PGS Production Secures Tanker for FPSO Conversion

Petroleum Geo-Services says that its wholly owned subsidiary PGS Production has entered into an agreement to purchase the shuttle tanker MT "Rita Knutsen" from Knutsen OAS Shipping for USD 35 million. PGS Production has developed plans for a conversion of the ship to a Floating Production, Storage and Offloading Unit (FPSO). The vessel is considered as a possible FPSO solution for several upcoming projects, and a conversion will be started when a firm contract for the ship is secured in the market. "Rita Knutsen" is a double hull vessel of 124.472 dwt, built by the Daewoo shipyard in Korea in 1986.

Pending a suitable contract, the ship will be operated by Knutsen OAS Shipping on a bareboat agreement, which ensures PGS a satisfactory return of capital on the purchase price.

PGS' Chairman of the Board, Jens Ulltveit-Moe is a major shareholder of Knutsen OAS Shipping. In accordance with good governance the Chairman has not in any way been involved in the Board decision making relating to this transaction.

President of PGS Production, Espen Klitzing stated the following:

"This is an important move in our announced international expansion strategy. In today's FPSO market it is crucial to have secured tanker capacity for conversion prior to bidding on potential projects. PGS Production has in the last months scanned the market for suitable tankers and has found 'Rita Knutsen' as the best candidate. We are currently evaluating various opportunities and will be bidding on projects in the near future."