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Marine Log

June 16, 2006

I.M. Skaugen gets approval for Chinese yard venture

Norway's I.M. Skaugen ASA reports it has has received all Chinese governmental approvals to establish a cooperative joint venture named "The Taizhou Skaugen Wuzhou Shipbuilding Co Ltd" in China.

The joint venture is with the privately owned Taizhou Wuzhou Shipbuilding Industrial Co. Ltd. The shipyard is located in Taizhou city, in the Zhejiang Province, southeast of Shanghai. The joint venture has received registration number 001 as it is the first of its kind in this Province.

Background.

In December, 2005, I.M. Skaugen announced another stage in its newbuilding program with a further ten advanced LNG/LPG/Ethylene gas carriers (of which four are now committed including purchases from some major subcontractors).

This commitment followed an earlier decision to build three advanced chemical/ethylene carriers and two pressurized gas carriers in China under the same newbuilding concept.

The agreements to build the new gas carriers and the corresponding investment in the ship yard's infrastructure through a joint venture were subject to governmental approval on establishing the cooperative joint venture.

The building of the three different types of ships is underway.

The first vessel, a 3,200 cu. m pressurized vessel is scheduled to be delivered in the first quarter of this year. The first "LNG capable gas carrier" type of ship is due to be completed in 2008.

The Taizhou Skaugen Wuzhou Shipbuilding Co has been established to improve the infrastructure in the shipyard and to enhance production quality, productivity and employee safety.

The Joint Venture calls for an investment by Skaugen of about $4.5 million, with the possibility to obtain ownership in the shipyard.

The benefit for Skaugen is to obtain stricter control of the operation of the shipyard and control of its infrastructure investments through a cooperative joint venture agreement. In this alliance; the yard is a sub-contractor to Skaugen, providing labor, consumables, yard facilities and their management.

Skaugen says it "plans to occupy the total capacity of this ship yard for some years to come."

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