Corporate Governance in PGS PGS is committed to maintaining high standards of Corporate Governance. We believe that effective corporate governance is essential to the well-being of our company and establishes the framework by which we conduct ourselves in delivering services to our customers and value to our shareholders.

PGS is registered in Norway as a public limited liability company and our governance model is based on Norwegian corporate law and the Norwegian Code of Practice for Corporate Governance, as applicable at all times. We also adhere to requirements applicable to foreign registrants in the U.S. where our American Depositary Shares (ADS) are publicly traded. In addition we implement corporate governance guidelines beneficial to our business.

Our corporate governance principles are adopted by our Board of Directors (Board). Below is a summary of our principles. Our Articles of Association, in addition to full versions of our corporate governance principles, our rules of procedures for our Board , our Audit Committee charter, our Remuneration and Corporate Governance Committee charter and our Nomination Committee charter are available on our websitewww.pgs.com.

Code of Conduct and Core Values
We have adopted a Code of Conduct that reflects our commitment to our shareholders, customers and employees to conduct our business with the utmost integrity. Our Code of Conduct and Core Values are available in full versions on www.pgs.com.

Business
Our business is defined in our Articles of Association as: “The business of the Company is to
provide services to and participate and invest in energy related businesses.

Equity and Dividends
Our dividend policy is described on www.pgs.com.

Equal Treatment of Shareholders and Transactions with Related Parties
We have one class of shares. In our General Meetings each share has one vote. Our Board is committed to equal treatment of shareholders in all respects. When applicable, transactions in our shares should be carried out through the stock exchange.

An owner with shares registered through a custodian has voting rights equivalent to the number of shares which are covered by the custodian arrangement, provided that the owner of the shares, within two working days before the General Meeting provides us with his name and address together with a confirmation from the custodian to the effect that he is the beneficial owner of the shares held in custody.

Transactions between us and related parties shall be conducted at market values. Material transactions will be subject to independent valuation by third parties. According to our Code of Conduct, none of our employees shall have any personal or financial interest which might conflict with ours, or influence, or appear to influence, their judgment or actions in carrying out their responsibilities to PGS. According to our Rules of Procedures, a member of our Board may not participate in the discussion or decision of issues, where the director, or any person closely related to the director, has material personal or financial interest in the matter.

Freely Transferable Shares
Our shares are freely transferable.

General Meetings
Through the General Meetings, our shareholders exercise ultimate authority and elect the members of our Board and the chairperson.

Notice of the General Meeting including all pre-material, is generally given at least four weeks in advance to the shareholders or their depositary bank. For ADS holders, a record date is set approximately 5 weeks prior to the Annual General Meeting. A copy of the calling notice with appendices will be posted at our website, www.pgs.com

The notice convening an Extraordinary General Meeting shall be given at least two weeks before the meeting if the holding of the meeting is demanded in writing by the independent auditor or shareholders representing at least 5% of the share capital. Shareholders who wish to take part in a General Meeting must give notice to PGS by the date stated in the calling notice, which date must be at least two working days before the General Meeting.

To vote at the General Meeting, in person or by proxy, a shareholder must be registered with the Norwegian Registry of Securities. Holders of ADS may vote the shares underlying the ADS by: (a) having the underlying shares transferred to an account with the Norwegian Registry of Securities in the name of the holder, (b) attending the meeting as a shareholder by providing their name and address and a confirmation from Citibank, depositary for the ADS, to the effect that they are the beneficial owner of the underlying shares, or (c) authorizing Citibank to vote the ADS on their behalf.

In accordance with our Articles of Association, the Chair-person of the Board chairs the General Meeting.

Nomination Committee
According to our Articles of Association we shall have a Nomination Committee consisting of three members to be elected by our shareholders at the General Meeting. The General Meeting also elects the chairperson of the Nomination Committee. The majority of the members of the Nomination Committee shall qualify as independent pursuant to the Norwegian principles of corporate governance. The term of service shall be two years unless the General Meeting determines that the period shall be shorter. The Nomination Committee’s main duties are to propose nominees for election as members and chairperson to the Board and the Nomination Committee, and to propose the fees to be paid to the members of the Board and the Nomination Committee. The General Meeting approves the fees. The Nomination Committee shall provide a report to our shareholders prior to the General Meeting.

The Current Nomination Committee
The current members of the Nomination Committee consist of Roger O’Neil (chairperson), Hanne Harlem and C. Maury Devine. They were all re-elected in the Annual General Meeting held 15 June 2007 for a new service period of one year. Shareholders who wish to propose new board members to PGS may do so by submitting a proposal of a candidate to the administration on www.pgs.com, “Nominate a Board Member”. None of the members of our Nomination Committee are employed by us or are members of our Board. In 2007, our Nomination Committee had 5 meetings. A report regarding the work of our Nomination Committee will be distributed with the calling notice for our Annual General Meeting.

Board of Directors – Composition and Independence
According to our Articles of Association our Board shall have from three to thirteen directors. No member of the Board is elected for a period exceeding two years for each elected period. The Board has adopted internal rules of procedures that establish in more detail its role and responsibilities, including:

All directors are independent from our management and major business relations, as defined in the Norwegian principles for corporate governance. Five of our seven current shareholder appointed directors are independent from our largest shareholders, as defined in the Norwegian principles for corporate governance. Our chairperson, Mr. Jens Ulltveit-Moe is the owner of Umoe Invest AS, whereas Harald Norvik is a member of the board of directors in Umoe. No member of our Board shall be an executive of PGS. Directors can not perform paid consultancy work for us. Three of the board members, directly or indirectly, own shares in PGS.

Shareholders and other interested parties may communicate directly with our independent directors by sending a written letter in an envelope addressed to Petroleum Geo-Services “Board of Directors (Independent Members)”, General Counsel Rune Olav Pedersen, P.O. Box 89, 1325 Lysaker, Norway.

The Current Board of Directors
As of December 31, 2007, the Board consisted of seven shareholder representatives. Anthony Tripodo resigned from the Board with effect from February 1, 2007, after being appointed chief financial officer of Tesco Corporation. Neither the CEO nor any other member of the executive management in PGS is a director of the Board. The current members of the Board are presented on page 30 and 31 of this annual report and on www.pgs.com.

The Work of the Board of Directors
In accordance with Norwegian corporate law, our Board has overall responsibility for management of our Company, while our CEO is responsible for day-to-day management. Our Board supervises our CEO’s day-to-day management and our activities in general. It is also responsible for ensuring that appropriate steering and control systems are in place. Our CEO shall, in agreement with the chairperson of the Board, annually present a meeting calendar covering the next calendar year to the Board for approval. In 2007 our Board had 11 meetings.

Our Board has adopted internal rules of procedures, which establish in more detail its role and responsibilities in relation to the management and supervision of the Company. The rules emphasize, among other things, our Board’s responsibility to decide our financial targets and determine our overriding strategy in collaboration with our CEO and our executive committees, and to approve our business plans, budgets and frameworks. In its supervision of our business activities, our Board will seek to ensure that there exist satisfactory routines for follow-up of principles and guidelines required by our Board in relation to ethical behaviour, conformity to law, health, safety and environment, and social responsibility. The rules also require provision for an annual self-evaluation of our Board to determine whether our Board and its committees are functioning effectively. The tasks and duties of our CEO vis-à-vis our Board are outlined in the rules, along with the tasks and duties of the chairperson of our Board. Our Board shall have a vice-chairperson to chair our Board in our chairperson’s absence. The full version of the rules of procedures for our Board is available on www.pgs.com.

Our governance structure is organized as described below:
Our Board is responsible for the development and supervision of our business activities. Our Board has established an Audit Committee and a Remuneration and Corporate Governance Committee to assist in organizing and carrying out its responsibilities.

Board Committees
Our Audit Committee consists of the board members Francis Gugen (chairperson), Wenche Kjølås and Daniel J. Piette. Piette replaced Harald Norvik as of 25 July, 2007. Its function is to assist our Board in its oversight of the integrity of the financial statements of PGS, moni-toring the independent auditor’s qualifications, independence, and performance, as well as the performance of the internal audit function, and ensure that PGS is in compliance with legal and regulatory requirements.

Our Remuneration and Corporate Governance Committee consists of the board members Harald Norvik (chairperson), Holly Van Deursen and Siri Beate Hatlen. The function of the Committee is to assist with the matters relating to the compensation, benefits and perquisites of our CEO and other senior executives and examine and maintain our guidelines
regarding good corporate governance.

Risk Management and Internal Control
The Board is responsible for ensuring that appropriate steering and control systems are in place.

The Board ensures that the CEO uses proper and effective management and control systems, including systems for risk management, which continuously provide a satisfactory overview of PGS’ risk exposure. The Board makes sure that the control functions work as intended and that the necessary measures are taken to reduce extraordinary risk exposure. Further, the Board see to that there exist satisfactory routines to ensure follow-up of principles and guidelines adopted by the Board in relation to ethical behavior, conformity to law, health, safety and working environment, and social responsibility.

PGS’ management conduct day-to-day follow-up of financial management and reporting. The Board’s audit committee assesses the integrity of our accounts, and prepares, for the Board, items related to the financial review and control and external audit of accounts.

PGS has a proper internal auditing system and the Board ensures that it is capable of producing reliable annual reports and that the external auditor’s recommendations are given proper attention.

The Board shall conduct an annual self-evaluation to determine whether it and its committees are functioning effectively, which evaluation will then be discussed and considered by the Board in its consideration of any appropriate action or response. In addition, the Board shall conduct a periodic review of PGS’ corporate governance policies and procedures, including the Boards Rules of Procedure. The Remuneration and Corporate Governance Committee shall assist the Board with its annual self-evaluation and any periodic review of corporate governance policies and procedures.

Non-conformances are systematically foll-owed up and corrective measures initiated.

Remuneration of the Board of Directors and the Executive Management
The remuneration of the members of the Board is not linked to performance, but is based on participation in meetings, and is approved by the General Meeting annually. The Board Members shall not take on specific assignments for us in addition to their appointment as a member of the Board. No member of the Board holds any options in PGS.

For details on compensation for each member of the Board, please see www.pgs.com.

The remuneration to our Board will be proposed by the Nomination Committee according to its charter at our Annual General Meeting.

The compensation structure and guidelines for executive managers are subject to annual review by the Remuneration and Corporate Governance committee and are approved by the Board. PGS currently has a compensation structure for our executive managers including base salary, cash bonus, share bonus, a retention bonus and a stock option program. For further details on our compensation structure and total compensation to our executive team see www.pgs.com.

Information and Communications
Our Board is committed to reporting financial results and other relevant information based on openness and taking into account the requirement for equal treatment of all participants in the securities market. As a listed company, we comply with relevant regulations regarding disclosure. Announcements are released through the Hugin system and posted on www.newsweb.no. In addition, all announcements are available on the company’s website www.pgs.com. Our share-holder policy is described onwww.pgs.com.

Take-overs
The Board has established guiding principles for how it will act in the event of
a take-over bid. The Board will not seek to hinder or obstruct any take-over bids for our activities or shares, or exercise mandates or pass any resolutions that obstruct take over bids that are put forward. In the event of a take-over bid, the Board will, in accordance with its overall responsibility for corporate governance, act for the benefit of our shareholders and ensure that the shareholders are given sufficient information. If an offer is made, the Board will issue a statement evaluating the offer and making a recommendation as to whether our shareholders should or should not accept the offer. PGS’ Articles of Association do not contain any restrictions, limitations or defense mechanisms on acquiring our shares.

Auditor
Our Audit Committee shall support the Board in the administration and exercise of its responsibility for supervisory oversight of the work of the independent auditors, which shall keep our Board informed of all aspects of its work for PGS. This includes submission of an
annual plan for the audit of PGS. The auditor meets our Audit Committee at least once a year without management present. Our internal procedures limit the use of services from our auditors.

The independent auditor shall meet our Audit Committee at least once a year in connection with the preparation of the annual accounts, and at least once a year present to our Audit Committee a review of our internal control procedures. The auditor will be asked annually to confirm in writing that the auditor satisfies the requirements for independence. The auditor shall also provide our Audit Committee with a summary of all services in addition to audit work that have been undertaken for us. The remuneration paid to the auditor with respect to audit services will be reported to the Annual General Meeting for approval.