdrawal of certain primarily trading based companies from
the European energy markets, trading volumes of both gas and electricity has
declined. However, the current size of the financial trading activity appears
more in line with the general development of liquidity in the physical spot
market.

Unusually low precipitation in Scandinavia during the autumn of 2002 and
high demand due to cold weather resulted in record high power prices on the
Nordpool power exchange and a temporary decrease in trading liquidity.
However, this is not expected to have a negative long-term effect on the
future liquidity of the Nordic power market or the power exchange.

Competitive Strengths

Experience from liberalized Energy Markets

Hydro has an established position in the value chain in both the European
gas and power markets, being a producer of gas and power, an owner of natural
gas transportation systems, an active trader in the markets, and having
customer portfolios in the industrial/wholesale market both for gas and
electricity.

By combining all commercial activities for energy products and services in
one operating segment, Hydro leverages its commercial skills and contacts in
each of the energy sectors. Hydro is able to build on experiences gained in one
market in pursuing opportunities resulting from similar processes underway in
new markets. Hydros experience as a major producer and consumer of energy
products has enabled it to provide services to major electricity customers in
the Nordic region.

Major Gas Producer in the NCS

Because of location, transportation infrastructure and substantial
reserves, both discovered and undiscovered, Norwegian gas is competitive in the
European region. Hydro is the third-largest producer on the NCS. Hydro has an
interest in all the major gas fields and pipelines on the NCS. From 2002 to
2006, Hydros gas production is expected to increase from 6.4 to around 10
billion cubic meters. Hydro is also operator in the development phase of Ormen
Lange, the second-largest gas discovery on the NCS and a major candidate for
long-term supply of gas to Europe. Production is expected to begin in 2007.

Hydro has made substantial investments in gas export capacity from the
Oseberg and Troll fields, together comprising a major portion of its proved gas
reserves. This capacity will enable Hydro to increase exports of gas
significantly in the coming years as reservoir conditions allow more off take
of gas without the need for further investment.

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(SLIDE 9 OF OE.PPT)

European Downstream Gas Position

Through the NCS gas transportation system, Hydro has access to four
landing points for gas in Europe. This situation offers a flexible and
favorable position with respect to capturing value in the market. In the
Continental market, Hydro has achieved an attractive position through a
combination of long-term sales contracts, long-term supply contracts, access to
transportation and as a result of being the largest industrial consumer of
natural gas in Europe. On the basis of this portfolio, Hydro is actively
addressing the end-user market as liberalization continues in addition to
trading on the different gas trading hubs.

Power Sourcing and Marketing Activities

|                                                             |  |      |    |      |  |      |    |  |  |  |    | 
|------------------------------------------------------------ |  | ---- | -- | ---- |  | ---- | -- |  |  |  | -- | 
|(in TWh)                                                     |  | 2002 |    | 2001 |  | 2000
|                                                             |  |      |    |      |  |     
|Power production                                             |  |      | 10 |      |  |      | 10 |  |  |  | 12 | 
|Acquired under long term contracts for production facilities |  |      | 7  |      |  |      | 7  |  |  |  | 7  | 

All of Hydros power plants are hydroelectric. Annual production varies
depending on annual precipitation and inflow to reservoirs. It is expected that
the production in 2003 will be lower than normal due to less precipitation in
Norway during the autumn and winter of 2002/03.

Hydro has clear title concessions (which do not revert to the Norwegian
government) for power plants with a generating capacity of 2.7 TWh per year.
This represents approximately 31 percent of Hydros normal production capacity.
The remaining production capacity will revert to the Norwegian government
without compensation at the expiration date of the concessions. This will take
place in the period between 2018 and 2052.

Energy supplies electric power to Hydros industrial plants in Norway. To
meet those needs, Hydro has entered into long-term purchase contracts, the
majority of which are with the Norwegian state-owned power company, Statkraft.
These long-term contracts provide assurance of the availability of a certain
quantity of power to Hydros power-intensive industries. In 1997, Hydro
entered into an agreement with Statkraft to purchase electricity from 2000 to
2020. The agreement replaces supplies under existing contracts, which terminate
during the 2006  2010 period. In addition,

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the 1997 Statkraft agreement provides an additional 1 TWh per year from 2000 to
2020. The price for these deliveries is based on a price formula tied to market
prices for aluminum.

Oil Trading and Refining

|                     |  |      |        |      |  |      |        |  |  |  |        | 
|-------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|Sales (000's tonnes) |  | 2002 |        | 2001 |  | 2000
|                     |  |      |        |      |  |     
|Crude oil/NGL        |  |      | 19,068 |      |  |      | 17,507 |  |  |  | 16,307 | 
|Oil products         |  |      | 2,326  |      |  |      | 2,912  |  |  |  | 2,795  | 

|                            |  |      |       |      |  |      |       |  |  |     |       | 
|--------------------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  | --- | ----- | 
|Refining (000's tonnes)     |  | 2002 |       | 2001 |  | 2000
|                            |  |      |       |      |  |     
|Gasoline                    |  | 660  |       |      |  | 841  |       |  |  | 956 |      
|Diesel fuels, gasoils, etc. |  | 796  |       |      |  | 897  |       |  |  | 915 |      
|Heavy fuel oil              |  | 550  |       |      |  | 440  |       |  |  | 516 |      
|Other                       |  | 36   |       |      |  | 66   |       |  |  | 59  |      
|Total refining              |  |      | 2,042 |      |  |      | 2,244 |  |  |     | 2,446 | 

Trading activities include the sale of Hydros crude oil, refined oil
products and NGL production, as well as the supply of NGL feedstock to Hydros
fertilizer and petrochemical plants. The volumes of these activities have
increased partly due to Exploration and Productions increased oil and gas
production over the past years.

Hydro owns 25 percent of the Scanraff refinery in Sweden after the
merger in 2002 of the companies Scanraff and Scancracker. Scanraff is one of
Europes most modern refineries with a crude oil capacity of ten million tonnes
per year.

Marketing of Natural Gas

|                              |  |      |     |      |  |      |     |  |  |  |     | 
|----------------------------- |  | ---- | --- | ---- |  | ---- | --- |  |  |  | --- | 
|(in bcm)                      |  | 2002 |     | 2001 |  | 2000
|                              |  |      |     |      |  |     
|Equity gas production         |  |      | 6.4 |      |  |      | 5.4 |  |  |  | 5.1 | 
|Non-equity sales and sourcing |  |      | 4.2 |      |  |      | 2.7 |  |  |  | 2.4 | 

Natural gas produced from fields in which Hydro has an interest is mainly
sold under long-term contracts. Pricing under such contracts is generally
based on a market principle whereby the natural gas price is indexed to oil
product prices in the end user market, mainly gas oil and low sulfur fuel oil,
and has provisions for price reviews based on changes in certain market
conditions.

In 2002 equity gas production from NCS amounted to 6.4 bcm. Based on
producing fields and fields under development, this is expected to increase to
10 bcm in 2006. In addition to its equity gas, Hydro in 2002 supplied 4.2 bcm
based on non-equity gas of which 2.1 bcm was supplied to Hydros industrial
factories on the European continent.

Transportation of Natural Gas

Gassled  the new gas infrastructure joint venture on the NCS  has been
in operation from January 1, 2003. The gas pipelines and associated terminals
had previously been organized as several different joint ventures owned by oil
companies and the Norwegian government. During the spring of 2001, the
Norwegian parliament requested the owners of the infrastructure to initiate
negotiations with the aim to establish a unitized ownership structure. The
objective was to facilitate an efficient operation and to simplify further
development of the transportation system. During the spring of

49



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2002, the infrastructure owners agreed to establish Gassled, the merged gas
infrastructure joint venture. Gassled will consist of the following systems:
Europipe, Europipe II, Norpipe, Zeepipe, Franpipe, Vesterled, Statpipe, Oseberg
Gass Transport, Åsgard Transport and the Kårstø terminal. Gassco, a 100 percent
state-owned company, is the operator of Gassled. Hydro holds an initial direct
ownership interest of 11.134 percent in Gassled. The ownership interest will be
reduced to 9.386 percent in 2011. Hydro also has a minor indirect ownership
interest through the ownership of Norsea Gas. Hydro does not anticipate that
the establishment of Gassled will substantially change Hydros net gas
transportation cost consisting of tariff payments and system revenues.

A uniform access regime for the gas infrastructure on the NCS has been
established resulting from legislation imposed by the Norwegian Ministry of
Petroleum and Energy. The objective has been to create a neutral regime for
all companies requiring transportation capacity. All natural gas undertakings
and eligible customers that have a duly substantiated reasonable need of
transportation will, in the future, have a right to access the system under
non-discriminatory, objective and transparent conditions. Access to the system
will be based on long term and short term transportation agreements. Gassco
will be responsible for enforcing the capacity management system. The new
access regime was implemented by the Norwegian Government through amendments to
the petroleum regulations. Tariffs have been established through new,
separate regulations with effect from January 1, 2003.

Investments

The amounts disclosed in this section represent investments made in the
respective years, which include additions to property, plant and equipment,
plus long-term securities, intangibles, long-term advances and investments in
non-consolidated investees.

Investments in 2002 totaled NOK 443 million, related primarily to the
upgrading of the Tyin hydro power station in Norway.

Electricity  Ordinary Taxes (Norway)

Profits from hydroelectric power production are subject to ordinary
Norwegian income taxation at a rate of 28 percent. Fixed assets are
depreciated for tax purposes over 67 years or the concession period, if shorter
(dams and tunnels); 40 years (machinery); and at a 5 percent declining balance
(transmission and other electrical equipment). The depreciation base of fixed
assets was revalued as of January 1, 1997. The higher basis will be deductible
in future years in the form of increased tax depreciation.

A companys ordinary income tax for hydroelectric power plants is assessed
on an aggregated basis and may be tax consolidated with other activities in
Norway.

Electricity  Surtax on hydroelectric power plants (Norway)

In 1996, a tax law was enacted in Norway for hydroelectric power plants
effective from January 1, 1997. In addition to ordinary income tax, the major
provisions of the law called for the introduction of a surtax. The surtax rate
is 27 percent. The surtax is assessed individually for each hydroelectric
power plant (ring-fenced taxation). Unlike the ordinary income tax, finance
costs are not deductible. Uplift is a special deduction in the net income
computed as a percentage of the average tax basis of fixed assets (including
intangible assets and goodwill) for a given year. The percentage, which is
determined annually by the authorities, essentially provides for a certain
return on capital that is not subject to surtax. The percentage used to
calculate the uplift for 2002 was 10.5 percent.

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Revenue for surtax purposes is based on market spot prices with certain
exceptions. Revenues from power supplies used for a companys own industrial
production facilities and from sales under certain long-term contracts are not
subject to market spot price adjustments. As most of Hydros hydroelectric
production is used for its own production or sold under qualifying contracts,
only a minor portion of the production is subject to taxation based on spot
prices at the time of production.

Losses can be carried forward indefinitely or until the plant reverts to
the Norwegian government. Losses carried forward is increased with interest.

As mentioned above the depreciation base for ordinary taxation was
revalued as for January 1, 1997. This revaluation also has effect for
depreciation and uplift for the surtax. For additional information
see Note 10
to the Consolidated Financial Statements.

Apart from the uplift deduction, the provisions for finance costs and the
use of spot prices for revenue measurement, the elements of the ordinary tax
and surtax base are identical.

A natural resource tax related to hydro-generated electricity became
effective as of January 1, 1997. The rate for 2003 is NOK 0.013 per kWh. The
tax is fully deductible from the ordinary income tax of the company.

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Oil Marketing

Oil Marketing markets and sells refined petroleum products (gasoline,
diesel and heating oil) and electricity to retail customers in Scandinavia and
the Baltic countries. Hydro owns 100 percent of the Companys operating unit
in Sweden and 50 percent of Hydro Texaco, an oil marketing company with retail
outlets in Norway, Denmark and the Baltic countries. Hydro markets a range of
complementary energy products in addition to refined petroleum products, such
as electricity, natural gas, biogas for cars, bioenergy for heating purposes
and convenience store goods.

Strategy

Hydros strategy for the foreseeable future is to maximize Hydros return
on investments already made in its gasoline station chains by focusing on the
most profitable stations and closing smaller and unprofitable outlets, building
a strong brand recognition and expanding on profitable segments of the market.
Service stations with high profitability potential will be expanded to include
a convenience store/fast food unit, and service stations with limited prospects
will be converted into automatic stations.

Industry Trends

Increased Competition in the Service Station Segment

Many industry experts believe that competition in the service station
segment will continue to intensify as in the recent years. Several oil
companies and food retailers have entered this segment by investing
substantially in the convenience store concept. As a result, it is expected
that the convenience store/fast food unit concept will be the focus of future
development.

Competitive Strengths

Extensive Service/Automate Station Network

Hydro has invested and continues to invest significantly in automated
stations and continues to introduce convenience stores at filling stations.
Hydro and Hydro Texaco operate both service stations and automated stations in
the retail segment. As a result, Hydros established market position provides
flexibility to maintain its competitiveness.

Large Customer Base

Hydro has brand name recognition and a strong position in the most
profitable segments of the industrial and residential heating oil markets. Its
large customer base offers a platform for the sale of electricity, which is the
main substitute for heating oil. Also, Hydros and Hydro Texacos large
customer bases provide a significant potential for cross sales. Sales of
electricity have, to date, been relatively modest compared to Hydros sale of
gasoline and gasoil, but is growing.

Sales and Distribution

At the end of 2002, Hydros retail network in Sweden comprised 574
gasoline stations and 117 Hydro Diesel service stations. Hydro operates both
Hydro and the Uno-X branded stations in the Swedish gasoline market.
Approximately 50 percent of the station network is Hydro-branded.

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Hydro Texaco operates 398 gasoline outlets and 46 diesel sites in Norway,
444 gasoline outlets and 106 diesel sites in Denmark, and 39 gasoline outlets
and 10 diesel sites in the Baltic countries with Hydro Texaco or Uno-X brands.

Gasoline is sold through service stations and unmanned, automated stations
in all markets. Gasoils are sold through automated diesel stations and through
direct deliveries from depots to end consumers.

|                      |  |      |       |      |  |      |       |  |  |  |       | 
|--------------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|Volumes (000s m3)(1) |  | 2002 |       | 2001 |  | 2000
|                      |  |      |       |      |  |     
|Gasoline              |  |      | 1,476 |      |  |      | 1,500 |  |  |  | 1,534 | 
|Gasoil                |  |      | 2,074 |      |  |      | 2,084 |  |  |  | 2,042 | 






| |  | (1) Includes 100 percent of Hydro Texaco
| |  | ----------------------------------------

The market share in the Swedish gasoline market declined by approximately
1 percent in 2002 mainly as a result of the discontinuation of agreements with
Volvo dealers and their customers. These agreements will be phased out over a
period of 5 years,from 2001 to 2005. Oil Marketing is currently evaluating
potential deals to compensate for the loss in market share.

The Danish gasoil market share declined by 1.6 percent mainly as a result
of HydroTexacos decision to go out of low margin volumes.

|                             |  |        |      |            |  |             |      |  |  |  |      | 
|---------------------------- |  | ------ | ---- | ---------- |  | ----------- | ---- |  |  |  | ---- | 
|Market share (%) ( 2002))(1) |  | Sweden |      | Norway (2) |  | Denmark (3)
|                             |  |        |      |            |  |            
|Gasoline                     |  |        | 10.5 |            |  |             | 20.0 |  |  |  | 15.6 | 
|Gasoil                       |  |        | 14.5 |            |  |             | 16.2 |  |  |  | 18.0 | 






| |  | (1) Includes 100 percent of Hydro Texaco
| |  | ----------------------------------------
| |  | (2) As of November 2002                 
| |  | (3) As of October 2002                  

Investments

The amounts disclosed in this section represent investments made in the
respective years, which include additions to property, plant and equipment,
plus long-term securities, intangibles, long-term advances and investments in
non-consolidated investees.

Investments for the Oil Marketing segment in 2002 totaled NOK 56 million,
related primarily to repairs and maintenance of depots and the existing retail
network, and the construction of new automate outlets in Sweden. Hydro Texaco
had investments of NOK 140 million in 2002, primarily related to repairs and
maintenance and the construction of new outlets.

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Hydro Aluminium

During the first quarter of 2002, Hydro acquired VAW and the French
building systems company, Technal. Both companies are fully integrated into
Hydro Aluminiums operations. Hydros consolidated results include the
operating results of VAW as of March 15, 2002 and Technal, as of January 26,
2002. Hydros acquisition of VAW continued the trend of increasing industry
consolidation, driven by the need to generate greater economies of scale and
cost savings in an increasingly mature and more globally cost-competitive
industry.

As of January 1, 2002, Hydro Aluminiums organizational structure is as
follows:

(CM 37)

During year-end 2002, an agreement was signed to sell the Flexible
Packaging operations. The transaction was approved by regulatory authorities in
EU in February 2003.

With the VAW acquisition, Hydro Aluminium solidified its position as one
of the top three integrated aluminium companies in the world (Alcoa is number
one; Alcan; number two). Hydro Aluminium is now a more full range aluminium
company with leadership positions in, for Hydro Aluminium, new market segments
(foil and lithography in the Rolled Products sub-segment), a strengthened
extrusion and automotive offering and a greater presence in North America and
Asia. With the strategic steps taken in 2002, Hydro Aluminium has strengthened
its position as a world-class, integrated player in the aluminium industry.

The VAW acquisition represented the single biggest step Hydro Aluminium
took in 2002 to enhance its competitive position in the midst of rather
challenging market conditions for the aluminium industry. The global recession
and the generally weak demand for aluminium continued throughout 2002. This
exacerbated the global supply/demand imbalance leading to high inventory levels
and weak aluminium prices. For the industry as a whole, price developments for
critical raw materials for upstream production (i.e., electricity and alumina)
resulted in a further squeeze on margins. The impact on Hydro was less severe
because of its numerous long-term or London Metal Exchange (LME)-related energy
and alumina contracts. In general, there was deterioration in operating results
among industry participants. In 2003, weak economic conditions, the threat of
war in

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Iraq, and uncertainty about the level of aluminium exports from China
provide an outlook of continued weak demand and prices, creating the potential
for further downward pressure on margins.

The VAW acquisition has provided a greater balance between Hydro
Aluminiums primary upstream production and downstream activities, as the value
chain depicted below illustrates. Further, VAWs downstream activities
complement and broaden Hydro Aluminiums product portfolio, contributing to
such activities achieving a critical size. Accordingly, Hydro Aluminium
perceives that it is now well-positioned to face the current and future market
and industry challenges, drawing upon its considerable organizational
strengths, innovative business solutions and good customer relations.

(HAL.PPT)

The VAW acquisition had the immediate advantage of expanding Hydro
Aluminiums portfolio of cost-attractive plants given the scale of several of
the smelters and rolling mills acquired. Furthermore, it provided new
opportunities to capture the synergies available from a larger scale of
operations. This included streamlining the selling, general and administration
processes, reducing manning, and sharing best production and other practices to
enhance productivity (revenues) and reduce fixed and variable costs. Hydro
Aluminium dedicated significant time and attention in 2002 to the successful
integration and extraction of synergies from the acquisition. These efforts
will continue with full force in 2003 to assure the entire potential is
realized.

Even before the VAW acquisition, Hydro Aluminium had implemented cost
improvement programs. In 2002, Hydro Aluminium achieved its cost and manning
targets for these programs. This resulted in aggregate savings of approximately
NOK 1 billion during 2002 compared to the base line cost level in 2001 for the
combined Hydro Aluminium and VAW businesses. Closure of the primary magnesium
production in Norway yielded NOK 430 million of the total savings. Additional
programs announced in connection with the VAW acquisition resulted in the
remaining NOK 560 million in savings. Staff reductions during 2002 totalled 528
employees in the primary magnesium operations and 708 employees associated with
other cost reduction initiatives.

Hydro Aluminium increased its total savings targets in the fourth quarter
of 2002. Cost reduction targets for the combined savings programs were
increased by NOK 400 million to a total of NOK 2.5 billion by the end of 2003,
to be achieved with full effect in 2004. These savings are compared to the cost
level of the combined Hydro Aluminium and VAW businesses in 2001.
This includes the target for cost savings of NOK 500 million related to
the closure of the primary

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production of magnesium in Norway, of which NOK 430
million was, as noted above, achieved by year-end 2002. Total costs directly
related to the implementation of the improvement programs are expected to be
approximately NOK 1.4 billion, of which NOK 990 million was incurred by the end
of 2002.

Effect of Currency Exchange Rates on Operating Results

LME prices are denominated in US dollars. Further, a portion of Hydro
Aluminiums production of aluminium is sold in local currencies based on US
dollar exchange rates. This leads to operating results, which are reported in
NOK, being negatively impacted by the strengthening of the NOK against the USD.
However, as a result of the acquisition of German and overseas smelters as
part of the VAW deal, the Metals sub-segment is now relatively less exposed to
the USD/NOK exchange rate and more exposed to the USD/EURO exchange rate.

Although the alumina price is also denominated in US dollars (as are most
raw material costs), Metals Brazilian-based alumina business (through its
non-consolidated investee, Alunorte) is heavily exposed to the USD/Brazilian
real exchange rate. A decline in the value of the Brazilian real against the
USD, which is the predominant financing currency for Hydros aluminium
operations, can lead to a currency loss with respect to Metals interest in
Alunorte, as occurred in 2002.

Metals

Hydro Aluminiums Metals sub-segment (Metals) consists of the two
sectors, Primary Metal and Metal Products. The Metals sub-segment encompasses
Hydro Aluminiums upstream activities, principally the production and sale of
virgin aluminium produced in Hydros smelters. Metals activities also include
the processing of scrap into high quality products for the mid- and downstream
markets, all aluminium and raw materials trading activities, Hydros magnesium
operations and its high purity business.

Strategy

Metals business strategy reflects a continued focus on:



| |  |  | active restructuring and improvement of the production portfolio to
increase volumes and improve the relative cost position of Hydros
smelter system;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | leveraging its increasingly global metal supplier concept of
developing alternative metal sources and expanding Hydro Aluminiums
remelt capacity;    
|
| |  |  | improving operational performance by implementing improvement
projects and capturing synergies; and                                                   
|
| |  |  | sourcing a sufficient and cost-effective supply of alumina.                                                                                           

Active Restructuring of Production Portfolio

The acquisition of VAW was a step forward in one aspect of meeting Hydros
ambition to be one of the top three integrated aluminium companies in the
world. However, being among the top is not only about size but performance.
In order to be cost competitive in the primary metals industry, scale of
production necessary to achieve cost competitive unit production costs is
crucial. Metals principal focus throughout 2002 has been on improving its
competitive position. The VAW acquisition improved significantly Hydro
Aluminiums average upstream production cost position by expanding its portfolio of
cost-attractive smelters beyond Norway and Central Europe to, most notably, Australia

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(the location of the wholly-owned Kurri Kurri
smelter) and Canada (the location of the Alouette smelter, in which Hydro
Aluminium now has an equity interest of 20 percent).

Hydro Aluminium plans to increase the share of its production being
produced at smelters with a capacity of more than 250,000 tonnes per year from
27 percent in 2002 to approximately 46 percent in 2006. The expansions are in
the upstream area (both alumina and primary production), where the existing
infrastructure supports a larger capacity. This can be done at a lower
investment level than a corresponding new or greenfield investment.
Expansion of an existing facility improves the operating cost position of the
plant, thereby improving Hydro Aluminiums overall long-term cost position.

To streamline operations and improve its overall cost position, Metals has
initiated several expansion projects. Phase one of the aluminium plant
expansion in Sunndal, Norway started production in fourth quarter 2002, as
planned. The new production line replaced an old line (based upon outdated
Søderberg technology) that was no longer cost-competitive and did not meet
modern environmental performance requirements. The plant expansion will be
completed in 2004, increasing capacity in total by 173,000 tonnes to
approximately 330,000 tonnes. Furthermore, Hydro approved the participation in
the expansion of the Alouette smelter in Canada. Total annual primary
aluminium production capacity will increase by 307,000 tonnes to 550,000 tonnes
in 2005, making Alouette the largest aluminium smelter in North America and
among the worlds lowest cost smelters. Hydros share of the production is 20
percent. To strengthen its internal supply of alumina, a raw material, Metals
is participating in an expansion project of the Alunorte alumina refinery in
Brazil. When completed, Alunorte will be one of the most competitive alumina
refineries in the world. During 2002, Hydro decided not to take part in a
greenfield aluminium smelter in Iceland. These decisions are consistent with
Metals strategy to selectively invest in high potential, brownfield expansions
with comparatively low investment cost and a high overall cost improvement
ratio.

An example of a small-scale efficiency improvement investment is the
on-going program to increase the amperage in the smelter potrooms to increase
output and improve productivity, with virtually no capital cost.

Metal Supplier Concept

In view of the high investment costs associated with new smelter capacity,
since the 1990s Hydro Aluminium has pursued a multi-sourcing strategy, which it
refers to as the metal supplier concept. This strategy has had two primary
components: (1) develop alternative metal sources through commercial alliances
and other agreements; and (2) expand Hydro Aluminiums remelt activities.

Hydro Aluminium has entered into several long-term commercial alliances
and agreements that further its strategy of developing and leveraging the metal
supplier concept with limited asset investment. Under the most recent of these
agreements, Hydro Aluminium will participate in upgrading the aluminium cast
house at Rusals Sayanogorsk smelter, located in southern Siberia. Upon
completion of the first stage of the construction, anticipated at the end of
2003, Hydro Aluminium will be supplied with 80,000 tonnes per year of high
quality extrusion ingot. The second stage, to follow a few years later, will
further increase casting capacity up to 160,000 tonnes.

As an active player, especially in the central markets in Europe, Hydro
Aluminium has developed its network of extrusion ingot suppliers and other cast
house products so that its proximity to customers is as close as possible.

Hydro Aluminium has established remelt plants for conversion of scrap metal
into extrusion ingot in all major European markets. Facilities are located in
Luxembourg, the UK, Germany and France, as well as at the metal plants in
Norway. A new remelt and extrusion ingot cast house in

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Spain came on stream in 2002. The plant, with an annual capacity of
60,000 tonnes, will serve the growing market for extrusion ingot in Spain and
Portugal.

Operational Performance

Following the completion of the VAW acquisition on March 15, 2002, Hydro
Aluminium undertook the rapid integration of the two companies upstream
activities. To capture the synergies associated with the acquisition, Hydro
Aluminium launched a program encompassing internal benchmarking to identify and
implement cost savings through the introduction of best practices work
processes across the units and the optimization of production systems.
Together with the improvement programs already in place, these programs have
made a significant contribution to the reduction of average cash costs per
tonne (defined to include liquid metal costs, casthouse costs, site overhead
costs, freight costs, interest costs of work in progress and other costs).
Implementation of improvement programs in 2003 is expected to result in
realization of further synergies and cost savings.

Sourcing Supply of Alumina

Hydro Aluminium has secured a part of its long-term alumina requirements
for its primary metal production through equity investments. In 2002,
approximately 40 percent of its alumina requirements for primary metal
production were provided by such investments. With the expansion at Alunorte,
a Brazilian alumina refinery, this share will increase to approximately 50
percent in 2003.

The Alunorte expansion program, to be completed in 2003, will increase
Alunortes capacity from 1.5 million tonnes to approximately 2.3 million tonnes
per year. In connection with this expansion, Hydros equity interest increased
from 32.3 percent to 34 percent in 2002. The refinery has the potential for
further expansions based on local bauxite resources.

Hydro Aluminium also has a 35 percent equity interest in the Alpart
alumina refinery in Jamaica, which has an annual production capacity of 1.5
million tonnes. Alpart secures long-term supplies of bauxite from local
sources.

Hydro Aluminiums remaining alumina requirements are covered by medium- to
long-term contracts with price formulas based upon a percentage of the LME
price.

Notwithstanding the current primary aluminium overcapacity situation,
industry analysts expect that some 2.6 million tonnes per year of new aluminium
smelting capacity will come on stream in the Western World alone in the next
four-to-five years; up to 5.2 million tonnes per year of new capacity could
come on stream in China during this period. Some industry analysts have
expressed concerns about whether the greenfield and expansion projects in the
alumina sector that are currently in the planning stages will be adequate to
meet the projected growth in demand from the aluminium sector. The cost of
alumina is the biggest single component of the cash cost of producing primary
aluminium metal, comprising around 35-40 percent on average. Although the price
of alumina has been historically correlated with the price of aluminium in the
long-term, there might occur differences in the market price between alumina
and aluminium at least in the short-term, when an increased aluminium
production is not supported by new alumina capacity. This risk is heightened
given the greater industry concentration for alumina (as compared to the
upstream aluminium production market) that affords alumina industry suppliers
greater pricing power.

Hydro Aluminiums overall short strategy is based on the belief that over
time new alumina production capacity will materialize to support the growth in
world alumina consumption. Higher prices would encourage expansion in the
alumina industry, the closure of less productive aluminium production and
restored balance in the market over time. Brief periods of tight alumina
supply will occur from time to time, but Hydro Aluminium does not base the
sourcing of alumina on spot market operations, thus the sourcing portfolio is
not very exposed to short-term imbalances. The share of

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Hydro Aluminiums metal production being supplied from its own alumina
sources is evaluated periodically as part of an ongoing monitoring of the
alumina industry. Hydros portfolio of equity alumina, medium- and long-term
contracts, and a flexible smelter system capable of accepting many sources of
alumina, positions it well to face shorter term alumina shortages.

Industry Trends

Increasing Global Aluminium Production Capacity

Shipments of aluminium in the Western World increased by close to 500,000
tonnes in 2002 (roughly 2.5 percent). Western World production increased by
around 600,000 tonnes. About 400,000 tonnes related to new capacity and the
balance was due to the restart of previously idled capacity in Brazil.
Worldwide, production grew a reported 5-6 percent in 2002 to approximately 26
million tonnes.

China increases uncertainty around the potential oversupply situation that
could negatively affect international prices. China has traditionally been a
net importer of aluminium. However, during 2002 Chinas capacity and
production increased by about 30 percent while consumption grew by roughly 20
percent. Net exports from China in 2002 were estimated at 250,000 tonnes. Over
the longer term, Chinas consumption is expected to utilize more of its
aluminium production.

Registered stocks increased by 280,000 tonnes in 2002. However, taking
into account accumulation of unreported inventories, the total estimated
increase in primary inventories amounted to some 600,000 tonnes. This reflects
the low growth in industrial activity in 2002.

The worldwide balance between supply and demand and the extent of the
overcapacity will depend on economic conditions and the rate of growth in
demand for aluminium. In 2002, growth in demand in the US, currently the
worlds largest aluminium consumer, and Europe was low to moderate. The outlook
for 2003 is uncertain, although macroeconomic forecasts have gradually become
more pessimistic. Early warning signals and confidence indicators have
improved somewhat in the US. Macroeconomic forecasts would suggest that there
could be a recovery in US aluminium shipments in 2003. However, this will
depend upon, among other things, uncertainty around or an actual war in Iraq.
Europe and Japan are expected to have moderate, though potentially improving,
growth. The Asian market (excluding Japan) is expected to experience strong
growth. While shipments may increase in the Western World by approximately 4-5
percent, worldwide production is likely to increase by close to 600,000 tonnes.
If these estimates prove accurate, inventories in 2003 would be expected to
increase by approximately 500,000 tonnes.

In light of the current oversupply situation, low aluminium prices and
higher energy costs, there is a need to cut production. In 2002, several of
the leading players in the industry, including Alcoa and Alcan, announced the
permanent closure of smelter capacity. Continued low prices may also
accelerate the closure of older, inefficient smelters, which could positively
contribute to the demand-supply balance.

Long-Term Growth in Consumption

Notwithstanding current market conditions, the longer term prospects for
aluminium companies remain more optimistic. During the last 50 years, the
growth rate in the consumption of aluminium has been higher than any of the
other competitive metals. Presently, more aluminium is produced than all other
nonferrous metals combined. The estimated average long-term growth in total
aluminium consumption in the Western World amounts to approximately 3 percent
per year, somewhat higher than the expected growth in GNP/industrial production
of 2.5 percent per year. The demand for virgin, primary metal is expected to
increase on average by about approximately 3 percent per year, taking into
consideration the long-term growth in total aluminium consumption and estimated
increase in recycling of used scrap of more than 4 percent.

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Restructuring in the Industry

Important structural changes continue to take place within the aluminium
industry. Ownership concentration, defined as the share of primary aluminium
capacity held by the six major companies in the Western World, has increased
from 43 percent in 1995 to about 55 percent in 2002. Major acquisitions
contributing to this trend are the Alcan/Algroup (Alusuisse) merger and Alcoas
takeover of Reynolds Metals in 2000, as well as Hydro Aluminiums acquisition
of VAW in 2002.  The industry
consolidation is being driven by the need to generate economies of scale in an
increasingly global, competitive and mature marketplace. Reinforcing the
level of consolidation among primary metal producers is the increasing
concentration of control of alumina suppliers.

Although the Western World aluminium industry has become less
state-influenced, with government-controlled production dropping from 25
percent in 1995 to about 18 percent at the end of 2002, in Asia there has not
been the same trend. Future privatization of aluminium companies in countries
such as China and India may create opportunities for further industry
consolidation.

Competitive Strengths

Customer Service

Metals has extended significantly its supply capabilities through the
expansion and modernization of existing plants, acquisitions and the
construction of remelt plants. Moreover, Hydro Aluminium has consistently
strengthened its commitment to customer service and increased the efficiency of
its production systems. Metals regional market teams have competencies within
technical and commercial service, research and development, logistics, contract
administration and scrap conversion. Market teams are organized in such a
manner that each member of the team can communicate in the local language of
the customers respective professionals.

To enhance its existing service level, Metals implemented a new program in
2001 called Hydro Billet Plus. The aim of the program is to reward the
sub-segments most important customers and customers who wish to increase their
business volume. The program includes a comprehensive service package
including technical support, as well as activities aimed at helping customers
manage their own business and market risks. The program was also extended by
an ePortal where customers can initiate orders and access a range of additional
technical and financial services.

Remelt Know-How

The remelting and recycling of aluminium is not only an environmental and
political issue, but also an important part of Hydro Aluminiums business
strategy. Conventional wisdom in the aluminium industry, particularly in the
US, has been that high quality metal could only be produced by primary smelting
operations. Scrap-based facilities were thought to produce alloys with less
rigorous specifications. Ten years ago, Hydro Aluminium determined to channel
its research and development efforts into technology and operating practices to
achieve primary quality metal from scrap. By controlling the metal
microstructure and cleanliness, through the use of Hycast molten metal
degassing and filtration equipment, state-of-the-art homogenizing furnaces and
cooling chambers, Hydro Aluminium has been able to produce specific alloy
series from scrap of a quality on par with primary metal, both in terms of
physical properties and rate of extrusion.

Duty Advantages

Aluminium produced within the European Economic Area, which includes
Norway and some other countries, presently enjoys a nominal duty advantage of 6
percent (effectively about 5 percent)

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of the metal price on sales to within the EU. This has been subject to
debate within the EU and it is not possible to predict whether this advantage
will be maintained in the medium to long-term.

Issues/Risks Relevant to Competitive Position

London Metals Exchange Price Level

The projected London Metals Exchange (LME) price for standard aluminium
ingot in 2003 is USD 1,350 per tonne. This figure reflects the expected metal
surplus described above. Metals operating results are negatively affected by
lower LME prices, although some major costs for the production process
(purchased alumina and electricity in the German and Canadian smelters) are
linked to the LME price. The variance in the LME price, combined with changes
in currency exchange rates, can have a material impact upon Hydro Aluminiums
results as a whole even though its downstream operations are principally margin
businesses that are less directly impacted by the LME price level.

Power Contracts

To mitigate risks related to increases in power prices, Hydro Aluminium
has negotiated long-term contracts for the Norwegian smelters (much of which is
purchased within the Group) with pricing terms not tied to changes in the LME
price. For the former VAW smelters in Germany and Canada, the power contracts
are linked to the LME price. The contract for the Canadian smelter is a
long-term contract, whereas the power contracts for the German smelters will
expire at the end of 2005. New contracts will be negotiated, but given the
present market situation and political threat of new eco-taxes to be levied on
energy producers, it is not possible predict the outcome of such negotiations.
The contracts for the Australian smelters are also long-term contracts that
ensure a competitive cost position.

Production of Virgin Primary Aluminium

Alumina (aluminium oxide) and energy are the major raw materials for
primary aluminium production. Alumina is produced from bauxite through a
chemical process. It takes 4-5 tonnes of bauxite to produce two tonnes of
alumina. Aluminium is produced through the electrolytic reduction of alumina.
Approximately two tonnes of alumina yield one tonne of aluminium.

The process of separating the aluminium from the oxygen in alumina
requires electrical energy. The smelting of one tonne of aluminium requires
between 13 and 17 megawatt hours of electric energy. Hydro Energy produces a
significant part of the electricity required by its Norwegian primary aluminium
smelters at its own hydroelectric generating plants, the basis for competitive
aluminium production in Norway.

Hydro Aluminium produces its virgin primary aluminium at twelve wholly- or
partly-owned primary aluminium smelters. Due to high power prices in Norway in
2002, Hydro Aluminium made minor reductions in the production at some of its
Norwegian smelters where it was possible to sell electricity back to the market
under terms of the electricity contracts. This reduced production by
approximately 1,000 tonnes. Most smelters operated at full capacity during
2002. Production at the smelters and tonnes sourced from other main sources
during the three most recent years is reflected in the table below:

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|                                          |                                                                   |                                    |           |         |         |      |         |         |         |  |         |         |         | 
|----------------------------------------- | ----------------------------------------------------------------- | ---------------------------------- | --------- | ------- | ------- | ---- | ------- | ------- | ------- |  | ------- | ------- | ------- | 
|Aluminium production (tonnes)             |                                                                   | 2002*                              |           | 2001    |         | 2000
|                                          |                                                                   |                                    |           |         |         |     
|Primary Aluminium                         |                                                                   |                                    |           |         |         |      |         |         |         |  |         |        
|                                          |                                                                   | Karmøy                             |           |         | 273,000 |      |         |         | 272,000 |  |         |         | 270,000 | 
|                                          |                                                                   | Årdal                              |           |         | 206,000 |      |         |         | 206,000 |  |         |         | 204,000 | 
|                                          |                                                                   | Sunndal                            |           |         | 153,000 |      |         |         | 156,000 |  |         |         | 154,000 | 
|                                          |                                                                   | Høyanger                           |           |         | 73,000  |      |         |         | 71,000  |  |         |         | 72,000  | 
|                                          |                                                                   | Søral (Hydros 49.9 percent share) |           |         | 67,000  |      |         |         | 62,000  |  |         |         | 62,000  | 
|                                          |                                                                   | Slovalco (20 percent share)        |           |         | 22,000  |      |         |         | 18,000  |  |         |         | 17,000  | 
|                                          |                                                                   | Rheinwerk                          |           |         | 173,000 |      |         |         |         |  |         |         |         | 
|                                          |                                                                   | Elbewerk                           |           |         | 48,000  |      |         |         |         |  |         |         |         | 
|                                          |                                                                   | HAW (33.3 percent share)           |           |         | 33,000  |      |         |         |         |  |         |         |         | 
|                                          |                                                                   | Kurri Kurri                        |           |         | 122,000 |      |         |         |         |  |         |         |         | 
|                                          |                                                                   | Tomago (12.4 percent share)        |           |         | 45,000  |      |         |         |         |  |         |         |         | 
|                                          |                                                                   | Alouette (20 percent share)        |           |         | 38,000  |      |         |         |         |  |         |         |         | 
|                                          |                                                                   |                                    |           |         |         |      |         |         |         |  |         |         |         | 
|Total virgin primary aluminium production |                                                                   |                                    | 1,253,000 |         |         |      | 785,000 |         |         |  | 779,000 |        
|                                          |                                                                   |                                    |           |         |         |      |         |         |         |  |         |        
|                                          | Remelting                                                         |                                    |           | 449,000 |         |      |         | 425,000 |         |  |         | 387,000 |        
|                                          | Average price primary aluminium (USD/tonne per
LME 3-month price) |                                    |           | 1,365   |         |      |         | 1,454   |         |  |         | 1,567   |        
|                                          |                                                                   |                                    |           |         |         |      |         |         |         |  |         |        






|* |  | Excludes VAW volumes before the closing on March 15, 2002
|- |  | ---------------------------------------------------------

Sales and Trading

Most of Hydro Aluminiums own production of aluminium cast house products
is sold in Western Europe, to semi-fabricating plants like extruders, rollers
and wire mills, as well as foundries. The main consumer areas are
transportation, construction and packaging. The major consuming countries are
Germany, France, the UK, Italy and Spain. The aluminium is sold in the form of
value-added products such as extrusion ingot, sheet ingot, wire rod and foundry
alloys.

Hydro Aluminium also engages in trading of aluminium and related raw
materials. Aluminium trading activities consist of physical metal purchases
and sales, as well as trading on the LME. Hydro Aluminiums raw material and
metal traders sold externally 478,000 tonnes of primary aluminium products in
2002 compared to 538,000 tonnes in 2001. The main trading product is standard
aluminium ingot, which is also the global aluminium product on which price
quotations on the LME and other metal exchanges are based. For additional
information on derivative commodity instruments, see Item 11. Quantitative and
Qualitative Disclosures about Market Risk.

Metals Magnesium Business

Hydro is the worlds largest producer of primary magnesium. The industry
in the Western World, excluding China and CIS, is comprised of fewer than 10
producers with a total production estimated at 220,000 tonnes. China was
reported to be producing roughly 195,000 tonnes, 170,000 tonnes of exports and
25,000 tonnes of indigenous production. In 2002, Hydro Magnesiums combined
production of primary and recycled magnesium was 80,000 tonnes.

The increased quantities of Chinese magnesium available in Western markets
have resulted in significant downward pressure on magnesium prices over the
past several years. The doubling of the European Unions anti-dumping duties
in 2000 had limited effect. The downward price pressure was exacerbated by the
soft aluminium and automotive markets in North America and low growth in demand
in Europe. In view of these market conditions, Hydro Aluminium terminated its
primary magnesium production in Norway. A magnesium remelt plant is now
operating on the site of the closed primary metal facility utilizing certain of
the plant equipment and expertise formerly engaged

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in the production of primary metal. The closure of the Norwegian
operations reflects the Companys strategy to focus capacity within the higher
margin alloy and remelt market sectors. The Becancour plant in Canada has a
total annual production capacity of 48,000 tonnes of primary metal (pure
magnesium and magnesium alloys) and a recycling capacity of up to 22,000 tonnes
per year. It was recently announced that the Noranda magnesium plant in Canada
would be temporarily closed. The potential impact on the magnesium market is
not yet foreseeable.

In 2002, the new magnesium foundry in Xian, China continued to ramp-up.
The plant started operations in late 2001 and has a capacity of approximately
10,000 tonnes of metal and 400 tonnes of anodes after full ramp-up. This first
venture in China is expected to provide a foundation for additional activities
in the future.

Hydro Aluminium also has a recycling plant in Germany with a capacity of
7,500 tonnes.

Metals High Purity Business

As a result of the VAW acquisition, Hydro Aluminium is now a world market
leader, in terms of production, for high purity aluminium products. The
industry is quite concentrated, with two producers in Europe, four in Japan,
two in China and one in Russia. The high purity aluminium business is a niche
business tied to the electronics industry. Most of the material is used as raw
material for electrolytic capacitors or for semiconductors. The worldwide
consumption of high purity aluminium for capacitors with an aluminium content
between 99.98  99.998 percent was about 60,000 tonnes in 2002. The demand for
aluminium content between 99.999  99.9999 percent,primarily for
semiconductors, is estimated to be 800 tonnes. Through its three production
sites in Japan, Norway and Germany, Hydro Aluminium sold about 15,000 tonnes in
2002.

After a substantial decline in the market in 2001, there was a significant
recovery beginning in the second quarter of 2002. Global production capacities
are still not fully utilized, putting downward pressure on market prices. Given
these market conditions, Hydro Aluminium reduced its high purity aluminium
inventories in 2002 by more than 50 percent and is now positioned to restart
temporarily stopped furnaces. Japan currently represents roughly 75 percent of
the market for high purity aluminium, but demand in China increased
significantly in 2002.

Investments

In 2002, Metals investments (defined to include additions to property,
plant and equipment, long-term securities, intangibles, long-term advances and
investments in non-consolidated investees) totaled NOK 12,728 million, compared
with NOK 1,872 million in 2001 and NOK 2,437 million in 2000. The primary
contributor to the increase in 2002 was the acquisition of VAW. Other large
investments in 2002 included the modernization and expansion at Sunndal, the
expansion activities at Alunorte, and a new baking furnace built at the carbon
plant, Aluchemie. These investments were made to improve the operating cost
position of the plants (through economies of scale), thereby improving Hydro
Aluminiums overall long-term cost position.

Rolled Products

Hydro Aluminiums Rolled Products sub-segment (Rolled Products) consists
of four business units serving different market segments: Lithography, Foil,
Strip and Automotive. Hydros product range comprises a wide variety of foil,
strip, sheet and plate products used in the packaging, automotive and transport
industries, as well as the construction and printing industries. In addition to
flat rolled products, the sector sells and produces wire rod, a semifabricated
product used mainly in the electrical conductor market. The table below
illustrates the different products and the markets served by each of Rolled
Products business units:

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|         |  |                                         |  |                                           |  |                                  |  |                                                      
|-------- |  | --------------------------------------- |  | ----------------------------------------- |  | -------------------------------- |  | -----------------------------------------------------
|         |  | Lithography                             |  | Foil                                      |  | Strip                            |  | Automotive                                           
|        
|Products |  | Strip/Sheet                             |  | Foil                                      |  | Strip/Sheet                      |  | Strip/Sheet                                          
|         |  | - Plain                                 |  | - Plain                                   |  | - Plain                          |  | - Plain                                              
|         |  |                                         |  | - Converted                               |  | - Lacquered                      |  |                                                      
|         |  |                                         |  |                                           |  | - Cladded                        |  | Welded tubes                                         
|         |  |                                         |  |                                           |  | - Converted                      |  |                                                      
|         |  |                                         |  |                                           |  |                                  |  |                                                      
|         |  |                                         |  |                                           |  | Wire rod                         |  |                                                      
|        
|Markets  |  | Offset plates for
the printing
industry |  | Flexible packaging
Technical
applications |  | Packaging
Beverage cans
Building |  | Wheel and axle
components for the
automotive industry
|         |  |                                         |  |                                           |  | General
engineering              |  |                                                      
|         |  |                                         |  |                                           |  | Heat exchanger                   |  |                                                      
|         |  |                                         |  |                                           |  | Electrical
applications          |  |                                                      
|        

Volumes, sales growth rates, and market shares in the Rolled Products
business description are pro formafigures for the combined VAW and Rolled
Products assets for all of 2002, unless explicitly expressed otherwise.

With the ambition of becoming one of the top three integrated aluminium
companies in the world, Hydro Aluminium recognized the need to strengthen its
flat rolled products segment since such products represent 50 percent of the
worlds aluminium consumption. As a result of the VAW acquisition, Hydro
established important European positions within high margin rolled products
segments such as lithographic (printing) plates and foil, as well as obtaining
a 50 percent ownership interest in the worlds largest hotmill, Aluminium Norf
GmbH (Alunorf).

With the acquisition, Hydro Aluminium evolved from a rather marginal to a
leading position in the European rolled products business with more than 80
years of experience as a specialist in the rolling and converting of rolled
products. Rolled Products is the worlds fourth-largest producer of flat
rolled products measured by volume. In Europe, Rolled Products has a clear
number three position with an overall market share of 19 percent. Within
attractive business units such as lithography and foil, Rolled Products has a
number one position in the main geographical areas in which these units
operate.

During the past few years, the industry has consolidated due to major
acquisitions  for example, Alcoas acquisition of Reynolds Metals and Alcans
merger with Alusuisse. Hydros downstream aluminium
operations now face competition from increasingly global and stronger players.
As explained more fully below, Rolled Products intends to meet the competitive
challenges presented by focusing on productivity and cost improvements, product
development and innovation, and pursuing limited growth opportunities in areas
of strength.

The rolling business is seasonal in nature. Demand is typically low during
July, August and December, especially within the building, construction, foil
and can businesses. During these months, planned maintenance work is scheduled.

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Strategy

Optimization of Product Mix and Capacity Utilization

Rolled Products, like the rest of the rolling industry, produces a wide
variety of products for different industries and with very different product
margins. The important success factors within the rolling industry are to
optimize the product mix and capacity utilization, as well as to streamline the
production system. There are large spreads in margins between different
products, with the most attractive products limited in terms of demand. It is
vital for a rolling mill to have a high degree of capacity utilization to be
cost competitive. Delivering customer value, while optimizing product mix and
continuously improving the production system, is therefore a day-to-day
challenge. Rolled Products has implemented a sophisticated IT-based planning
tool to optimize mill loading to ensure the highest contribution per bottleneck
capacity.

Productivity and Cost Improvements

Enhancing productivity and reducing cost levels are high on the agenda in
all areas within Hydro Aluminium. In 2002, a separate program with defined
actions was established to contribute to an improved cost base for Rolled
Products. The synergies captured are expected to be a mix of cost savings,
optimization of production systems, capitalization on specific technical and
commercial knowledge, and increased sales through an extended customer base.
Moreover, a cost improvement program will be launched in 2003 to reduce costs,
both within sales and general administrative functions, in addition to
improving the cost base in the production system.

Market Position in Lithography

Both on the demand and supply side, the lithography market is
characterized by a few large players. Rolled Products has a strong global
presence with an approximate 29 percent market share, placing it number one in
this market. Over the last four years, the Lithography business unit had an
average annual growth in sales volume of about 7 percent, outpacing the 3
percent growth in general lithography demand. Rolled Products attributes this
primarily to its focus on quality and customer service. Hydros Lithography
business is well-positioned to continue to expand its customer base and meet
increased competition from more consolidated industry players.

Market Position in Foil

In Europe, Rolled Products Foil business unit has a number one position,
with an overall market share of 30 percent. Foil has leveraged its
market-leading position in Europe to respond to the needs of global customers
for a global supplier with a local presence. In 2001, Rolled Products acquired
a 65 percent ownership interest (increased to 81 percent in 2002) in a
Malaysian rolling mill to serve as a base for sourcing customers in the Asian
region. Living standards in Asia are rising hence packaging needs are growing
rapidly and foil is one of the most important packaging materials.

Optimize Strip Production System and Product Range

The Strip unit is Rolled Products base business, characterized by high
volumes and lower margins. For this business, high capacity utilization and
production efficiency are key. The current strategy is to optimize the combined
production and market system of Hydros Rolled Products and the former VAW to
realize the full potential of the integrated business operations.

Develop Opportunities in Automotive Body Sheet

Automotive flat rolled products are expected to have higher growth than
other flat rolled products in Europe, with an estimated annual increase in
consumption from 2001 to 2006 of 20 percent. Principally using its existing
asset base, Hydro Aluminium intends to expand its flat rolled

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product range from non-visible applications to applications that are visible
(referred to as the body-in-white market) on a finished manufactured vehicle.
Body applications are expected to be a strong, growing market segment due to
the car makers constant need to reduce weight. As the surface quality requires
a special quality, a new finishing line is under construction in Grevenbroich,
Germany.

Issues/Risks Relevant to Hydros Rolled Products Business

German Legislation to Promote Recycling of Beverage Cans

In January 2003, Germany enacted legislation to promote, through refunds,
the recycling of all types of sparkling beverage packaging. The legislation may
have the effect of reducing the can packaging market in Germany, though any
decrease would be expected to be more significant for cans made of steel rather
than aluminium given aluminiums greater ability to be recycled. Rolled
Products is only marginally exposed because 95 percent of its present beverage
can business is for consumption outside Germany.

Capacity in the Finished Product Sector

Rolled Products constantly monitors the capacity utilization rate in the
industry, as overcapacity is always a threat to maintaining margins. Capacity
restructuring and consolidation within the rolled products industry can present
a challenge for all market participants. At the present time, Rolled Products
is not experiencing any material long-term margin deterioration.

Production

The physical lead-time in the rolling production process averages between
2 to 3 months. The rolling process from rolling sheet ingots is illustrated
below.

(IMAGE)

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The table below shows the ownership interest and production volume per
site in Rolled Products production system.

|                         |  |         |     |                    |  |                       |     | 
|------------------------ |  | ------- | --- | ------------------ |  | --------------------- | --- | 
|                         |  |         |     |                    |  | Sales Volume for 2002
|Site                     |  | Share % |     | (in kilo tonnes) *
|                         |  |         |     |                   
|Grevenbroich, Germany    |  |         | 100 |                    |  |                       | 494 | 
|Hamburg, Germany         |  |         | 100 |                    |  |                       | 127 | 
|Slim, Italy              |  |         | 100 |                    |  |                       | 79  | 
|INASA, Spain             |  |         | 100 |                    |  |                       | 24  | 
|AISB, Malaysia           |  |         | 82  |                    |  |                       | 12  | 
|Karmøy, Norway           |  |         | 100 |                    |  |                       | 62  | 
|Holmestrand, Norway      |  |         | 100 |                    |  |                       | 65  | 
|Alucoat, Norway          |  |         | 100 |                    |  |                       | 29  | 
|Wire Rod, Karmøy, Norway |  |         | 100 |                    |  |                       | 75  | 
|Alutubes, Germany        |  |         | 100 |                    |  | Tube welding         
|Hydro Dormagen, Germany  |  |         | 100 |                    |  | Slitter only         
|Alunorf, Germany         |  |         | 50  |                    |  |                       | 591 | 



---

|* |  | includes 647 kilo tonnes per year of external shipments
|- |  | -------------------------------------------------------

Sales and Distribution

A major part of the sales functions is organized centrally along the
product and business unit dimension. Such organization enables optimization of
sales, planning and production in Rolled Products total rolling system.
Distribution is partly organized centrally and partly decentralized to ensure
customer satisfaction. All major transportation contracts are optimized and
negotiated centrally.

Investments

In 2002, Rolled Products investments (defined to include additions to
property, plant and equipment, long-term securities, intangibles, long-term
advances and investments in non-consolidated investees) totaled NOK 7,437
million, compared with NOK 201 million in 2001 and NOK 249 million in 2002.
Investments in 2002 were primarily used for the acquisition of VAWs rolling
business. In comparison, a normal investment level necessary for maintaining
the Rolled Products existing operations would be approximately NOK 600 million
on an annualized basis.

Extrusion and Automotive

The Extrusion and Automotive sub-segment of Hydro Aluminium consists of
three sectors: Extrusion, Automotive and North America.

Extrusion

The Extrusion sector (Extrusion) is primarily focused on the European
market, but also has some operating entities in Brazil, Argentina and South
Africa. Extrusion is Europes largest soft alloy extruder of aluminium in terms
of volume. Extrusion mainly consists of general extrusion activities and its
Building Systems unit. With respect to its general extrusion activities,
Extrusion supplies custom-made general extrusions of soft alloy aluminium,
surface treatments such as anodizing and powder coating, fabrication,
components and finished products. Building Systems supplies complete design
and solution packages to metal builders, enabling them to supply both the
commercial and residential building markets with products, such as facades,
partition walls, doors and windows, as well as other building applications
through its three main brands: Technal, Wicona and Domal.

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In January 2002, Extrusion enhanced its position through the acquisition
of Technal, a French-based manufacturer of aluminium building systems.
Integration of Technal progressed ahead of schedule throughout 2002, allowing
the sector to realize more of the estimated synergies more rapidly than
originally planned. Technals strong market position in France and solid
positions in Spain, Portugal and the UK complements Extrusions overall
European standing. Prior to the acquisition, Extrusions largest markets were
Germany and Italy. The Technal acquisition augmented Extrusions general
extrusion operations through the addition of extrusion capacity in France and
by doubling Building Systems volumes. This puts Extrusion into a leading
position in building systems in Europe based on extruded aluminium.

Automotive

The Automotive sector (Automotive) comprises all of Hydro Aluminiums
precision tubing, structures and casting businesses worldwide. Automotive is a
world-leading supplier of aluminium extrusion-based applications within crash
management, drawn tube applications used primarily within radiators, fuel
coolers and liquid lines, and casting of cylinder heads and engine blocks.
Automotive is the market leader in crash management applications in Europe and
has a market share of 80 percent of aluminium bumper beams. Automotive is
involved in crash management in North America and will increase its US bumper
production in 2003 based upon existing contracts. The sector has achieved
safety awards for crash management systems supplied to several vehicles.

Automotives precision tubing unit has a global leading position with
market shares of approximately 60 percent in Europe, 40 percent in North
America, and 50 percent in South America. The unit also supplies part of the
Chinese market through its plant in China.

Through the acquisition of VAW, Hydros Automotive sector acquired VAWs
casting business and technology. The sector is now the worlds leading
(non-captive) supplier of aluminium cylinder heads and engine blocks. Through
its technological leadership and in cooperation with Daimler Chrysler,
Automotive has developed the first aluminium high performance, high volume
diesel engine block.

North America

The North America sector (North America) is comprised of all
non-automotive extrusion and remelt plants in the US. Through the acquisition
of Wells Aluminum in 2000 and VAWs North American extrusion assets in 2002,
the sector has become the third-largest extrusion company in the North American
market with a market share of approximately 8 percent. The North America
sector has a leading position within the North American drawn tube market and
also supplies extrusion-based products to the transportation, building and
construction, and consumer durable markets. The sector operates six remelters,
including its new remelter in Commerce, Texas (started operations in 2002),
representing one of the largest remelting systems in the US. In 2002, progress
was made in improving performance at several of its remelters.

Strategy

Focus on Value-Added Products in Extrusion

In 2002, the Extrusion sector successfully focused on improving
performance in a continued challenging market, gaining market share while not
impairing margins. The Extrusion sector intends to continue to expand its
product offering through selected forward integration into product refinements
such as surface treatment and machining of extruded profiles to improve margins
and volume. Further, the Extrusion sector will seek to increase its production
capacity through organic growth and selective acquisitions should the right
opportunities appear.

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Improving profitability in Automotive

In 2002, Automotive continued to focus on its core competencies within
crash management, cast cylinder heads and engine blocks, and continuous
development of products within the drawn tube area. The sector signed new
contracts within all its strategic focus areas, which will increase capacity
utilization levels going forward. In the last few years, Automotive has had a
high period of growth necessary to establish itself as a serious supplier to
the highly demanding automotive industry. Automotive has been challenged by a
substantial number of new product introductions, start-up problems common on
new lines and rapid organizational development. The main emphasis in 2003 will
be a fix strategy aimed at improving profitability by streamlining production
processes to reduce costs.

Permanent Capacity Reduction and Press Productivity in North America

In 2002, the North America operation was challenged by poor customer
demand that would not support its existing cost structure. The old VAW
headquarters in Florida and a Kentucky office were closed in 2002.
Furthermore, the asset portfolio was adjusted to market conditions by the
closure of a Georgia extrusion plant, allowing the transfer of existing
contracts to other facilities to improve press utilization and profitability.
These closures are part of an overall strategy to upgrade North Americas
operations and improve the asset base following the integration and
restructuring of the three previously separate entities that now comprise this
sector (i.e., the original Hydro activities and the former Wells Aluminum and
VAW plants).

Currently, North Americas press productivity, although on par with the
average within the North American industry, lags behind that of the European
Extrusion units. Corrective actions to narrow the gap through controlled
maintenance and competence transfers between Hydro activities are underway to
increase productivity.

During 2003, the main strategy will continue to be to increase
productivity, improve product quality and reduce cost to raise profitability
for the North American operation to an acceptable level.

Issues/Risks Relevant to Extrusion and Automotives Business

Volatility of Extrusion Business

The US market has proven to be more volatile to market downturns in the
economy than Europe. The North American extrusion market fell by approximately
21 percent from 2000 to 2001, and remained flat in 2002. European shipments
declined by approximately 4 percent and 3 percent during the same periods. The
US market tends to be a more homogenous market, while the European market has
different cycles in different countries. North American operations were
particularly effected by the trailer market segment, which experienced the
largest decline. Weak demand is expected to continue in 2003. The lower
production levels have been met by plant closures both by Hydro and its
competitors. However, the primary response to a falling market is to scale
back production at the plants, through reduction in number of shifts and
consequently reduction in work force.

Building/Construction Markets in Europe Remain Depressed

In Germany, the biggest building and construction market in Europe,
construction level contracted throughout 2002. There were also weaker market
conditions in Portugal, Spain and the UK. France and Italy were better than
the trend curve in 2002; however, a weakening is expected in 2003.

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Sales of Global Light Vehicles to Remain Flat

The global light vehicle market in 2002 was slightly down compared to the
2001 when
approximately 56 million units were sold. The primary reason was Europe, with a
decline of about 4 percent. US sales were up approximately 1 percent,
stimulated by strong incentive programs throughout the year. Anticipated sales
for global light vehicles for 2003 remain uncertain. The US market is expected
to decline if the high level of incentives offered by the car manufacturers are
either dropped or reduced. The European markets are also showing signs of
continued weakness, particularly in the important German market. The uncertain
political situation pertaining to the Iraqi situation is expected to have a
considerable negative impact on new car sales if a war should erupt.

Production and Products

The conversion of aluminium billets into fabricated and finished products
requires the application of a variety of intermediate processes. The primary
products produced within all three of Extrusion and Automotives sectors are
extruded aluminium profiles, used primarily within the building and
construction markets and the transportation segment. Within the Automotive
sector, extrusion technology is coupled with the high technological competence
level in Hydro to produce solutions for the automotive industry, primarily
within the crash management area. In addition, in North America sales include
high quality extrusion billet from its remelt system.

Sales and Distribution

Through its organizational model, Hydros extrusion businesses have
implemented a strong decentralized operation, facilitating close relationships
with customers. By combining the entrepreneurial and performance-driven plant
system with Hydros global metal competence base, Hydro is able to sell not
only value-added products but also value-added services. Through its extensive
network of more than 80 manufacturing plants throughout Europe, the Americas
and Asia, Hydro is able to provide global competence for local needs.

Investments

In 2002, Extrusion and Automotives investments (defined to include
additions to property, plant and equipment, long-term securities, intangibles,
long-term advances and investments in non-consolidated investees) totaled NOK
5,153 million, compared with NOK 1,454 million in 2001 and NOK 2,389 million in
2000. Investments in 2002 principally related to the acquisition of Technal and
VAW, as well as rationalizing and upgrades of the existing business activities.

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AGRI

General

Hydro Agri produces and sells ammonia and mineral fertilizer products,
including nitrogen-based finished products such as urea, nitrate fertilizer and
complex fertilizer, as well as third-party sourced phosphate and potash
fertilizer. Hydro Agris fertilizer business is global and substantial in
size. Over half of Hydro Agris sales are made outside its home market of
Europe, a position which is unique in the industry. This reduces exposure to
problems in one specific region and also provides arbitrage opportunities
between different geographic markets. It also helps smoothen the effects of
seasonality inherent in the mineral fertilizer business. Hydro Agris
purchasing power promotes advantageous pricing terms when buying from other
producers and reduces the need for heavy investment in new plant and equipment
to support growth.

(SLIDE #1)

Fertilizer value chain

Hydro Agri is sourcing fertilizer product from a combination of own
production plants mostly located in Europe, from joint venture plants and from
third parties. A global planning function optimizes supplies for sale through
Hydro Agris regional business units. A current drive to further enhance
productivity in Hydro Agris plants both in Europe and in overseas growth
markets like Brazil and Vietnam, is expected to increase availability of own
product and may influence the trend of steadily increasing third-party
sourcing. The current situation with a nearly balanced position between
deliveries to European and non-European markets, demonstrates the substantial
impact a flexible sourcing system has had and will continue to have on Hydro
Agris overall business.

(SLIDE #2)

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Seasonality

The fertilizer industry is characterized by seasonal fluctuations.
Generally in Europe about 80 percent of annual fertilizer use occurs in a
six-to-eight week season. In contrast, production takes place evenly
throughout the year. Approximately 65-70 percent of the annual sales of Hydro
Agris European production of fertilizers takes place in the period from
September to March. In order to assure that product is available at
agricultural cooperatives and wholesalers in the peak period and to fully
utilize the storage capacity of the total distribution system, Hydro Agri seeks
to sell products more evenly throughout the year. The combination of Hydro
Agris distribution network in Europe and overseas smoothens seasonal demands
for deliveries and allows for better capacity utilization in the distribution
as well as the production system.

(SLIDE #3)

Successful turnaround

In 2001, Hydro Agri completed a turnaround program begun in 1999,
achieving total manning reductions in excess of 30 percent compared to 1998
levels, as well as equivalent fixed cost reductions. During this period,
production per employee increased by 1000 tonnes or 37 percent, while
fixed costs per tonne decreased by approximately NOK 40 or 17 percent.

(SLIDE #4)

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Further measures were initiated during 2001 to drive fixed costs lower,
including new organizational structures at certain production sites aimed at
delayering and merging operational functions. In addition, actions aimed at
improving capacity utilization were identified and targets established at
specific sites for volume improvements. Aiming to avoid new turnarounds, Hydro
Agri is focused on continued improvement through a large number of smaller
projects throughout the organization, such as seeking to extract more product
from existing plants, and scale and synergies in the global logistics and
marketing network. Targeted reductions in fixed costs in 2003 are more modest
than in the past several years as Hydro Agri approaches the bedrock of its
current business and organizational structure.

In the period from 1999 to the end of 2002, Hydro Agri has exited nearly
50 substantial operations considered outside the segments core area. In 2001,
Hydro Agri completed a substantial restructuring of its Central European
operations, closing offices, consolidating activities and exiting unattractive
market areas. These additional measures have further simplified the Hydro Agri
business and have contributed to improved operating results. In November 2002,
substantially all of the assets owned by Farmland Hydro, L.P. , a 50/50 JV
between Hydro Agri and Farmland Industries, Inc, were sold to Cargill
Fertilizer, Inc. after final approval was given by a federal bankruptcy court
in Kansas City, Mo., allowing Farmland to participate in the deal.

Hydro Agri has also instituted an operating capital improvement programme,
aimed at achieving a reduction in net operating capital days (defined as the
12-month rolling average sum of credit days plus inventory days, less payable
days).

Production System and Raw Materials

Hydro Agris major large-scale fertilizer production facilities include
two plants in Norway and in Germany, three plants in France and in Italy, one
plant in Sweden and one plant in the Netherlands. Plants are modern, efficient
and well located. The bulk of the production equipment was put into operation
during the 1980s and 1990s. At the end of 2002, Agris total production
capacity was approximately 11.9million tonnes per year.

The most important raw material for Agris fertilizer operations is
natural gas. Natural gas serves as a hydrogen source with which nitrogen from
the air is reacted to produce ammonia. Ammonia is used to produce a full line
of upgraded fertilizer products, including urea and NPK. Agri purchases most
of its annual consumption of natural gas from external suppliers. Agris
annual consumption of natural gas in Europe amounts to about 140 million MBTU.
A 1USD change in the crude oil price implies a NOK 110 million effect on gas
costs.

(SLIDE #5)

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Business model

Capacity to create value The value of Hydro Agri has increased over the
past 3-4 years. The main drivers of this value creation are summarized in the
figure below and can be explained as:



| | 1. |  | Income drivers where both supply side effects (like US gas costs
for nitrogen products) and demand side effects (like grain prices) are
influencing price levels of commodity fertilizer products. Prices of
the more sophisticated products are influenced by regional
supply/demand balances and marketing tools.
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Cost drivers where Hydro Agri is specifically exposed to oil prices
and productivity development.                                                                                                                                                                                                                  
|
| | 3. |  | Growth will influence future value creation.                                                                                                                                                                                                                                                                       

(SLIDE #6)

After the successful completion of its turnaround program, Hydro Agri has
emerged as the worlds largest fertilizer player and the only truly global
company, having a product portfolio well balanced between the three key plant
nutrients N, P and K, a strong sourcing power and unique brands. Hydro Agri has
improved its competitiveness significantly from the situation in the late
nineties as a result of the turnaround process.

Areas of particular strength and related strategy

Hydro Agri has six areas of particular strength, and strategic priorities
are aimed at enhancing and developing these to achieve further expansion of
the business in areas presenting earnings potential as indicated in the figure
below.

(SLIDE #7)

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Ammonia

Ammonia is the key raw material for all nitrogen fertilizers. Hydro Agris
ammonia plants are characterized by high technological and environmental
standards. As a result, mandatory future investment in existing plants is
expected to be relatively low. Hydro Agris extensive shipping and logistical
network for ammonia enables participation in contracts that few competitors are
able to execute.

Agri is the leading ammonia player in terms of production capacity,
shipping and trade and storage capacity in deep sea ports. In addition to
ammonia plants in the Netherlands, France, Italy and Norway, Hydro Agri has a
49 percent interest in Trinidad Nitrogen Co. Ltd. (Tringen) in Trinidad and
Tobago and a 25 percent interest (Qatar Petroleum has the remaining 75 percent
interest) in the Qatar Fertilizer Company (Qafco) in Qatar.

In Trinidad, Hydro Agri operates and manages the two plants owned by
Tringen (and a third plant in which Hydro is the sole owner), which have a
combined annual ammonia capacity of approximately 1.3 million tonnes. Hydro
Agri has a long-term commitment for 227,000 tonnes of this volume while the
remainder is marketed on a commission basis. The location of these plants is
advantageous from the standpoint of access to long-term supplies of natural
gas. In addition, Trinidad serves as an important strategic location for
exports to the United States.

In Qatar, Hydro Agri provides marketing support and technical assistance
to Qafco. In September 2001, the shareholders in Qafco approved plans to
construct Qafco 4, a new ammonia-urea complex at Messaied, Qatar, expected to
be in operation during the second half of 2004. In connection with the project,
Hydro Agri also signed a new 13-year marketing agreement with Qafco to sell
part of its urea production in international markets. After the completion of
Qafco 4, Qafco will have a total production capacity of 2 million tonnes of
ammonia and 2.8 million tonnes of urea, making Qafco the worlds largest
producer of ammonia/urea. Hydro Agris 25 percent share ownership corresponds
to 0.5 million tonnes of ammonia and 0.7 million tonnes of urea.

slide #9 of Agri.ppt

Ammonia strategy   Growth by playing on strength

Hydro Agri is the world leader in ammonia. Consisting of modern, efficient
world scale plants, Hydro Agris ammonia production capacity is larger than
that of the biggest of its peers. Access to ample shipping and maritime storage
capacity in deep sea ports in combination with large scale

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downstream upgrading of ammonia to fertilizer products, provides opportunities
to maximize the value of ammonia through a global logistical handling system.

slide #10 of Agri.ppt

Hydro Agri is seen as an interesting partner for many types of projects
and commercial arrangements and intends to further leverage its ammonia
strengths in order to get access to increased ammonia volumes from locations
considered well placed to serve demand in growth markets for mineral
fertilizer, as well as to extend its position in the large North American
market where high domestic gas prices are weakening domestic producers. The
future gas market in the US is expected to be strong (Gas Future Market) and
should create a floor for the ammonia price as long as the US producers
continue to play a role as swing producers* for the industry. The October 2001
decision to participate in the Qafco 4 ammonia and urea project is one example
of this strategy, and the December 2002 long term agreement to market the
ammonia from the Burrup Fertilizer project in Australia being another.



| |  
| | -
| | *

Nitrates

Hydro Agri is the largest and most cost-effective producer of nitrates,
the most important type of fertilizer in Europe. The recent restructuring of
the European nitrate industry has resulted in a better market balance and
improved prices.

slide #11 of Agri.ppt

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Strategy Nitrates  Maintain market share in Europe

Nitrate is the most important fertilizer in Europe, and Agri is the leader
both in sales and production of nitrate fertilizer with higher production
capacity and lower average production cost than the rest of the nitrate
industry as indicated in the graph above. The European fertilizer market is
mature and growth is foreseen as being flat to negative. However, with much of
its nitrate capacity located in Europe, Agri has a good basis to further
develop its European market share.Many of Hydro Agris European competitors
have owners that do not view the fertilizer industry as a core activity.
Hydro Agri expects that its dedication to its key customers and its well
maintained production facilities will create a good basis for development of
market share.

Balanced fertilization/NPK

Hydro Agri is a world leader in deliveries of NPKs, products that contain
all three of the main plant nutrients. In order to promote balanced
fertilization, Hydro Agri offers complex fertilizers essentially combining all
three nutrients within every single fertilizer particle. The Porsgrunn plant is
strongly focused on NPK export markets with approximately half of its
production going to premium priced markets.

The Porsgrunn and Glomfjord plants are using a nitro phosphate process to
produce NPKs, thereby avoiding the generation of gypsum (calcium sulphate)
waste resulting from standard phosphate upgrading processes based on the use of
sulphuric acid. The equivalent process step in a nitro phosphate plant creates
calcium nitrate, a useful byproduct developed into a speciality mineral
fertilizer, thereby generating additional income instead of gypsum disposal
cost.

slide #12 of Agri.ppt

Balanced Fertilization (NPK) strategy  Growth in high value markets

Hydro Agri has a strong focus on balanced fertilization and the overall
product offering seeks to reflect market demand for the three main plant
nutrients N, P and K. NPK products are offered with formulas targeting
specific high value markets around the world. Hydro Agri holds a leading
position in this market segment. The future market for these products will be
heavily influenced by technical and quality developments within the more
advanced agricultural market segments. Competition today comes from Russian
plants.

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Hydro Agris presence in these overseas markets is being developed through
continuous marketing efforts in partnership with local distributors and
agronomic advisors. China is an example where this approach is currently
giving significant results. A productivity focus in all Hydro Agri plants is
expected to result in increased availability of NPK product and should further
strengthen Hydro Agris competitive edge.

Speciality fertilizers

Specialty fertilizer products are fertilizers targeted for growers of cash
crops such as fruit, plant fibers and flowers, called cash crops, as opposed to
so-called food crops like grain. The higher growth rates and better margins
that tend to be achieved by growers of cash crops rather than food crops, has
led to an increased demand for specially formulated fertilizers demonstrating
an ability to enhance crop output and optimize crop growing economics. Based on
calcium nitrate produced as a by-product from its nitro phosphate process,
Hydro Agri is the world leader in one of the key products for cash crops.

Speciality fertilizer strategy  Growth in cash crops

The global strategic alliance formed by Hydro Agri and SQM, the world
leader in production of potassium nitrate, another key speciality product, in
2001 has given both partners critical mass and provides a basis for further
development in this attractive segment of the overall fertilizer market. Sales
and marketing of products is done under well recognized brands, and products
are sourced either from one of the alliance partners or from a 50/50 production
JV in Europe that includes the production facilities previously owned by the
partners separately. This arrangement has created synergies and cost savings
for both partners since implementation started at the beginning of 2002 with
resultant benefits for their customers both in terms of pricing and service.
Other fertilizer suppliers are also looking for positions in this attractive
segment but a combination of the right products at good prices, agronomical
advice, service tailored to customer needs and an extensive and easy to reach
marketing network is expected to provide a good basis for continued development
and leadership.

Selected industrial applications

Several production plants within Hydro Agri in Europe are supplying
industrial products. This improves production economies and logistics. The
infrastructure shared with fertilizers also provides access to raw materials
and facilities for local manufacturing of products adjusted to meet defined
market needs in the food industry, for environment related technologies and for
production of civil explosives. Hydro Agri operates industrial gas businesses,
including dedicated production facilities, in Sri Lanka, Thailand and Malaysia
and is the leading European supplier of liquid CO2 and ammonium nitrate for
civil explosives. Most of Hydro Agris other products for industrial segments
are intermediates in the production of fertilizers without any firm capacity
restrictions.

Hydro
Agris downstream system for liquid CO2 in Europe includes specially
designed vessels, as well as terminals in a number of countries around the
North Sea basin. Hydro Agri has a distribution system for industrial gases and
chemicals that covers a major part of Europe. Due to good product and
application knowledge in Hydro Agris organization, health, environmental and
safety issues are addressed throughout the distribution and delivery process.

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Selected industrial applications strategy   Develop new products and
markets

The strategy of the gas and chemicals operations of Hydro Agri is to
offer technical solutions to customers where its existing assets and skills
base provide a competitive advantage. The aim is to optimize the use of the
common production infrastructure within Hydro Agri by providing sophisticated
product applications to customers. Increased quality awareness in the food
industry offers new opportunities for carbon dioxide whereas increased
environmental awareness presents an opportunity for further development of
environmental process applications of nitrogen based chemicals, including
treatment of waste water and gaseous emissions from combustion.

Marketing and Distribution

Hydro Agri has a marketing network and distribution system for mineral
fertilizers in approximately 17 countries in Europe and an international
marketing network and distribution system with chartered gas tankers, bulk
blending plants, sales offices, terminals and bagging operations in 27
countries outside of Europe, ensuring a local presence on all five continents
and sales in about 120 countries.

Distribution and marketing strategy  Reach critical size in all chosen
markets

The operations of most fertilizer industry players are either local or
regional in nature.
Hydro Agris extensive distribution and marketing network covers all five
continents with a local presence in 47 markets and sales in more than 120
countries, making it the only truly global player. Hydro Agris global market
share for mineral fertilizers is around 6 percent.

slide #13 of Agri.ppt

Industry Trends

Industry Consolidation

Several of the European fertilizer producers are parts of big industrial
groups now seeking to increase focus on core activities. These processes are
fostering speculation that several European fertilizer operations may be
offered for sale. In North America, several of the fertilizer producers

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seem to be struggling and owners appear unable to take the steps required to
improve performance. Hydro Agri believes in pursuing opportunities arising at
the bottom of the business cycle as demonstrated by the take over of Kynoch and
Trevo in 1999/2000. In Europe the industry as a whole would benefit if more
owners viewed fertilizer as a core activity. The North American market offers
good opportunities for a leading global nitrogen player like Hydro Agri, able
to realize synergies not available to some of the current producers
experiencing problems.

Market Liberalization

The enlargement of the European Union (EU) and ongoing WTO negotiations
are expected to bring about changes in global fertilizer markets in the years
to come offering both challenges and opportunities to Hydro Agri. WTO
membership is expected to gradually open the markets of China, Russia and India
to imports complementary to products produced within those countries. EU
membership is expected to expose the East European fertilizer industry to a
similar competitive climate as the western industry, with greater emphasis on
commercial issues and profitability. Existing antidumping measures aimed at
protecting West European fertilizer producers against unfair competition are
expected to be gradually dismantled as the industry in the east is
restructured. However, since market economics have not yet been achieved in all
producing regions of East Europe, it is expected that the EU will maintain
balancing systems until unfair competition has been sufficiently addressed.
The likely impact of the extension of the EU on Western European fertilizer
producers is unclear, but it is expected that the new development will create
new opportunities as well as some structural pressure on West European
agriculture.

Increasing Global Fertilizer Consumption

The population growth and national wealth development in the world has
resulted in sustainable growth in mineral fertilizer consumption and this
development is expected to continue. The number of hectares per person is
declining and mineral fertilizer is considered the only sustainable large scale
nutrient source. The industry forecasts reflect a medium-term global nitrogen
fertilizer consumption growth rate of 2-2.5 percent per year. The main growth
in nitrogen fertilizer consumption over the past decade has been in Asia and
Latin America. Growth in fertilizer consumption is expected to be similar for
nitrogen, phosphate and potash fertilizers. The general financial development
and growth in the third world is expected to be the main risk factor in
forecasting fertilizer demand.

Cereal Consumption Higher than Production

slide #14 of Agri.ppt

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Consumption of the main cereals, wheat, maize and rice, has recently
surpassed production resulting in declining inventories and higher prices.
Grain production in 2002 was negatively influenced by adverse weather
conditions in several key grain exporting regions, most notably USA, Canada and
Australia. This was only partly compensated by strong harvests in FSU
countries. This has added to reduction in global grain inventories, and prices
increased substantially through the autumn of 2002. The declining crop prices
towards the end of the year, however, suggest that the poor harvests in North
America and Australia, more than the tightening global supply/demand balance,
explained the increase in prices. In spite of a decline towards the end of the
year, prices at the end of 2002 were considerably higher than at the end of
2001. Higher cereal prices normally stimulate increased cereal production,
driving the demand for fertilizer with resulting upward pressure on fertilizer
prices, as can be seen from the graph above.

The supply and demand balance for nitrogen fertilizer is also expected to
benefit from limited capacity additions over the next couple of years. There is
limited new capacity coming on stream before 2005 worldwide. Permanent closures
of existing capacity following high energy costs in several parts of the world,
also contribute to reducing supply.

Issues/Risks Relevant to Competitive Position

Imports into Europe

Imports of finished fertilizer products from fertilizer plants located in
Eastern Europe, particularly Russia with its vast reserves of natural gas,
continue to be a source of concern in European markets. Russias entry into
the World Trade Organization (WTO) is expected to result in Russian fertilizer
plants paying market prices for natural gas, replacing the current subsidy
regime. Imports from Eastern Europe represent roughly 20 percent of the market
currently after a large decline in 2002.

The expansion of the European Union

The expansion of the European Union could gradually lead to decreased
subsidies to West European agriculture. It is expected that this will be a
gradual process that will allow both the farming community and the industry to
adapt. The fertilizer industry does not expect that this will lead to large
reductions in the use of agricultural land because the quality and fertility of
West European soil is generally excellent. Short term challenges as a result
of this development however, are expected.

Greenhouse Gas regulations

Greenhouse Gas regulations could imply a challenge to the fertilizer
industry by potentially changing the competitive position of companies in
different regions. Hydro Agri is concerned that the implementation route that
is being discussed in some countries in Europe could negatively impact the cost
position of some plants at the same time without achieving an optimal
environmental effect.

Currency

The Hydro Agri business area operates with USD as the key currency with
one important exception; fixed costs in Europe and certain European revenues
are not USD related. As a result, 12.5 percent change in USD exchange rate
compared to EUR/NOK would result in approximately USD 40 million increase or
decrease in EBITDA measured in USD depending on the direction of the change.
As a result, currency effects will have a substantial effect on EBITDA in 2003
compared to 2002 if the USD remains at current levels.

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Investments

In 2002,
investments were about NOK 1,543 million compared to NOK
797 million in 2001 and NOK 1,333 million in 2000. The main part of the investments in 2002 related to minor operational projects in the plants. In
addition, Hydro Agri started a major program to upgrade the power production
and distribution system in the Sluiskil plant, a program that will continue
also in 2003. Hydro Agri also spent a major amount related to the JV
established in Chile as part of the strategy to strengthen the specialty
fertilizer business.

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Other Activities

Other activities consist of Petrochemicals, Treka AS (formerly known as A/S
Korn-og Foderstof Kompagniet, KFK), VAWs Flexible Packaging, Pronova,
Industriforsikring-the industrial insurance company, and Hydro Business
Partner.

PETROCHEMICALS

Hydros petrochemicals business is involved in all stages of production of
the plastic raw material, polyvinyl chloride (PVC), also known as vinyl, and
its intermediate products, ethylene, chlorine and vinyl chloride monomer (VCM).
Hydro Petrochemicals is the largest PVC supplier in the Nordic countries, with
a market share of approximately 66 percent. In the UK, the segment ranks first
with approximately 36 percent of the market. The petrochemicals industry in
Europe is relatively fragmented, reflecting the industrys development on a
national, rather than a European, basis. Hydro has an advantage in having
close proximity to other Scandinavian countries and the UK, as well as
long-term strategic relationships with customers in these markets.

Petrochemicals operations extend outside of the Nordic countries. Hydro
has a 29.7 interest in Qatar Vinyl Company Ltd. (QVC), which operates a
petrochemical plant at Mesaieed Industrial City, Qatar. The plant has an
annual capacity of 230,000 tonnes of VCM, 175,000 tonnes of ethylene dichloride
and 290,000 tonnes of caustic soda. In China, Hydro has a 31.8 percent
interest in Suzhou Huasu Plastics Co., Ltd., which produces PVC film and has a
S-PVC capacity of 120,000 tonnes per year. Hydro also has a 26.2 percent
interest in CIRES, a PVC resin and compound manufacturer in Portugal.

Strategy

In 2000 Hydro announced its intention to pursue an active divestment
program, seeking to generate NOK 10 billion by the end of 2003 from divestment
of operations, both outside and within its core business areas. Among Hydros
larger non-core business areas targeted for divestment is its petrochemicals
business. Hydro announced in February 2001 that market and industry conditions
at that time were not conducive to a reduction in Hydros ownership interest in
its petrochemicals business. Since then, Hydro has operated its petrochemicals
business to secure its industrial potential while endeavoring to identify a
structural solution that will provide sufficient value for Hydro and its
shareholders.

Since late 1996, the global petrochemical industry has faced an oversupply
situation. In that time, competitive pressures have led to alliances,
restructurings and mergers within Europe (e.g., the merger of Royal
Dutch/Shells and DEAs petrochemicals businesses in Germany, BPs purchase of
Veba Oel from E.On). The consolidation has been motivated, in large part, by
the objectives of achieving economies of scale, lowering operating costs and
increasing unit margins. Hydros Petrochemicals business has not participated
in the industry consolidation, but it has nonetheless focused on reducing fixed
recurring and variable costs and increasing asset productivity through, among
other things, de-bottlenecking and staff reductions of roughly 57 percent
(including activities sold) compared to 1996 levels.

For the foreseeable future, the competitive environment for world
commodity petrochemicals and polymers is expected to be characterized by a
widening cost gap between the global petrochemical/polymer producers and the
smaller, more regional producers. In view of market conditions, Hydros
Petrochemicals business will continue to focus on operational improvements
through the establishment of best practice teams to ensure the transfer of
knowledge in both operations management and process technology. The efficiency
enhancement process is expected to entail further staff reductions, improved
supply contracts, increased productivity and improved margin management.

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Raw Materials and Production

Hydro has a 50 percent ownership interest in an ethylene cracker through
Hydros joint venture interest in Noretyl AS. The cracker is integrated with
Hydros chlorine and VCM production facilities located at Rafnes in Norway.
The production efficiencies inherent in an integrated production process
contribute to higher margins compared to margins of competitors that rely on
purchased VCM. Petrochemicals has a secure supply for most of its remaining
ethylene (43,700 tons) and chlorine (about 100,000 tons) needs through
medium-term supply contracts.

Petrochemicals production

|               |  |         |  |         |  |         |  |        
|-------------- |  | ------- |  | ------- |  | ------- |  | -------
|( tonnes)      |  | 2002    |  | 2001    |  | 2000    |  | 1999   
|               |  |         |  |         |  |         |  |        
|Base Products  |  |         |  |         |  |         |  |        
|VCM            |  | 540,000 |  | 591,000 |  | 536,000 |  | 539,000
|Caustic Soda   |  | 262,000 |  | 279,000 |  | 271,000 |  | 272,000
|Polymers       |  |         |  |         |  |         |  |        
|S-PVC          |  | 458,000 |  | 465,000 |  | 445,000 |  | 451,000
|P-PVC          |  | 70,000  |  | 72,000  |  | 76,000  |  | 68,000 
|Total Polymers |  | 528,000 |  | 537,000 |  | 521,000 |  | 519,000
|PVC Compounds  |  | 128,000 |  | 143,000 |  | 154,000 |  | 161,000
|               |  |         |  |         |  |         |  |        

Average market quoted prices North West Europe

|                                 |  |      |     |      |  |      |     |      |  |  |     |  |  |  |     | 
|-------------------------------- |  | ---- | --- | ---- |  | ---- | --- | ---- |  |  | --- |  |  |  | --- | 
|                                 |  | 2002 |     | 2001 |  | 2000 |     | 1999
|                                 |  |      |     |      |  |      |     |     
|Ethylene  Euro/tonne delivered  |  |      | 518 |      |  |      | 616 |      |  |  | 662 |  |  |  | 425 | 
|                                 |  |      |     |      |  |      |     |      |  |  |     |  |  |  |     | 
|VCM   Spot export FOB USD/tonne |  |      | 451 |      |  |      | 345 |      |  |  | 562 |  |  |  | 418 | 
|                                 |  |      |     |      |  |      |     |      |  |  |     |  |  |  |     | 
|S-PVC   Euro/tonne delivered    |  |      | 714 |      |  |      | 656 |      |  |  | 857 |  |  |  | 625 | 
|                                 |  |      |     |      |  |      |     |      |  |  |     |  |  |  |     | 

Hydro manufactures PVC at the following plants: Hydro Polymers AS
(Porsgrunn, Norway), Hydro Polymers AB (Stenungsund, Sweden) and Hydro Polymers
Ltd. (Aycliffe, UK). The Nordic sites produce suspension PVC (S-PVC) and paste
PVC (P-PVC), while the UK site produces S-PVC for external sale and mixing with
additives to generate PVC compounds in a variety of grades to meet customer
specifications. VCM is produced at Hydros Rafnes and Stenungsund plants.

Ethylene feedstock for the Rafnes facility is supplied by long-term
contracts for natural gas liquids (NGLs) from a number of North Sea fields for
approximately 50 percent of the required volumes. The remaining need is
covered by spot purchases. Price formulas are linked to naphtha or oil prices.
As such, oil prices are an important driver of ethylene costs.
Petrochemicals share of ethylene produced at Rafnes in 2002 was 219,000
tonnes. The Stenungsund plant purchases ethylene for its VCM and PVC production
and chlorine for the production of ethylene di-chloride (EDC), which is being
shipped to the Rafnes plant. The total production of chlorine in 2002 was
approximately 232,000 tonnes. Chlorine feedstock in excess of Hydros own
production is covered by medium-term and spot purchases (approximately 85,000
tonnes). Plant closures in Europe have reduced the chlorine supply in 2002.

At present, Petrochemicals transports raw materials and intermediates
among its plants in Rafnes, Stenungsund and Aycliffe. Increased efficiency and
lower transportation costs could be achieved by an even higher level of balance
between input (raw materials) and output (final product) streams at the
individual plants. Hydro Petrochemicals management has developed technical
plans, which would allow for the increase in the balance at Rafnes by
increasing chlorine production. Hydro has received the necessary permits from
the Norwegian governmental authorities for increased production and
modernization of Rafnes chlorine and VCM plants.

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Sales and Distribution

PVC and PVC compounds are mainly sold by Hydros own sales organization.
Distribution is mainly by truck. Pipe grade suspension PVC (S-PVC) is
considered to be a commodity product, while there is considerable product and
price differentiation in other S-PVC applications. Paste PVC (P-PVC) accounts
for about 7 percent of the total PVC market. This product is traditionally
considered to be a specialty product influenced only to a limited extent by the
S-PVC price development.

Caustic soda, a byproduct of chlorine production, which is used by a
variety of industries such as in paper and pulp, aluminum and soap production,
is sold to customers in Europe and North America through Hydros own sales
organization. Distribution is by vessel, rail or truck. In addition to its
own production, Hydro trades moderate quantities of caustic soda in the same
markets.

Investments

The amounts disclosed in this section represent investments made in the
respective years which include additions to property, plant and equipment, plus
long-term securities, intangibles, long-term advances and investments in
non-consolidated investees.

Investments in 2003 will be concentrated towards cost reduction and
efficiency. Investments in 2002 totaled NOK 254 million, compared to NOK 347
million in 2001 and 540 million in 2000.

TREKA AS (Formerly A/S Korn-og Foderstof Kompagniet  KFK)

A/S Korn og Foderstof Kompagniet (KFK) is a publicly-held Danish company,
in which Hydro owned 68.8 percent interest at the time of divestment during the
third quarter of 2002. KFK is engaged in the production and sale of animal
feed, together with the trading of grain, feed stuffs, fertilizer and other
agricultural related products.

KFK signed an agreement with a consortium of eight Danish chemical and
feed companies to divest its Danish feed and grain business in the third
quarter of 2002. During the same period, a similar agreement was signed to
divest its Swedish operations. The sale of the Danish operations was approved
by the authorities and completed in the fourth quarter of 2002, while the sale
of the Swedish operations was completed in January of 2003.

Following the sale of its feed and grain operation, KFK was renamed to
Treka AS. Remaining activities in Treka relate primarily to Biomar fish feed
operations.

FLEXIBLE PACKAGING

Hydro acquired the flexible packaging business as part of the VAW
acquisition in 2002. Flexible Packaging focuses primarily in providing flexible
packaging solutions for a wide variety of retail customers.

Hydro announced during the acquisition of VAW its plan to divest the
flexible packaging operation of VAW which was considered non-core activity for
Hydro Aluminium. Following its planned strategy, Hydro signed an agreement with
Alcan Inc. to sell the Flexible Packaging business in the fourth quarter of
2002. The divestment transaction is pending regulatory approvals and is
expected to be finalized in coming months. The sale agreement was signed
representing an enterprise value of EURO 345 million excluding minority
interests. No significant gain or loss related to the sale transaction is
expected other than potential currency translation effects at closing.

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PRONOVA

Hydro Pronova is responsible for commercializing products and businesses
at the periphery of the Companys core business areas, with the objective of
developing businesses and realizing their long-term potential as part of Hydro
or outside of the Company.

Hydro Pronova is comprised of several activities including Omega-3 fatty
acids, heparinized surfaces applied on medical devices and implants, formic
acid and formates for use as animal feed additive, deicing agents and drilling
fluid, packaging systems for transportation of bulk goods and cooling/heating
systems based on transcritical (high pressure) CO2 technology.

Hydro Pronova has developed a highly concentrated Omega-3 drug, Omacor,
for treatment of post- myocardial infarction (Post MI) and hypertriglyceridemia
(HTG). The drug was approved for treatment of Post MI by seven European
countries in 2001. Agreements have been signed with four major pharmaceutical
companies to launch Omacor in Europe.

Hydro Pronova has global, exclusive rights to commercialize patented
technology developed at the Norwegian Institute of Technology using
transcritical CO2 as a medium in cooling and heating systems. The technology,
branded SheccoTM, provides an energy efficient and environmentally friendly
alternative to hydrofluoride carbon gases in such systems. Hydro Pronova has
signed agreements with Denso of Japan for the application of Shecco technology
to water heating and to mobile air conditioning systems.

Formi, the formate-based feed additive, was the first animal feed additive
to be approved as a growth promoter by the EU in 2001. At present, Formi is
the only EU-approved non-antibiotic growth stimulant. In 2002, Hydro signed an
agreement with a leading chemical company BASF for further commercialization of
Formi. The agreement will allow Hydro to produce Formi for the coming 15 years.

INDUSTRIFORSIKRING

Industriforsikring a.s (the industrial insurance company) is a
wholly-owned subsidiary which provides property, casualty and marine insurance
for companies in the Group.

HYDRO BUSINESS PARTNER

Hydro Business Partner (HBP) was formed as a sector for service and
support functions in the beginning of January 2000. HBP is organized in two
primary functional units: Production and Facility Services, and IS Services and
Business Support Services.

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ITEM 4.C.      ORGANIZATIONAL STRUCTURE

The following significant subsidiaries, as that term is defined by
applicable rules of the Securities and Exchange Commission, are included in the
consolidated financial statements of the Group:

|                                 |                          |                                   |  |            
|-------------------------------- | ------------------------ | --------------------------------- |  | -----------
|Company Name                     | Country of Incorporation | Proportion of ownership Interest*
|                                 |                          |                                  
|Norsk Hydro Produksjon AS        |                          | Norway                            |  | 100 percent
|Hydro Aluminium AS               |                          | Norway                            |  | 100 percent
|Hydro Aluminium Deutschland GmbH |                          | Germany                           |  | 100 percent

*Ownership percentage reflects proportion of voting power.

ITEM 4.D.      PROPERTY, PLANTS AND EQUIPMENT

The Groups rights to oil and gas located on the Norwegian Continental
Shelf, mainly in the North Sea, are among its most important assets. See Item
4.B. Information on the Company  Business Overview  Oil and Energy -
Exploration, Development and Productionfor information with regard to
reserves and sources of oil and gas and Item 4.B. Information on the Company -
Business Overview  Oil and Energy  Government Regulationwith regard to the
Norwegian governments authority to increase its participation in the
development of certain oil and gas fields and other regulatory matters.

The Groups major production plants in Norway are located at Porsgrunn
(fertilizers and PVC), Rafnes (petrochemicals), Karmøy, Årdal, Sunndalsøra,
Holmestrand and Høyanger (aluminium) and Glomfjord (fertilizers). The Group
owns clear title concessions to hydroelectric power stations with a generating
capacity of 2.7 TWh per year. Generating capacity of approximately 8.7 TWh is
operated under concessions from the Norwegian government which will expire
without compensation in the period between 2018 and 2052. Hydros principal
Agri and Aluminium production facilities abroad are located in Austria,
Belgium, Canada, China, Denmark, France, Germany, Hungary, Italy, the Ivory
Coast, Luxembourg, the Netherlands, Poland, Portugal, South Africa, Australia,
Spain, Sri Lanka, Sweden, Trinidad and Tobago, the United Kingdom and the
United States. Hydro has an interest in an oil refinery in Sweden (Scanraff),
a retail gasoline and fuel oil marketing network through an affiliated company
in Denmark and Norway and wholly owned operations in Sweden. Hydro also
participates in a fertilizer complex in Qatar, Trinidad and Tobago, alumina
refineries in Jamaica and Brazil, and an automotive parts casting plant in
Mexico.

Virtually all of the Groups properties are owned by the Companys
subsidiaries, except certain facilities in the oil and gas, hydroelectric and
petrochemicals businesses which are jointly-owned with other companies. All
major facilities of the Group are insured in line with customary industry
practices.

Hydro is subject to changing environmental laws and regulations that in
the future may require Hydro to modernize technology to meet more stringent
emissions standards or to take actions for contaminated areas. See Note 21 to
the Consolidated Financial Statementsfor a description of expenses and
accruals relating to corrective environmental measures for the current and
preceding fiscal years. There were no environmental measures, implemented
voluntarily or required by law, which had a significant effect on the
utilization of Hydros main production facilities in 2002.

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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

|             |  |                                                                                                                      
|------------ |  | ---------------------------------------------------------------------------------------------------------------------
|ITEMS 5.A.-D |  | OPERATING RESULTS; LIQUIDITY AND CAPITAL
RESOURCES; RESEARCH AND DEVELOPMENT, PATENTS
AND LICENSES; TREND INFORMATION

2002 Compared with 2001

The comparative discussion of Hydros financial condition and results of
operations as of and for the years ended December 31, 2002 and 2001, as well as
information regarding Hydros material commitments for capital expenditures as
of year-end 2002 and Hydros research and development policies for the
three-year period ended December 31, 2002, is incorporated by reference to the
Financial Review section (pages 52 through 85) of the Companys 2002 annual
report to shareholders. Such discussion, together with Hydros consolidated
financial statements as of and for the year ended December 31, 2002 and the
related notes, included in the 2002 annual report to shareholders, has been
filed as an exhibit to this Annual Report on Form 20-F in accordance with
applicable rules under the Exchange Act.

2001 Compared with 2000

Hydros net income after tax in 2001 was NOK 7,892 million (NOK 30.50 per
share) compared to NOK 13,981 million (NOK 53.40 per share) in 2000. The
reduction primarily resulted from lower crude oil prices and lower prices and
margins in the Light Metals area. In addition, net income for 2001 included an
after tax gain related to divestments of businesses of NOK 520 million (NOK
2.00 per share) compared to NOK 2,800 million (NOK 10.70 per share) for the
previous year. The impact of weaker markets became apparent during the second
half of the year. The Agri area delivered good results, continuing to reduce
costs while increasing market share.

Operating Results

Operating revenues in 2001 decreased approximately 3 percent to NOK
152,835 million from NOK 156,861 million in 2000.

Operating income of NOK 21,083 million was roughly 26 percent below the
record result in 2000. EBITDA for 2001 was NOK 37,757 million, a decline of 19
percent compared to the prior year. The overall decline was primarily due to
weaker markets and restructuring costs in 2001. Hydro changed the way it
allocates pension costs to its Norwegian operations in 2000. Previously, costs
were determined based on the number of years of service resulting in a
concentration of the total costs towards the end of the service period. The
change resulted in nonrecurring charges to the segments with a corresponding
credit of NOK 2,007 million reflected in Corporate, which is included in
Corporates net periodic pension credit.

Earnings from non-consolidated investees were reduced by NOK 106 million
to NOK 566 million, primarily as a result of foreign currency losses on alumina
operations in Brazil, of which Hydros share amounted to NOK 159 million.

Other Income, which consists of pretax gains on divestments of businesses,
was on a lower scale than in the previous year. For 2001 these gains
represented before tax in the amount of NOK 578 million in 2001 compared to NOK
3,161 million in the prior year. The most significant amounts in 2001 related
to the sale of Hydro Seafoods UK operation, plus the sale of electricity grid
in Norway.

Financial items

Net financial expenses in 2001 were NOK 762 million compared to NOK 2,158
million in 2000. The decrease reflected the Companys increased cash balances
resulted in increased interest earnings.

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Currency losses were somewhat lower than the previous year notwithstanding
losses of approximately NOK 130 million relating to the devaluation of the
Argentine peso at the end of 2001.

Net interest bearing debt at the end of 2001 was NOK 21.1 billion, a
reduction of NOK 8.6 billion from the end of the prior year.

Taxes

The provision for current and deferred taxes for 2001 amounted to NOK
13,750 million, representing 64 percent of pretax income. The corresponding
figure in 2000 was NOK 16,178 million, equivalent to 54 percent of pretax
income. The tax percentage for 2000 was influenced by the gains on the sales of
operations included in Other Income, which were taxed at a lower rate.
Excluding the effects of these gains, the tax percentage would have been
approximately 59 percent for 2000. The increase in the effective tax rate for
2001 resulted from the relatively larger share of earnings from oil and gas
activities in Norway, which were taxed at a marginal tax rate of 78 percent.

Reorganization of the reporting structure in the first quarter of 2002
resulted in certain changes in segment reporting. Hydros three core business
areas remain the same, but the sub-segments within each core business area have
been revised. In addition, certain operations identified as non-core activities
have been included in Other Activities. These include Petrochemicals and A/S
Korn- og Foderstof Kampagniet (KFK). The financial review comparison for 2001
to 2000 for the above mentioned three core areas disclosed below has been
revised to be consistent with the 2002 financial review at the business area
level.

OIL AND ENERGY

Revenues and market conditions

Operating revenues declined approximately 6 percent to NOK 52,016 million
from NOK 55,123 million in the prior year, primarily as a result of lower crude
oil prices and lower refined product prices. However, average production of oil
and gas increased by approximately one percent compared to 2000. Oil production
outside the NCS increased toward the end of the year as the Girassol field in
Angola came on stream. Crude oil prices fell sharply in the latter of 2001 due
to global recession and OPECs production policy in 2001. The growth in global
oil demand for 2001 was the weakest since 1985. Additionally, the terrorist
attacks in the US on September 11, 2001 increased uncertainty, causing a
further reduction in demand for crude oil.

Operating costs

Hydros total expenditures for exploration of oil and gas and appraisal of
discoveries increased approximately 12 percent from 2001 to 2000. Exploration
costs charged to results were NOK 1,400 million in 2001 compared to NOK 1,701
million in the prior year. The increase was primarily attributable to higher
international exploration activity reflecting Hydros strategy to expand its
international oil and gas portfolio. For Energy, refining costs per barrel
(comprising both fixed and variable processing costs) increased from NOK 12.3
in 2000 to NOK 13.0 in 2001 as a result of the reduced throughput caused by a
five-week refinery outage at the Scanraff refinery, Hydros partly owned
refinery located in Sweden. Product variable costs for refined oil products
decreased in 2001 as a result of lower oil prices.

Operating income and EBITDA

Operating income for Oil and Energy was NOK 19,178 million in 2001
compared to NOK 21,804 million in 2000. EBITDA was NOK 27,604 million in 2001
compared to NOK 30,641 million in 2000, approximately a 10 percent decrease.
The decline in operating income was primarily due to

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lower crude oil prices and refined product prices. EBITDA for 2001
included a NOK 179 million gain on the sale of electricity grid assets. EBITDA
for 2000 was positively influenced by a gain of NOK 387 million relating to the
sale of UK oil and gas operations. EBITDA for both 2001 and 2000 was influenced
by nonrecurring pension charges.

HYDRO LIGHT METALS

Revenues and market conditions

Operating revenues for 2001 of NOK 51,083 million were essentially flat
compared to 2000. The Metals sub-segment increased by NOK 992 million in 2001
compared to the prior year and was offset by a net decline of NOK
1,039 million in 2001 compared to 2000 in the other Light Metals
sub-segments. The downturn in the
business cycle in the second half of 2001 resulted in lower prices and lower
margins for both primary aluminium and all fabricated products. Shipments of
primary aluminium in the Western World in 2001 decreased roughly 6 percent
compared with 2000 representing the largest year-to-year decline since 1981.
The downturn was particularly pronounced in the US for primary aluminium and
extruded products. In view of these market developments, the average
three-month price for primary aluminium on the LME decreased by approximately 7
percent to US dollar 1,454 per tonne in 2001 compared to US dollar 1,567 per
tonne in 2000. Realized average aluminium prices in 2001, in NOK, were
marginally higher than in 2000. Slightly lower average prices, in USD, were
offset by a stronger USD/NOK exchange rate. In November 2001, Hydro signed an
agreement to acquire the French building systems Technal group for a price of
EUR 73 million (NOK 580 million) and the assumption of NOK 307 million in debt.

Operating costs

In 2001, the total operating costs of Hydros smelters increased by
approximately 7 percent compared to the prior year. The biggest component of
total operating costs is the cost of raw materials and energy for primary
aluminium production, consisting principally of alumina, electricity, and
carbon anode (consumed in the smelting process). Raw material and energy costs,
per tonne of primary aluminium produced, increased approximately 8 percent in
2001 compared to the prior year.

Responding to market conditions (most notably, the declining demand) in
2001, Hydro implemented several measures aimed at reducing production volumes
and saving costs. During the year, Extrusion reduced its European and US
extrusion press capacity by approximately 10 percent. This was accomplished
primarily by temporary measures such as adjusting factory shifts and reducing
staffing. In addition, local market conditions and cost considerations led to
the complete shut down of 2 presses. Related workforce reductions during 2001
represented approximately 300 man years.

Operating income and EBITDA

Operating income for Light Metals in 2001 was NOK 185 million compared to
NOK 3,336 million in 2000. EBITDA for 2001 was NOK 2,543 million compared to
NOK 5,501 million in 2000. The decline in operating results was largely
attributable to the deterioration in market conditions, particularly in the
second half of 2001. In addition, EBITDA declined in 2001 primarily due to
losses on aluminium options of NOK 545 million, lower margins at metal plants
and the positive effects in 2000 of exceptional metal trading results. Hydro
decided in October 2001 to close down its primary magnesium production plant in
Porsgrunn, Norway. EBITDA for 2001 included NOK 700 million representing
closure costs and costs for workforce reductions. In addition, operating income
for 2001 included a write-down of NOK 261 million of fixed assets related to
this closure.

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HYDRO AGRI

Revenues and market conditions

Hydro Agris operating revenues increased in 2001 to NOK 37,407 million
compared to NOK 36,607 million in the prior year, an increase of approximately
2 percent. The increase in operating revenues reflected improved fertilizer
prices and increased sales volumes outside Europe, primarily Latin America and
Asia, offsetting lower volumes sold in Europe. As mentioned above, the
sub-segment, KFK, has been moved to Other Activities to be consistent with
the 2002 reporting structure.

Operating costs

Average prices for the most important nitrogen products and chemicals
(primarily natural gas) increased sharply in 2001. The average ammonia price
(another primary raw material) increased only slightly, although there was a
sharp decline in price in 2001 from the exceptionally high level at year-end
2000.

The Hydro Agri Turnaround program was completed at the end of 2001
achieving total manning reductions of approximately 3,750 people and annual
cost reductions of approximately NOK 2,900 million compared to the 1998 level
(approximately NOK 200 million was cost savings related to Gas and Chemicals
sub-segment). This resulted in total savings in cost by more than 30 percent.
Operating results in 2001 included approximately NOK 300 million in redundancy
and other costs related to the staffing reductions compared to NOK 460 million
in 2000.

Costs in 2001 also included losses and write-downs totalling NOK 126
million related to the disposal of Oleochemicals and other non-core business
activities.

Operating income and EBITDA

Operating income for 2001 was NOK 2,114 million compared to NOK 1,303
million in 2000. EBITDA was NOK 4,402 million in 2001 compared to NOK 3,553
million in 2000. The increase in operating income and EBITDA compared to the
prior year was primarily due to improved fertilizer prices partially offset by
reduced sales volumes. Nonrecurring charges of NOK 239 million reduced EBITDA,
compared with nonrecurring charges of NOK 731 million in 2000.

OTHER ACTIVITIES

Other Activities include Petrochemicals, Pronova, the industrial casualty
insurance company, Industriforsikring, Hydro Business Partner, Hydro Technology
and Projects, and KFK.

Petrochemicals

Revenues and market conditions

Petrochemicals operating revenues decreased by approximately 14 percent
in 2001, compared to 2000. The reduction is primarily due to lower average
product prices, particularly suspension polyvinyl chloride (S-PVC) prices.
Hydros average realized prices for S-PVC was approximately 26 percent lower in
2001 than in 2000 as a result of a decline in demand.

Noretyl, in which Hydros share was reduced to 50 percent with effect from
January 1, 2001, was reported as a non-consolidated investee. As a result,
earnings from non-consolidated investees were higher and operating income was
lower than compared to 2000.

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Operating costs

Total raw material costs for Petrochemicals were at a similar level
compared to the previous year.

Total fixed costs (excluding a one-time pension adjustment in 2000 and
other non-recurring costs) were reduced in 2001 compared to 2000 reflecting
reduced staffing and improved work processes.

Operating income and EBITDA

Petrochemicals operating income/(loss) in 2001 was NOK (101) million
compared to NOK 265 million in the prior year. EBITDA was NOK 363 million in
2001 compared to NOK 662 million in the prior year, a decrease of 45 percent.
EBITDA for 2001 was negatively affected by nonrecurring items in the amount of
approximately NOK 225 million relating to the costs of staffing reductions and
demolition and cleanup costs for the Porsgrunn, Norway facility. This was
partly offset by a gain of NOK 59 million on the sale of Singapore Polymer
Corporation (SPC). Non-recurring costs in 2000, mainly relating to pensions,
were around NOK 173 million.

EBITDA for Other activities was NOK 1,215 million, a decline of NOK 1,735
million compared to 2000. At the end of 2000, the Company sold Hydro Seafood
resulting in a gain of NOK 1,609 million. Hydro Seafoods British operations
were sold in 2001 resulting in a gain of NOK 418 million. The results for 2000
were also positively influenced by Hydro Seafoods operating results up to the
time of sale. In 2001, staffing reductions at the Companys Grenland industrial
site in Norway resulted in a nonrecurring charge of NOK 300 million. Underlying
operating results improved by approximately NOK 40 million excluding the
effects of the divestment of Hydro Seafood and the nonrecurring charges
described above.

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ITEM 6.         DIRECTORS, SENIOR MANAGERS AND EMPLOYEES

ITEM 6.A.     DIRECTORS AND CORPORATE MANAGEMENT BOARD

Hydro is registered in Norway and the Groups governance structure is
based on Norwegian corporate law. This law has been revised in recent years to,
among other things, clarify areas of responsibility of the Board of Directors of
a Norwegian company.

Corporate Assembly

The Corporate Assembly consists of 21 members. Fourteen members are
elected by the shareholders, while seven (one-third, according to Norwegian
legislation) are elected by and among the employees of the Groups companies in
Norway. The Corporate Assembly elects the Board of Directors and nominates the
external auditor. At the request of the Board, the Corporate Assembly adopts
resolutions in matters concerning investments that are substantial in relation
to the Companys resources, or concerning such rationalization of, or changes
in, operations as will entail a major change in or redeployment of the labor
force. The Corporate Assembly will advise the shareholders at the annual
shareholders meeting on the approval of the Companys accounts and dividend
distribution as proposed by the Board, and can advise the shareholders to
reduce the dividend proposed. The Corporate Assembly met four times in 2002.

Nomination Committee

The Companys Articles of Association (See Item 10.B. Articles of
Association) provide for a nomination committee. The committee consists of four
members  two of whom are elected directly by the shareholders, one elected by
and among the shareholders representatives in the Corporate Assembly, and the
chairman of the Corporate Assembly. The committee nominates candidates to the
Corporate Assembly to be elected by the shareholders at the shareholders
meeting, and candidates to the Board of Directors to be elected by the
Corporate Assembly. The committee operates under a charter established by the
shareholders representatives in the Corporate Assembly.

Board of Directors

The Board of Directors currently consists of nine members who are
nominated and elected by the Corporate Assembly. Six Board members are elected
by the shareholder representatives in the Corporate Assembly and three Board
members are elected by the employee representatives in the Corporate Assembly.

Neither the President and CEO nor any other member of the Companys
executive management is a director of the Board (see discussion below under
President and CEO and Corporate Management Board). According to Norwegian
corporate law, the Board of Directors has the overall responsibility for
management of the Company, while the President and CEO is responsible for
day-to-day management. The Board supervises day-to-day management as carried
out by the President and CEO and the activities of the Company in general, as
well as ensuring that appropriate steering and control systems are in place.
The Boards internal rules and procedure were amended in 2001 to clarify the
Boards role in relation to the management of the Company as well as the other
corporate bodies. The President and CEOs authority and responsibilities were
defined in greater detail to allow the Board of Directors to concentrate on the
Companys strategy and organization, while subcommittees have been appointed to
prepare matters for which the Board is responsible.

93



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##### 



For each member of the Board of Directors, there follows information
regarding his or her age, the period during which the Board member has served
as such, and information regarding his or her business experience outside of
the Company (including directorships in other companies).

|                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|----------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                     
|Name and Age of Director;                             |  | Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Tenure as Director                                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                     
|Egil Myklebust, 60,
Director since 1992               |  | Mr. Myklebust assumed the position
as Chairman of the Board of
Directors of the Company on May 2,
2001 following his serving as
President and CEO of the Company
from 1991 to 2001. Prior to his
serving as President and CEO, he
held positions within the Companys
legal department in both Norway and
in the United States, including a
period as Head of Corporate
Secretariat. He was Executive Vice
President of Human Resources from
1982 to 1987. From 1987 to 1989,
Mr. Myklebust held the position of
General Director for both the
Federation of Norwegian Employers
and the Confederation of Norwegian
Business and Industry (CNBI). Mr.
Myklebust is currently serving as
Chairman of the Board of Directors
of SAS and as a member of the Board
of Directors of Norske Skog ASA.
Mr. Myklebust earned a Bachelor of
Law degree at the University of
Oslo in 1967.
|                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                     
|Anne Cathrine Høeg Rasmussen,
66, Director since 1998 |  | Ms. Høeg Rasmussen is a partner in
the Norwegian law firm of Schjødt
AS. She is also a director of K.A.
Rasmussen as, Aczo Nobel Car
Finishes AS, Technip Norge Offshore
AS, Technip Geoproduction Norge AS
and Organon AS. She is also a
member of Børsklagenemda, the Oslo
Stock Exchange Appeals Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                     
|Borger A. Lenth, 65,
Director since 1990              |  | Mr. Lenth has served as the Deputy
Chairman of the Board of Directors
of the Company since May 2, 2001.
Mr. Lenth was previously CEO of
Christiania Bank and Kreditkasse
from 1991 to 1997. He has also
acted as Permanent Secretary in
the Ministry of Development
Corporation. He is also Chairman
of the Board of Directors of
Treschow Fritzøe ASA and BnBank
ASA, and Vice Chairman of the Board
of Directors of Kommunal
Landspensjonskasse (KLP) and
Norfund.                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                     
|Ingvild Myhre, 45,
Director since 2001                |  | Ms. Myhre is the President and CEO
of Telenor Mobil AS. She is also
the Deputy Chairman of the
Norwegian Defense Research
Establishment, a director of the
Board on Power and Democracy and
the Board of the Research Park in
Narvik, a director on the Board of
Sonofon (in Denmark), and a
director on the Board of the
Norwegian Business Daily.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                     
|Gudmund Per Olsen, 44,
Director since 1999            |  | Mr. Olsen is employed by the
Company as a principal engineer in
the Exploration and Production
segment. He represents the
employees union.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                     
|Elisabeth Grieg, 43,
Director since 2001              |  | Ms. Grieg is the co-owner of the
Grieg Group and the CEO of Grieg
International AS. She is also a
member of the Board of the
Norwegian Shipowners Association
and of the Corporate Assembly in
Orkla AS.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                     
|Odd Semstrøm, 58,
Director since 1997                 |  | Mr. Semstrøm represents the
employees union and is located at
the Companys aluminum plant in
Årdal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                     

94



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|                                      |  |                                                                                                                                                                                                     
|------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                     
|Name and Age of Director;             |  | Business Experience                                                                                                                                                                                 
|Tenure as Director                    |  |                                                                                                                                                                                                     
|                                     
|Håkan Mogren, 58,
Director since 2001 |  | Dr. Mogren is the Chairman of
Reckitt Benckiser plc and Affibody
AB. He is also the Deputy Chairman
of AstraZeneca plc, and Vice
Chairman of Gambro AB. He also
serves as a director of Investor AB.
|                                      |  |                                                                                                                                                                                                     
|                                     
|Per Wold, 60,
Director since 1990     |  | Mr. Wold represents the employees
union and is located at the
industrial plant in Herøya,
Porsgrunn.                                                                                               
|                                     

President and CEO and Corporate Management Board

The President and CEO constitutes a formal corporate body according to
Norwegian corporate law. The President and CEO is responsible for day-to-day
management of the Company. In Hydro, the division of functions and
responsibilities has been defined in greater detail in the rules of procedures
established by the Board of Directors.

In accordance with rules of procedure established by the Board of
Directors, the President and CEO has established a corporate management board
(CMB) to assist in discharging his responsibilities. The CMB consists of the
Executive Vice Presidents for the three core business areas in addition to the
Chief Financial Officer and the Executive Vice President 
Organization and Competence. The members of the CMB have a collective duty to promote Hydros
strategic, financial and other objectives, as well as to safeguard the
Companys assets, organization and reputation. The CMB convenes at least once a
week.

The following table reflects information concerning each member of Hydros
Corporate Management Board, as of February 26, 2003, including his or her age
and position, and brief background information regarding his or her business
experience.

|                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                        
|Name, Age and Position                                   |  | Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                        
|Eivind Reiten, 49,
President and Chief Executive Officer |  | Eivind Reiten succeeded Egil
Myklebust as President and CEO of
the Company effective May 2, 2001.
From 1999 to the date of his
appointment as President and CEO,
Mr. Reiten served as Executive Vice
President for Hydros Light Metals
business area. Mr. Reiten served as
President of Hydro Aluminium Metal
Products from 1996 to 1998. This
followed four years as President of
Hydros Refining and Marketing
Division from 1992 to 1996. From
1991 to 1992 Mr. Reiten held the
position of Senior Vice President,
Special Projects, after a period as
Minister of Petroleum and Energy in
the Norwegian government from 1990
to 1991. Mr. Reiten held the
position of President of the Energy
Division from 1988 to 1990 following
a two-year period as manager, and
later, Vice President for Hydro
Agri. During the seven-year period
from 1979 to 1986, Mr. Reiten held
several governmental posts including
Junior Executive Office, Ministry of
Fisheries, and Secretary to the
Center Partys Parliamentary Group,
State Secretary, Ministry of Finance
and Minister of Fisheries. Mr.
Reiten graduated from the University
of Oslo with a degree in Economics
in 1978.

95



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|                                                                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                           
|Name, Age and Position                                                      |  | Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                           
|Thorleif Enger, 59,
Executive Vice President                                |  | Thorleif Enger has served as
Executive Vice President for Hydros
Agri business area since 1997.
Prior to that, he served as
President of Hydros Exploration &
Production Division from 1987 to
1996. Mr. Enger also was the Project
Director of the Oseberg field for
four years (1982 to 1986), following
various positions with Hydros
Engineering and Exploration &
Production Divisions beginning in
1973. This followed several years as
a senior research engineer for the
Shell Development Company in the
United States. Mr. Enger was
educated at the University of
Colorado in the United States,
receiving bachelors, masters and
doctorate degrees in the areas of
engineering and structural
mechanics.                                                                                                                                                                      
|                                                                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                           
|John Ove Ottestad, 53,
Executive Vice President
and Chief Financial Officer |  | John Ove Ottestad was appointed
Executive Vice President and Chief
Financial Officer for Hydro,
effective March 1, 2002. Prior to
this appointment, he served as
Senior Vice President for Mergers
and Acquisitions (from 1999 to
2002), as President of Hydros
Refining and Marketing Division
(from 1996 to 1999), as President of
Hydros Magnesium Division (from
1988 to 1996), and as President of
Hydro Innovation (from 1985 to
1987). This followed eight years of
serving in various corporate staff
functions (e.g., financial planning
and strategy) from 1977 to 1985 and
two years experience as an engineer
within Hydros Oil and Gas Division
from 1975 to 1977. Mr. Ottestad also
served two years as an EDP scientist
with the Norwegian Research
Foundation, SINTEF. Mr. Ottestad
graduated with a degree in Physics
from the Norwegian Institute of
Technology in 1973.
|                                                                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                           
|Alexandra Bech, 37,
Executive Vice President                                |  | Alexandra Bech was appointed
Executive Vice President as of
January 15, 2002, after serving as
Senior Vice President of Corporate
Human Resources since 2000. Ms. Bech
joined Hydro in New York in 1993 as
the legal counsel for Hydros US
subsidiaries. Since then, she has
served as Company Secretary and as
Vice President of Strategy and
Organization in Hydros Automotive
Structures division. Ms. Bech holds
a Bachelor of Law degree from the
University of Oslo and a Diploma in
Legal Studies from Oxford
University. She is admitted to the
bar in the State of New York, US.                                                                                                                                                                                                                                                                                                  
|                                                                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                           
|Tore Torvund, 50,
Executive Vice President                                  |  | Tore Torvund has served as Executive
Vice President for Hydros Oil and
Energy area since 1997. Prior to
this position, he served as Senior
Vice President  Operations, in
Hydros Exploration and Production
(E&P) division from 1992 to 1997.
During the period from 1982 to 1992,
Mr. Torvund held several management
positions within the E&P division
relating to drilling operations,
field development and technology
projects. From 1977 to 1982 Mr.
Torvund worked with Elf Aquitaine on
the Petronord study in France and
the FRIGG development project in
Norway. From 1976 to 1977 he worked
as a reservoir engineer for the E&P
division in Norway. Mr. Torvund
graduated with a degree in Petroleum
Technology from the Norwegian
Institute of Technology in 1976.                                                                                                            

96



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##### 



|                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|----------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                               
|Name, Age and Position                          |  | Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                               
|Jon-Harald Nilsen, 51,
Executive Vice President |  | Jon-Harald Nilsen has served as
Executive Vice President for Hydros
Aluminium area since February 15,
2001. Prior to this position, he
served as President of Hydro
Aluminium Metal Products from 1999
to 2001, following seven years as
Senior Vice President of various
areas within the Hydro Aluminium
Metal Products group. From 1985 to
1988 Mr. Nilsen was the
Market/Product Director for Hydro
and held various managerial
positions in financial planning and
control for the Oseberg project,
financial and market projects, and
as an Assistant Export Manager for
Bergensmeieriet from 1975 to 1985.
Mr. Nilsen graduated from the
Norwegian School of Economics and
Business Administration in 1975.
|                                               

No member of the Board of Directors or the Corporate Management Board has
any family relationship with any other director or member of Corporate
Management Board.

ITEM 6.B.     COMPENSATION

Director Compensation Arrangements

Compensation for Employee Directors

Members of the Board of Directors who are also employees of the Company
(or any subsidiary of the Company) received a compensation of NOK 210,000 in
2002 for serving on the Board in addition to their normal salaries. Egil
Myklebust, Chairman of the Board of Directors, received NOK 410,000 in 2002 for
serving on the Board and his salary was reduced accordingly. Mr. Myklebust
received salary and other benefits of NOK 3,676,000, excluding remuneration as
Board Chairman, in 2002. Mr. Myklebust retired as President of the Company in
May 2001 and continued to be employed by the Company in accordance with his
employment contract of 1991.

General Compensation Rules for Non-Employee Directors

Directors who are not employees of the Company or any subsidiary of the
Company (non-employee directors) received NOK 210,000 in compensation in 2002
and the Deputy Chairman received NOK 315,000.

Compensation of Chief Executive Officer

Eivind Reiten, President and CEO, received salary and other benefits in
the total amount of NOK 4,432,000 in 2002. In May 2001, Eivind Reiten assumed
the position as President and CEO, but was not made a member of the Board. The
President will also receive bonus for 2002 in the amount of NOK 630,000 in
2003.

Grants of Stock Options in Last Fiscal Year

Senior officers and other key employees are eligible to participate in the
Companys stock-based compensation plans, the 2002 and 2001 Executive Share
Option Plans, both of which are intended to provide incentives to plan
participants by providing them with opportunities to purchase ordinary

97



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##### 



shares of the Companys stock pursuant to options granted under the plans. The
plans are administered by the Board of Directors through its sub-committee, the
Compensation Committee. The Board has the exclusive right to interpret,
construe and administer each of the plans and to determine the number, terms,
conditions and duration of any grant in accordance with the terms of the
applicable plan.

The 2002 and 2001 Plans cover approximately 30 people in the Companys top
management, including the President and CEO and members of the Corporate
Management Board. During 2002, the Board granted to eligible participants in
the 2002 Plan, options exercisable for an aggregate of 111,000 ordinary shares
at an exercise price of NOK 361.90 per share. The Board, during 2001, granted
to eligible participants in the 2001 Plan, options exercisable for an aggregate
of 92,000 ordinary shares at an exercise price of NOK 390.40 per share. The
total number of ordinary shares with underlying option grants for both the 2002
and 2001 plans is presented below:

|                                                |  |                           |               | 
|----------------------------------------------- |  | ------------------------- | ------------- | 
|                                                |  | Number of Ordinary Shares
|Recipient                                       |  | Underlying Option Grants 
|                                               
|President and CEO                               |  |                           | 10,000        | 
|Other members of the Corporate Management Board |  |                           | 7,000         | 
|Other participants in top management            |  |                           | 2,000 - 3,500 | 

The options vesting schedule is tied to shareholder return, as defined in
the Plans, calculated over a three-year performance period beginning in July
2002 for the 2002 Plan and in May 2001 for the 2001 Plan. If shareholder return
is less than 12 percent, none of the options vest. If the shareholder return
achieved is between 12 percent and 20 percent, the corresponding percentage of
options that vest increases linearly between 20 percent and 100 percent. The
options are exercisable for two years following the three-year performance
period. None of the options vested in 2002 and in 2001.

Options for all the shares authorized for both the 2002 Plan and the 2001
Plan have been granted. For further information, see Note 4 to the
Consolidated Financial Statements.

ITEM 6.C.     BOARD PRACTICES

Hydro adheres to requirements applicable in the countries where its shares
are listed and also implements corporate governance initiatives deemed
beneficial to the Companys development. In 2001, the Company conducted a
review of its corporate governance structure in order to align it with
international best practice.

Hydros primary share listing is on the Oslo Stock Exchange (OSE).
Accordingly, Hydro must comply with Norwegian securities legislation, including
periodic recommendations issued by the OSE. In 2002, the OSE issued a
recommendation that listed companies focus on corporate governance matters.

The Companys shares
are also listed on the New York Stock Exchange
(NYSE). In 2002 and on a continuing basis, Hydro has monitored closely the
development of regulations issued or proposed by the Securities Exchange
Commission (SEC) under the Sarbanes-Oxley Act as well as proposed changes to
NYSE listing standards. Hydro has implemented new requirements in effect for
2002 relating to foreign registrants including the required certification of
the Companys disclosures included in this annual Form 20F and the Companys
disclosure controls and procedures (see also Item 15. Controls and Procedures;
CEO and CFO Certifications).

Board members are elected for a two-year period. See the table above under
Item 6A. Directors and Corporate Management Board  Board of Directorsfor
the period during which each Board member has served as such.

98



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##### 



Non-employee directors have no other service contractual agreements with
the Company outside of the agreement governing their responsibilities as Board
members. Elisabeth Grieg, who is a member of the Board of Directors,
is part-owner of a family-owned company Grieg Maturitas AS which
indirectly holds 30 percent of the ownership in Aon Grieg. Aon Grieg
provided agent services in relation to offshore insurance for Hydro
in 2002, and received approximately NOK 8.3 million in fees for such
services in total, of which, NOK 7.5 million related directly to Hydro
while the remaining amount was borne by partners in Hydro operated
offshore licenses.
Employee directors have no other service contractual agreements with
the Company outside of their employee contracts and the agreement governing
their responsibilities as Board members.

Committees of the Board of Directors

Compensation Committee. On October 12, 2001, the Board of Directors
constituted the Compensation Committee, to consist of not fewer than three
members of the Board of Directors who are not officers of the Company. The
Compensation Committee currently consists of three members: Anne Cathrine Høeg
Rasmussen, Ingvild Myhre, and Egil Myklebust. The members of the Compensation
Committee are to serve in such capacity for two years, but are subject to
removal at any time by a majority of the Board of Directors.

The mandate or charter of the Compensation Committee provides that the
committee is, on an annual basis, to:



| |  |  | review the performance of the Companys Chief Executive Officer and
other members of senior management;                                                                             
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | prepare and recommend to the Board proposals for compensation for the
Chief Executive Officer, including base salary adjustments, awards under
incentive plans and other benefits;  
|
| |  |  | review and advise the Chief Executive Officer on the compensation of
the other members of senior management; and                                                                    
|
| |  |  | determine eligible participants in the Companys share incentive
plans, and approve the participants in, and the types of awards and
number of shares covered under, each such plan.

Audit Committee. On November 1, 2001, the Board of Directors constituted
the Audit Committee. The Audit Committee consists of three members of the Board
of Directors and is appointed by the Board. The Audit Committee currently
consists of Board members: Borger A. Lenth, Elisabeth Grieg, and Gudmund Per
Olsen.

The Audit Committee operates in accordance with a mandate approved by the
entire Board. The mandate establishes that the Audit Committee acts as a
preparatory body related to the Boards supervisory role with respect to the
Companys financial controls, disclosures and external audit, consistent with
Norwegian law. The mandate provides that the Audit Committee is to assist the
Board through, among other things:



| |  |  | the review of the Companys financial reporting;                                             
| | - |  | ---------------------------------------------------------------------------------------------
|
| |  |  | evaluation of the relationship between the Companys top management
and the external auditor;
|
| |  |  | discussion of the result of the audit with the external auditor; and                         
|
| |  |  | ensuring that the Company has a satisfactory internal audit system.                          

The Board expects that
the mandate of the Audit Committee will be amended
in 2003 following the anticipated adoption by the SEC and the New York Stock
Exchange of additional rules and listing standards pertaining to audit
committees. The Audit Committee, in fulfillment of its oversight obligations,
held three meetings in 2002.

99



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##### 



ITEM 6.D.     EMPLOYEES

As of December 31, 2002, the Group employed approximately 49,700 people,
compared with approximately 35,600 people in 2001, and approximately 38,200
people in 2000. Approximately 35,100 of the Groups employees were located
outside Norway as of December 31, 2002, compared to approximately 20,000 at the
end of 2001 and 22,000 at the end of 2000. The number of people employed in
each segment as of December 31, 2002 is as follows:

|                         |                     |  |        | 
|------------------------ | ------------------- |  | ------ | 
|                        
|Business Segment         | Number of Employees
|                        
|Exploration & Production |                     |  | 3,372  | 
|                        
|Energy and Oil Marketing |                     |  | 667    | 
|                        
|Metals                   |                     |  | 6,284  | 
|                        
|Rolled Products          |                     |  | 4,306  | 
|                        
|Extrusion and Automotive |                     |  | 16,520 | 
|                        
|Agri                     |                     |  | 7,371  | 
|                        
|Other Activities (1)     |                     |  | 11,142 | 
|                        



| | (1) |  | Other Activities consists of the following: Petrochemicals, Treka AS
(previously A/S Korn- og Foderstof Kompagniet, or KFK), Flexible
Packaging, Pronova, the industrial insurance company, Industriforsikring,
Hydro Business Partner and Seafood, and other Corporate staff.
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Production workers and certain staff categories in Norway are generally
organized on a national basis with annual or bi-annual contract negotiations
held between employee organizations and the national employers association.
Norwegian employees are represented in Hydros Corporate Assembly and Board of
Directors. The Company considers its relationship with the Norwegian employee
organizations to be good. Outside Norway, the degree of worker organizations
and the form of negotiations with such organizations varies from one country to
another. Generally, Hydro seeks to achieve terms of employment comparable to
that negotiated with the Norwegian employee organizations.

100



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##### 



ITEM 6.E.     SHARE OWNERSHIP

The following table sets forth the beneficial ownership of ordinary shares
as of February 26, 2003 by (i) each director and member of senior management,
and (ii) all directors and members of the Corporate Management Board of the
Company as a group.

|                                                                                                                                      |  |                     |        | 
|------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | ------ | 
|                                                                                                                                     
|Name of Beneficial Owner                                                                                                              |  | Shares Beneficially
|                                                                                                                                      |  | Owned              
|                                                                                                                                     
|Egil Myklebust                                                                                                                        |  |                     | 4,244  | 
|                                                                                                                                     
|Anne Cathrine Høeg Rasmussen                                                                                                          |  |                     | 1,014  | 
|                                                                                                                                     
|Borger A. Lenth                                                                                                                       |  |                     | 144    | 
|                                                                                                                                     
|Gudmund Per Olsen                                                                                                                     |  |                     | 791    | 
|                                                                                                                                     
|Odd Semstrøm                                                                                                                          |  |                     | 75     | 
|                                                                                                                                     
|Per Wold                                                                                                                              |  |                     | 858    | 
|                                                                                                                                     
|Thorleif Enger                                                                                                                        |  |                     | 16,838 | 
|                                                                                                                                     
|Eivind Reiten                                                                                                                         |  |                     | 6,987  | 
|                                                                                                                                     
|Tore Torvund                                                                                                                          |  |                     | 3,532  | 
|                                                                                                                                     
|Alexandra Bech                                                                                                                        |  |                     | 872    | 
|                                                                                                                                     
|John Ove Ottestad                                                                                                                     |  |                     | 8,184  | 
|                                                                                                                                     
|Jon-Harald Nilsen                                                                                                                     |  |                     | 216    | 
|                                                                                                                                     
|Total number of ordinary shares owned by
all directors and members ofCorporate
Management Board as a group (consisting
of 15 persons) |  |                     | 43,755 | 
|                                                                                                                                     

The total number of issued and outstanding ordinary shares of the Company
as of December 31, 2002 was 257,960,532.

Option Ownership

The following table sets forth the beneficial ownership of options to
acquire ordinary shares as of February 26, 2003 by (i) each director and member
of Corporate Management Board, and (ii) all directors and members of Corporate
Management Board of the Company as a group.

|                                                                                                 |  |                           |        |                |  |                 |        |      |  |      |        |      |  |  |        |  |  |                |  |               |  |  |  | 
|------------------------------------------------------------------------------------------------ |  | ------------------------- | ------ | -------------- |  | --------------- | ------ | ---- |  | ---- | ------ | ---- |  |  | ------ |  |  | -------------- |  | ------------- |  |  |  | 
|                                                                                                
|                                                                                                 |  | Number of Ordinary Shares |        |                |  |                 |        |      |  |      |        |      |  |  |        |  |  |               
|                                                                                                 |  | Underlying Options        |        | Exercise Price |  |                 |        |      |  |      |        |     
|Name                                                                                             |  | Granted (#)               |        | (NOK/Sh)       |  | Expiration Date
|                                                                                                 |  |                          
|                                                                                                 |  | 2001                      |        | 2002           |  | 2001            |        | 2002 |  | 2001 |        | 2002
|                                                                                                
|Eivind Reiten                                                                                    |  |                           | 10,000 |                |  |                 | 10,000 |      |  |      | 390.40 |      |  |  | 361.90 |  |  | April 30, 2006 |  | June 30, 2007
|                                                                                                
|Thorleif Enger                                                                                   |  |                           | 7,000  |                |  |                 | 7,000  |      |  |      | 390.40 |      |  |  | 361.90 |  |  | April 30, 2006 |  | June 30, 2007
|                                                                                                
|Leiv
Lea Nergaard 1)                                                                             |  |                           | 7,000  |                |  |                 | N/A    |      |  |      | 390.40 |      |  |  | 361.90 |  |  | April 30, 2006 |  | June 30, 2007
|                                                                                                
|Jon-Harald Nilsen                                                                                |  |                           | 7,000  |                |  |                 | 7,000  |      |  |      | 390.40 |      |  |  | 361.90 |  |  | April 30, 2006 |  | June 30, 2007
|                                                                                                
|Tore Torvund                                                                                     |  |                           | 7,000  |                |  |                 | 7,000  |      |  |      | 390.40 |      |  |  | 361.90 |  |  | April 30, 2006 |  | June 30, 2007
|                                                                                                
|Alexandra Bech                                                                                   |  |                           | 2,000  |                |  |                 | 7,000  |      |  |      | 390.40 |      |  |  | 361.90 |  |  | April 30, 2006 |  | June 30, 2007
|                                                                                                
|John Ove Ottestad 2)                                                                             |  |                           | 2,000  |                |  |                 | 7,000  |      |  |      | 390.40 |      |  |  | 361.90 |  |  | April 30, 2006 |  | June 30, 2007
|                                                                                                
|All directors and
members of
Corporate
Management Board as
a group (consisting
of 15 persons) 3) |  |                           | 42,000 |                |  |                 | 45,000 |      |  |      |        |      |  |  |        |  |  |                |  |               |  |  |  | 
|                                                                                                



| | 1) |  | Leiv Lea Nergaard served as the Companys Executive Vice President
and Chief Financial Officer and remained on the Corporate Management
Board until March 1, 2002. John Ove Ottestad assumed the position as
Executive Vice President and Chief Financial Officer on March 1, 2002.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2) |  | Executive Vice President and Chief Financial Officer as of March 1,
2002                                                                                                                                                                                                           
| | 3) |  | No other members of the Board had any options outstanding as of
February 26, 2003. The options reflected in the above table were
granted in 2001 and 2002.                                                                                                                         

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ITEM 7.
 
     
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

ITEM 7.A.     MAJOR SHAREHOLDERS

The Kingdom of Norway is the only person or entity known to the Company to
own beneficially, directly or indirectly, more than 5 percent of the Companys
ordinary shares. As of February 26, 2003, the Kingdom owned 116,832,770
ordinary shares, representing 45.3 percent of the total number of ordinary
shares issued and outstanding as of such date. There are no different voting
rights associated with the ordinary shares held by the Kingdom.

The Kingdom acquired most of its interest in the Company in 1945. From
that time and until July 1999, the Kingdom owned 51 percent of the total number
of ordinary shares issued and outstanding. Ordinary shares issued in
connection with the acquisition of Saga Petroleum in July 1999 increased the
total number of shares issued and outstanding with a corresponding decrease in
the Kingdoms percentage ownership interest. See Note 3 to the Notes to the
consolidated financial statementsin the Companys 2002 annual report to
shareholders.

Since 1945, the Kingdom has not disposed of any of the Companys ordinary
shares owned by it. However, there can be no assurance that the Kingdom will
not do so in the future. The Norwegian Ministry of Trade and Industry
represents the Norwegian government in exercising the Kingdoms voting rights.
Acting through the Norwegian government, the Kingdom, in its capacity as a
shareholder of the Company, has never taken an active role in the day-to-day
management of Hydro.

As of February 26, 2003, Morgan Guaranty Trust Company of New York, as
depositary of the ADSs, through its nominee company, Morgan Guaranty Nominees
Limited, held interests in 15,788,491 ordinary shares (approximately 6.1
percent of the issued and outstanding ordinary shares as of such date) on
behalf of approximately 636 registered holders of American depositary receipts
(ADRs), evidencing ADSs. There were 291 holders of ordinary shares with
addresses in the United States (not including the Depositary) as of the same
date. These shareholders held 13,059,440 ordinary shares, equal to
approximately 5.1 percent of the issued and outstanding ordinary shares.

ITEM 7.B.     RELATED PARTY TRANSACTIONS

Loans to Related Parties

The following table sets forth information regarding loans extended by the
Company to members of the Board of Directors and the Companys Corporate
Management Board including (i) the largest amount outstanding at December
31, 2002, (ii) the amount outstanding as of February 26, 2003, (iii) the nature of the loan, and (iv) the interest rate on the loan:

|                       |  |                     |                |                         |                    |                |       |               |  |                  |                 |  |         |   |  |  | 
|---------------------- |  | ------------------- | -------------- | ----------------------- | ------------------ | -------------- | ----- | ------------- |  | ---------------- | --------------- |  | ------- | - |  |  | 
|                      
|                       |  |                     | Largest Amount |                         |                    |                |       |               |  |                  |                 |  |        
|                       |  |                     | Outstanding at |                         | Amount
Outstanding |                |       |               |  |                  |                 |  |        
|Name of Loan Recipient |  | December 31, 2002   |                | as of
February 26, 2003 |                    |                |       |               |  |                  |                 | 
|                       |  | in thousands of NOK |                | in thousands of NOK     |                    | Nature of Loan |       | Interest Rate
|                      
|Gudmund Per Olsen      |  |                     | 28             |                         |                    |                | 26    |               |  | General purpose* |                 |  | 7.0     | %
|                      
|Odd Semstrøm           |  |                     | 53             |                         |                    |                | 52    |               |  | General purpose  |                 |  | 7.0     | %
|                      
|Egil Myklebust         |  |                     | 2,450          |                         |                    |                | 2,447 |               |  | Mortgage and     |                 |  | 6.0-6.5 | %
|                       |  |                     |                |                         |                    |                |       |               |  |                  | general purpose |  |         |   | 
|                      
|Alexandra Bech         |  |                     | 269            |                         |                    |                | 266   |               |  | General purpose  |                 |  | 7.0     | %
|                      
|John O. Ottestad       |  |                     | 702            |                         |                    |                | 653   |               |  | General purpose* |                 |  | 7.0     | %
|                      
|Tore Torvund           |  |                     | 460            |                         |                    |                | 451   |               |  | General purpose  |                 |  | 7.0     | %
|                      
|Jon-Harald Nilsen      |  |                     | 227            |                         |                    |                | 222   |               |  | General purpose  |                 |  | 7.0     | %
|                      



| | * |  | Includes interest-free loans for the purchase of the Companys ordinary shares.
| | - |  | -------------------------------------------------------------------------------

102



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Except as described in the next paragraph, the loans included in the above
table have been extended to members of the Board of Directors or the Corporate
Management Board under terms and conditions that are equivalent to those made
available to all Norwegian-based employees of the Company.

A secured loan of NOK 2.2 million, with an annual interest rate of 6.5
percent, was extended to Egil Myklebust, the Chairman of the Board of
Directors, in October 2000.

All loans to directors and executive officers (i.e., members of the
Corporate Management Board) of the Company were entered into prior to July 30,
2002. The Company has not materially modified or renewed any of the
pre-existing loans extended to or for its directors or executive officers.

ITEM 7.C.     INTERESTS OF EXPERTS AND COUNSEL

In accordance with the instructions to Form 20-F, the Company does not
need to provide the information called for by Item 7.C. if, as is the case in
this instance, the Form 20-F is being filed as an annual report under the
Exchange Act.

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ITEM 8.     FINANCIAL INFORMATION

ITEM 8.A.     CONSOLIDATED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION

The Companys consolidated financial statements as of and for the year
ended December 31, 2002 and the related notes thereto are incorporated by
reference to pages 86 through 88, 91 through 125 and 135 through 138 of the
Companys 2002 annual report to shareholders. Such financial statements,
including the notes thereto, have been filed as an exhibit to this Annual
Report on Form 20-F in accordance with applicable rules under the Exchange Act.

Reference is made to Item 19. Financial Statements and Exhibitsfor a
list of all financial statements incorporated herein by reference.

Export Sales

See Note 5 to the Notes to the consolidated financial statementsand the
table on page 105 in the Companys 2002 annual report to shareholders listing
the operating revenues by country of customer for export sales information.

Legal Proceedings

In 2001, the European Union competition authorities issued a statement of
objections to Hydro and all other gas producers on the Norwegian Continental
Shelf. The authorities claimed that the joint sale of natural gas by producers
on the Norwegian Continental Shelf, through the Gas Negotiating Committee
(GFU), contravenes EU legislation related to competition. Norsk Hydro and the
European Commission have agreed to settle amicably the dispute related to the
previous marketing of gas from the Norwegian Continental Shelf through the Gas
Negotiation Committee (GFU). The GFU system was abolished by Royal Decree on
June 1, 2001. Consequently, the companies on the Norwegian Continental Shelf
are now at liberty to sell their own gas individually. On this basis, Norsk
Hydro will market any and all gas produced in Norway and/or on the Norwegian
Continental Shelf to customers in the EEA individually, except insofar as joint
sales and marketing are permissible under EC/EEA competition law. In
accordance with its current trading practice, Norsk Hydro agreed to make
available on commercially competitive terms a total of 2.2 bcm of gas to new
customers in the period from June 1, 2001 to September 30, 2005. A part of this
volume has already been contracted.

Hydro is involved in or threatened with various other legal, tax and
environmental matters arising in the ordinary course of business. Hydro is of
the opinion that resulting liabilities, if any, will not have a material
adverse effect on its consolidated results of operations, liquidity or
financial position.

Dividend Policy

The Board of Directors believes that long-term returns to shareholders
should reflect the value created in the company in the form of dividends and a
higher share price. The Boards policy is that dividends paid should increase
steadily in line with the growth in Hydros results, while taking into
consideration opportunities for adding value through profitable new
investments. Over time, the value added will be reflected to a greater extent
by a higher share price than through dividend distributions. Hydros Board
considers it appropriate that dividends over a period of several years average
roughly 30 percent of the companys net income. Future dividends will be
dependent on Hydros future earnings, financial conditions and cash flow, as
well as other factors affecting Hydro.

In order to achieve the greatest possible value creation over time, it is
necessary to deploy adequate financial resources. This requires Hydro to
maintain a position that will allow it to be able to

104



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##### 



access the necessary loan capital with attractive conditions. Standard & Poors
and Moodys have given Hydro ratings of A and A2, respectively.

Share Repurchase

A share buy-back will be considered in light of alternative investment
opportunities available to the Company, its financial situation, and its share
price trend. On the basis of these considerations, the Board may propose to the
Corporate Assembly that authorization be given for a repurchase of shares. An
agreement has been signed with the Norwegian state, represented by the Ministry
of Trade and Industry to take appropriate action ensuring that the States
ownership interest will remain unchanged if the aim of a repurchase is to
cancel the shares. The agreement covers possible resolutions regarding share
repurchase in 2003 and 2004.

ITEM 8.B.     SIGNIFICANT CHANGES

There have been no significant changes in Hydros results of operations,
financial condition or business prospects since December 31,
2002.

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ITEM 9.
  
     
THE OFFER AND LISTING

ITEM 9.A.     OFFER AND LISTING DETAILS

The following table gives, for the periods indicated, adjusted high and
low prices for the Companys ordinary shares on the Oslo Stock Exchange and the
ADSs on the New York Stock Exchange  Composite Tape.

Five Most Recent Fiscal Years

|     |  |                     |        |                         |  |                   |        |                   |  |  |        |  |  |  |        | 
|---- |  | ------------------- | ------ | ----------------------- |  | ----------------- | ------ | ----------------- |  |  | ------ |  |  |  | ------ | 
|    
|     |  | Oslo Stock Exchange |        | New York Stock Exchange
|     |  |                    
|Year |  | High                |        | Low                     |  | High              |        | Low              
|     |  | (in NOK)            |        | (in NOK)                |  | (in U.S. Dollars) |        | (in U.S. Dollars)
|    
|1998 |  |                     | 391.00 |                         |  |                   | 227.00 |                   |  |  | 51 3/4 |  |  |  | 30 1/2 | 
|    
|1999 |  |                     | 371.00 |                         |  |                   | 245.00 |                   |  |  | 46 5/8 |  |  |  | 32 3/4 | 
|    
|2000 |  |                     | 415.00 |                         |  |                   | 296.50 |                   |  |  | 45 3/8 |  |  |  | 35 1/2 | 
|    
|2001 |  |                     | 404.00 |                         |  |                   | 310.00 |                   |  |  | 44.90  |  |  |  | 35.00  | 
|    
|2002 |  |                     | 441.00 |                         |  |                   | 273.00 |                   |  |  | 52.30  |  |  |  | 37.05  | 
|    

Quarterly Data for Two Most Recent Fiscal Years

|                    |  |                     |        |                         |  |                   |        |                   |  |  |       |  |  |  |       | 
|------------------- |  | ------------------- | ------ | ----------------------- |  | ----------------- | ------ | ----------------- |  |  | ----- |  |  |  | ----- | 
|                    |  | Oslo Stock Exchange |        | New York Stock Exchange
|                    |  |                    
|Quarterly Period    |  | High                |        | Low                     |  | High              |        | Low              
|                    |  | (in NOK)            |        | (in NOK)                |  | (in U.S. Dollars) |        | (in U.S. Dollars)
|                   
|First quarter 2001  |  |                     | 400.00 |                         |  |                   | 359.00 |                   |  |  | 44.90 |  |  |  | 39.99 | 
|                   
|Second quarter 2001 |  |                     | 404.00 |                         |  |                   | 367.00 |                   |  |  | 43.55 |  |  |  | 40.50 | 
|                   
|Third quarter 2001  |  |                     | 399.50 |                         |  |                   | 310.00 |                   |  |  | 43.90 |  |  |  | 35.68 | 
|                   
|Fourth quarter 2001 |  |                     | 378.00 |                         |  |                   | 310.50 |                   |  |  | 42.00 |  |  |  | 35.00 | 
|                   
|First quarter 2002  |  |                     | 432.00 |                         |  |                   | 364.00 |                   |  |  | 48.50 |  |  |  | 40.60 | 
|                   
|Second quarter 2002 |  |                     | 441.00 |                         |  |                   | 346.00 |                   |  |  | 52.30 |  |  |  | 46.60 | 
|                   
|Third quarter 2002  |  |                     | 367.00 |                         |  |                   | 276.00 |                   |  |  | 48.54 |  |  |  | 37.10 | 
|                   
|Fourth quarter 2002 |  |                     | 316.00 |                         |  |                   | 273.00 |                   |  |  | 45.25 |  |  |  | 37.05 | 
|                   

Most Recent Six Months

|               |  |                     |        |                         |  |                   |        |                   |  |  |       |  |  |  |       | 
|-------------- |  | ------------------- | ------ | ----------------------- |  | ----------------- | ------ | ----------------- |  |  | ----- |  |  |  | ----- | 
|              
|               |  | Oslo Stock Exchange |        | New York Stock Exchange
|               |  |                    
|Month          |  | High                |        | Low                     |  | High              |        | Low              
|               |  | (in NOK)            |        | (in NOK)                |  | (in U.S. Dollars) |        | (in U.S. Dollars)
|              
|September 2002 |  |                     | 324.00 |                         |  |                   | 276.00 |                   |  |  | 42.37 |  |  |  | 37.10 | 
|              
|October 2002   |  |                     | 303.00 |                         |  |                   | 273.00 |                   |  |  | 40.43 |  |  |  | 37.05 | 
|              
|November 2002  |  |                     | 296.50 |                         |  |                   | 273.00 |                   |  |  | 40.05 |  |  |  | 37.67 | 
|              
|December 2002  |  |                     | 316.00 |                         |  |                   | 291.00 |                   |  |  | 45.25 |  |  |  | 40.20 | 
|              
|January 2003   |  |                     | 317.50 |                         |  |                   | 280.50 |                   |  |  | 45.83 |  |  |  | 41.11 | 
|              
|February 2003  |  |                     | 295.00 |                         |  |                   | 262.00 |                   |  |  | 42.09 |  |  |  | 37.09 | 
|              

There were 291 holders of Hydros ordinary shares with addresses in the
United States (not including the Depositary) as of February 26, 2003. These
shareholders held 13,059,440 ordinary shares, equal to approximately 5.1
percent of the outstanding ordinary shares. As of February 26, 2003, a total
of 15,788,491 ADSs (representing approximately 6.1 percent of the total
ordinary shares outstanding) were held by approximately 636 registered holders
of ADSs.

106



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ITEM 9.B.     PLAN OF DISTRIBUTION

In accordance with the instructions to Form 20-F, the Company does not
need to provide the information called for by Item 9.B if, as is the case in
this instance, the Form 20-F is being filed as an annual report under the
Exchange Act.

ITEM 9.C.     MARKETS

The Companys ordinary shares are listed on the stock exchanges in Oslo,
Düsseldorf, Frankfurt, Hamburg, London, Paris, Stockholm and Zürich. The ADSs
are listed on the New York Stock Exchange.

ITEM 9.D.     SELLING SHAREHOLDERS

In accordance with the instructions to Form 20-F, the Company does not
need to provide the information called for by Item 9.D. if, as is the case in
this instance, the Form 20-F is being filed as an annual report under the
Exchange Act.

ITEM 9.E.     DILUTION

In accordance with the instructions to Form 20-F, the Company does not
need to provide the information called for by Item 9.E. if, as is the case in
this instance, the Form 20-F is being filed as an annual report under the
Exchange Act.

ITEM 9.F.     EXPENSES OF THE ISSUE

In accordance with the instructions to Form 20-F, the Company does not
need to provide the information called for by Item 9.F. if, as is the case in
this instance, the Form 20-F is being filed as an annual report under the
Exchange Act.

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ITEM 10.
  
     
ADDITIONAL INFORMATION

ITEM 10.A.     SHARE CAPITAL

In accordance with the instructions to Form 20-F, the Company does not
need to provide the information called for by Item 10.A. if, as is the case in
this instance, the Form 20-F is being filed as an annual report under the
Exchange Act.

ITEM 10.B.     ARTICLES OF ASSOCIATION

Norsk Hydro ASA is a public limited company organized under the laws of
Norway. Its registration number in the Norwegian Register of Business
Enterprises is 914 778 271. Norsk Hydro ASA was incorporated on December 2,
1905 and registered with the Norwegian Register of Business Enterprises in
1906.

Section 2 of the Companys articles of association provides that the
Companys objects or purposes are to engage in industry, commerce and
transport, to utilize energy resources and raw materials, and to engage in
other activities connected with the above-mentioned objects. The Companys
operations may be conducted through participation in or in cooperation with
other enterprises.

Board of Directors

Section 5 of the Companys articles of association provides that the Board
of Directors shall be composed of nine members who are elected by the Corporate
Assembly to serve for a term of two years, such term to expire at the
conclusion of the annual general meeting of shareholders in the year in which
the period of service ends. The Corporate Assembly also elects the Chairman
and the Vice-Chairman of the Board. In the event a director retires, is
removed or is disqualified as a result of personal bankruptcy prior to the end
of his or her period of service and there is no alternate Board member, the
rest of the Board of Directors must arrange for the election by the Corporate
Assembly of a new member of the Board of Directors for the remainder of the
period of service.

There are no requirements for a Board members being qualified to serve in
such capacity other than a requirement under Norwegian law that at least half
of the members of the Board of Directors must reside in the Kingdom of Norway
or another country that is a member of the European Economic Community (absent
the grant of an exemption by the King of Norway in an individual case).
Section 9 of the Companys articles of association requires a director to
retire the year he or she reaches the age of 70.

Under Norwegian law and the Rules of Procedure for the Board of Directors,
a member of the Board of Directors may not participate in the discussion or in
the decision on any matter in which the Board member (or any person affiliated
with such Board member) has a major personal or financial interest. The rest
of the Board may decide whether the Board member has such an interest in the
decision or matter. In addition, no member of the Board may participate in any
matter concerning a loan or other credit to such Board member or with respect
to the pledge of security for such members debt to the Company.

Under Norwegian law, the Companys directors have no power to vote
compensation to themselves or any member of their body. Instead, the Corporate
Assembly fixes the remuneration to be received by members of the Board of
Directors, alternate members and observers. Norwegian law also stipulates that
members of the Board of Directors are not to receive any remuneration from
parties other than the Company in connection with their services for the
Company. However, a Board member who does not participate in the day-to-day
management of the Company is not precluded from acting as an agent on behalf of
a business carried on by the Board member and receiving a

108



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standard agency fee in such capacity, provided that such member does not also
represent the Company in the transaction.

The members of the Board of Directors and the members of the Corporate
Assembly owe a fiduciary duty to the Company and its shareholders. Their
principal obligation is to safeguard the interests of the shareholders. In
addition, they may also have duties to other third parties, such as employees
and creditors. The Companys directors and members of the Corporate Assembly
can be held liable for any damage they negligently or intentionally cause the
Company. Norwegian law permits shareholders to exempt any such persons from
liability, but the exemption is not binding if substantially correct and
complete information was not provided to the shareholders at the general
meeting at which the shareholder action to exempt the person(s) from liability
was taken. In addition, if shareholders have exempted such persons from
liability or decided not to hold such persons liable for a certain matter,
shareholders representing at least ten percent of the share capital or, if
there are at least 100 shareholders, more than ten percent of the total number
of shareholders can raise the claim on the Companys behalf and in its name.
The cost of any such action is not the Companys responsibility, but can be
recovered from any proceeds the Company receives as a result of the action. If
the decision not to hold such persons liable was adopted by the same majority
of shareholders as required to amend the Companys articles of association (see
the discussion under Voting Rights below), that decision is binding on the
minority shareholders.

Neither Norwegian law nor the Companys articles of association contain
any provision concerning indemnification by the Company of the members of the
Board of Directors.

Description of Ordinary Shares

The following is a summary of material information relating to the share
capital and the ordinary shares of the Company, including summaries of certain
provisions of the articles of association of the Company and applicable
Norwegian law (including the Norwegian Public Limited Companies Act) in effect
as of the date of this annual report.

General

The authorized share capital of the Company consists of one class of
shares: 266,596,650 ordinary shares, nominal value NOK 20 per share, of which
257,960,532 ordinary shares were outstanding as of December 31, 2002. All
outstanding ordinary shares are validly issued, fully paid and nonassessable.

The VPS System

The ordinary shares are registered in the Norwegian Verdipapirsentralen
(the Norwegian Registry of Securities), referred to as the VPS. The VPS,
established in 1986, is a certificate-less securities registry system created
by an act of the Norwegian Parliament. In general terms, the VPS is a
computerized bookkeeping system operated by an independent institution in which
the ownership of, and all transactions related to, Norwegian-listed equity
securities must be recorded. The Companys share register has been transferred
to the VPS, and the Companys ordinary shares are registered in the VPS in
accordance with Section 4 of the Companys articles of association.

All transactions related to securities registered with the VPS are handled
through computerized book entries. The VPS confirms each entry by sending a
transcript to the registered shareholder regardless of beneficial ownership.
In order to effect such entries, the individual security holder must establish
a securities account or accounts with one or more Norwegian account agents.
Norwegian banks, the Bank of Norway, authorized securities brokers in Norway,
bond issuing mortgage companies, unit trust managing companies, and Norwegian
branches of credit institutions established within the European Economic Area
are allowed to act as account agents. If a security holder does not

109



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establish such an account, an account agent will be appointed on the security
holders behalf by the issuer of the security in question.

The entry of a transaction in the VPS will generally be decisive in
determining the legal rights of parties as against the issuing company or a
third party claiming an interest in a security.

The VPS is strictly liable for any loss suffered as a result of faulty
registration or the amending or deletion of rights in respect of registered
securities except in the event of contributory negligence on the part of the
aggrieved party, in which case compensation owed by the VPS may be reduced.

A transferee or assignee of the Companys ordinary shares may not exercise
the rights of a shareholder with respect to such shares unless the transferee
or assignee has registered its shareholding or has reported and shown evidence
of the share acquisition and the share acquisition is not prohibited by
applicable Norwegian law or the Companys articles of association.

Shareholder Meetings

Under Norwegian law, the Company is required to hold its annual general
meeting of shareholders within six months following the end of the fiscal year.
In accordance with Norwegian law and Section 11 of the Companys articles of
association, the following business must be transacted at the annual general
meeting:



| |  |  | approving the annual accounts and annual report for the prior fiscal
year, including the distribution of dividends;                             
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | electing the shareholders members and deputy members to the
Corporate Assembly (if subject to election at the annual general
meeting); and     
|
| |  |  | dealing with any other matters required by law or required by the
Companys Articles of Association to be covered in the annual general
meeting.

In addition to the annual general meeting, extraordinary general meetings
of shareholders may be held if deemed necessary by the Board of Directors, the
Corporate Assembly or the Chairman of the Corporate Assembly. An extraordinary
general meeting must also be convened for the consideration of specific matters
at the written demand of the Companys auditors or shareholders representing
five percent or more of the share capital of the Company.

The Board of Directors is to convene a general meeting of shareholders,
including any extraordinary general meeting. A general meeting must be
convened by written notice to all shareholders, sent at least 14 days in
advance of the meeting date. Shareholders have the right to have an issue
discussed at a general meeting. In order to exercise this right, shareholders
must deliver written notice to the Board of Directors in sufficient time so
that the issue can be included in the notice convening the general meeting. If
the Companys notice of the general meeting has already been sent, a new notice
as to the convening of the general meeting must be sent if at least two weeks
remain before the general meeting is to be held.

Neither Norwegian law nor the Companys articles of association provide
for any quorum requirement (i.e., a minimum level of voting power to be
present, either in person or by proxy, in order to conduct business at any
general meeting).

Under Norwegian law, shareholders are entitled to attend and vote at a
general meeting, either in person or by a proxy appointed at their own
discretion. The right to attend a general meeting cannot be restricted in the
Companys articles of association. Under Section 10 of the Companys articles
of association, shareholders or their procurators (proxies) are entitled to
attend and to vote at an annual general meeting provided they have informed the
Company of their intended attendance at least five days in advance of the
meeting date.

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Voting Rights

Holders of the Companys ordinary shares (other than the Company itself or
any of its subsidiaries) are entitled to one vote per share.

Generally, all matters to be voted on by shareholders must be approved by
a majority of the votes cast by all ordinary shares that are present in person
or represented by proxy at the general meeting at which such matters are
considered. In the case of elections (for example, of members of the Corporate
Assembly), the persons who receive the most votes cast are deemed elected.



| |   |  | Certain actions, including resolutions to:                                                                                                                                                                                                                              
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | amend the Companys articles of association;                                                                                                                                                                                                                            
|
| |  |  | approve a merger or demerger;                                                                                                                                                                                                                                           
|
| |  |  | increase or reduce the Companys share capital; or                                                                                                                                                                                                                      
|
| |  |  | waive preemptive rights in connection with an increase in share
capital must be approved by at least two-thirds of the votes cast at the
general meeting at which such amendment is considered and at least
two-thirds of the share capital represented at such meeting.

Any resolution which has the effect of reducing shareholders rights to a
dividend or to the assets of the Company requires the approval of shareholders
representing more than 90 percent of the share capital represented at the
general meeting at which such action is considered as well as at least
two-thirds of the votes cast at that meeting.

Under Norwegian law, certain matters require the unanimous approval of the
Companys shareholders, including the taking of any action that would:



| |  |  | increase shareholders obligations to the Company;                   
| | - |  | ---------------------------------------------------------------------
|
| |  |  | restrict the right to transfer, acquire or own shares in the Company;
|
| |  |  | subject the shares to compulsory redemption; or                      
|
| |  |  | change the legal relationship among previously equal shares.         

If any such action would affect less than all shareholders, such action
would require the unanimous approval of all affected shareholders as well as at
least two-thirds of the votes cast and at least two-thirds of the share capital
represented at the general meeting at which such action is considered.

Under Norwegian law, shareholders may not take action by written consent.

The beneficial owners of shares which are registered in the name of a
nominee are generally not entitled to vote under Norwegian law, nor are any
persons who are designated in the share register as holding such shares as
nominees.

Dividends

Under Norwegian law, any proposal to pay dividends must be made by the
Board of Directors and approved by the shareholders at the annual general
meeting of shareholders. The dividend cannot exceed the amount proposed or
consented to by the Board of Directors. Dividends in respect of a fiscal year
are normally determined at the annual general meeting held in the following
year. Any dividend approved at a general meeting accrues to those shareholders
who are shareholders at the time of shareholder approval, unless otherwise
stated in the resolution with respect to such dividend distribution.

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Under Norwegian law, the amount of any dividend distribution with respect
to any fiscal year is limited to the profit for that year (determined in
accordance with the approved profit and loss account for that year) and other
equity, after deduction of:



| |  |  | uncovered losses (i.e., losses from a prior year or years that could
not be covered because of insufficient distributable equity);                                                                  
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the capitalized costs of research and development, goodwill and the
net deferred tax benefits reflected in the balance sheet for that year;
and                                                     
|
| |  |  | that part of the profit for the year which, by law or in accordance
with the Companys articles of association, must be allocated to
undistributable reserve or cannot be distributed as a dividend.

With respect to any license or entity in which the Company has an
investment valued using proportionate consolidation or the equity method, the
difference between the Companys share of the earnings of the license or entity
recognized and the dividend received from such license or entity is allocated
to the reserve for valuation variances. The reserve for valuation variances
constitutes undistributable equity, and may not be distributed either as a
dividend or as a distribution in connection with a reduction in capital.

Norwegian law does not permit the payment of dividends based on interim
results of operations.

In accordance with Norwegian law, the Company cannot distribute any
dividend if the equity, according to the balance sheet, amounts to less than 10
percent of the Companys total assets without following a creditor notice
procedure for a reduction of the share capital. Further, no dividend may be
distributed in any circumstance which exceeds an amount that is compatible with
prudent and sound business practice and with due consideration of any loss that
may have been incurred, or is expected to be incurred, after the balance sheet
date.

Dividends have usually been mailed by the Company to shareholders entitled
to such dividends approximately five to six weeks after they have been approved
at the annual general meeting.

Because the Company pays dividends in Norwegian kroner, exchange rate
fluctuations will affect the US dollar amounts received by holders of ADSs upon
the conversion of cash dividends into US dollars by the Depositary.

Limitations on the Right to Own Ordinary Shares

There are no restrictions affecting the right of non-Norwegian residents
or citizens to own or exercise voting rights with respect the Companys
ordinary shares. However, based on a 1917 law as amended in 1994, which
applies to Norwegian companies engaged in hydropower, mining and real estate,
no person or entity may acquire more than 20 percent (or the right to vote more
than 20 percent) of the share capital of the Company, and no group of two or
more persons may, whether by mutual agreement or by family relationship,
jointly or separately acquire an aggregate of more than 20 percent of the share
capital of the Company or 20 percent of its voting rights unless such person or
persons obtain the consent of the Norwegian government. The Depositary and The
Depository Trust Company have been granted a concession from the Norwegian
government to hold up to 25 percent of the Companys ordinary shares in their
respective capacities as depositaries.

Restrictions on Transfer

Except in certain circumstances, no acquirer of ordinary shares is
entitled to any of the rights of a shareholder unless and until he has
registered the transfer in the companys share registry in the

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VPS. Under Norwegian law, the transferor must ensure that the VPS is notified
of any change of ownership immediately after it has taken place.

The Companys articles of association do not contain any provisions
restricting the transferability of ordinary shares other than that the Board of
Directors may refuse to consent to the transfer of ordinary shares and may take
such other steps as may be necessary to prevent ordinary shares from being
transferred if in contravention of the restrictions, if any, then provided by
applicable Norwegian law. If the Board of Directors refuses to consent to a
transfer of ordinary shares, the Board must, without delay, notify the
transferee of the decision as well as the reasons for such refusal and what is
required in order to remedy the matter. If the transferee has not been
notified of a refusal to grant consent within two months of the date of the
VPSs receipt of notice of the acquisition, the Boards consent shall be
regarded as having been granted. If the Board refuses to grant its consent to
the acquisition of the ordinary shares, the transferee may (i) rescind the
purchase agreement with the transferor (unless otherwise provided in such
agreement), (ii) dispose of the shares, or (iii) bring a legal action against
the Company with respect to the refusal to grant consent. Any of the foregoing
actions must be taken within two months from when the transferee receives
notice of the Boards refusal of consent to the transfer. If the transferee
fails to act in a timely manner, the Board of Directors may demand that the
shares be sold.

Additional Issuances and Preemptive Rights

All issuances of ordinary shares by the Company, including bonus issues
(share dividends), require an amendment of the Companys articles of
association (which specifies the Companys share capital) and, thus,
shareholder approval.

Holders of the Companys ordinary shares have preemptive rights to acquire
or subscribe for additional ordinary shares to be issued for cash. Such rights
may be waived by a resolution at a general meeting by the same vote as required
to approve an amendment to the Companys articles of association.
Shareholders, by the same majority as required for an amendment to the
Companys articles of association, may also grant the Board of Directors a
power of attorney to increase the share capital by a new subscription for
shares, such power of attorney to specify, among other things, the amount by
which the share capital may be increased, the term of the power of attorney,
and whether or not shareholders are to have preemptive rights with respect to
such share capital increase.

Shareholders preemptive rights, if any, are pro ratain accordance with
their relative holdings in the Companys ordinary shares at the time of such
issuance. If not all shareholders exercise their preemptive rights (or not all
shareholders exercise such rights in full), shareholders who have exercised
their preemptive rights and want to acquire additional shares may subscribe for
those shares which have not been subscribed for, generally on a pro ratabasis
based on the number of shares for which preemptive rights have been exercised.
Under Norwegian law, preemptive rights cannot be set aside in the Companys
articles of association.

The Companys articles of association provide that if the share capital is
increased, and provided the Norwegian law then in effect so permits,
preferential subscription rights shall be reserved in connection with each such
capital increase, on the conditions stipulated by the Board of Directors, for
up to:



| |  |  | 0.83 percent of the increase for holders of the 83 unredeemed founder
certificates, and   
| | - |  | ------------------------------------------------------------------------------------------
|
| |  |  | 2.79 prcent of the increase for holders of the 4,343 unredeemed
subscription certificates.

These preferential rights shall not apply if the increase is made in order
to allot shares to third parties as compensation for their transfer of assets
to the Company.

Under Norwegian law, bonus issues (share dividends) of the Companys
ordinary shares may be distributed, subject to shareholder approval, from
amounts which (i) could otherwise be distributed as

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dividends, or (ii) may be created by transferring funds from the Companys
share premium reserve or from retained earnings available for dividends. Such
bonus issues (share dividends) may be effected either by issuing new ordinary
shares, allotted to the Companys shareholders on a pro ratabasis, or by
increasing the nominal value of the ordinary shares outstanding.

Redemption of the Ordinary Shares

The Companys articles of association do not currently contain any
provisions regarding the redemption of the Companys ordinary shares. Under
Norwegian law, a company may, upon a motion by its board of directors and
subject to obtaining shareholder approval, reduce its share capital to:



| |  |  | cover a loss which cannot be covered in any other way;                                                                   
| | - |  | -------------------------------------------------------------------------------------------------------------------------
|
| |  |  | effect a distribution to shareholders;                                                                                   
|
| |  |  | effect a stock repurchase plan by the company;                                                                           
|
| |  |  | allocate amounts from share capital to reserves to be used in
accordance with the resolution adopted by the shareholders.

The reduction in share capital may be implemented by a redemption of
ordinary shares or by a reduction in the nominal value of the shares.

Rights Upon Dissolution and Winding Up

Any decision by a Norwegian company to dissolve generally requires the
approval of two-thirds of the votes cast by its shareholders, as well as
two-thirds of the share capital represented at the general meeting called to
vote on the issue. If any conditions have occurred which, in accordance with a
companys articles of association, must result in the dissolution of the
company, or if the company must be dissolved as a result of a statutory
provision, the shareholder proposal with respect to the companys dissolution
requires approval of the majority of votes cast at the general meeting called
to vote on the proposal. In the event of a dissolution, liquidation or winding
up of the Company, the holders of ordinary shares are entitled to share ratably
in all assets remaining after payment of all liabilities of the Company.

Obligations upon Acquiring Certain Percentages of the Companys Shares

Norwegian law requires any person, entity or group acting in concert that
acquires more than 40 percent of the voting rights of a Norwegian company
listed on the Oslo Stock Exchange (OSE) to make an unconditional general offer
to acquire the whole of the outstanding share capital of that company. The
offer is subject to approval by the OSE before submission of the offer to the
shareholders. The offer must be in cash or contain a cash alternative at least
equivalent to any other consideration offered. The offering price per share
must be at least as high as the highest price paid by the offeror in the
six-month period prior to the date the 40 percent threshold was exceeded, but
equal to the market price if the market price was higher when the 40 percent
threshold was exceeded. A shareholder who fails to make the required offer
must within four weeks dispose of sufficient shares so that the obligation
ceases to apply. Otherwise, the OSE may cause the shares exceeding the 40
percent limit to be sold by public auction. A shareholder who fails to make
such offer cannot, as long as the mandatory offer requirement remains in force,
vote its shares or exercise any rights of share ownership unless a majority of
the remaining shareholders approve, other than the right to receive dividends
and preferential rights in the event of an increase in share capital. In
addition, the OSE may impose a daily fine upon a shareholder who fails to make
the required offer.

If a shareholder, directly or via subsidiaries, acquires shares
representing more than 90 percent of the total number of issued shares as well
as more than 90 percent of the total voting rights attached to those shares,
then the majority shareholder has the right (and each remaining minority
shareholder of that company has the right to require the majority shareholder)
to effect a compulsory acquisition

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for cash of any shares not already owned by the majority shareholder. Upon
effecting the compulsory acquisition, the majority shareholder must offer the
minority shareholders a specific price per share. The determination of the
price per share would be at the discretion of the majority shareholder. If any
minority shareholder does not accept the offered price, such minority
shareholder may, within a specified period of not less than two months, request
that the price be set by the Norwegian courts. The cost of the court procedure
would normally be charged to the account of the majority shareholder, and the
courts would have full discretion in determining the consideration due the
minority shareholder as a result of the compulsory acquisition.

Description of American Depositary Receipts

The following is a summary of certain provisions of the Amended and
Restated Deposit Agreement, dated as of October 1, 1987, as amended by
Amendment No. 1, dated May 27, 1999 (the Deposit Agreement), among the
Company, Morgan Guaranty Trust Company of New York, as depositary (the
Depositary) and holders from time to time of the American depositary receipts
(ADRs) issued by the Depositary under the Deposit Agreement. An ADR is the
physical certificate that evidences any number of American depositary shares
(ADSs). Subject to the terms of the Deposit Agreement, each ADS represents
rights attributable to one ordinary share of the Company.

This summary is not intended to be a complete description of the Deposit
Agreement. Copies of the Deposit Agreement are available for inspection at the
Depositarys office located at 60 Wall Street, New York, New York 10260 (the
Depositarys Office) and at the principal Oslo office of Den norske Bank (the
Custodian) or any successor or additional custodian.

The Deposit Agreement and the ADRs are governed by New York law.

Deposit of Ordinary Shares

A person or entity may register ordinary shares of the Company in the VPS
System in the name of the Depositary (as a nominee of such person or entity and
not as a beneficial owner of such shares). Ordinary shares (or evidence of
rights to receive ordinary shares) may be deposited through:



| |  |  | electronic transfer of such shares to the account of the Depositary
in the Companys share registry on the VPS System, or                                                                                               
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | evidence, satisfactory to the Custodian, of irrevocable instructions
to cause the ordinary shares to be transferred to the Depositarys
account, together with related documentation specified in the Deposit
Agreement.

Subject to the terms and conditions of the Deposit Agreement, upon each
deposit of ordinary shares, receipt of related delivery documentation and
compliance with the other provisions of the Deposit Agreement, including the
payment of the fees and charges of the Depositary and any taxes or other fees
or charges owing, the Depositary will issue an ADR or ADRs in the name of the
person or entity entitled to such ADR(s) evidencing the number of ADSs to which
such person or entity is entitled. Certificated ADRs will be delivered at the
Depositarys Office.

The Depositary may issue ADRs prior to the deposit of ordinary shares (or
rights to receive ordinary shares), referred to in the Deposit Agreement as a
pre-release, only if: (i) the ADRs are fully collateralized (marked to market
daily) with cash or U.S. government securities until the ordinary shares are
deposited in the Depositarys name; (ii) the applicant for the ADRs represents
in writing that it owns the ordinary shares, has assigned all beneficial right,
title and interest in such ordinary shares to the Depositary, and will not
dispose of such ordinary shares other than in satisfaction of the pre-release;
and (iii) all such ADRs represent not more than 20 percent of all ADSs
(excluding those

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evidenced by pre-released ADRs). The collateral shall be held for the benefit
of the ADR holders. The Depositary may retain for its own account any
compensation for the issuance of ADRs in connection with a pre-release,
including any earnings on the held collateral.

Transfer of ADRs

The ADRs are transferable on the books of the Depositary; provided,
however, that the Depositary may close the transfer books at any time or from
time to time when deemed expedient by it in its reasonable judgment in
connection with the performance of its duties. As a condition precedent to the
execution and delivery, registration of transfer, split-up, or combination or
surrender of, any ADR, or transfer and withdrawal of ordinary shares, the
Depositary or the Custodian may require payment from the person presenting the
ADR or the depositor of the ordinary shares of a sum sufficient to reimburse it
for any taxes or other governmental charges and any stock transfer or
registration fees with respect the ADR or ordinary shares and payment of any
applicable fees payable by the holders of ADRs. The Depositary may refuse to
deliver an ADR, register the transfer of any ADR or make any distribution of,
or related to, ordinary shares until it or the Custodian has received such
proof of citizenship, residence, exchange control approval, legal or beneficial
ownership or other information as it may deem necessary or proper or as the
Company may require by written request to the Depositary or the Custodian. The
delivery, transfer and surrender of ADRs generally may be suspended during any
period when the transfer books of the Depositary are closed, or if any such
action is deemed necessary or advisable by the Depositary or the Company at any
time or from time to time because of any requirement of law or of any
government or governmental body or commission, or under any provision of the
Deposit Agreement, or for any other reason.

Surrender of ADRs for purposes of Receiving Ordinary Shares and Other
Deposited Securities

An ADR holder may surrender its ADRs at the Depositarys Office for the
purpose of withdrawal of the ordinary shares represented thereby, together with
all securities, property and cash received by the Depositary or the Custodian
in respect of or in lieu of such ordinary shares (collectively, the Deposited
Securities). Upon such surrender, the payment of applicable fees, charges and
taxes, and delivery of proper instructions, the holder is entitled to have the
ordinary shares relating to the surrendered ADRs registered in the name of the
holder (or such other name as the holder may request) in the VPS System. The
holder is also entitled to delivery, at the Depositarys Office or at the
office of the Custodian, of a certificate or certificates for, or other
documents of title to, the Deposited Securities, if any, not registered in the
VPS System that are then represented by the surrendered ADRs. At the
Depositarys discretion, the Depositary may make delivery of any cash,
dividends, distributions or rights with respect to the amount of the Deposited
Securities evidenced by the surrendered ADRs, or any proceeds of sale of such
cash, dividends, distributions or rights held by the Depositary.

Under the terms of the Deposit Agreement, the Depositary may refuse or
suspend the surrender of outstanding ADRs only in connection with:



| |  |  | temporary delays caused by closing the transfer books of the
Depositary or the Company, the deposit of ordinary shares in connection
with voting at a shareholders meeting, or the payment of dividends;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the payment of fees, taxes and similar charges; or                                                                                                                                                       
|
| |  |  | compliance with any laws or governmental regulations relating to the
ADRs or to the withdrawal of Deposited Securities.                                                                                  

Dividends and Other Distributions

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The Company may make various types of distributions with respect to its
ordinary shares. Under the terms of the Deposit Agreement, the Depositary has
agreed to pay ADR holders the cash dividends and other distributions received
by the Custodian on any Deposited Securities. ADR holders shall receive these
distributions, in proportion to the number of ADSs held by them, in the
following manner:

Cash Distributions

Whenever the Depositary receives any cash dividend or other cash
distribution by the Company on any Deposited Securities, the Depositary is to
convert such dividend or distribution into US dollars and remit the amount
received, net of applicable taxes and governmental charges, to the ADR holders,
net of any amounts required to be withheld by the Company, the Custodian or the
Depositary on account of taxes or other governmental charges and reasonable and
customary expenses incurred by the Depositary, if any, in the conversion of
currency.

The Depositary will distribute only such amount of the net cash dividend
or other cash distribution as can be distributed without attributing to any ADR
holder a fraction of one cent. Any balance not distributable on that basis
will be held by the Depositary (without liability for interest on such balance)
and added to the next sum received by the Depositary for distribution to
holders of then outstanding ADRs.

If the Depositary receives any currency other than US dollars, the
Depositary is required, to the extent that in its judgment it can convert such
currency on a reasonable basis into US dollars and transfer the resulting US
dollars to the United States, to convert all cash dividends and other cash
distributions which it receives in respect of the Deposited Securities into US
dollars. If the Depositary determines, in its judgment, that such other
currency received by it cannot be so converted or transferred (or if any
approval or license of a governmental authority or agency of the United States
required for such conversion is denied or is not obtainable or is not obtained
within a reasonable period as determined by the Depositary), the Depositary may
distribute such other currency (or documentation evidencing the right to
receive the same) or, in its discretion, hold such currency for the respective
accounts of the ADR holders entitled to receive the same. If any conversion of
currency, in whole or in part, cannot be effected for distribution in US
dollars to some of the ADR holders, the Depositary may, in its discretion,
convert the currency into US dollars and distribute the same to ADR holders for
whom such conversion and distribution is practicable and distribute the balance
of such currency to, or hold such balance for, the accounts of the ADR holders
for whom such conversion and distribution is not practicable.

Distributions of Ordinary Shares

If a distribution by the Company consists of a dividend in, or
distribution of, ordinary shares, the Depositary may, with the Companys
approval, and shall, if the Company so requests, distribute to the ADR holders
additional ADRs for an aggregate number of ADSs representing the number of
ordinary shares received as such dividend or distribution. In lieu of
delivering ADRs for fractional ADSs, the Depositary may sell the amount of
ordinary shares represented by the aggregate of such fractions and distribute
the net proceeds in the manner described with respect to cash distributions.
If additional ADRs are not so distributed (other than with respect to
fractional ADSs), each ADS will then represent the additional ordinary shares
distributed upon the Deposited Securities represented thereby.

Distributions other than Cash or Ordinary Shares

If the Depositary receives any distribution upon the Deposited Securities
in a form other than cash or the Companys ordinary shares (e.g., other
securities or property), the Depositary is to distribute the same in any manner
that the Depositary deems equitable and practicable. If, in the opinion of the
Depositary, it cannot distribute such distribution (for example, because of its
determination that such distribution in the United States would be unlawful) or
cannot do so

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proportionately among the ADR holders, the Depositary may, with the Companys
approval, adopt such method as it deems equitable and practicable to effect the
distribution, including the sale (at public or private sale) of the securities
or other property distributed, or any part of the distribution, and then
distribute the net proceeds of any such sale in the manner described with
respect to cash distributions.

Subscription Rights

In the event that the Company offers (or causes to be offered) to the
holders of any Deposited Securities any rights to subscribe for additional
ordinary shares or any rights of any other nature, the Depositary, after
consultation with the Company, has discretion to (i) follow a procedure to make
such rights available to the ADR holders, or (ii) dispose of such rights and
make the net proceeds available in US dollars to such holders. However, if
requested by the Company, the Depositary is to either:



| | (a) |  | if lawful and feasible at the time of the rights offering, make
such rights available to ADR holders by means of warrants or other
instruments, or employ another method deemed feasible to facilitate
the exercise, sale or transfer of the rights by the ADR holders; or                                                                                                                                                                                                                                                                                                                                                                      
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | if not then lawful and feasible by means of warrants or other
instruments (or if the rights represented by such warrants or other
instruments are not exercised and appear to be about to lapse), sell
such rights or such warrants or other instruments at public or private
sale on terms the Depositary deems proper, and allocate the proceeds
of any such sale for the accounts of the ADR holders, upon an averaged
or other practicable basis without regard to distinctions among ADR
holders because of the application of exchange restrictions applicable
to any particular ADR holder(s), the date of delivery of ADRs or
otherwise.

Record Dates

Whenever any cash dividend or other cash distribution, if any, becomes
payable or any distribution other than cash is made, or rights are issued, with
respect to the Deposited Securities, or whenever the Depositary receives notice
of any meeting of holders of ordinary shares or other Deposited Securities, the
Depositary will, after consultation with the Company, if the Company so
requests, fix a record date for the determination of the ADR holders who will
be entitled to receive such dividend, distribution or rights, or the net
proceeds of the sale of the dividend, distribution or rights, to give
instructions for the exercise of voting rights at any such meeting.

Voting of the Underlying Ordinary Shares

Upon receipt of notice of any meeting of holders of ordinary shares or
other Deposited Securities, the Depositary is obligated, as soon as practicable
thereafter, to mail to ADR holders (i) a notice containing a summary of such
information as is contained in such notice of meeting and a statement that ADR
holders at the close of business on a specified record date will be entitled,
subject to applicable Norwegian law and the Companys articles of association,
to instruct the Depositary as to the exercise of voting rights, if any,
pertaining to the ordinary shares or other Deposited Securities underlying
their ADSs, and (ii) a statement as to the manner in which such instructions
may be given, including an express indication that instructions may be given to
the Depositary to give a discretionary proxy to a person designated by the
Company. Upon the written request of an ADR holder on such record date,
received on or before the date established by the Depositary for such purpose,
the Depositary will endeavor insofar as practicable to vote or cause to be
voted the ordinary shares or other Deposited Securities under the ADSs
evidenced by the holders ADRs in accordance with any non-discretionary
instructions set forth in such request. Under the Companys articles of
association, notice of shareholders meeting must be given at least 14 days in
advance of the meeting. Unless notification of a meeting is given in
sufficient time to permit the Depositary to notify ADR holders of

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the proposed meeting and to allow holders to take the steps described above,
ADR holders will not be able to exercise voting rights with respect to the
ordinary shares underlying their ADRs.

The Depositary will not, under any circumstances, exercise any discretion
as to voting. Further, the Depositary will not vote the ordinary shares or
other Deposited Securities represented by ADRs other than in accordance with
the written instructions received from ADR holders.

Reports and Notices

The Depositary will make available for inspection by ADR holders at the
Depositarys Office any reports and communications received from the Company
which are both (a) received by the Depositary or its nominee or nominees as the
holder of the Deposited Securities, and (b) made generally available to the
holders of such Deposited Securities by the Company. The Depositary will mail
to ADR holders copies of notices of shareholder meetings (or adjournments
thereof) furnished by the Company to the Custodian, the taking of any action in
respect of cash or other distributions, or any rights offering.

Amendment and Termination of the Deposit Agreement

The form of the ADRs and the Deposit Agreement may at any time be amended
by agreement between the Company and the Depositary. Any amendment which
imposes or increases any fees or charges (other than stock transfer or other
taxes and other governmental charges, transfer or registration fees, cable,
telex or facsimile transmission costs, delivery costs, and expenses of the
Depositary in connection with conversion of any currency into US dollars) or
which otherwise prejudices any substantial existing right of ADR holders, will
not take effect as to outstanding ADRs until the expiration of three months
after the Depositary has given notice of such amendment to the ADR holders.
Every ADR holder at the time such amendment becomes effective will be deemed,
by continuing to hold such ADR(s), to consent and agree to such amendment and
to be bound by the Deposit Agreement as amended thereby. In no event may any
amendment impair the rights of any ADR holder to surrender its ADRs and receive
the Deposited Securities represented thereby.

Whenever so directed by the Company, the Depositary has agreed to
terminate the Deposit Agreement by mailing notice of such termination to the
holders of the ADRs then outstanding at least 60 days prior to the date fixed
in such notice for such termination. The Depositary may likewise terminate the
Deposit Agreement at any time 60 days after the Depositary has delivered to the
Company a notice of its election to resign if a successor depositary has not,
within the 60-day period, been appointed and accepted its appointment as
provided in the Deposit Agreement. If any ADRs remain outstanding after the
termination date, the Depositary will then discontinue the registration of
transfer of ADRs, suspend the distribution of dividends to the holders and not
give any further notices or perform any further acts under the Deposit
Agreement. The Depositary will continue to collect dividends and other
distributions pertaining to the Deposited Securities, sell rights as provided
in the Deposit Agreement, deliver ordinary shares and other property
represented by ADRs and the net proceeds of the sale of any rights or other
property, in exchange for surrendered ADRs. At any time after the expiration
of two years from the termination date, the Depositary may sell the Deposited
Securities and hold the net proceeds, together with any other cash then held,
without liability for interest, for the pro ratabenefit of the holders of ADRs
which have not previously been surrendered.

Charges of Depositary

The Depositary will charge the party to whom ADRs are delivered against
deposits, and the party surrendering ADRs for delivery of ordinary shares or
other deposited securities, property and cash, $5.00 for each 100 ADSs (or
fraction thereof) represented by the ADRs issued or surrendered. The Company
will pay all other charges of the Depositary and those of any registrar or
co-registrar under the Deposit Agreement, except for taxes and other
governmental charges, any applicable share transfer or registration fees on
deposits or withdrawals of ordinary shares, certain cable, telex,

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facsimile transmission and delivery charges and such expenses as are incurred
by the Depositary in the conversion of foreign currency into US dollars. The
Company will pay all charges and expenses of the Depositary in connection with
the initial issuance of ADRs payable as a dividend or distribution to
shareholders and in connection with any rights offering to shareholders. The
charges and expenses of the Custodian are for the sole account of the
Depositary.

Limitations on Obligations and Liability to ADR Holders

Neither the Depositary nor the Company will be liable to the holders of
ADRs if prevented or delayed by law, governmental authority, any provision of
the Companys articles of association or any circumstances beyond its control
in performing its obligations under the Deposit Agreement or if obliged to do
or perform any act or thing inconsistent with the provisions of the Deposit
Agreement. The obligations of the Company and the Depositary under the Deposit
Agreement are expressly limited to using their best judgment and good faith in
performing their respective duties specified in the Deposit Agreement.

Neither the Depositary nor the Company has any obligation to appear in,
prosecute or defend any action, suit or other proceeding in respect of any
Deposited Securities or the ADRs which, in its opinion, may involve it in
expense or liability, unless indemnity satisfactory to it against all expense
(including fees and disbursements of counsel) and liability is furnished as
often as may be required.

The Depositary will not be responsible for any failure to carry out any
instructions to vote any of the Deposited Securities, or for the manner in
which any vote is cast or the effect of any such vote, provided that any such
action or failure to act is in good faith.

The Depositary, subject to the laws of Norway, the Companys articles of
association and the terms of the Deposit Agreement, may own and deal in any
class of the Companys securities and in ADRs.

ITEM 10.C.     MATERIAL CONTRACTS

Item 10.C. of Form 20-F requires a summary of each material contract,
other than contracts entered into in the ordinary course of business, to which
the Company or any member of the Group is a party, for the two years
immediately preceding publication of the Form 20-F. Hydro is of the view that,
with the exception of the Share Purchase Agreement, dated January 6, 2002,
entered into in connection with the acquisition of VAW Aluminium AG (a copy of
which was filed as an exhibit to the Companys annual report on Form 20-F for
the year ended December 31, 2001), all material contracts entered into by the
Company or any member of the Group during this time period have been entered
into in the ordinary course of business. A summary of the principal terms of
the VAW acquisition, as reflected in the Share Purchase Agreement, was provided
in Item 4.B. Business Overview  Hydro Aluminium of the 2001 annual report.

ITEM 10.D.     EXCHANGE CONTROLS

Under Norwegian foreign exchange controls currently in effect, transfers
of capital to and from Norway are not subject to prior government approval
except for the physical transfer of payments in currency, which is restricted
to licensed banks. Thus, non-Norwegian resident shareholders may receive
dividend payments without a Norwegian exchange control consent, but such
payments must be made through a licensed bank.

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ITEM 10.E.     TAXATION

United States Federal Income Tax Consequences

The following discussion outlines certain possible United States federal
income tax consequences of the acquisition, ownership and disposition of the
Companys ordinary shares or ADSs. The discussion generally applies to a U.S.
holder (as defined below) of ordinary shares or ADSs that hold the same as
capital assets for tax purposes. This discussion does not apply to certain
U.S. holders subject to special rules, such as dealers in securities, traders
in securities that elect to use a mark-to-market method of accounting for their
securities holdings, tax-exempt organizations, life insurance companies,
persons liable for alternative minimum tax, persons that hold ordinary shares
or ADSs through a partnership or other pass-through entity, persons that hold
shares or ADSs as part of a straddle or a hedging or conversion transaction or
persons whose functional currency is not the US dollar.

This discussion is based on the Internal Revenue Code of 1986, as amended,
its legislative history, existing and proposed regulations, published rulings
and court decisions, and the Convention between the United States and the
Kingdom of Norway for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect to Taxes on Income and Property (the Treaty).
These laws are subject to change, possibly on a retroactive basis. In
addition, this discussion is based in part upon the representations of the
Depositary and the assumption that each obligation in the Deposit Agreement and
any related agreement will be performed in accordance with its terms.

A holder of ordinary shares or ADSs is a U.S. holder if he is a
beneficial owner of such shares or ADSs and is (i) a citizen or resident of the
United States, (ii) a corporation created or organized in or under the laws of
the United States or any political subdivision thereof, (iii) an estate whose
income is subject to United States federal income tax regardless of its source,
or (iv) a trust, if a United States court can exercise primary supervision over
the trusts administration and one or more United States persons are authorized
to control all substantial decisions of the trust.

A non-U.S. holder is a beneficial owner of ordinary shares or ADSs that
is not a U.S. holder.

You should consult your own tax advisor regarding the United States
federal, state, local and other tax consequences of acquiring, owning and
disposing of ordinary shares and ADSs in your particular circumstances.

Taking into account the above assumptions, for United States federal
income tax purposes, if you hold ADRs evidencing ADSs, you generally will be
treated as the owner of the ordinary shares represented by those ADSs.
Exchanges of ordinary shares for ADSs, and ADSs for shares, generally will not
be subject to United States federal income tax.

Taxation of Dividends

Dividends distributed are subject to taxation in Norway as general income
at a flat rate, currently 28 percent. A non-Norwegian shareholder is subject
to a withholding tax at a rate of 25 percent on dividends distributed by
Norwegian companies, unless the shareholder is carrying on business activities
in Norway and such shares are effectively connected to such activities. The
withholding tax of 25 percent is normally lower according to tax treaties
between Norway and the country in which the shareholder is resident. The
Treaty rate is 15 percent. The 15 percent withholding rate under the Treaty
will generally apply to dividends paid on shares held directly by U.S. holders
that are residents of the United States within the meaning of the Treaty.

Dividends paid to the Depositary for redistribution to U.S. holders will
generally be subject to a withholding tax of 15 percent. If you are a U.S.
holder, you must generally include in your gross income for United States
federal income tax purposes as a dividend the gross amount of any

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distribution made by the Company out of its current or accumulated earnings and
profits (as determined for United States federal income tax purposes). You
must include in gross income any Norwegian tax withheld from any dividend even
though you do not, in fact, receive the amount withheld as tax. You must
include any dividend in income when you (in the case of shares) or the
Depositary (in the case of ADSs) receive the dividend, actually or
constructively. The dividend will not be eligible for the dividends-received
deduction generally allowed to United States corporations in respect of
dividends received from other United States corporations.

The amount of the dividend that any U.S. holder must include in income is
the US dollar value of the gross amount of the Norwegian kroner dividend,
determined at the spot Norwegian kroner  US dollar exchange rate on the date
the dividend distribution is included in your income, regardless of whether the
payment is, in fact, converted into US dollars.

Distributions in excess of the Companys current and accumulated earnings
and profits, as determined for United States federal income tax purposes, will
be treated as a nontaxable return of capital to the extent of your tax basis in
the ordinary shares or ADSs and, to the extent such distribution exceeds your
tax basis, the distribution will be treated as capital gain.

Subject to certain limitations, the 15 percent Norwegian tax withheld in
accordance with the Treaty and paid over to Norway will be creditable against
your United States federal income tax liability. Dividends will be income from
sources outside the United States, but generally will be passive income or
financial services income, which is treated separately from other types of
income, for purposes of computing the foreign tax credit allowable to you.
Alternatively, you may elect to claim a U.S. tax deduction, instead of a
foreign tax credit, for such Norwegian tax, but only for a year in which you
elect to do so with respect to all foreign income taxes.

Any gain or loss resulting from currency exchange fluctuations during the
period from the date you include the dividend payment in income to the date you
convert the payment into US dollars generally will be treated as ordinary
income or loss. Such gain or loss generally will be income or loss from
sources within the United States for foreign tax credit limitation purposes.

If you are a non-U.S. holder, dividends paid to you in respect of ordinary
shares or ADSs will not generally be subject to United States federal income
tax unless the dividends are effectively connected with the conduct of a
trade or business within the United States or are attributable to a permanent
establishment or fixed base that you maintain in the United States (if that is
required by an applicable income tax treaty as a condition for subjecting you
to United States taxation on a net income basis). In such cases, you will
generally be taxed in the same manner as a U.S. holder. If you are a corporate
non-U.S. holder, effectively connected dividends may, under certain
circumstances, be subject to an additional branch profits tax at a 30 percent
rate or at a lower rate if you are eligible for the benefits of an income tax
treaty that provides for a lower rate.

Taxation of Capital Gains

If you are a U.S. holder and you sell or otherwise dispose of your
ordinary shares or ADSs, you will generally recognize capital gain or loss for
United States federal income tax purposes equal to the difference between the
US dollar value of the amount that you realize and your tax basis, determined
in US dollars, in your ordinary shares or ADSs. Capital gain of a
non-corporate U.S. holder is generally taxed at a maximum rate of 20 percent
where the property has been held for more than one year. The gain or loss will
generally be income or loss from sources within the United States for foreign
tax credit limitation purposes. If you receive any foreign currency on the
sale of ordinary shares or ADSs, you may recognize U.S.-source ordinary income
or loss as a result of currency fluctuations between the date of the sale of
the ordinary shares or ADSs and the date the sales proceeds are converted into
US dollars.

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If you are a non-U.S. holder, you will not be subject to United States
federal income tax on gain recognized on the sale or other disposition of your
ordinary shares or ADSs unless: (i) the gain is effectively connected with a
trade or business in the United States, or the gain is attributable to a
permanent establishment or fixed base that you maintain in the United States
(if that is required by an applicable income tax treaty as a condition for
subjecting you to United States taxation on a net income basis), or (ii) you
are an individual, you are present in the United States for at least 183 days
in the taxable year of the sale, and certain other conditions exist. If you
are a corporate non-U.S. holder, effectively connected gains that you
recognize may also, under certain circumstances, be subject to an additional
branch profits tax at a rate of 30 percent or at a lower rate if you are
eligible for the benefits of an income tax treaty that provides for a lower
rate.

Passive Foreign Investment Company (PFIC) Rules

The Company believes that its ordinary shares and ADSs should not be
treated as stock of a passive foreign investment company, or PFIC, for United
States federal income tax purposes. However, this conclusion is a factual
determination that is made annually and may, therefore, be subject to change.

A PFIC is defined as a corporation that is not formed in the U.S. and, for
any taxable year, either (i) 75 percent or more of its gross income is passive
income or (ii) the average percentage, by fair market value (or, if the
corporation is not publicly traded and either is a controlled foreign
corporation or makes an election, by adjusted tax basis), of its assets that
produce or are held for the production of passive income is 50 percent or
more. Passive income generally includes dividends, interest, certain rents
and royalties, certain gains from the sale of stock and securities, and certain
gains from commodities transactions. However, gains resulting from commodities
transactions are generally excluded from the definition of passive income if
substantially all of a merchants, producers or handlers business is as an
active merchant, producer or handler of such commodities.

For purposes of the PFIC income test and the assets test, if a foreign
corporation owns (directly or indirectly) at least 25 percent by value of the
stock of another corporation, such foreign corporation shall be treated as if
it (a) held a proportionate share of the assets of such other corporation, and
(b) received directly its proportionate share of the income of such other
corporation. Also, for purposes of such PFIC tests, passive income does not
include any interest, dividends, rents or royalties that are received or
accrued from a related person to the extent such amount is properly allocable
to the income of such related person which is not passive income.

U.S. holders owning common or ordinary shares of a PFIC are subject to the
highest rate of tax on ordinary income in effect for the applicable taxable
year and to an interest charge based on the value of deferral of tax for the
period during which the common or ordinary shares of the PFIC are owned with
respect to certain excess distributions on and certain dispositions of PFIC
stock. However, if the U.S. holder makes a timely election to treat a PFIC as
a qualified electing fund (QEF) with respect to such shareholders interest
therein, the above-described rules generally will not apply. Instead, the
electing U.S. holder would include annually in his gross income his pro rata
share of the PFICs ordinary earnings and net capital gain regardless of
whether such income or gain was actually distributed. A U.S. holder of a QEF
may, however, elect to defer the payment of U.S. federal income tax on such
income inclusions. In addition, subject to certain limitations, U.S. holders
owning, actually or constructively, marketable (as specifically defined) stock
in a PFIC will be permitted to elect to mark that stock to market annually,
rather than be subject to the tax regime described above. Amounts included in
or deducted from income under this alternative (and actual gains and losses
realized upon disposition, subject to certain limitations) will be treated as
ordinary gains or losses.

The Company believes that it was not a PFIC for its fiscal year ended
December 31, 2002. However, there can be no assurance that the Company will
not be considered a PFIC for the current or any future taxable year. There can
be no assurance that the Companys determination concerning its

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PFIC status will not be challenged by the IRS, or that it will be able to
satisfy record keeping requirements that will be imposed on QEFs in the event
that it qualifies as a PFIC.

If you are a U.S. holder and you own shares or ADSs during any year that
the Company is a PFIC, you must file Internal Revenue Service Form 8621.

Backup Withholding and Information Reporting

Dividend payments, or other taxable distributions, made within the United
States to you generally will be subject to information reporting requirements
and backup withholding tax at a rate of 30 percent (for 2003) if you are a
non-corporate United States person and you (i) fail to provide an accurate
taxpayer identification number, (ii) are notified by the Internal Revenue
Service that you have failed to report all interest or dividends required to be
shown on your federal income tax returns, or (iii) in certain circumstances,
fail to comply with applicable certification requirements.

Persons that are not United States persons may be required to establish
their exemption from information reporting and backup withholding by certifying
their status on an appropriate Internal Revenue Service Form W-8.

If you sell your ordinary shares or ADSs to or through a United States
office of a broker, the payment of the proceeds is subject to both United
States backup withholding and information reporting unless you certify that you
are a non-U.S. person, under penalties of perjury, or you otherwise establish
an exemption. If you sell your ordinary shares or ADSs outside the United
States through a non-U.S. office of a non-U.S. broker, and the sale proceeds
are paid to you outside the United States, then United States backup
withholding and information reporting requirements generally will not apply to
that payment. However, United States information reporting, but not backup
withholding, will apply to a payment of sales proceeds, even if that payment is
made outside of the United States, if you sell your ordinary shares or ADSs
through a non-U.S. office of a broker that:



| |  |  | is a United States person,                                                                                                                                                                                                                                                                                                                                                    
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | derives 50 percent or more of its gross income for a specified
three-year period from the conduct of a trade or business in the United
States,                                                                                                                                                                                                                                
|
| |  |  | is a controlled foreign corporation as to the United States, or                                                                                                                                                                                                                                                                                                             
|
| |  |  | is a foreign partnership, if at any time during its tax year: (i) one
or more of its partners are U.S. persons, as defined in U.S. Treasury
regulations, who in the aggregate hold more than 50 percent of the
income or capital interest in the partnership, or (ii) at any time
during its tax year the foreign partnership is engaged in a United
States trade or business,

and the broker has documentary evidence in its records that you are a
non-United States person and does not have actual knowledge that you are a U.S.
person or you otherwise establish an exemption.

You generally may obtain a refund of any amounts withheld under the backup
withholding rules that exceed your income tax liability by filing a refund
claim with the United States Internal Revenue Service.

ITEM 10.F.     DIVIDENDS AND PAYING AGENTS

In accordance with the instructions to Form 20-F, the Company does not
need to provide the information called for by Item 10.F. if, as is the case in
this instance, the Form 20-F is being filed as an annual report under the
Exchange Act.

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ITEM 10.G.     STATEMENT BY EXPERTS

In accordance with the instructions to Form 20-F, the Company does not
need to provide the information called for by Item 10.G. if, as is the case in
this instance, the Form 20-F is being filed as an annual report under the
Exchange Act.

ITEM 10.H.     DOCUMENTS ON DISPLAY

The English translation of the Companys articles of association has been
filed as an exhibit to this Annual Report. See the Index to Exhibits.

ITEM 10.I.     SUBSIDIARY INFORMATION

In accordance with the instructions to Form 20-F, the Company does not
need to provide the information called for by Item 10.I. if, as is the case in
this instance, the Form 20-F is being filed in the United States.

ITEM 11.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and qualitative information about market risk as of December
31, 2002 is incorporated by reference to the Financial Review  Risk
Management section (pages 81 through 85) of the Companys 2002 annual report
to shareholders. This section of the annual report to shareholders has been
filed as an exhibit to this Annual Report on Form 20-F in accordance with
applicable rules under the Exchange Act. All statements other than historical
information incorporated in this Item 11 are forward-looking statements. The
actual impact of future market changes could differ materially due to, among
other things, the risk factors discussed in the Annual Report.

ITEM 12.      DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

In accordance with the instructions to Form 20-F, the Company does not
need to provide the information called for by Item 12 if, as is the case in
this instance, the Form 20-F is being filed as an annual report under the
Exchange Act.

PART II

ITEM 13.      DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Item 13 of Form 20-F requires information with respect to (i) any material
default in the payment of principal, interest, a sinking or purchase fund
installment, or any other material default not cured within 30 days, relating
to indebtedness of the Company or any of its significant subsidiaries, (ii) the
payment of dividends if in arrears, (iii) any other material delinquency not
cured within 30 days, relating to any class of preferred stock. There is
nothing to report by the Company within the scope of this Item requirement.

ITEM 14.      MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

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ITEM 15.      CONTROLS AND PROCEDURES; CEO AND CFO CERTIFICATIONS

Requirements

As a result of the recently enacted Sarbanes-Oxley Act (the Act), new
requirements have been introduced by the US Securities and Exchange Commission
(the SEC) pertaining to managements responsibility for information included in
periodic reports filed with the SEC and for controls and procedures related to
compiling and reviewing such information. The rules adopted by the SEC to
implement the provisions of Section 302 of the Act require the Chief Executive
Officer (CEO) and Chief Financial Officer (CFO) of the Company, as a foreign
private issuer (as that term is defined in the Securities Exchange Act of
1934), to certify, among other things:



| |  |  | the accuracy and completeness of the disclosures included in
the Companys annual report on Form 20-F filed with the SEC;
| | - |  | -------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the existence of and evaluation of the effectiveness of the
Companys disclosure controls and procedures"               

The Companys CEO and CFO are also required to disclose to the Companys
external auditors and audit committee all significant deficiencies in the
design or operation of internal controls and any fraud involving management or
other employees having a significant role in the Companys internal controls
identified as a result of their most recent evaluation of the disclosure
controls and procedures.

In addition, the Companys CEO and CFO are required in this annual report
to certify their indication of any changes occurring subsequent to their most
recent evaluation of the disclosure controls and procedures which could
significantly affect the Companys internal controls, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Definitions

Disclosure controls and procedures relate to the Companys process of
recording, processing, summarizing and reporting financial and non-financial
information within specified time periods required by the SECs rules and
forms, for purposes of ensuring that the information is accumulated and
communicated to the Companys management, including the CEO and CFO, to allow
timely decisions regarding required disclosure. Disclosure controls and
procedures include internal controls over financial reporting, as well as
controls designed to ensure compliance with SEC disclosure requirements beyond
the financial statements.

Internal controls are procedures designed to provide reasonable assurance
that the Companys transactions are properly authorized, assets are safeguarded
against unauthorized or improper use, and transactions are properly recorded
and reported.

Professional auditing standards define reportable conditions as
significant deficiencies that could have a significant adverse effect on the
ability to initiate, record, process, and report financial data consistent with
the assertions of management in the financial statements. A material weakness
is a reportable condition where the internal control does not reduce to a
relatively low level of risk that misstatements caused by error or fraud may
occur in amounts that would be material in relation to the financial statements
and not be detected within a timely period by employees in the normal course of
performing their assigned functions.

Limitations on the Effectiveness of Controls

The Companys management does not expect that its existing disclosure
controls and procedures or internal controls will prevent all error or fraud. A
control system, regardless of how well thought out and operated, can provide
only reasonable, not absolute, assurance that the objectives of the

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system are met. In addition, the design of any control system will reflect
economic constraints; the benefit of controls must be considered relative to
the related cost.

Because of the inherent limitations in all control systems, no evaluation
can provide absolute assurance that all control issues or instances of fraud,
if any, have been detected. Inherent limitations include failures in judgment
and decision-making, as well as inadvertent error. Controls can also be
circumvented by individuals, collusion of two or more people, or management
override of controls. The design of any system of controls is also based, in
part, on certain assumptions about the likelihood of future events and there
can be no assurance that any design will succeed in achieving its objectives
under all possible future conditions.

Scope of Evaluation and Conclusions

In 2002, Hydro formed a disclosure committee to assist the Companys CEO
and CFO in fulfilling the certification requirements described above. The
committee, comprised of senior executives of the Company was given the
responsibility to 



| |  |  | Evaluate the financial and non-financial information underlying
the Companys public disclosure information                                                     
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Evaluate the effectiveness of the Companys disclosure controls
and procedures                                                                                  
|
| |  |  | Act as a forum for evaluating and implementing new disclosure
requirements and the ongoing improvement and assessment of the
Companys public disclosure process

The Companys management, including the CEO and CFO, has implemented
control procedures which are consistent with Hydros business and internal
management and supervisory practices. In response to the requirements of
Section 302 of the Sarbanes-Oxley Act discussed above, during 2002, management
designed and executed an evaluation of disclosure controls including
identifying areas for further improvement and development either on a
concurrent basis or for future periods. The evaluation included a review of
the controls objectives and design, implementation of the controls, and the
effect of the controls on the information generated for use in this annual
report on Form 20-F.

As a result of the evaluation described above, the CEO and CFO have
concluded that the Companys disclosure controls and procedures are adequate to
provide reasonable assurance that material information relating to the Company
and its consolidated subsidiaries is made known to management, including the
CEO and CFO, on a timely basis. In addition, no significant deficiencies in the
design or operation of the Companys internal controls nor any fraud involving
management or other employees having a significant role in executing internal
controls were identified.

In accordance with SEC requirements, the CEO and CFO note that, since the
date of the controls evaluation to the date of filing of this annual report on
Form 20-F, there have been no significant changes in the Companys internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.

The Section 302 certifications of the CEO and CFO appear immediately
following the signature pages of this Form 20-F. The reader is encouraged to
review the certifications in conjunction with this disclosure for a more
complete understanding of these matters.

The Company has filed
Section 906 certification as correspondence with the SEC in
connection with the 2002 20-F.

ITEM 16A.      AUDIT COMMITTEE FINANCIAL EXPERT

The SEC rules requiring disclosure under this caption are not yet in
effect.

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ITEM 16B.      CODE OF ETHICS

The SEC rules requiring disclosure under this caption are not yet in
effect.

ITEM 16C.      PRINCIPAL ACCOOUNTANT FEES AND SERVICES

The SEC rules requiring disclosure under this caption are not yet in
effect.

PART III

ITEM 17.      FINANCIAL STATEMENTS

Not applicable.

ITEM 18.      FINANCIAL STATEMENTS

The Companys consolidated financial statements as of and for the year
ended December 31, 2002, and the related notes thereto, which are made a part
of this Annual Report (by virtue of being incorporated by reference to pages 86
through 88, 91 through 125, and 135 through 138 of the Companys 2002 annual
report to shareholders), as well the schedule to the consolidated financial
statements listed in Item 19(a), have been audited by Deloitte & Touche AS,
independent public accountants, as indicated in their report. Reference is made
to Item 19 for a list of all financial statements incorporated herein by
reference or filed herewith.

ITEM 19.      FINANCIAL STATEMENTS AND EXHIBITS



| | a. |  | Financial Statements                                                                                                                                                             
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | The following are filed as part of this Annual Report on Form 20-F:                                                                                                              
|
| |    |  | Independent Auditors Report  page 130                                                                                                                                          
|
| |    |  | Schedule VIII  Valuation and qualifying accounts and reserves  page
131                                                                                                        
|
| |    |  | Glossary: Terms Relating to the Groups Businesses and Operations  page
132                                                                                                     
|
| |    |  | The following financial statements are incorporated by reference to
pages 86 through 88, 91 through 125, and 135 through 138 of the
Companys 2002 annual report to shareholders:

|                                                                                                      |  |         |                 | 
|----------------------------------------------------------------------------------------------------- |  | ------- | --------------- | 
|                                                                                                      |  | Pages *
|                                                                                                      |  |        
|Consolidated income statements for the years ended
December 31, 2002, 2001, and 2000                  |  |         | 86              | 
|Consolidated statements of comprehensive income for the
Years ended December 31, 2002, 2001, and 2000 |  |         | 86              | 
|Consolidated balance sheets at December 31, 2002 and 2001                                             |  |         | 87              | 
|Consolidated statements of cash flows for the years ended
December 31, 2002, 2001, and 2000           |  |         | 88              | 
|Notes to the consolidated financial statements                                                        |  |         | 91-125, 135-138 | 

* Page references are to the Companys 2002 annual report to shareholders.

128



---



##### 





| | b.  |  | Exhibits                                                                                                                                                                                 
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 1.  |  | The Companys articles of association (as amended and currently in
effect).                                                                                                              
|
| | 8.  |  | Significant Subsidiaries of the Registrant                                                                                                                                               
|
| | 10. |  | Pages 52 through 85, 86 through 88, 91 through 125, and 135
through 138 of the Companys 2002 annual report to shareholders. See
the Index to Exhibits on page 138 of this Annual Report.

129



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##### 



INDEPENDENT AUDITORS REPORT

To the Board of Directors and shareholders of Norsk Hydro ASA
Oslo, Norway

We have audited the consolidated balance sheets of Norsk Hydro ASA and
subsidiaries as of December 31, 2002 and 2001, and the related consolidated
income statements, statements of comprehensive income, and cash flows for each
of the three years in the period ended
December 31, 2002. Our audits also included the schedule to the consolidated
financial statements included at Item 19(a).As described in Note 1 to the
consolidated financial statements, these financial statements and the financial
statement schedule have been prepared on the basis of accounting principles
generally accepted in the United States of America. These financial statements
and the financial statement schedule are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Norsk Hydro ASA and subsidiaries
as of December 31, 2002 and 2001, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2002 in
conformity with accounting principles generally accepted in the United States
of America. Also, in our opinion, the consolidated financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

As discussed in Note 1 to the financial statements, the Company changed its
method of accounting for derivatives in 2001 and goodwill and other intangible
assets in 2002 to conform to newly adopted accounting principles.

DELOITTE & TOUCHE AS

Oslo, Norway
February 28, 2003

130



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##### 



Norsk Hydro ASA and subsidiaries
Schedule VIII  Valuation and qualifying accounts and reserves

(Amount in NOK million)

|                           |                                 |              |            |           |            |                   |            |     |               |        |                   |      |   |  |  |      |   |  |  |       | 
|-------------------------- | ------------------------------- | ------------ | ---------- | --------- | ---------- | ----------------- | ---------- | --- | ------------- | ------ | ----------------- | ---- | - |  |  | ---- | - |  |  | ----- | 
|                           |                                 |              | Additions 
|                          
|                           |                                 |              | Balance at |           | Charged to |                   | Charged to |     | Deductions 2) |        | Balance at end of
|Description                |                                 | beginning of |            | costs and |            | other accounts 1) |            |     |               | period
|                           |                                 | period       |            | expenses  |            |                   |            |     |               |        |                   |     
|Year-end December 31, 2002 |                                 |              |            |           |            |                   |            |     |               |        |                   |      |   |  |  |      |   |  |  |      
|                           | Allowance for doubtful accounts |              |            | 1,138     |            |                   |            | 463 |               |        |                   | (131 | ) |  |  | (368 | ) |  |  | 1,102 | 
|                           | Restructuring allowance         |              |            | 724       |            |                   |            | (10 | )             |        |                   | (36  | ) |  |  | (374 | ) |  |  | 304   | 
|                           | Environment accruals            |              |            | 2,379     |            |                   |            | 348 |               |        |                   | 497  |   |  |  | (298 | ) |  |  | 2,926 | 
|                           |                                 |              |            |           |            |                   |            |     |               |        |                   |      |   |  |  |      |   |  |  |      
|Year-end December 31, 2001 |                                 |              |            |           |            |                   |            |     |               |        |                   |      |   |  |  |      |   |  |  |      
|                           | Allowance for doubtful accounts |              |            | 970       |            |                   |            | 413 |               |        |                   | (31  | ) |  |  | 214  |   |  |  | 1,138 | 
|                           | Restructuring allowance         |              |            | 117       |            |                   |            | 700 |               |        |                   | (3   | ) |  |  | 90   |   |  |  | 724   | 
|                           | Environment accruals            |              |            | 2,228     |            |                   |            | 424 |               |        |                   | (12  | ) |  |  | 261  |   |  |  | 2,379 | 
|                           |                                 |              |            |           |            |                   |            |     |               |        |                   |      |   |  |  |      |   |  |  |      
|Year-end December 31, 2000 |                                 |              |            |           |            |                   |            |     |               |        |                   |      |   |  |  |      |   |  |  |      
|                           | Allowance for doubtful accounts |              |            | 792       |            |                   |            | 254 |               |        |                   | 94   |   |  |  | 170  |   |  |  | 970   | 
|                           | Restructuring allowance         |              |            | 191       |            |                   |            | 135 |               |        |                   | 4    |   |  |  | 213  |   |  |  | 117   | 
|                           | Environment accruals            |              |            | 2,246     |            |                   |            | 496 |               |        |                   | (357 | ) |  |  | 157  |   |  |  | 2,228 | 



| | 1) |  | Includes amounts recognized in business combinations and foreign currency
translation adjustments.                                                                                                          
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2) |  | Deductions primarily represent uncollectible accounts charged against the
allowance for doubtful accounts and expenditures related to and reductions
of restructuring allowances and environmental accruals.

131



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##### 



Glossary

Terms Relating to the Groups Businesses and Operations

|                      |  |                                                                                                                                                                                                                                                      
|--------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                     
|Term                  |  | Definition                                                                                                                                                                                                                                           
|                     
|ADR                 |  | American Depositary Receipt, evidencing a specified number of ADSs                                                                                                                                                                                   
|                     
|ADS                 |  | American Depositary Share, representing one deposited ordinary share                                                                                                                                                                                 
|                     
|Company             |  | Norsk Hydro ASA, a Norwegian public company limited by shares                                                                                                                                                                                        
|                     
|CO2                 |  | Carbon Dioxide                                                                                                                                                                                                                                       
|                     
|Hydro/The Group     |  | The Company and its consolidated subsidiaries                                                                                                                                                                                                        
|                     
|DAP                 |  | Diammonium phosphate fertilizer                                                                                                                                                                                                                      
|                     
|Deposit Agreement   |  | Deposit Agreement, dated as of January 3, 1986, as amended and
restated as of October 1, 1987, and as further amended by Amendment
No. 1 thereto, dated May 27, 1999, among the Company, the
Depositary and the holders from time to time of the ADRs
|                     
|Depositary          |  | Morgan Guaranty Trust Company of New York, as depositary of the ADSs                                                                                                                                                                                 
|                     
|kWh                 |  | Kilowatt hour                                                                                                                                                                                                                                        
|                     
|MAP                 |  | Monammonium phosphate fertilizer                                                                                                                                                                                                                     
|                     
|NPK                 |  | Complex fertilizers                                                                                                                                                                                                                                  
|                     
|ordinary share      |  | Ordinary share, par value NOK 20 per share, of the Company                                                                                                                                                                                           
|                     
|PVC                 |  | Polyvinyl chloride, a plastic raw material                                                                                                                                                                                                           
|                     
|tonne               |  | One metric tonne (approximately 1,000 kilograms or 2,205 pounds)                                                                                                                                                                                     
|                     
|TWh                 |  | Terawatt hour (one billion kilowatt hours)                                                                                                                                                                                                           
|                     
|VCM                 |  | Vinyl chloride monomer, the main raw material for PVC                                                                                                                                                                                                
|                     
|VPS or VPS System |  | The Norwegian Verdipapirsentralen.                                                                                                                                                                                                                   
|                     

132



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##### 



SIGNATURES

The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.

|                     |  |                 |  |                             
|-------------------- |  | --------------- |  | ----------------------------
|                     |  | NORSK HYDRO ASA |  |                             
|                     |  |                 |  |                             
|Date: March 17, 2003 |  |                 |  | /s/ John Ove Ottestad       
|                     |  |                 |  |                             
|                     |  |                 |  | John Ove Ottestad           
|                     |  |                 |  | Executive Vice President and
|                     |  |                 |  | Chief Financial Officer     

133



---



##### 



CERTIFICATION

President and Chief Executive Officer

I, Eivind Reiten, certify that:



| | 1. |  | I have reviewed this annual report on Form 20-F of Norsk Hydro;                                                                                                                                                                                                                                                         
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in
all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this annual report;                   
|
| | 4. |  | The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                  



| | a) |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this annual report (the Evaluation
Date); and                                                                                                  
|
| | c) |  | presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



| | 5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of the registrants board of directors (or persons
performing the equivalent function):
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors
any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        

134



---



##### 





| | 6. |  | The registrants other certifying officers and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: March 17, 2003

/s/ Eivind Reiten

Eivind Reiten

President and Chief Executive Officer

135



---



##### 



CERTIFICATION

Executive Vice President and Chief Financial Officer

I, John Ove Ottestad, certify that:



| | 1. |  | I have reviewed this annual report on Form 20-F of Norsk Hydro;                                                                                                                                                                                                                                                         
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in
all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this annual report;                   
|
| | 4. |  | The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                  



| | a) |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this annual report (the Evaluation
Date); and                                                                                                  
|
| | c) |  | presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



| | 5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of the registrants board of directors (or persons
performing the equivalent function):
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

| | d) |  | all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors
any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | e) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        

136



---



##### 





| | 6. |  | The registrants other certifying officers and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: March 17, 2003

/s/ John Ove Ottestad

John Ove Ottestad

Executive Vice President and Chief Financial Officer

137



---



##### 



INDEX TO EXHIBITS

|            |  |                                                                                                                              |  |  |  | 
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit No. |  | Exhibit                                                                                                                      |  |  |  | 
|           
|1           |  | Articles of association, as amended and currently in effect.                                                                
|            |  |                                                                                                                             
|8           |  | Significant Subsidiaries of the Registrant.                                                                                 
|            |  |                                                                                                                             
|10          |  | Pages 52 through 85, 86 through 88, 91 through 125, and 135
through 138 of the Companys 2002 annual report to shareholders.

138