Petroleum Geo-Services reports that its floating production, storage and offloading unit (FPSO) Petrojarl I producing on the Glitne field on the Norwegian Continental Shelf (NCS) has been selected by the Norwegian Shipowners Association to be included in a general employee lockout affecting several NCS installations. Industry-wide, approximately 300 OFS union members are affected by this lockout, which will commence September 2, 2004.

If no resolution to this lockout is reached by September 2, 2004, production on the FPSO Petrojarl I would be expected to be shut down sometime thereafter. According to the force majure provision of the Petrojarl I contract, PGS will continue to be compensated, but at reduced levels. Compensation would be reduced up to approximately $77,000 per day for the first week and approximately $91,000 per day for the first month. PGS could receive a portion of this lost compensation from the Norwegian Shipowners Association's labor conflict compensation program.