Skaugen Reports Loss

The I.M. Skaugen group reported a pre-tax result of minus MUSD 1.5 in 2Q04 (MUSD 0.8 in 1Q04, minus MUSD 3.0 in 4Q03 and MUSD 2 in 2Q03). The result on EBITDA basis is MUSD 3.8 for this period (MUSD 4.4 in 1Q04, MUSD 5.4 in 4Q03 and MUSD 7.5 in 2Q04). The Gas Activities, and mainly Norgas experienced a much weaker EBITDA result in 2Q04 than anticipated. A worldwide shortage of product supply resulted in more idle time for the MNGC fleet and thus a reduced EBITDA contribution.

The general picture is still considered optimistic for the world economy in late 2004 and beyond and hence also for Norgas.

SPT - The Shuttle Tanker Activities reported a satisfactory overall performance and achieved acceptable results after a challenging period in the beginning of the year. SPT enjoys a position of being an integral part of our customers' logistic chain. SPT continues the focus on being a "High Reliability Organization" (HRO) characterized also by superior customer service, a "can-do-attitude", and very high internal expectations for safety, punctuality and dependability. These factors are among the key drivers for the results.

The outlook for IMS is considered positive. We formed two key strategic alliances in 4Q03, with Teekay re SPT and with AP Moller- Maersk re Norgas. These should further advance the IMS strategy and enable us to capitalize even further on our past accomplishments. With these two alliances, with acknowledged world-leading companies, place both of our key business units in prime global positions.