Fred Olsen Pte Inks Deal to Upgrade Knock Nevis FSO

First Olsen Pte. Ltd, a wholly owned subsidiary of Fred.Olsen Production ASA, has entered into an agreement with Maersk Oil Qatar for the upgrading of the capacity of the Knock Nevis floating, storage and offloading vessel (FSO) currently on contract to Maersk on the Al- Shaheen field, offshore Qatar.

The upgrade project targets a 25% increase in the liquid handling capacity of the vessel. All Fred.Olsen Production - related capital expenditure is refundable by Maersk and there is a compensation arrangement in place which is expected to yield an increase in the EBITDA contribution of US $3-$5 million over the remaining life of the contract.

The 564,000 dwt Knock Nevis, which is the world's largest vessel, is on contract to Maersk until August 2009. Maersk may terminate the contract as from August 2007.