Knock Dee FSO Chartered for El Paso's Pinauna Field Offshore Brazil

Fred Olsen Production through its subsidiary Knock Dee Pte Ltd, and El Paso Maritime, B.V. have entered into an option agreement whereby the vessel Knock Dee is exclusively retained for use as a floating storage and offloading vessel (FSO) for the Pinauna field offshore Brazil.

Subject to finalization of the FSO Contract and associated agreements, the option may be declared up until December 31, 2009. The parties have agreed an option fee payable immediately which covers the whole option period.

Previously the parties entered into a Letter of Intent (LOI) to finalize contracts for the above services with start-up in December 2009 and for a minimum period of 10 years. As the timing of field development and start-up is dependent upon El Paso securing certain Brazilian regulatory approvals, the option above is given in order to provide schedule flexibility, while maintaining the same overall objectives.