Since a resolution to the lockout was not reached by midnight on September 2, 2004, the shut down of the production on the FPSO Petrojarl I has commenced, and the oil production is expected to be shut down completely by early next week.
As previously disclosed, according to the force majure provisions 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
-- $95,000 per day from day 8 through day 30
-- $77,000 per day for the following next two months.
Also, as previously stated, PGS could receive a portion of this lost compensation from the Norwegian Shipowners Association's labor conflict compensation program.
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