EXHIBIT 2.34

                                 AGREEMENT FOR
                                        A
                           U.S. $30,000,000 TERM LOAN
                                    FACILITY

                             TO BE MADE AVAILABLE TO
                             VSSI AUSTRALIA LIMITED

                                       BY

                             RABO AUSTRALIA LIMITED
                                (ACN 060 452 217)



                                 April __, 1997



                                      INDEX

                                                                            PAGE


CLAUSE 1  DEFINITIONS  ..................................................      1

         1.1           Defined Terms.....................................      1
         1.2           Construction......................................      5
         1.3           Accounting Terms..................................      5

CLAUSE 2  REPRESENTATIONS AND WARRANTIES.................................      5

         2.1(a)        Due Organization and Power........................      6
         2.1(b)        Authorization and Consents........................      6
         2.1(c)        Binding Obligations...............................      6
         2.1(d)        No Violation......................................      6
         2.1(e)        Litigation........................................      6
         2.1(f)        No Default........................................      7
         2.1(g)        Financial Statements..............................      7
         2.1(h)        Tax Returns and Payments..........................      7
         2.1(i)        Insurance.........................................      7
         2.1(j)        Offices...........................................      7
         2.1(k)        Equity Ownership..................................      7
         2.1(l)        Limited Purpose...................................      7
         2.1(m)        Confirmation......................................      8
         2.1(n)        Survival..........................................      8

CLAUSE 3  THE LOAN     ..................................................      8
         3.1(a)        Purposes..........................................      8
         3.1(b)        Loan .............................................      8
         3.2           Drawdown Notice...................................      8
         3.3           Effect of Drawdown Notice.........................      8

CLAUSE 4  CONDITIONS PRECEDENT...........................................      8

         4.1           Conditions Precedent to Drawdown of the
                         Loan ...........................................      8
         4.2           Further Conditions Precedent......................     10

CLAUSE 5  REPAYMENT AND PREPAYMENT ......................................     11

         5.1           Repayment.........................................     11
         5.2           Voluntary Prepayment..............................     11
         5.3           Application of Prepayments........................     11

CLAUSE 6  INTEREST AND RATE..............................................     11

         6.1           Interest Rate; Default Rate.......................     11
         6.2           Interest Periods..................................     12
         6.3           Interest Payments.................................     12
         6.4           Calculation of Interest...........................     12

CLAUSE 7  PAYMENTS     ..................................................     12

         7.1           Place of Payments, No Set Off.....................     12
         7.2           Tax Credits.......................................     14

CLAUSE 8 EVENTS OF DEFAULT...............................................     14

         8.1(a)        Repayment.........................................     14
         8.1(b)        Other Payments....................................     14
         8.1(c)        Representations, etc..............................     14
         8.1(d)        Impossibility, Illegality.........................     14
         8.1(e)        Covenants.........................................     14
         8.1(f)        Indebtedness......................................     15
         8.1(g)        Stock Ownership...................................     15
         8.1(h)        Default under the Reimbursement
                         Agreement and First Loan Agreement..............     15
         8.1(i)        Bankruptcy........................................     15
         8.1(j)        Sale of Assets....................................     15
         8.1(k)        Judgments.........................................     16
         8.1(l)        Inability to Pay Debts............................     16
         8.1(m)        Financial Position................................     16
         8.2           Indemnification...................................     16
         8.3           Application of Moneys.............................     17

CLAUSE 9 COVENANTS     ..................................................     17

         9.1           Covenants.........................................     17

CLAUSE 10  ASSIGNMENT               19

CLAUSE 11  ILLEGALITY, INCREASED COST,
                        NON-AVAILABILITY, ETC............................     19

         11.1          Illegality   .....................................     19
         11.2          Increased Cost....................................     19
         11.3          Determination of Losses...........................     20
         11.4          Compensation for Losses...........................     21

CLAUSE 12  CURRENCY INDEMNITY       .....................................     21

         12.1          Currency Conversion...............................     21
         12.2          Change in Exchange Rate...........................     21
         12.3          Additional Debt Due...............................     21
         12.4          Rate of Exchange..................................     21

CLAUSE 13  FEES AND EXPENSES        .....................................     21

         13.1          Expenses     .....................................     21

CLAUSE 14  APPLICABLE LAW, JURISDICTION AND WAIVER.......................     22

         14.1          Applicable Law....................................     22
         14.2          Jurisdiction .....................................     22

CLAUSE 15  NOTICES AND DEMANDS      .....................................     23

         15.1          Notices      .....................................     23

CLAUSE 16  MISCELLANEOUS            .....................................     23

         16.1          Time of Essence...................................     23
         16.2          Unenforceable, etc., Provisions -
                         Effect     .....................................     24
         16.3          References   .....................................     24
         16.4          Further Assurances................................     24
         16.5          Entire Agreement, Amendments......................     24
         16.6          Headings     .....................................     24


EXHIBITS

    A Form of Letter of Guarantee
    B Form of Drawdown Notice


01029.004 #160636



                          TERM LOAN FACILITY AGREEMENT

                  THIS TERM LOAN  FACILITY  AGREEMENT is made as of the __th day
of April __, 1998, and is by and among:

         (1)      VSSI  AUSTRALIA  LIMITED,   a  corporation   incorporated  and
                  existing  under  the  laws of the  Republic  of  Liberia  (the
                  "Borrower"); and

         (2)      RABO  AUSTRALIA  LIMITED  (ACN  060 452  217),  a  corporation
                  incorporated  and existing  under the laws of New South Wales,
                  Australia (the "Lender").

                                WITNESSETH THAT:

1.       DEFINITIONS

1.1 Defined Terms. In this Agreement the words and  expressions  specified below
shall, except where the context otherwise requires, have the meanings attributed
to them in Clause 1.1 of the  Reimbursement  Agreement (as defined  below) or as
follows:

     "Agent"  shall  have the  meaning  ascribed  thereto  in the  Reimbursement
     Agreement;

     "Agreement" means this Agreement as the same shall be amended,  modified or
     supplemented from time to time;

     "Applicable  Rate" means any rate of interest on the Loan from time to time
     applicable pursuant to Clause 6.1 hereof;

     "Banking   Day(s)   shall  have  the  meaning   ascribed   thereto  in  the
     Reimbursement Agreement;

     "Banks" means the "Banks" party to the Reimbursement Agreement;

     "Barrington"  shall have the meaning ascribed thereto in the  Reimbursement
     Agreement;

     "Default  Rate" means the rate per annum equal to the sum of the Applicable
     Rate and three percent (3%);

     "Dollars"  shall have the  meaning  ascribed  thereto in the  Reimbursement
     Agreement;

     "Drawdown Date" means, the date, being a Banking Day falling not later than
     May 31, 1998, upon which the Borrower shall have requested that the Loan be
     made available as provided in Clause 3 hereof and;

     "Drawdown  Notice"  shall have the meaning  ascribed  thereto in Clause 3.2
     hereof;

     "Event(s) of Default" means any of the events set out in Clause 8 hereof;

     "Facility  Period" means the period from the Drawdown Date to the date upon
     which all  amounts  owing  under the Loan and all other  amounts due to the
     Lender  pursuant  to this  Agreement,  and  the  Security  Document  become
     repayable and are repaid in full or are prepaid in full;

     "First  Loan  Agreement"  shall have the  meaning  ascribed  thereto in the
     Reimbursement Agreement;

     "Guarantor" Nedship Bank (America) N.V., a banking corporation incorporated
     and existing under the laws of the Netherlands Antilles;

     "Indebtedness" shall have the meaning ascribed thereto in the Reimbursement
     Agreement;

     "Interest Payment Date" means the last day of each Interest Period and, for
     Interest  Periods  longer than three  months  that day falling  every three
     months  after  the  commencement  thereof  until  the end of such  Interest
     Periods;  should any such day not be a Banking  Day the  relevant  Interest
     Payment  Date shall be the next  following  Banking  Day,  unless such next
     following Banking Day falls in the following  calendar month, in which case
     the  relevant  Interest  Payment  Date shall be the  immediately  preceding
     Banking Day;

     "Interest  Period(s)"  with  respect  to the  Loan,  means  any  period  by
     reference to which an interest  rate is  determined  pursuant to Clause 6.2
     hereof;

     "Letter of Guarantee" means the amended and restated letter of guarantee in
     respect of the  obligations  of (i) the Borrower  under this  Agreement and
     (ii) the Original Borrowers under the First Loan Agreement,  to be executed
     by the  Guarantor in favor of the Lender  pursuant to Clause  4.1(d) hereof
     substantially in the form of Exhibit B hereto;

     "LIBOR"  means,  in relation  to  Interest  Periods of three (3) or six (6)
     months,  the rate (rounded upward to the nearest 1/16th of one percent) for
     offer rates for deposits of Dollars for a period  equivalent to such period
     at or about  11:00 a.m.  (London  time) on the second  London  Banking  Day
     before the first day of such  period as  displayed  on  Telerate  page 3750
     (British  Bankers'  Association  Interest  Settlement Rates) (or such other
     page as may replace such page 3750 on such system or on any other system of
     the  information  vendor  for the  time  being  designated  by the  British
     Bankers'  Association  to calculate  the BBA Interest  Settlement  Rate (as
     defined  in  the  British  Bankers'  Association's  Recommended  Terms  and
     Conditions  ("BBAIRS" terms) dated August 1985)),  provided that if on such
     date no such rate is so displayed  or if the Interest  Period is other than
     three (3) or six (6) months,  LIBOR for such period shall be the arithmetic
     mean  (rounded  upward if necessary  to four  decimal  places) of the rates
     respectively  quoted  to the  Agent by each of the  Reference  Banks at the
     request  of the Agent as the  offered  rate for  deposits  of Dollars in an
     amount  approximately  equal to the amount in relation to which LIBOR is to
     be determined for a period  equivalent to such period to prime banks in the
     London  Interbank Market at or about 11:00 a.m. (London time) on the second
     Banking Day before the first day of such period;

     "Loan"  means the term loan to be made  available  to the  Borrower  by the
     Lender  pursuant  to Clause 3.1 in the maximum  principal  amount of Thirty
     Million  Dollars  (US$30,000,000)  or the balance thereof from time to time
     outstanding;

     "Manager" means Teekay Shipping  Limited,  a Bahamian  company and a Wholly
     Owned Subsidiary of Teekay;

     "Margin" is .10% per annum;

     "Maturity  Date" means December 17, 2005; if such day is not a Banking Day,
     the next  following  Banking Day,  unless such next  following  Banking Day
     falls in the  following  calendar  month,  in which case the Maturity  Date
     shall be the immediately preceding Banking Day;

     "Original  Borrowers"  shall  have  the  meaning  ascribed  thereto  in the
     Reimbursement Agreement;

     "Palmerston"  shall have the meaning ascribed thereto in the  Reimbursement
     Agreement;

     "Reimbursement  Agreement"  means the  Amended and  Restated  Reimbursement
     Agreement  dated  the  date  hereof  entered  into  between  the  Borrower,
     Palmerston,  Barrington, VSSI Transport, Alliance, the Banks, the Agent and
     the Security Trustee;

     "Repayment  Date"  means  June 17,  1998 and each of the dates  falling  at
     intervals of six months  thereafter;  if such day is not a Banking Day, the
     next following Banking Day, unless such next following Banking Day falls in
     the following  calendar  month,  in which case the relevant  Repayment Date
     shall be the immediately preceding Banking Day;

     "Security Document" means the Letter of Guarantee;

     "Security  Trustee"  means Nedship Bank (America)  N.V.,  appointed as such
     pursuant to Clause 13 of the Reimbursement Agreement;

     "Teekay" means Teekay  Shipping  Corporation,  a corporation  organized and
     existing under the laws of the Republic of Liberia;

     "Transaction Documents" means this Agreement and the Security Documen;t

     "Vessel" means the Bahamian registered vessel, DAMPIER SPIRIT, Official No.
     730939;

     "VSSI   Transport"   shall  have  the  meaning   ascribed  thereto  in  the
     Reimbursement Agreement; and

     "Wholly Owned  Subsidiary"  shall have the meaning  ascribed thereto in the
     Reimbursement Agreement.

1.2  Construction.  Words  importing the singular  number only shall include the
plural and vice versa. Words importing persons shall include  companies,  firms,
corporations,  partnerships,  unincorporated  associations  and their respective
successors and assigns.

1.3 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted  accounting  principles as in
effect from time to time in the United  States of America  consistently  applied
("GAAP") and all financial statements submitted pursuant to this Agreement shall
be prepared in accordance with, and all financial data submitted pursuant hereto
shall be derived from financial statements prepared in accordance with, GAAP.

2        REPRESENTATIONS AND WARRANTIES

2.1 In order to induce the Lender to enter into this  Agreement  and to make the
Loan   available,   the  Borrower   hereby   represents   and  warrants   (which
representations  and warranties shall survive the execution and delivery of this
Agreement and the drawdown of the Loan hereunder) that:

                  (a) Due  Organization  and Power.  The Borrower is duly formed
and  validly  existing  in  good  standing  under  the  laws  of its  respective
jurisdiction of  incorporation,  has duly qualified and, insofar as the Borrower
is aware,  has been  registered  as a foreign  corporation  in Australia  and is
authorized to do business as a foreign corporation in each jurisdiction  wherein
the  nature  of  the  business   transacted  thereby  makes  such  qualification
necessary, has full power to carry on its business as now being conducted and to
enter into and perform its obligations under the Transaction  Documents to which
it is or is to be a party,  and has complied with all statutory,  regulatory and
other   requirements   relative  to  such  business  and  such   agreements  the
noncompliance with which could reasonably be expected to have a material adverse
effect on its business, assets or operations, financial or otherwise.

                  (b) Authorization and Consents. All necessary corporate action
has been taken to authorize,  and all necessary  consents and  authorities  have
been  obtained  and remain in full force and effect to permit,  the  Borrower to
enter into and perform its obligations  under the  Transaction  Documents and to
borrow,  service  and repay the Loan and, as of the date of this  Agreement,  no
further  consents or authorities  are necessary for the service and repayment of
the Loan or any part of any thereof.

                  (c) Binding Obligations.  The Transaction Documents constitute
or, when  executed and  delivered,  will  constitute,  legal,  valid and binding
obligations of the Borrower  enforceable  thereagainst  in accordance with their
terms,  except to the extent that such  enforcement  may be limited by equitable
principles,  principles of public policy or applicable  bankruptcy,  insolvency,
reorganization,  moratorium or other laws affecting generally the enforcement of
creditors' rights.

                  (d) No  Violation.  The  execution  and  delivery  of, and the
performance of the provisions of, the Transaction Documents by the Borrower does
not, and will not during the term of this  Agreement,  contravene any applicable
law or  regulation  existing at the date hereof or any  contractual  restriction
binding  on  any  thereof  or the  articles  of  incorporation  or  by-laws  (or
equivalent documents) of any thereof.

                  (e)  Litigation.  Except as otherwise  disclosed in writing to
the  Lender on or before  the date  hereof,  no action,  suit or  proceeding  is
pending or  threatened  against the  Borrower  before or by any court,  board of
arbitration  or  administrative  agency  which has a  reasonable  likelihood  of
resulting in any material adverse change in the business or condition (financial
or otherwise) of the Borrower.

                  (f) No  Default.  The  Borrower  is not in  default  under any
agreement by which it is bound,  nor is any thereof in default in respect of any
financial commitment or obligation.

                  (g)  Financial  Statements.  Except as otherwise  disclosed in
writing to the Lender on or prior to the date hereof,  all information and other
data  furnished by the Borrower to the Lender are complete and correct,  and all
financial  statements furnished by the Borrower have been prepared in accordance
with GAAP and  accurately  and fairly  present the  financial  condition  of the
parties  covered  thereby as of the respective  dates thereof and the results of
the  operations  thereof for the period or  respective  periods  covered by such
financial  statements.  Since  such  date or dates  there  has been no  material
adverse change in the financial condition or results of the operations of any of
such parties and none thereof has any contingent  obligations,  liabilities  for
taxes or other  outstanding  financial  obligations  which are  material  in the
aggregate except as disclosed in such statements, information and data.

                  (h) Tax Returns and  Payments.  The Borrower has filed all tax
returns  required  to be filed  thereby and has paid all taxes  payable  thereby
which have become due,  other than those not yet delinquent or the nonpayment of
which would not have a material  adverse  effect on any such party,  as the case
may be,  and  except  for  those  taxes  being  contested  in good  faith and by
appropriate  proceedings or other acts and for which adequate reserves have been
set aside on its books.

                  (i)  Insurance.  The Borrower has insured its  properties  and
assets  against such risks and in such amounts as are  customary  for  companies
engaged in similar businesses.

                  (j)  Offices.  The chief  executive  office and chief place of
business of the Borrower and the office in which the financial  records relating
the Vessel are kept,  is, and will  continue to be,  located at Ernst & Young at
Ernst & Young Building, 321 Kent Street, Sydney NSW Australia; the Borrower does
not  maintains a place of business  in Canada,  the United  States or the United
Kingdom.

                  (k)  Equity   Ownership.   The  Borrower  is  a  Wholly  Owned
Subsidiary of Teekay. On the Drawdown Date, the Borrower will not own any shares
of capital stock,  partnership  interest or any other direct or indirect  equity
interest in any corporation, partnership or other entity.

                  (l) Limited Purpose. The Borrower is a special purpose company
whose sole  capital  asset is the Vessel;  the  Borrower  does not engage in any
business other than the owning of the Vessel.

                  (m)   Confirmation.   All   representations,   covenants   and
undertakings made pursuant to Clause 3 of the Reimbursement Agreement are hereby
incorporated,  repeated  and  warranted  to be true and  correct as if they were
fully set forth herein.

                  (n) Survival.  All  representations,  covenants and warranties
made herein and in any certificate or other document  delivered  pursuant hereto
or in connection herewith shall survive the making of the Loan.

3        THE LOAN

3.1 (a) Purposes.  The Lender shall make the Loan  available to the Borrower for
the purpose of financing the acquisition cost of the Vessel.

                  (b) Loan. The Lender, relying upon each of the representations
and  warranties  set out in Clause 2,  hereby  agrees  with the  Borrower  that,
subject to and upon the terms of this  Agreement,  it will on the Drawdown  Date
advance the Loan to the Borrower.  The proceeds of the Loan shall be utilized to
partially finance the acquisition cost of the Vessel.

3.2 Drawdown Notice. The Borrower, shall, at least three (3) Banking Days before
a Drawdown Date, serve a notice,  such notice to be substantially in the form of
Exhibit C hereto (a "Drawdown Notice"),  on the Lender which notice shall (a) be
in writing  addressed to the Lender,  (b) be effective on receipt by the Lender,
(c) specify  the amount of the Loan to be drawn,  (d) specify the Banking Day on
which the Loan is to be drawn,  (e) identify the  purpose(s) of the Loan and the
Borrower(s)  on whose  behalf the Loan is  requested,  (f)  specify  the initial
Interest Period for the Loan, (g) specify the disbursement  instructions and (h)
be irrevocable.

3.3 Effect of Drawdown Notice. The Drawdown Notice shall be deemed to constitute
a warranty by the Borrower (a) that the representations and warranties stated in
Clause 2 (updated  mutatis  mutandis)  are true and  correct on the date of such
Drawdown  Notice and will be true and correct on the Drawdown Date as if made on
such date,  and (b) that no Event of Default nor any event which with the giving
of notice or lapse of time or both  would  constitute  an Event of  Default  has
occurred and is continuing.

4        CONDITIONS PRECEDENT

4.1 Conditions  Precedent to Drawdown of the Loan . The obligation of the Lender
to make the  Loan  available  to the  Borrower  under  this  Agreement  shall be
expressly subject to the following conditions precedent:

                  (a) the Lender shall have received the following  documents in
form and substance satisfactory to the Lender and counsel to the Lender:

                    (i)  copies, certified as true and complete by an officer of
                         the  Borrower,  of  the  resolutions  of its  board  of
                         directors (and, if any necessary under appropriate law,
                         shareholders)  evidencing  approval of the  Transaction
                         Documents  to which  such  company is to be a party and
                         authorizing  an  appropriate  officer  or  officers  or
                         attorney-in-fact  or  attorneys-in-fact  to execute the
                         same on its behalf;

                    (ii) copies, certified as true and complete by an officer of
                         the  Borrower  or  other   applicable   party,  of  all
                         documents   evidencing  any  other   necessary   action
                         (including  actions by such parties  thereto other than
                         the  Borrower,  as may  be  required  by  the  Lender),
                         approvals or consents  with  respect to this  Agreement
                         and the transactions contemplated hereby and thereby;

                    (iii)copies,  certified  as true and  complete by an officer
                         of the  Borrower  of the  articles  or  certificate  of
                         incorporation  and by-laws (or the equivalent  thereof)
                         thereof;

                    (iv) good standing  certificate  or the  equivalent  thereof
                         with respect to the Borrower  issued by the appropriate
                         authorities  of  the   jurisdiction  of   incorporation
                         thereof; and

                    (v)  evidence  that the Borrower is  registered as a foreign
                         corporation in Australia; and

                  (b) the Lender shall have received  evidence  satisfactory  to
the Lender and  counsel to the Lender  that all  conditions  precedent  required
pursuant to Clause 4 of the Reimbursement Agreement have been satisfied;

               (c) the  Borrower  shall have duly  executed and  delivered  this
Agreement;

               (d) the  Guarantor  shall have duly  executed and  delivered  the
Letter of Guarantee;

                  (e) the Lender shall have received payment in full of all fees
and  expenses  due  to  the  Lender  on  the  date  thereof  including,  without
limitation, all fees and expenses due under Clause 13 hereof;

                  (f) the  Borrower  shall have  provided  such  evidence as the
Lender may require documenting the current legal and beneficial ownership of the
shares of the Borrower;

                  (g)  Watson,  Farley &  Williams,  counsel to the  Borrower on
matters of Liberian law, shall have provided a legal opinion with respect to the
laws of the United States, New York and Liberia acceptable to the Lender; and

                  (h)  Norton  Smith & Co.,  special  counsel  to the  Lender on
matters of Australian  corporate  law,  shall have provided a legal opinion with
respect in Australian law acceptable to the Lender.

4.2 Further Conditions Precedent.  The obligation of the Lender to make the Loan
available to the Borrower shall be expressly and  separately  from the foregoing
conditional upon, on the relevant Drawdown Date:

               (a) the Lender  having  received a Drawdown  Notice in accordance
with the terms of Clause 3.2;

                  (b) the  representations  stated in Clause 2 (updated  mutatis
mutandis to such date) being true and correct as if made on that date;

                  (c) no Event of Default having  occurred and being  continuing
and no event having  occurred  and being  continuing  which,  with the giving of
notice or lapse of time, or both, would constitute an Event of Default; and

                  (d) the Lender being  satisfied  that no Event of Default will
arise  following  the drawdown of the Loan in question by reason of the drawdown
of the Loan and that no event or state of affairs exists which  constitutes,  in
the reasonable  opinion of the Lender,  a material risk that it will be unlawful
or impossible for the Borrower,  or any other of the parties thereto to make any
payment or perform any material  obligation as required  under the terms of this
Agreement and the Security Document to which it is a party or any of them.

5        REPAYMENT AND PREPAYMENT

5.1 Repayment.  The Borrower  shall repay the principal  amount of the Loan with
interest  thereon in sixteen (16)  consecutive  semiannual  installments  on the
Repayment  Dates,  the first eight of which shall be in the principal  amount of
One Million Dollars  ($1,000,000)  the next following seven of which shall be in
the principal  amount of Two Million Dollars  ($2,000,000) and the sixteenth and
last  installment  shall be in the  principal  amount of Eight  Million  Dollars
($8,000,000).

5.2 Voluntary  Prepayment.  The Borrower may prepay,  upon five (5) Banking Days
written  notice  (which  notice  shall be  irrevocable),  on the last day of any
Interest Period applicable to the Loan or the portion thereof to be prepaid, the
Loan or any portion  thereof,  without  penalty.  Each prepayment  shall be in a
minimum amount of Five Million Dollars ($5,000,000) in increments of One Million
Dollars ($1,000,000) or the full amount of the Loan.

5.3  Application  of  Prepayments.  Any  prepayments  of the Loan made hereunder
(including,  without  limitation,  those made  pursuant  to Clauses 5.2 and 9.1)
shall be subject to the condition that:

                    (a)  any partial  prepayment  made shall be applied pro rata
                         in   or   towards   satisfaction   of   the   remaining
                         installments of the Loan;

                    (b)  any  amounts   prepaid   shall  not  be  available  for
                         re-borrowing; and

                    (c)  on the date of any prepayment  all accrued  interest to
                         the date of such prepayment  shall be paid in full with
                         respect to the portion of the principal  being prepaid,
                         together  with any and all  actual  costs  or  expenses
                         incurred by the Lender in connection  with any breaking
                         of  funding  (as   certified   by  the  Lender,   which
                         certification  shall,  absent any  manifest  error,  be
                         conclusive and binding on the Borrower).

6        INTEREST AND RATE

6.1 Interest Rate;  Default Rate. The Loan shall bear interest at the Applicable
Rate,  which shall be the rate per annum equal to the aggregate of (a) LIBOR for
the applicable  Interest  Period and (b) the Margin.  Any amounts due under this
Agreement,  not paid when due,  whether on a Repayment  Date, by acceleration or
otherwise, shall bear interest thereafter at the Default Rate.

6.2 Interest  Periods.  The Borrower may select Interest Periods of three or six
months,  or such other period as selected by the Borrower which is available to,
and accepted by the Lender for purposes of funding the Loan, provided,  however,
that at all times the Borrower must select an Interest Period which  corresponds
to the  Interest  Period (as such term is  defined in the First Loan  Agreement)
under the First Loan  Agreement.  The  Borrower,  shall  provide the Lender with
written notice  specifying the Interest Period selected by the Borrower at least
three  (3)  Banking  Days  prior  to the  Drawdown  Date and the end of any then
existing Interest Period. If at the end of any then existing Interest Period the
Borrower fails to give notice as aforesaid,  the relevant  Interest Period shall
be three (3) months.

6.3 Interest Payments.  The Borrower agrees to pay interest accrued on the Loan,
in arrears, on the Interest Payment Dates.

6.4  Calculation  of Interest.  All interest shall accrue from day to day and be
calculated on the actual number of days elapsed over a three hundred sixty (360)
day year.

7        PAYMENTS

7.1 Place of Payments,  No Set Off. (a) All payments to be made hereunder by the
Borrower  shall be made on the due dates of such  payments  to the Lender at its
office located at Level 10, Challis House, 4 Martin Place, Sydney, NSW Australia
or to such other place as the Lender may direct without  set-off or counterclaim
and free from, clear of and without deduction for, any Taxes, provided, however,
that if the Borrower shall at any time be compelled by law to withhold or deduct
any Taxes from any amounts  payable to the Lender  hereunder,  then,  subject to
Clause 7.2, the Borrower shall pay such additional  amounts in Dollars as may be
necessary in order that the net amounts received after  withholding or deduction
shall equal the amounts  which would have been received if such  withholding  or
deduction  were not required and, in the event any  withholding  or deduction is
made,  whether for Taxes or otherwise,  the Borrower  shall promptly send to the
Lender such  documentary  evidence with respect to such withholding or deduction
as may be  required  from  time  to  time  by the  Lender.  Notwithstanding  the
preceding sentence, the Borrower shall not be required to pay additional amounts
or otherwise indemnify the Lender for or on account of:

                  (i) Taxes  based on or  measured  by the overall net income of
the Lender or Taxes in the nature of franchise  taxes or taxes for the privilege
of doing business  imposed by any  jurisdiction or any political  subdivision or
taxing  authority  therein unless such are imposed as a result of the activities
of the Borrower within the relevant taxing jurisdiction;

                  (ii)  Taxes  imposed  by any  jurisdiction  or  any  political
subdivision or taxing  authority  therein on the Lender that would not have been
imposed  but for the Lender  being  organized  in or  conducting  business in or
maintaining a place of business in the relevant taxing jurisdiction, or engaging
in activities  or  transactions  in the relevant  taxing  jurisdiction  that are
unrelated to the  transactions  contemplated by the Transaction  Documents,  but
only to the extent such Taxes are not imposed as a result of the  activities  of
any of the Borrower within the relevant taxing  jurisdiction or the jurisdiction
of the Borrower under the laws of the taxing jurisdiction;

                  (iii)  Taxes  imposed  on or with  respect  to the Lender as a
result of a transfer,  sale,  assignment,  or other disposition by the Lender of
any interest in any  Transaction  Document or the Vessel  (other than a transfer
pursuant to an exercise of remedies upon an Event of Default);

                  (iv) Taxes imposed on, or with respect to, a transferee  (or a
subsequent  transferee)  of the Lender (and  including as such a transferee  the
Lender  whose  shares  of stock  have been  transferred  or the  purchaser  of a
participation  in the  Loan) to the  extent  of the  excess of such Tax over the
amount of such Tax that  would have been  imposed  on, or with  respect  to, the
Lender had there not been a transfer,  sale,  assignment or other disposition of
the shares of the Lender or a transfer, sale, assignment or other disposition by
the Lender of any  interest in the Vessel or any  Transaction  Document (in each
case,  other than any transfer  pursuant to the exercise of remedies as a result
of an Event of Default that shall have occurred and be continuing); or

                  (v)  Taxes  imposed  on the  Lender  that  would not have been
imposed  but for any  failure  of the Lender to comply  with any  return  filing
requirement or any certification, information, documentation, reporting or other
similar  requirement  known to the  Lender,  if such  compliance  is required to
obtain or establish relief or exemption from or reduction in such Taxes.

                  (b) In the event that the Borrower has actual  knowledge  that
the  Borrower  is  required  to, or there  arises in the  Borrower's  reasonable
opinion a substantial  likelihood  that the Borrower will be required to, pay an
additional amount or otherwise indemnify the Lender for or on account of any Tax
pursuant to Clause 7.1(a),  the Borrower will promptly  notify the Lender of the
nature of such Tax,  and shall  furnish  such  information  to the  Lender  with
respect to such Tax, as the Lender may reasonably  request.  In the event of any
knowledge or opinion of the Borrower  described in the preceding  sentence,  the
Borrower  and the Lender shall  consult in good faith to  determine  what may be
required to fund the Loan in  Australian  Dollars  and/or to eliminate or reduce
such Tax, and shall each use  reasonable  efforts to fund the Loan in Australian
Dollars  and/or to eliminate or reduce such Tax (so long as such efforts do not,
in the  reasonable  opinion of the  relevant  Lender,  result in any cost to the
Lender or any  modification  of the terms or  repayment of the Loan or result in
the Lender being subjected to any additional risk or exposure).

7.2 Tax  Credits.  If the Lender at its  discretion  utilises  the  benefit of a
credit  against its liability for Taxes imposed by any taxing  authority for all
or part of the Taxes as to which the  Borrower  has paid  additional  amounts as
aforesaid  then the Lender  shall  reimburse  the Borrower for the amount of the
credit so obtained.  The Lender shall use reasonable  efforts in filing such tax
return as are necessary to obtain any such credit. In connection therewith,  the
Lender may consult with its legal advisers, all fees and expenses of which shall
be for the account of the Borrower. Where the credit is not utilized, the Lender
shall use reasonable endeavors to pass credit on to the Borrower.

8        EVENTS OF DEFAULT

8.1 In the event that any of the following events shall occur and be continuing:

               (a) Repayments.  Any principal or interest  payment due hereunder
is not paid on the due date; or

                  (b) Other Payments.  Any fees or other amount becoming payable
to the Lender  under this  Agreement is not paid on the due date or within three
(3) Banking Days after the date of demand (as the case may be); or

                  (c)  Representations,  etc.  Any  representation,  warranty or
other  statement  made  by the  Borrower  in  this  Agreement  or in  any  other
instrument,  document or other  agreement  delivered in  connection  herewith or
therewith proves to have been untrue or misleading in any material respect as at
the date as of which made; or

                  (d)  Impossibility,   Illegality.  It  becomes  impossible  or
unlawful  for the  Borrower,  to fulfill any of the  covenants  and  obligations
contained  herein or, exercise any of the rights vested in any of them hereunder
and such  impossibility or illegality,  in the reasonable opinion of the Lender,
will have a  material  adverse  effect  on its  rights  hereunder,  or under the
Security Document or on its rights to enforce any thereof; or

                  (e) Covenants. The Borrower defaults in the performance of any
term,  covenant  or  agreement  contained  in  this  Agreement  or in any  other
instrument,  document or other  agreement  delivered in  connection  herewith or
therewith,  or there occurs any other event which  constitutes  a default  under
this Agreement in each case other than an Event of Default referred to elsewhere
in this Clause 8.1, and such default,  in the reasonable  opinion of the Lender,
could have a material  adverse effect on their rights  hereunder or under any of
the  Security  Document or on their  right to enforce any thereof and  continues
unremedied for a period of thirty (30) days; or

                  (f)  Indebtedness.  The Borrower  shall default in the payment
when due (subject to any applicable  grace period),  whether by  acceleration or
otherwise,  of any Indebtedness  having an outstanding  principal amount of Five
Hundred  Thousand  Dollars  ($500,000) or more or any party becomes  entitled to
enforce the security for any such  Indebtedness  and such party shall take steps
to enforce the same,  unless such default or enforcement  is being  contested in
good faith and by  appropriate  proceedings or other acts and the Borrower shall
set aside on its books adequate  reserves with respect  thereto,  and so long as
such  default or  enforcement  shall not subject the Vessel to material  risk of
forfeiture or loss; or

                  (g) Stock  Ownership.  There  is,  without  the prior  written
consent of the Lender (i) any change in the legal or beneficial  stock ownership
or the voting  control of the  Borrower  or (ii) any pledge of the shares of the
Borrower in favor of a party other than the Security  Trustee or (iii) less than
fifty-one  percent (51%) of the issued and outstanding  shares of Teekay is held
beneficially and of record by the Cirrus Trust and the JTK Trust; or

                  (h) Default under the  Reimbursement  Agreement and First Loan
Agreement.  There is an event  of  default  under  either  of the  Reimbursement
Agreement  or  the  First  Loan  Agreement  which  shall  have  occurred  and be
continuing; or

                  (i) Bankruptcy. The Borrower commences any proceeding relating
to any substantial portion of its property under any reorganization, arrangement
or  readjustment  of debt,  dissolution,  winding up,  adjustment,  composition,
bankruptcy or  liquidation  law or statute of any  jurisdiction,  whether now or
hereafter in effect  ("Proceeding"),  or there is commenced against the Borrower
any Proceeding and such Proceeding remains  undismissed or unstayed for a period
of thirty (30) days; or any receiver, trustee, liquidator or sequestrator of, or
for,  the  Borrower  or any  substantial  portion  of the  property  thereof  is
appointed  and is not  discharged  within a period of thirty  (30) days;  or the
Borrower by any act indicates  consent to or approval of or  acquiescence in any
Proceeding  or to  the  appointment  of any  receiver,  trustee,  liquidator  or
sequestrator of, or for, itself or any substantial portion of its property; or

                  (j) Sale of Assets.  The  Borrower  ceases,  or  threatens  to
cease, its operations or sells or otherwise disposes of, or threatens to sell or
otherwise  dispose  of,  all  or  substantially  all  of  its  assets  or all or
substantially all of its assets are seized or otherwise appropriated; or

                  (k)  Judgments.  Any  judgment  or order  is made  the  effect
whereof would be to render  ineffective  or invalid this  Agreement the Security
Document or any of them; or

                  (l)  Inability to Pay Debts.  The Borrower is unable to pay or
admits its inability to pay its debts as they fall due or if a moratorium  shall
be declared in respect of any Indebtedness thereof; or

                  (m) Financial  Position.  Any change in the financial position
of the Borrower  which,  in the reasonable  opinion of the Lender,  is likely to
have a material  adverse  effect on the  ability of the  Borrower to perform its
material obligations under this Agreement;

         then the Lender's obligation to make the Loan available shall cease and
the Lender, by notice to the Borrower,  may declare the then outstanding  amount
of the  Loan,  accrued  interest  and any other  sums  payable  by the  Borrower
hereunder,  to be immediately due and payable whereupon the same shall forthwith
be due and payable without presentment,  demand,  protest or notice of any kind,
all of which are hereby expressly waived; provided that upon the happening of an
event  specified in subclauses (i) or (l) of this Clause 8.1, the Loan,  accrued
interest  and any other sums  payable  hereunder  shall be  immediately  due and
payable without declaration or other notice to the Borrower.  In such event, the
Lender, may (i) proceed to protect and enforce its rights by action at law, suit
in equity or in admiralty or other appropriate proceeding,  whether for specific
performance  of any  covenant  contained  in this  Agreement  or in the Security
Document or to enforce the  payment of the  Security  Document or to enforce any
other legal or equitable right of the Lender, or (ii) proceed to take any action
authorized  or permitted  under the terms of any of the Security  Document or by
applicable  laws  for  the  collection  of all  sums  due,  or so  declared  due
including,  without  limitation,  the  right  to  appropriate  and hold or apply
(directly,  by way of set-off or otherwise) to the payment of the obligations of
the  Borrower  to the Lender  hereunder,  all  moneys  and other  amounts of the
Borrower,  then or  thereafter  in  possession  of the Lender,  inclusive of the
balance of any deposit  account  (demand or time,  matured or  unmatured) of the
Borrower, then or thereafter with the Lender.

8.2 Indemnification.  The Borrower agrees to, and shall,  indemnify and hold the
Lender harmless against any loss or costs or expenses  (including legal fees and
expenses)  which the Lender may sustain or incur as a consequence of any default
in repayment of the principal  amount of the Loan or interest accrued thereon or
any other amount payable  hereunder (other than costs and expenses caused by the
gross negligence or willful misconduct of the Lender) including, but not limited
to, all actual losses  incurred in  liquidating or  re-employing  fixed deposits
made by third  parties or funds  acquired to effect or maintain  the Loan or any
part  thereof.  The Lender's  certification  of such costs and  expenses  shall,
absent any manifest error, be conclusive and binding on the Borrower.

8.3  Application of Moneys.  All moneys received by the Lender under or pursuant
to this Agreement  after the happening of any Event of Default  (unless cured to
the  satisfaction of the Lender) shall be applied by the Lender in the following
manner:

                    (i)  first,  in or towards the payment or  reimbursement  of
                         any expenses or  liabilities  incurred by the Lender in
                         connection  with  the   ascertainment,   protection  or
                         enforcement  of its rights and remedies  hereunder  and
                         under the Security Document,

                    (ii) secondly,  in or towards  payment of any interest owing
                         in respect of the Loan,

                    (iii)thirdly,  in or towards repayment of principal owing in
                         respect of the Loan,

                    (iv) fourthly, in or towards payment of all other sums which
                         may be owing to the Lender under this  Agreement or the
                         First Loan Agreement, and

                    (v)  fifthly,  the  surplus  (if  any)  shall be paid to the
                         Borrower or to whomsoever else may be entitled thereto.

9        COVENANTS

9.1 The Borrower hereby  covenants and undertakes with the Lender that, from the
date hereof and so long as any principal,  interest or other monies are owing in
respect of this Agreement:

The Borrower will:

                   (i) Performance of Agreements.  Duly perform and observe, and
procure the observance and  performance by all other parties thereto (other than
the Lender) of, the terms of this Agreement and the Reimbursement Agreement;

                  (ii)  Notice of  Default.  Promptly  inform  the Lender of the
occurrence  of (a) any Event of Default or of any event which with the giving of
notice or lapse of time, or both, would constitute an Event of Default,  (b) any
litigation or governmental proceeding pending or threatened against the Borrower
or Teekay which could  reasonably be expected to have a material  adverse effect
on the business, assets, operations, property or financial condition of any such
party and (c) any other event or  condition  of which it becomes  aware which is
reasonably  likely to have a  material  adverse  effect on its  ability,  or the
ability of any other  party  thereto,  to  perform  its  obligations  under this
Agreement;

                 (iii) Obtain  Consents.  Obtain every  consent and do all other
acts and things which may from time to time be  necessary  or advisable  for the
continued  due  performance  of all its and any other  party's  (other  than the
Lender's') obligations under this Agreement;

                  (iv) Corporate Existence.  Do or cause to be done, and procure
that Teekay and Alliance shall do or cause to be done,  all things  necessary to
preserve and keep in full force and effect their respective corporate existence,
and all licenses, franchises, permits and assets necessary to the conduct of the
business of each such corporation;

                   (v) Taxes.  Pay and discharge,  and cause Teekay and Alliance
to pay and discharge,  all taxes, assessments and governmental charges or levies
imposed upon each such corporation or upon such corporation's income or property
prior to the date upon which penalties attach thereto;  provided,  however, that
such  corporations  shall not be required to pay and  discharge,  or cause to be
paid and  discharged,  any such tax,  assessment,  charge or levy so long as the
legality or amount  thereof shall be contested in good faith and by  appropriate
proceedings or other acts and it shall set aside on its books adequate  reserves
with respect thereto, and so long as such deferment in payment shall not subject
the Vessel to material risk of forfeiture or loss;

                  (vi)  Compliance  with Statutes,  etc. Do or cause to be done,
and procure  that Teekay and Alliance  shall do or cause to be done,  all things
necessary  to comply  with all  material  laws,  and the  rules and  regulations
thereunder,  applicable  to the  Borrower,  Teekay and Alliance  and  including,
without  limitation,  those  laws,  rules and  regulations  relating to employee
benefit plans and environmental matters; and

                 (vii)  Maintenance  of  Properties.  Maintain,  or  cause to be
maintained,  and keep, or cause to be kept, and procure that Teekay and Alliance
shall  maintain,  or cause to be maintained,  and keep, or cause to be kept, all
properties  used or useful in the  conduct of its  business  in good  condition,
repair and working  order and supplied  with all  necessary  equipment  and will
cause to be made necessary  repairs,  renewals and replacements  thereof so that
the business  carried on and in connection  therewith and every portion  thereof
may be properly  and  advantageously  conducted at all times.  In addition,  the
Borrower  shall  cause the Vessel to be  drydocked  as often as  required by the
Vessel's classification society and as a prudent shipowner would require.

9.2 The Borrower covenants and undertakes with the Lender that the Borrower will
be duly registered as a foreign company under the  Corporations Law of Australia
within 60 days from the date of this  Agreement or such further period which the
Lender shall in writing permit.

10       ASSIGNMENT

                  This Agreement shall be binding upon, and inure to the benefit
of, the Borrower, the Lender and their respective successors and assigns, except
that the  Borrower  may not assign any of its  rights or  obligations  hereunder
except as specifically  provided herein.  The Lender may, with the prior written
consent of the Borrower (such consent not to be unreasonably  withheld) assign a
portion of its rights and  obligations  under this  Agreement to any one or more
commercial  lenders  (the  expenses  of the Lender in  connection  with any such
assignment shall be for its own account).  The Borrower will take all reasonable
actions  requested by the Lender to effect such assignment,  including,  without
limitation,  the  execution  of a written  consent  to such  assignment  and any
agreement executed in connection therewith.

11       ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.

11.1.  Illegality.  In the event that by reason of any change in any  applicable
law, regulation or regulatory  requirement or in the interpretation  thereof the
Lender  reasonably  concludes  that it has  become  unlawful  for the  Lender to
maintain or give effect to its  obligations as  contemplated  by this Agreement,
the Lender shall inform the Borrower to that effect, whereafter the liability of
the Lender to make the Loan  available  shall  forthwith  cease and the Borrower
shall be required to prepay the then outstanding portion of the Loan immediately
in  accordance  with and subject to the  provisions  of Clause 11.4. In any such
event,  but without  prejudice to the aforesaid  obligations  of the Borrower to
prepay the Loan, the Borrower and the Lender shall  negotiate in good faith with
a view to agreeing on terms for making the Loan available in Australian  Dollars
or or otherwise  restructuring  the Loan on a basis which is not  unlawful  with
respect to the Lender and the  Lender  shall use  reasonable  efforts to replace
itself with a lender for which the making and performance of the Agreement would
not be illegal.

11.2 Increased Cost. If any change in applicable  law,  regulation or regulatory
requirement or in the interpretation or application  thereof by any governmental
or other authority, shall:

     (i)  change the basis of taxation  (excluding any change in the rate of any
          Tax) to the Lender of payments of  principal  or interest or any other
          payment due or to become due pursuant to this Agreement  (other than a
          change in taxation of the overall net income of the Lender effected by
          the  jurisdiction of organization or the jurisdiction of the principal
          place of business of the Lender,  the  Commonwealth of Australia,  the
          State of New  South  Wales or any  governmental  subdivision  or other
          taxing  authority  having  jurisdiction  over the Lender  (unless such
          jurisdiction  is asserted  solely by reason of the  activities  of the
          Borrower) or such other jurisdiction where the Loan may be repayable),
          or

     (ii) impose,  modify or deem applicable any reserve requirements or require
          the making of any special deposits against or in respect of any assets
          or liabilities  of,  deposits with or for the account of, or loans by,
          the Lender, or

     (iii)impose on the Lender  any other  condition  affecting  the Loan or any
          part  thereof,  and the result of the  foregoing is either to increase
          the cost to the Lender of making  available or maintaining the Loan or
          any part  thereof or to reduce the amount of any  payment  received by
          the Lender, then and in any such case if such increase or reduction in
          the  opinion of the Lender  materially  affects the  interests  of the
          Lender under or in connection with this Agreement, then:

          (a)  the Lender  shall  notify the  Borrower of the  happening of such
               event,

          (b)  the Borrower  agrees  forthwith  upon demand to pay to the Lender
               such amount as the Lender certifies to be necessary to compensate
               the Lender for such additional cost or such reduction, and

          (c)  any such  demand  as is  referred  to in  sub-clause  (b) of this
               Clause 11.2 may be made by the Lender at any time before or after
               any repayment of the Loan.

11.3  Determination  of Losses.  A certificate  or  determination  notice of the
Lender,  as to any of the matters  referred  to in this Clause 11 shall,  absent
manifest error, be conclusive and binding on the Borrower.

11.4  Compensation  for  Losses.  Where the Loan or a portion  thereof are to be
prepaid  by  the  Borrower   pursuant  to  Clause  11.1  the   Borrower   agrees
simultaneously with such prepayment to pay to the Lender all accrued interest to
the date of actual  payment  and all other sums  payable by the  Borrower to the
Lender pursuant to this Agreement, without penalty or premium.

12       CURRENCY INDEMNITY

12.1  Currency  Conversion.  If for the  purpose of  obtaining  or  enforcing  a
judgment in any court in any country it becomes  necessary  to convert  into any
other  currency  (the  "judgment  currency") an amount due in Dollars under this
Agreement then the conversion shall be made, in the discretion of the Lender, at
the rate of  exchange  prevailing  either on the date of  default  or on the day
before the day on which the  judgment is given or the order for  enforcement  is
made, as the case may be (the "conversion date"), provided that the Lender shall
not be entitled to recover under this clause any amount in the judgment currency
which  exceeds  at the  conversion  date the  amount in  Dollars  due under this
Agreement.

12.2  Change in  Exchange  Rate.  If there is a change  in the rate of  exchange
prevailing  between the  conversion  date and the date of actual  payment of the
amount due, the Borrower shall pay such  additional  amounts (if any, but in any
event not a lesser amount) as may be necessary to ensure that the amount paid in
the judgment  currency when converted at the rate of exchange  prevailing on the
date of payment  will  produce  the  amount  then due under  this  Agreement  in
Dollars;  any excess  over the amount due  received or  collected  by the Lender
shall be remitted to the Borrower.

12.3  Additional  Debt Due. Any amount due from the  Borrower  under Clause 12.2
shall be due as a separate  debt and shall not be  affected  by  judgment  being
obtained for any other sums due under or in respect of this Agreement.

12.4. Rate of Exchange.  The term "rate of exchange" in this Clause 12 means the
rate at which the Lender in accordance  with their normal  practices are able on
the relevant  date to purchase  Dollars with the judgment  currency and includes
any premium and costs of exchange payable in connection with such purchase.

13       FEES AND EXPENSES

13.1  Expenses.  The Borrower  agrees,  whether or not the  transactions  hereby
contemplated are consummated,  on demand to pay, or reimburse the Lender for its
payment of, the reasonable  expenses of the Lender incident to said transactions
(and in  connection  with  any  supplements,  amendments,  waivers  or  consents
relating  thereto or incurred in connection  with the  enforcement or defense of
the Lender's rights or remedies with respect  thereto or in the  preservation of
the  Lender's  priorities  under the  documentation  executed  and  delivered in
connection  therewith) including,  without limitation,  all reasonable costs and
expenses of  preparation,  negotiation,  execution  and  administration  of this
Agreement and the documents  referred to herein,  the fees and  disbursements of
the Lender's  counsel in  connection  therewith,  including  Seward & Kissel and
Norton  Smith  & Co.,  as  well  as the  reasonable  fees  and  expenses  of any
independent appraisers,  surveyors,  engineers and other consultants retained by
the  Lender  in  connection  with this  transaction,  all  reasonable  costs and
expenses,  if any, in connection  with the enforcement of this Agreement and the
Security  Document and stamp and other similar  taxes,  if any,  incident to the
execution  and delivery of the  documents  herein  contemplated  and to hold the
Lender free and  harmless in  connection  with any  liability  arising  from the
nonpayment  of any such stamp or other  similar  taxes.  Such taxes and, if any,
interest and  penalties  related  thereto as may become  payable  after the date
hereof shall be paid immediately by the Borrower to the Lender,  as the case may
be, when liability  therefor is no longer  contested by such party or parties or
reimbursed  immediately  by the Borrower to such party or parties  after payment
thereof (if the Lender, at its sole discretion, chooses to make such payment).

14       APPLICABLE LAW, JURISDICTION AND WAIVER

14.1  Applicable  Law.  This  Agreement  shall be governed by, and  construed in
accordance with, the laws of the State of New South Wales.

14.2 Jurisdiction.  The Borrower hereby irrevocably  submits to the jurisdiction
of the Supreme Court of New South Wales and of the Federal Court of Australia in
any action or proceeding  brought  against it by the Lender under this Agreement
or under any document  delivered  hereunder and hereby  irrevocably  agrees that
service of summons or other legal process on it may be served by registered mail
addressed thereto, c/o Clayton Utz, Levels 27-35, No. 1 O'Connell Street, Sydney
NSW Australia.  The service, as herein provided,  of such summons or other legal
process in any such action or proceeding  shall be deemed  personal  service and
accepted  by the  Borrower  as such,  and  shall be legal and  binding  upon the
Borrower for all the purposes of any such action or  proceeding.  Final judgment
(a certified or  exemplified  copy of which shall be conclusive  evidence of the
fact and of the  amount  of any  indebtedness  of the  Borrower  to the  Lender)
against the Borrower in any such legal action or proceeding  shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment. The Borrower
will  advise the Lender  promptly  of any change of address  for the  purpose of
service of process.  Notwithstanding anything herein to the contrary, the Lender
may bring any legal action or proceeding in any other appropriate jurisdiction.

15       NOTICES AND DEMANDS

15.1 Notices.  All notices,  requests,  demands and other  communications to any
party  hereunder  shall be in  writing  (including  prepaid  overnight  courier,
facsimile  transmission  or similar  writing) and shall be given to the Borrower
and  Lender at the  address  or  telecopy  number set out below or at such other
address or telecopy  number as such party may hereafter  specify for the purpose
by  notice to each  other  party  hereto.  Each such  notice,  request  or other
communication shall be effective (i) if given by telecopy, when such telecopy is
transmitted  to the  telecopy  number  specified  in this Clause and  telephonic
confirmation  of receipt  thereof is obtained or (ii) if given by mail,  prepaid
overnight  courier or any other means, when received at the address specified in
this Clause or when delivery at such address is refused.

                  If to the Borrower:

                  c/o      Teekay Shipping Limited
                           4th Floor
                           Euro-Canadian Centre
                           Marlborough Street and Navy Lion Road
                           P.O. Box SS 7293
                           Nassau, Bahamas
                           Telecopy No.: 242-328-7330
                           Attention: The President

                  If to the Lender:

                  Rabo Australia Limited
                  Level 10, Challis House
                  4 Martin Place
                  Sydney, NSW AUSTRALIA
                  Telecopy No.: 612-9231-0007
                  Attention: Manager -
                           Corporate Banking and Structured Finance

16       MISCELLANEOUS

16.1 Time of Essence. Time is of the essence of this Agreement but no failure or
delay on the part of the  Lender  to  exercise  any  power or right  under  this
Agreement  shall  operate as a waiver  thereof,  nor shall any single or partial
exercise  by the Lender of any power or right  hereunder  preclude  any other or
further  exercise  thereof  or the  exercise  of any other  power or right.  The
remedies  provided  herein are  cumulative and are not exclusive of any remedies
provided by law.

16.2  Unenforceable,  etc.,  Provisions - Effect. In case any one or more of the
provisions  contained in this  Agreement  would,  if given  effect,  be invalid,
illegal or unenforceable in any respect under any law applicable in any relevant
jurisdiction,  said provision shall not be enforceable against the Borrower, but
the validity,  legality and enforceability of the remaining provisions herein or
therein contained shall not in any way be affected or impaired thereby.

16.3 References.  References herein to Clauses and Schedules are to be construed
as references to clauses of, and schedules to, this Agreement.

16.4  Further  Assurances.  The  Borrower  agrees that if this  Agreement in the
reasonable  opinion of the  Lender,  at any time be deemed by the Lender for any
reason  insufficient in whole or in part to carry out the true intent and spirit
hereof or  thereof,  it will  execute  or cause to be  executed  such  other and
further assurances and documents as in the opinion of the Lender may be required
in order more effectively to accomplish the purposes of this Agreement.

16.5  Entire  Agreement;  Amendments.  This  Agreement  constitutes  the  entire
agreement of the parties  hereto This Agreement may be executed in any number of
counterparts,   each  of  will  shall  be  deemed  an  original,  but  all  such
counterparts  together  shall  constitute  one  and  the  same  instrument.  Any
provision  of this  Agreement  may be amended  or waived  if, but only if,  such
amendment  or waiver is in writing and is signed by the  Borrower and the Lender
(and, if the rights or duties of the Lender are affected thereby, by the Lender,
as applicable).

16.6 Headings.  In this Agreement,  Clause headings are inserted for convenience
of reference only and shall not be taken into account in the  interpretation  of
this Agreement.



<PAGE>



Executed as an Agreement



Signed for and on behalf of                                      )
VSSI Australia Limited                                           )
in the presence of:                                              )



-------------------------




Signed for and on behalf of                                      )
Rabo Australia Limited                                           )
ACN 060 452 217                                                  )
in the presence of :                                             )

-------------------------


01029.004 #160636





April    , 1998

To:        Rabo Australia Limited
           Level 10, Challis House
           74 Martin Place
           Sydney NSW Australia

At the  request  of  Barrington  (Australia)  Pty.  Limited  (ACN  080 850  559)
("Barrington"),   Palmerston   (Australia)   Pty.  Limited  (ACN  080  850  586)
("Palmerston"; Palmerston and Barrington shall sometimes hereinafter be referred
to together as the  "Original  Borrowers")  and VSSI  Australia  Limited  ("VSSI
Australia")  (collectively,  the "Borrowers" and each separately, a "Borrower"),
we the  undersigned  Nedship Bank  (America)  N.V.,  hereby issue the  following
guarantee  to you (the  "Guarantee"),  which  amends and  restates  the Original
Guarantee (as hereinafter defined).

We have  previously  issued a  guarantee  to you dated  December  17,  1997 (the
"Original  Guarantee"),  in connection with a term loan facility agreement dated
December 17, 1997 (the "First Loan  Facility  Agreement"),  between the Original
Borrowers, as borrowers,  and you, as lender,  regarding a loan in the amount of
US$44,000,000  (the  "First  Loan")  provided  by you in order to  assist in the
financing of the Australian flag vessels BARRINGTON and PALMERSTON.

You have  agreed to make a loan in the  amount  of  US$30,000,000  (the  "Second
Loan";  the First  Loan and the  Second  Loan  shall  sometimes  hereinafter  be
referred  to together  as the  "Loans"  and each  separately,  a "Loan") to VSSI
Australia,  an affiliate of the Original Borrowers,  as borrower,  pursuant to a
term loan facility agreement to be dated on or about April 17, 1998 (the "Second
Loan Facility Agreement";  the First Loan Facility Agreement and the Second Loan
Facility  Agreement shall  sometimes  hereinafter be referred to together as the
"Loan Facility Agreements" and each separately, a "Loan Facility Agreement"), in
order to assist in the financing of the Bahamian flag vessel DAMPIER SPIRIT.

We have received a copy of and have duly noted the contents of the Loan Facility
Agreements.

     1.   In  consideration  of you  having  entering  into  the  Loan  Facility
          Agreements  we hereby  irrevocably  guarantee to pay to you as primary
          obligor  any and all  amounts  due and  payable  to you  from  (i) the
          Original  Borrowers  under the First Loan Facility  Agreement and (ii)
          VSSI Australia under the Second Loan Facility Agreement (together, the
          "Guaranteed Amounts") as herein provided.

     2.   We shall  immediately,  and no later than five (5) Banking  Days after
          receipt of your written  demand,  pay to you all amounts due and which
          the  Borrower(s)  are  obliged  to pay to you under the Loan  Facility
          Agreements  to which they are a party,  provided only that your demand
          recites  that  there has been an Event of Default  under the  relevant
          Loan  Facility  Agreement and that you have  accelerated  the relevant
          Loan and specifies the amount that the relevant  Borrowers are obliged
          to pay to you. No further  documentation  or action shall be necessary
          in order to oblige us to make payment under this Guarantee.

           Upon our  payment  of the  Guaranteed  Amounts,  you shall  execute a
           release of this  Guarantee.  Any costs  incurred by you in connection
           with such release shall be for our account.
     3.    As a separate  obligation we unconditionally and irrevocably agree to
           indemnify  you against all  liability or loss arising  from,  and any
           costs, charges, expenses or interest incurred directly or indirectly,
           as a result of or arising out of the Guaranteed  Amounts not being or
           ever having been recoverable from any of the Borrowers because of any
           circumstance.

     4.    Our obligations  hereunder shall be irrevocable and absolute  without
           regard to:

          (1)  you, as lender under either of the Loan Facility  Agreements (the
               "Lender") or another  person  granting  time or other  indulgence
               (with or without  the  imposition  of an  additional  burden) to,
               compounding or compromising with or wholly or partially releasing
               the Borrowers, any other guarantor or another person in any way;

          (2)  laches,  acquiescence,  delay, acts, omissions or mistakes on the
               part of the Lender or another person or any one or more of them;

          (3)  any  variation  or  novation  of a right of the Lender or another
               person or material  alteration  of a document,  in respect of the
               Borrowers,  the Guarantor or another  person  including,  without
               limitation,  an  increase in the limit of or other  variation  in
               connection with advances or accommodation;

          (4)  the transaction of business,  expressly or impliedly,  with, for,
               or at the request of, the  Borrowers,  the  Guarantor  or another
               person;

          (5)  changes which from time to time may take place in the membership,
               name or business of a firm, partnership, committee or association
               whether by death,  retirement,  admission or otherwise whether or
               not the Guarantor or another person was a member;

          (6)  the loss or  impairment  of any  security  given with  respect to
               either of the Loan Facility Agreements (a "Security Interest");

          (7)  a Security Interest being void, voidable or unenforceable;

          (8)  a  person  dealing  in any  way  with a  guarantee,  judgment  or
               negotiable  instrument  (including,  without limitation,  taking,
               abandoning  or  releasing   (wholly  or  partially),   realizing,
               exchanging,   varying,   abstaining  from  perfecting  or  taking
               advantage of it);

          (9)  the  death  of  any   person  or  any   insolvency,   bankruptcy,
               reorganization  or  other  similar   proceeding  (an  "Insolvency
               Event");

          (10) a change  in the  legal  capacity,  rights  or  obligations  of a
               person;

          (11) the fact that a person is a trustee,  nominee, joint owner, joint
               venturer or a member of a partnership, firm or association;

          (12) a judgment against any Borrower or another person;

          (13) the  receipt  of a  dividend  after  an  Insolvency  Event or the
               payment  of a sum or sums into the  account  of any  Borrower  or
               another  person at any time  (whether  received or paid  jointly,
               jointly and severally or otherwise);

          (14) any part of the Guaranteed Amounts being irrecoverable;

          (15) an  assignment  of  rights  in  connection  with  either  of  the
               Guaranteed Amounts;

          (16) the acceptance of repudiation or other  termination in connection
               with either of the Guaranteed Amounts;

          (17) the invalidity or  unenforceability of an obligation or liability
               of a person other than the Guarantor;

          (18) invalidity or  irregularity in the execution of this guarantee by
               the  Guarantor  or  any  deficiency  in or  irregularity  in  the
               exercise of the powers of the  Guarantor to enter into or observe
               its obligations under this guarantee and indemnity;

          (19) the opening of a new account by any  Borrower  with the Lender or
               another person or the operation of a new account;

          (20) any obligation of any Borrower  being  discharged by operation of
               law;

          (21) property  secured  under a  Security  Interest  being  forfeited,
               extinguished, surrendered, resumed or determined.

     The liability of the Guarantor under this Guarantee is not affected;

           (a)    because any other  person who was  intended to enter into this
                  Guarantee,  or otherwise become a co-surety or  co-indemnifier
                  for  payment of any of the  Guaranteed  Amounts or other money
                  payable under this  guarantee and indemnity has not done so or
                  has not done so effectively; or

           (b)    because a person  who is a  co-surety  or  co-indemnifier  for
                  payment  of any of  the  Guaranteed  Amounts  or  other  money
                  payable under this Guarantee is discharged  under an agreement
                  or under statute or a principle of law or equity.

     1.           This Guarantee shall remain in full force and effect up to the
                  date which is six months after the Maturity  Date (as the term
                  is defined in the First Loan Facility Agreement).

     2.           If at any time any amount  payable by any  Borrower  under the
                  Loan Facility Agreement to which it is a party is rescinded or
                  must be otherwise  restored or returned  upon the  insolvency,
                  bankruptcy or reorganization of any Borrower or otherwise, our
                  obligations  hereunder  with respect to such payment  shall be
                  reinstated  at such time as though  such  payment had not been
                  made.

     3.    We waive any right we may have of requiring you to proceed against or
           enforce  your rights  against any  Borrower  under the Loan  Facility
           Agreement to which it is a party or any other person  before making a
           demand under the Guarantee.

           We confirm that our rights of  subrogation  and our rights to proceed
           against any of the Borrowers  (including without limitation the right
           to initiate  legal  proceedings  against any of the Borrowers and the
           right to claim dividend from any Borrower's  estate) are subordinated
           to your rights against the Borrowers.  We shall not exercise any such
           right unless either the Guaranteed  Amounts have been paid in full or
           with your prior written consent.

     4.    Any and all  payments  under this  Guarantee  shall be made in freely
           available  funds  without  set-off or  counterclaims  and without any
           restrictions  or  condition  and free and clear of all and any taxes,
           duties, charges or other deductions or withholdings of any nature.

     5.    This Guarantee is governed by  the law in force in New  South  Wales,
           Australia.

           The undersigned hereby irrevocably and unconditionally submits to the
           non-exclusive  jurisdiction  of the  courts  of New  South  Wales and
           courts of appeal from them. The  undersigned  waives any right it has
           to object to an action  being  brought  in those  courts,  including,
           without  limitation,  by claiming that the action has been brought in
           an inconvenient forum or that those courts do not have jurisdiction.

           Without  preventing  any other mode of  service,  any  document in an
           action (including,  without limitation,  any writ of summons or other
           originating process or any third or other party notice) may be served
           on the  undersigned  by being  delivered to or left for that party at
           Scharlooweg 55 Curacao, Netherlands Antilles,  Attention: Richard van
           Heel.

     6. This Guarantee becomes effective on the date hereof.

Executed as an Agreement


Signed for and on behalf of                          )
Nedship Bank (America) N.V.                          )
in the presence of:                                  )


 ............................................



01029.004 #160636


                                                                       EXHIBIT C

                                 DRAWDOWN NOTICE


                                                                  April   , 1998





Rabo Australia Limited
Level 10, Challis House
4 Martin Place
SYDNEY 2000
NSW AUSTRALIA

Attention:

Dear Sirs:

                  Please be advised that,  in  accordance  with the terms of the
Term Loan Facility  Agreement  among (i) you, as lender (the  "Lender") and (ii)
VSSI Australia Limited (the "Borrower"),  to be dated on or about April 17, 1998
(the "Loan Agreement"),  we hereby irrevocably request that the loan be advanced
to the Borrower as follows:

          (1)  Amount: US$30,000,000 (the "Loan")

          (2)  Date Loan requested to be made available:

          (3)  Purpose: To assist the financing of the acquisition of the vessel
               DAMPIER SPIRIT

          (4)  Initial Interest Period:

          (5)  Disbursement  Instructions:  Transfer for value today US$ to your
               account at Account No. for further credit to .

                  In the event  that the Lender  shall not be obliged  under the
terms of the Loan Agreement or as a result of any other cause or circumstance to
make the Loan, the Borrower  together with the  undersigned  shall indemnify and
hold the Lender fully  harmless  against any losses which the Lender may sustain
as a result  of  borrowing  or  agreeing  to borrow  funds to meet the  drawdown
requirement in respect thereof and the certificate of such Lender shall,  absent
manifest error, be conclusive and binding on the Borrower and the undersigned as
to the extent of any such losses.

The  undersigned  hereby  represents and warrants that all corporate  action has
been taken to authorize,  and all necessary  consents and authorities  have been
obtained to permit,  the  undersigned to enter into and perform its  obligations
under this Drawdown Notice.

This Drawdown Notice is governed by the law of New South Wales.


                                                     TEEKAY SHIPPING CORPORATION
                                                     on behalf of itself and
                                                     VSSI AUSTRALIA LIMITED


                                                     By_______________________
                                                        Name:
                                                        Title:

01029.004 #160636