M&M's main task is to maximise the value of Statoil's upstream production of crude oil and natural gas liquids (NGL) through professional refining and marketing. For this purpose, M&M has established efficient, integrated value chains with competitive midstream and downstream assets.

M&M's goal of safe, reliable and cost-efficient operations is the basis for further development of our market position. We will continue to pursue improvement opportunities and conduct necessary restructuring of our activities.

We will ensure high value creation based on Statoil's legacy assets on the Norwegian continental shelf, and a strong market position in North West Europe will continue to be a high priority.

Based on growing international upstream production, M&M will further develop regional trading hubs, with special emphasis on heavy oil activities. Statoil's heavy oil production in Canada and Brazil and our terminal asset on the Bahamas are important stepping stones.

M&M will continue to develop business-critical expertise and establish best practise in our work processes. We have developed a framework for deploying expertise throughout the organisation, with special emphasis on value chain expertise.

Oil sales, trading and supply (OTS)

OTS will continue to strengthen our global trading position, with an increased presence and activity in strategic regions such as the Americas and Asia, while maintaining our established market position in North West Europe. We will continue to develop business and infrastructure to secure market access and competitive pricing for our volumes worldwide. Trading infrastructure and sound logistical solutions give our business a competitive edge.

The acquisition of the South Riding Point Terminal in the Bahamas in 2009 will enable us to develop our trading around both equity and third party volumes sourced globally. OTS will continue to market Statoil's increasingly global upstream production both in conventional grades but even more importantly in extra heavy oils.

Manufacturing

Manufacturing's ambition is to contribute to maximising the value of Statoil's feedstocks from field to end user and to be an active downstream partner in the internationalisation of Statoil.

Manufacturing is preparing for the challenging market outlook that the European refining industry is facing. We are seeking to improve Mongstad and Kalundborg's competitive position by improving product yields, reliability and energy efficiency and by reducing costs while maintaining HSE performance.

Our ambition is to strengthen the value chain between our manufacturing and trading units and add value through more proactive integration of the operation of the Mongstad and Kalundborg refineries. This creates synergies through crude feedstock optimisation, greater flexibility and exchange of products between the refineries.

Energy and retail

Transportation fuel is the core of our energy and retail business (E&R), delivering 60% of gross income. Scandinavia and the Baltic region including Poland are the key geographical areas. In these markets, E&R is number one or two in terms of market share, with the exception of Poland where we are among the top five. In addition, we have a few stations in Murmansk and St Petersburg. Our engagement in the sale of heating oils and other stationary energy products is being reduced.

Our ambition is to improve profitability from our leading position in Scandinavia and to grow further on the eastern axis, building on our strong Baltic and Polish positions. We continually evaluate market opportunities based on the Scandinavian marketing concept. Acquisitions have recently been made in the automat sector and our ambition is to develop this market sector in parallel with our full-service offering. An important building block in realising this ambition is to be the environmental leader in our markets, with a first mover position in biofuels.

Statoil's Board of Directors has approved a proposal to create a stand-alone Energy & Retail business through an initial public offering (IPO) on the Oslo Stock Exchange. The IPO will take place at the earliest in the fourth quarter of 2010 or at a time when the capital market is deemed favourable for such an offering. Statoil intends to remain a majority shareholder of Energy & Retail at the time of the initial public offering and listing. The size and time horizon of Statoil's future ownership in Energy & Retail will be tailored to support and develop company value both for Energy & Retail and for the Statoil Group. The introduction of the new ownership structure is not expected to have a significant impact on the financial statements.