Dear reader,

2009 will go down in history as one of the weakest in terms of economic growth. The financial downturn has been challenging, also for the oil and gas industry. In such an uncertain business environment, the best protection comes from solid deliveries.

I am therefore pleased to report that in 2009 we delivered on our targets, both operationally and financially. Our equity production increased by 2%, we secured around 650 million boe of new resources and we maintained competitive unit production and finding costs. I am particularly pleased by the strong results within Natural Gas, despite the weak market we experienced in 2009.

Strong focus on cost and financial discipline last year has enabled us to maintain a strong balance sheet while protecting our investment programme through the downturn. Around 80% of the merger synergies have now been completed, amounting to realised net annual improvements of approximately NOK 5.5 billion by the end of 2009. The remaining potential will be realised in 2010.

Moving into 2010 we see many positive signals in the world economy, but there are still concerns regarding budget deficits and high unemployment rates. While we do not yet know whether the storm has passed, I remain cautiously optimistic.

HSE remains our top priority, and we have consistently improved on the most important parameters in 2009. In spite of that, we sadly experienced fatalities which overshadow the statistics, and our thoughts and sympathies are with the families and relatives involved. In June, we were devastated by the news that three colleagues from our Rio de Janeiro office were on a flight lost over the Atlantic. We also lost three colleagues in connection with our operations. We will continue our hard work and leadership determination to improve further within HSE.

2009 represented a new phase on our journey towards becoming a global player when we passed the milestone of 500,000 barrels per day outside Norway. The next couple of years will mark a real step change in our international activities, as we undergo the transition from being an international partner to operator. With production starting at Peregrino in Brazil and at our Leismer facility in Canada, we aim to demonstrate that we are a successful operator outside Norway as well. In Canada, we have great expectations for our oil sand test facility that will test several new technologies. We believe this will make significant inroads into improving the environmental footprint and operational viability of this operation.

On the Norwegian Continental Shelf, we continue to deliver good results. Since the merger alone we have made 58 discoveries, drilled more than 150 production wells, and brought on stream 190,000 barrels per day in new production capacity in addition to the ramp-up of Snøhvit and Ormen Lange. At the same time, the game on the NCS is changing. New discoveries are smaller, less accessible and more challenging to recover. We have therefore introduced a fast track initiative to develop new resources more efficiently. We aim to reduce time from discovery to production and bring down development costs by using more standardised concepts and simplified processes. Nobody knows the NCS better than us, and no one should doubt our commitment to take out the full potential of the shelf.

In 2009 three major milestones were reached within offshore wind. First, we entered a partnership to develop the Sheringham Shoal offshore wind farm in the UK, with 88 turbines coming on stream in 2011. Second, the Forewind consortium, where we participate, was awarded the largest development area in the UK third licensing round for offshore wind farms. And finally, off the western coast of Norway, we are testing a prototype of the world's first full-scale floating wind turbine, Hywind, designed for operation in deeper waters. Our focus is now on efficient execution and technological progress to bring costs down and increase profitability. Offshore wind is still highly dependent on government support to be commercially viable.

Last year Statoil launched a new vision - Crossing Energy Frontiers. To me, this vision symbolises our pioneering spirit and it represents what we have to do in order to prevail in the evolving business environment. Based on our capabilities, excellent people, large resource base of 22 billion boe, and a solid project portfolio, I firmly believe that we have a good position to deliver profitable growth towards 2012 and beyond. 

To us, sustainability is a way of doing business. We believe that stricter regulations will make it a profitable investment to develop a strong performance on HSE and social indicators such as local development and human rights improvements. As an energy company, we find ourselves at the crossroads between two apparently irreconcilable challenges - the energy crisis, and the climate crisis. Millions of people the world over have a legitimate ambition to rise from poverty and raise their standard of living. At the same time, we need to reduce carbon dioxide emissions. These challenges need to be solved simultaneously.

That is why we have called our annual report this year Balancing our responsibilities.

And it's why we have integrated our sustainability reporting in our annual report, for the second year running. 

I hope you will enjoy the 2009 annual report.


Helge Lund
26 March 2010