Proved reserves and changes in proved reserves are estimated in accordance with SEC definitions. The reserves replacement ratio is defined as the sum of proved reserves additions and revisions, divided by produced volumes in any given period.

Changes in proved reserves estimates most commonly originate from revisions of estimates due to observed production performance, extensions of proved areas through drilling activities, or inclusion of proved reserves in new discoveries through sanctioning of development projects.

These are sources of proved reserves additions that result from continuous business processes, and could be expected to continue to add reserves at some level in the future. Proved reserves can also be added or subtracted through acquisitions or disposals of assets.

Changes in proved reserves may also originate from factors outside management control, such as changes in oil and gas prices. While lower oil and gas prices normally allow less oil and gas to be recovered from the accumulations, StatoilHydro's proved oil and gas reserves under PSAs and similar contracts will generally increase as a result. StatoilHydro will receive larger quantities of oil and gas under the cost recovery and profit sharing arrangements of these contracts as a result of the decreased oil and gas prices. These changes are included in the revisions category in the table below.

Reserves in new discoveries are normally booked only when regulatory approval has been received, or when such approval is imminent. Reserve additions from new discoveries booked in 2008 are expected to be produced in the period from year 2009 to 2021. Reserves from new discoveries, upward revisions of reserves and purchases of proved reserves are expected to contribute to maintaining proved reserves in future years.

Below is a table showing the reserves additions in each change category relating to the reserve replacement ratio for the years 2008, 2007 and 2006.

	For the year ended 31 December
(million boe)	2008	2007	2006
Revisions and improved recovery	213	325	300
Extensions and discoveries	17	215	86
Purchase of petroleum-in-place	69	0	0
Sales of petroleum-in-place	(10)	0	(3)
Change in interest *	(68)	0	0
Total reserve additions	222	541	383
Production	(648)	(632)	(624)
Net change in proved reserves	(426)	(91)	(241)
* Reduction of interest in Petrocedeño

A total of 222 mmboe proved reserves was added during 2008, of which 186 mmboe were proved developed reserves. The remaining 36 mmboe were proved undeveloped reserves.

The reserves replacement ratio was 34% in 2008, compared to 86% in 2007. The decrease in the reserve replacement ratio in 2008 compared to 2007 is mainly due to 2008 being a year with small reserve additions from sanctions of new development projects and high production. The average replacement rate for the last three years was 60%, including purchases, sales and reduction of sharehold interest in Petrocedeño.

	For the year ended 31 December
Reserves replacement ratio (three-year average)	2008	2007	2006
Corporate	0.60	0.81	0.76
E&P Norway	0.51	0.78	0.62
International E&P	1.10	0.98	1.74

The usefulness of the reserves replacement ratio is limited by the volatility of oil prices, the influence of oil and gas prices on PSA reserve booking, the sensitivity related to the timing of project sanctions, and the time lag between exploration expenditure and booking of reserves.

We review our petroleum reserves in the course of business as new information becomes available. This information can be related to remaining reserves, existing production performance, decisions related to development, production, acquisition and divestment of reserves and changes in economic conditions. In addition, information on proved oil and gas reserves, standardised measure of discounted net cash flows related to proved oil and gas reserves, and other information related to proved oil and gas reserves reported in note 32 - Supplementary oil and gas information - to our Consolidated Financial Statements, is collected and checked for consistency and conformity with applicable standards by a central group that is independent of the exploration and production business units.

Although this group reviews the information centrally, each asset team is responsible for ensuring that it is in compliance with the requirements of the SEC and our corporate standards. Before presenting the aggregated results for approval to the management responsible for the relevant business units and the Chief Executive Officer, this central group asks DeGolyer and MacNaughton, independent petroleum engineering consultants, to perform an independent evaluation of proved reserves. This was last performed as of 31 December 2008.

The results obtained by DeGolyer and MacNaughton do not differ materially from those reported by us when compared on the basis of net equivalent barrels of oil. DeGolyer and MacNaughton have provided us with a summary letter report describing their procedures and conclusions, a copy of which is included in the following report section.

Reserve engineering is a process of forecasting the recovery and sale of oil and gas from a reservoir and is in part subjective. It is clearly associated with considerable uncertainty, both positive and negative. The accuracy of any reserve information is a function of the quality of available data and of engineering and requires interpretation and judgment. The requirements of the SEC with respect to the calculation of proved reserves set a standard for estimating reserves, which results in amounts that are reasonably certain technically and consistent with the economic, regulatory and operating conditions at the time the estimates are made. See Note 32 - Supplementary oil and gas information - to our Consolidated Financial Statements, for further details on our proved reserves.