Activity Report  

In 2007, we made considerable progress in our targeted effort to strengthen our international position. The entitlement production from our international upstream portfolio was 307 mboe per day, an increase of 31% compared to the previous year. Our exploration and business development activities have been high and we have established new positions in countries such as Canada and Russia supporting our strategy for longterm growth.

The exploration strategy for StatoilHydro was revised in 2002, and we carried out a major global screening of oil and gas basins to further develop our exploration portfolio.

We completed 47 wells in 2007 and 11 were ongoing as per year-end. Out of these 47 wells 18 were announced as discoveries and 14 were under evaluation at year-end. All of the 11 wells have been completed in first quarter 2008, and two of these 11 have been announced as discoveries.

We are further high-grading prospects for our short-term drilling, which imply prioritisation of the most prospective drilling targets, more optimal allocation of our rig fleet and a dedicated exploration organisation.

In 2007, we acquired 100% of the shares of North American Oil Sands Corporation (NAOSC).

The Leismer SAGD (steam assisted gravity drainage) Demonstration Project was sanctioned by the Board of Directors in December 2007. We anticipate the sanctioning of more project phases after 2009. Production start is scheduled for 2010. In August 2007, we submitted an application to the Alberta regulatory authorities for the full 220 mboe per day commercial SAGD project.

Our offshore assets consist of non-operated, mature oil production from the Hibernia and Terra Nova fields and two discoveries under appraisal - Hebron and Hibernia Southern Extension.

In October 2007, StatoilHydro signed a framework agreement with Gazprom to become a partner with 24% ownership in phase 1 of the Shtokman development through participation in the Shtokman Development Company. The implementation of the project is subject to a final investment decision which is planned to take place in the second half of 2009.

We also have a 40% interest in the producing oil field Kharyaga.

We have step by step built a high-quality asset portfolio in the US Gulf of Mexico (GoM) through a clear strategy combining acquisitions and exploration.

We are one of the largest deepwater acreage holders in the GoM with more than 400 leases. The Julia and Tonga West wells have been announced as deepwater discoveries in 2007.

Spiderman, Q and San Jacinto commenced production in the fourth quarter of 2007. We have production from several deepwater fields, we have interests in two oil fields under development, Tahiti and Thunder Hawk, and several discoveries under appraisal in the Walker ridge area, Jack and St. Malo.

All our assets on the shelf were sold to Mariner Energy effective 1 January 2008.

The Angolan continental shelf is the largest contributor to StatoilHydro’s present production outside Norway. It yielded more than 100 mboe per day at the end of 2007, representing approx. 35% of the group’s total oil and gas output outside Norway.

We have a 20% interest in block 4/05, 13.33% interest in block 15 and 31, 5% interest in block 15/06, 23.33% interest in block 17 and 50% interest in block 34, all offshore blocks. Current production from Angola comes from the Kizomba A, Kizomba B, Xikomba, Marimba North and Mondo fields in block 15, and Girassol, Jasmin, Rosa and Dalia fields in block 17. Marimba North and Rosa came on stream in 2007 and Mondo came on stream on 1 January 2008.

Gimboa in block 4 and Saxi Batuque in block 15 are both expected to commence production in 2008. In December 2007, the operator Total announced that the Pazflor field in Block 17 is ready for development with start-up scheduled for 2011. A new development project, PSVM in block 31, is expected to be approved in 2008. Work is also ongoing to pursue the CLOV development in block 17, additional development in block 31 and satellites like Clochas and Mavacola in block 15.

StatoilHydro is participating in two onshore producing fields, In Salah (31,8%) and In Amenas (50%). The In Salah field is Algeria’s third largest gas development and is currently producing at plateau level. The In Amenas field is the fourth largest gas field in Algeria where our revenue stream is based on the liquid volumes produced.

We are the operator for the exploration phase in the Hassi Mouina licence (75%). During 2007, we drilled three exploration wells and all wells resulted in gas discoveries. A fourth well was announced as a discovery in the first quarter of 2008.

Sonatrach has taken over the responsibility for the Algerian safe behaviour programme that StatoilHydro introduced and assisted in adapting to local conditions.

We hold a 8.56% interest in the Azeri-Chirag-Gunashli (ACG) oil field and a 25.5 % interest in the Shah Deniz gas and condensate field.

ACG commenced production in 1997 and the field is being developed in several stages. First oil from Phase III, which includes the Gunashli deepwater field, is expected to be delivered during the second quarter of 2008. We expect the overall daily production from ACG to reach plateau level of around one million bbls per day by 2010.

Shah Deniz stage I commenced production in December 2006. The plateau production from stage I is expected to be approximately 8.6 bcm (300 bcf) per year to be reached after two to three years of production. StatoilHydro is the commercial operator covering gas sales, contract administration and business development for the Shah Deniz stage I. A major new discovery was made in the Shah Deniz licence in 2007, laying the foundation for a second development phase.

In March 2008, we signed an agreement with Anadarko to take over their 50% interest in the Peregrino project. This will give StatoilHydro a 100% working interest and operatorship of the development. The development was sanctioned in 2007 and the field will be developed with an FPSO (floating production, storage and offloading vessel) and two drilling/wellhead platforms. First oil is planned by 2010.

We successfully bid for two blocks in the 9th Brazilian Bid Round in 2007. A new discovery near the Peregrino field was announced in 2007.

The Agbami field in deep waters off Nigeria is developed with an FPSO and first oil is expected in 2008. Agbami, operated by Chevron, is located in licences OML 127 and OML 128, and our interest in the unitised field is 18.85%.

StatoilHydro is operator for exploration activites in licences OML 128 and OML 129. OML 129 contains the Bilah and Nnwa discoveries, which currently are in the appraisal phase. In addition, we have interests in four other exploration licences.

In June 2007, we agreed with the Venezuelan government on the main terms and conditions for our participation in the new incorporated joint venture to be created for the Sincor project. The new mixed company, Petrocedeño S.A., started on 9 February 2008. At year end 2007, StatoilHydro held a 15% stake in the Sincor project, while our new stake in Petrocedeño S.A. is 9.677%.