Petrojarl Wins FPSO Contract from Petrobras

Petrojarl's subsidiary, Petrojarl Production AS, has been awarded a contract by Petrobras to supply a floating production storage and offtake vessel (FPSO) for the Siri project in Brazil. The contract will be assigned to, and performed by, Teekay Petrojarl Offshore L.P., its joint venture with Teekay Shipping Corporation. The Siri field is located in the Campos Basin located off the southeastern coast of Brazil.

The contract is for a two year firm period, with options for Petrobras to extend the contract by up to an additional year. The FPSO is scheduled to commence production on location at the Siri field during the first quarter of 2008, and is expected to generate annualized cash flow from operations of approximately $33 million. The capital cost of the FPSO will be shared equally by the joint venture partners. TPO intends to secure project financing for approximately 80% of the total project cost, with the balance of the funds to be contributed by the TPO partners. It is anticipated that the FPSO will be suitable for redeployment in other offshore fields after the completion of the Siri contract.

Espen Klitzing, President and Chief Executive Officer of Petrojarl commented, "The award of this contract from Petrobras for the Siri project represents an important milestone in the co-operation between Teekay and Petrojarl through their joint venture, Teekay Petrojarl Offshore, and is an important first step in achieving TPO's growth plans outside the North Sea.

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