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Fairstar's Fjord wins CLOV FPSO contract

January 3 - Fairstar Heavy Transport has signed a contract with DSME to transport FPSO components from Angola to Korea for the CLOV FPSO.

Fairstar says that the contract value is USD4.8 million and the open-stern semi-submersible Fjord is scheduled to commence transport operations at the end of 2011.

This will be the third marine heavy transportation contract which Fairstar has undertaken on behalf of DSME, having safely delivered two shipments for the Pazflor FPSO Project in 2009.

Chris Muilwijk, sales team leader of the Fairstar Client Services Group, commented: "DSME is a demanding client in our industry. Their standards for safety, on-time delivery and precise engineering support are extremely high. Winning this contract in the face of intense industry competition is another important achievement for Fairstar. Additionally, it perfectly positions Fjord to begin its work on the Gorgon Project in Q1 of 2012. These two contracts combine to give Fjord almost two years of continuous utilisation in 2012 and 2013".

Commenting on the current state of the market, Philip Adkins, Fairstar chief executive added: "The current spot market is at an absolute bottom. Price competition for low-value, heavy cargoes has driven day rates to levels at or even below break-even. The aging, converted oil tankers owned by our competitors, are slugging it out for every available cargo. Fairstar continues to believe that our strategy of owning and operating modern, true open-stern semi-submersible vessels like the Fjord, FjellForte and Finesse and involving these ships in complex, high-value, multiple-voyage energy infrastructure projects will firmly establish Fairstar at the premium sector of the market where our shareholders will achieve the highest returns on their investment.

"While the recent Fourth Quarter of 2010 was notable for an absence of cargoes in the spot market, Fairstar was invited to submit a number of proposals for multi-voyage contracts that will be awarded in the coming months for projects in 2011, 2012 and 2013. In some of these cases, we have learned that clients will not consider vessels older than 15 years. In addition, the standards for operating in Australian energy projects will require all vessels to be certified as "asbestos-free". We welcome these higher standards. It certainly validates the investment of our shareholders in Fairstar's fleet of four modern, asbestos-free, open-stern semi-submersible vessels.

"We believe the recent industry talk of a need for excessively large ships is not founded on sound economic returns. Single-voyage "mega cargoes" may look good on The Discovery Channel, but the final return for shareholders investing in such a project may be much closer to zero than is currently being contemplated. Leadership in our industry will not be determined by size".

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