Viking (formerly VANGUARD) Purchases Double Hull Tanker for Conversion to an FPSO (31 January 2008)

Viking Field Development Solutions Pte Ltd (“Viking”), which previously operated as Vanguard Field Development Solutions Pte Ltd, announces that it has entered into an agreement to purchase the M. V. “Ishwari” crude oil tanker for deployment as a Floating Production Storage and Offloading vessel (“FPSO”), for Nexus Energy Ltd’s Crux liquids project.

The M. V. “Ishwari” (154,971 deadweight tonnes) is a high quality, well maintained Suez-max class crude oil tanker with a full “double hull”. The vessel was built at Hyundai, South Korea and delivered in 1991. The tanker is relatively young for FPSO use and will continue to trade until required for dry docking and conversion.

Once converted, it is intended that the Ishwari will become the world’s largest gas processing FPSO, handling 900 mmscf of gas per day and extracting 35,000 barrels per day of condensate from this gas stream.

The purchase of the vessel is in accordance with a Memorandum of Agreement (“MOA”) between Nexus and Viking for the supply of an FPSO capable of processing Crux reservoir gas and recovering condensate as marketable liquids. Viking intend that the “Ishwari” will proceed to Sembawang Shipyard in the third quarter of 2008 to commence her conversion to an FPSO.

Viking entered into this agreement with Nexus in late December 2007, and it marks a significant step forward by Viking towards its goal of becoming a major FPSO owner and operator.

Under the MOA, Nexus and Viking have agreed to begin a significant engineering design and equipment procurement program leading up to the expected sanction of the Crux liquids project during the third quarter of 2008.

The key items of work are expected to include:

Detailed design of the gas processing plant to be incorporated into the topsides of the vessel.

Detailed design of the weather-vaning turret and mooring system to be incorporated into the FPSO.

Finalisation of a work program for FPSO marine conversion work to incorporate the turret and mooring system, the gas processing and recycling plant and all necessary marine systems on the converted tanker.

Commitment to key long lead items, intended to occur during the first quarter of 2008 in order to maintain the intended first liquids date for the project of mid 2010.

The integrated nature of the work program between Nexus and Viking during the pre project sanction phase utilises the specialist engineering skills available in both organisations in order that Viking can provide Nexus with a design and equipment that meet Nexus requirements.

Thome Offshore Management of Singapore will manage the new vessel during trading prior to conversion and also be involved as a subcontractor to Viking for life extension, conversion and operation and maintenance of the FPSO in the field.

Nexus’ Managing Director, Ian Tchacos said “Dedication of the vessel to the project marks the first major milestone in the development of the Crux field. It provides the process facilities team with the information required to allow the start of the detailed design for the project. We plan to provide further information in relation to the commencement of detailed design and to the purchase of other long lead items in the near future.”

Viking’s Managing Director, Michael Barraclough said: “We are extremely pleased to have concluded both the MOA with Nexus and the agreement to purchase the “Ishwari” for this innovative development. Gas recycling FPSO’s are a sector of the market in which we intend to specialize along with our innovative oil based FPSO solutions. Viking is further shortlisted for two other FPSO projects for which we are hopeful of a positive outcome.”

Thome Offshore”s Managing Director Claes Eek Thorstensen added: “Thome Offshore congratulates Nexus and Viking on securing the dedicated vessel. This high quality double hull vessel reflects our company’s corporate focus on safety and environmental issues and we are proud to be part of such a vision”.

Viking Field Development Solutions Pte Ltd is a 100% owned subsidiary of Viking Oil & Gas International Ltd. Viking Oil and Gas International is also the largest shareholder in Nexus Energy.

For further information please contact:

Michael Barraclough
Managing Director
Viking Field Development Solutions
Phone: +44 20 7495 5242
Mobile: +44 7956 648771
Website: www.vanguardoilandgas.com / www.thome.com.sg

Claes Eek Thorstensen
Managing Director
Thome Offshore Management
Phone: +65 6329 4864
Mobile: +65 9730 9277
Website: www.thome.com.sg

Background on the Crux Field

The Crux field (Nexus 85%) is 100 kilometres north east of the 66% Nexus owned permit WA-377-P which contains the Echuca Shoals gas discovery, adjacent to Inpex's Ichthys gas field; currently being considered for development as a LNG project.

A 3D seismic survey was acquired by Nexus over the Crux field in early 2006 and Front End Engineering and Design Study (“FEED”) was commenced for the Crux liquids project using Mustang Engineering as the FEED contractor.

Early in 2006 Nexus sold the rights to the gas (excluding condensate) to Shell Development (Australia) Pty Ltd (“Shell”) for US$40 million.

Nexus has the rights to 85% of condensate in AC/P23 produced before 2021 and full equity rights to 50% of both gas and condensate in AC/P41.

Appraisal of the Crux field commenced in early 2007 with the drilling of the Crux-2 well and the Crux-2 ST1 well. FEED for the Crux liquids project was completed in February 2007 providing a high degree of cost and engineering design definition for the floating production, storage and offloading facility (FPSO).

The results of Crux -2 ST1 well confirm the extension of the high quality reservoir sands seen in the Crux-1 well to the north eastern part of the field (as predicted from the similarity in seismic character at the sidetrack location) and increased confidence in the resource volumes. The Crux field is estimated to contain sufficient condensate volumes necessary to underpin the development of the Crux liquids project. The Crux-2 ST1 well was suspended as a future Crux liquids project injection well.

The Crux -3 appraisal well was spudded on 7 December 2007. The well is being drilled in the core area of the Crux field to evaluate the thickness of the main Nome formation reservoir section. Weekly progress reports are being released with the last announcement made on 28 December 2007.

Nexus has completed a basis for design of a gas recycling facility for the Crux liquids project with approximately 900 MMscf/d of gas being produced through four production wells.

Over 32,500 stb/d of condensate could be stripped from the gas before re-injection into the reservoir through three injection wells.

A development decision on Crux in early 2008 is expected to enable Nexus and its partner Osaka Gas Co., Ltd to obtain first condensate production from the Crux liquids project in 2010.