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Marine Log

Aker SMART FPSO

January 11, 2007

Aker in $1 billion Smart FPSO deal

Aker Floating Production ASA (AKFP) has signed a Letter of Intent with a non disclosed client for the provision and operation of the FPSO Aker Smart 1 together with associated subsea equipment for an oil and gas field offshore India. A five year FPSO charter contract running from February 2008, with purchase options, and subsea hardware and installation contracts will generate estimated revenues for the Aker Group of approx. US$ 1 billion, or about NOK 6.35 billion, of which approx. US$ 600 million represents the FPSO lease part.

Aker Floating Production's business is to own, operate, and charter out converted tankers equipped for offshore oil and gas production and storage.

The FPSO Aker Smart 1 is currently being converted at Singapore's Jurong Shipyard under a contract that will see the two NASSCO-built former ConocoPhillips tankers Polar Alaska and Polar California become the first two Aker Smart FPSO's. Both ships were acquired last June for $55 million en bloc. A third ship is also under conversion at Jurong.

The concept behind the Aker Smart FPSOs is to convert existing tankers based on a flexible modular design that allows functions to be added offshore and enables AKFP to start building its FPSOs before it has secured a lease contract--giving clients an opportunity to produce earlier.

The charter contract for FPSO Smart 1, including options, will have a duration of five to ten years with first oil 15th February 2008. The client has an option to buy the FPSO at different stages during the contract period. The FPSO Aker Smart 1 will operate offshore India in 1100 to 1400 meters water depth.

"We are very pleased to have been given this opportunity, says Aker Floating Production President and CEO Svein Olsen, as this is a strong example of Aker Group of Companies ability to cooperate in providing total field solutions. Aker Kvaerner will be responsible for the provision of the sub-sea facilities, while at the same time undertaking the mooring installation and hook-up of the FPSO through its subsidiary Aker Marine Contractors AS.

FPSO Aker Smart 1 has a daily production capacity of 60,000 barrels of oil, while substantial gas treatment, injection and export facilities will be installed with 3 million cum (or 100 million cuft) per day compression capacity. To meet field specific needs, Aker Floating Production expects to invest USD 300 million in addition to the base cost of the generic FPSO Aker Smart 1.

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