UPDATE 3-Conoco takes Venezuela hit on reserve replacement

(Adds background)

NEW YORK, Feb 19 (Reuters) - ConocoPhillips (COP.N) said on Tuesday it replaced only 29 percent of the oil and gas it produced in 2007 as it lost more than a billion barrels of oil equivalent from projects that were nationalized by Venezuela.

Excluding the seizure of its heavy oil projects there, ConocoPhillips said it replaced 159 percent of its production last year.

Leftist Venezuelan President Hugo Chavez pushed ConocoPhillips and Exxon Mobil Corp (XOM.N) out of the country in June as part of a nationalization drive that also targeted utilities and telecommunications companies.

Conoco has filed for arbitration over compensation for its projects and is also in talks with Venezuelan authorities. Conoco CEO Jim Mulva said last week he hopes to settle the dispute this year.

The company said that discounting the expropriation, it added 1.34 billion barrels of oil equivalent (boe) in 2007. The company produced 842 million boe in 2007.

Including the loss of the Venezuelan reserves, Conoco added only 249 million barrels last year.

The company's total year-end reserves were 10.56 billion barrels.

Conoco said the reserve additions did not include 200 million barrels from its stake in the Canadian oil sands, which the U.S. Securities and Exchange Commission defines as mining-related assets.

Industry analysts typically expect oil and gas companies to replace more than 100 percent of their annual production as a sign that they are growing.

But recently, large oil companies have had difficulties replacing all the oil they have produced, partly because oil-rich countries have restricted access to resources as commodity prices have surged and partly due to project delays.

Earlier on Tuesday, Marathon Oil Corp (MRO.N) said it added 88 million barrels for a reserve replacement rate of 70 percent, bringing its three-year average replacement rate to 135 percent.

Last week, Exxon said it added about 1.2 billion boe to its reserves, or 76 percent of its production, in 2007.

Royal Dutch Shell Plc (RDSa.L) and Chevron Corp (CVX.N) have not yet reported their reserves, but both have indicated that their replacement levels would disappoint investors. (Reporting by Matt Daily and Michael Erman; editing by Gerald E. McCormick and Derek Caney)