Document:

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                                                                    Exhibit 10.7

LOAN AGREEMENT

DATED: 2ND OCTOBER 2006

BETWEEN:

(1)  TEEKAY OFFSHORE OPERATING L.P., a limited partnership formed and existing
     under the laws of the Republic of the Marshall Islands whose registered
     office is at The Trust Company Complex, Ajeltake Island, PO Box 1405
     Majuro, The Marshall Islands, MH96960 (the "BORROWER"); and

(2)  the banks listed in Schedule 1, each acting through its office at the
     address indicated against its name in Schedule 1 (together the "LENDERS"
     and each a "LENDER"); and

(3)  DNB NOR BANK ASA, acting as agent (in that capacity the "AGENT");

(4)  DNB NOR BANK ASA, NORDEA BANK NORGE ASA, NEW YORK BRANCH and FORTIS CAPITAL
     CORP. acting as mandated lead arrangers (in that capacity each an "MLA" and
     together the "MLAS");

(5)  DNB NOR BANK ASA and NORDEA BANK NORGE ASA, NEW YORK BRANCH acting as
     bookrunners (in that capacity each a "BOOKRUNNER" and together the
     "BOOKRUNNERS"); and

(6)  DEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT acting as security agent (in that
     capacity the "SECURITY AGENT").

WHEREAS:

Each of the Lenders has agreed to advance to the Borrower its Commitment
(aggregating, with all the other Commitments, a revolving credit facility of up
to nine hundred and forty million Dollars $940,000,000) for the general
corporate purposes of the Borrower (including but not limited to the making of
intercompany loans to its shareholders and/or unitholders and Subsidiaries).

IT IS AGREED as follows:

1    DEFINITIONS AND INTERPRETATION

     1.1  In this Agreement:

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          "ADMINISTRATION" has the meaning given to it in paragraph 1.1.3 of the
          ISM Code.

          "AFFILIATE" means, in relation to any entity, a Subsidiary of that
          entity, a Holding Company of that entity or any other Subsidiary of
          that Holding Company.

          "APPROVED BROKERS" means H. Clarkson & Co. Ltd, Simpson Spence & Young
          Shipbrokers Ltd, Fearnley AS, R.S. Platou AS and P.F. Bassoe AS.

          "ASSIGNMENTS" means the deeds of assignment of Insurances, Earnings
          and Requisition Compensation, the Charter Rights (if applicable) and
          of the benefit of any relevant Charterer's Assignment, in respect of
          each of the Vessels referred to in Clause 10.1.2 (each an
          "ASSIGNMENT").

          "AUTHORISATION" means an authorisation, consent, approval, resolution,
          licence, exemption, filing, notarisation or registration.

          "BAREBOAT CHARTERS" means the bareboat charters identified in Schedule
          7 for certain of the Vessels only on the terms and subject to the
          conditions of which the relevant Charterer will bareboat charter its
          Vessel to the Bareboat Charterer.

          "BAREBOAT CHARTERER" means in respect of certain Vessels either (i)
          FIC and Transpetro or (ii) Petrojarl Production as identified against
          the names of the relevant Vessels in Schedule 7.

          "BORROWER'S ACCOUNTS" means the consolidated financial accounts of the
          Borrower to be provided to the Agent pursuant to Clause 12.1.

          "BREAK COSTS" means all sums payable by the Borrower from time to time
          under Clause 8.3.

          "BUSINESS DAY" means a day on which banks are open for business of a
          nature contemplated by this Agreement (and not authorised by law to
          close) in New York, London and any other financial centre which the
          Agent may reasonably consider appropriate for the operation of the
          provisions of this Agreement.

          "CHARTER RIGHTS" in relation to a Vessel means all rights and benefits
          accruing to the Charterer of that Vessel under or pursuant to the
          relevant Bareboat Charter and not forming part of the Earnings.

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          "CHARTERER" in respect of certain Vessels only means either UNS or TKN
          as identified against the names of the relevant Vessels in Schedule 7.

          "CHARTERER'S ASSIGNMENTS" means, in respect of NORDIC STAVANGER,
          NORDIC BRASILIA and NORDIC SPIRIT only, assignments by the relevant
          Charterer to the Owner of the Earnings and Charter Rights.

          "COMMITMENT" means, in relation to a Lender, the aggregate amount of
          the Loan which that Lender agrees to advance to the Borrower as its
          several liability as indicated against the name of that Lender in
          Schedule 1 and/or, where the context permits, the amount of the Loan
          advanced by that Lender and remaining outstanding and "COMMITMENTS"
          means more than one of them.

          "COMMITMENT COMMISSION" means the commitment commission to be paid by
          the Borrower to the Agent on behalf of the Lenders pursuant to Clause
          9.1.

          "COMMITMENT TERMINATION DATE" means the date being one (1) month
          before the Maturity Date or such later date as the Lenders may in
          their discretion agree.

          "COMPLETION OF SYNDICATION" means that the Commitments have been fully
          syndicated in a manner acceptable to the MLAs, as conclusively
          certified in writing by the Agent.

          "COMPLIANCE CERTIFICATE" means a certificate substantially in the form
          set out in Schedule 6.

          "CURRENCY OF ACCOUNT" means, in relation to any payment to be made to
          a Finance Party under a Finance Document, the currency in which that
          payment is required to be made by the terms of that Finance Document.

          "DEEDS OF COVENANTS" means the deeds of covenants referred to in
          Clause 10.1.1. (each a "DEED OF COVENANT").

          "DEFAULT" means an Event of Default or any event or circumstance
          specified in Clause 13.1 which would (with the expiry of a grace
          period, the giving of notice, the making of any determination under
          the Finance Documents or any combination of any of the foregoing) be
          an Event of Default.

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          "DOC" means, in relation to the ISM Company, a valid Document of
          Compliance issued for the ISM Company by the Administration under
          paragraph 13.2 of the ISM Code.

          "DOLLARS", "US$" and "$" each means available and freely transferable
          and convertible funds in lawful currency of the United States of
          America.

          "DRAWDOWN DATE" means the date on which a Drawing is advanced under
          Clause 4.

          "DRAWDOWN NOTICE" means a notice substantially in the form set out in
          Schedule 4.

          "DRAWING" means any one amount advanced or to be advanced pursuant to
          a Drawdown Notice or, where the context permits, the amount advanced
          and for the time being outstanding and "DRAWINGS" means more than one
          of them.

          "EARNINGS" in relation to a Vessel means all hires, freights, pool
          income and other sums payable to or for the account of the Owner or
          the relevant Charterer in respect of that Vessel including (without
          limitation) all remuneration for salvage and towage services,
          demurrage and detention moneys, contributions in general average,
          compensation in respect of any requisition for hire, and damages and
          other payments (whether awarded by any court or arbitral tribunal or
          by agreement or otherwise) for breach, termination or variation of any
          contract for the operation, employment or use of that Vessel.

          "ENCUMBRANCE" means a mortgage, charge, assignment, pledge, lien, or
          other security interest securing any obligation of any person or any
          other agreement or arrangement having a similar effect.

          "ENVIRONMENTAL AFFILIATE" means an agent or employee of the Owner or a
          person in a contractual relationship with the Owner in respect of the
          Vessel owned by it (including without limitation, the operation of or
          the carriage of cargo of such Vessel).

          "ENVIRONMENTAL APPROVALS" means any present or future permit, licence,
          approval, ruling, variance, exemption or other authorisation required
          under the applicable Environmental Laws.

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          "ENVIRONMENTAL CLAIM" means any and all enforcement, clean-up,
          removal, administrative, governmental, regulatory or judicial actions,
          orders, demands or investigations instituted or completed pursuant to
          any Environmental Laws or Environmental Approvals together with any
          claims made by any third person relating to damage, contribution, loss
          or injury resulting from any Environmental Incident.

          "ENVIRONMENTAL INCIDENT" means:

          (a)  any release of Environmentally Sensitive Material from a Vessel;
               or

          (b)  any incident in which Environmentally Sensitive Material is
               released from a vessel other than a Vessel and which involves a
               collision between a Vessel and such other vessel or some other
               incident of navigation or operation, in either case, in
               connection with which the relevant Vessel is actually or
               potentially liable to be arrested, attached, detained or
               injuncted and/or where any guarantor, any manager (or any
               sub-manager of such Vessel) or any of its officers, employees or
               other persons retained or instructed by it (or such sub-manager)
               are at fault or allegedly at fault or otherwise liable to any
               legal or administrative action; or

          (c)  any other incident in which Environmentally Sensitive Material is
               released otherwise than from such Vessel and in connection with
               which that Vessel is actually or potentially liable to be
               arrested and/or where any guarantor, any manager (or any
               sub-manager of the relevant Vessel) or any of its officers,
               employees or other persons retained or instructed by it (or such
               sub-manager) are at fault or allegedly at fault or otherwise
               liable to any legal or administrative action.

          "ENVIRONMENTAL LAWS" means all present and future laws, regulations,
          treaties and conventions of any applicable jurisdiction which:

          (a)  have as a purpose or effect the protection of, and/or prevention
               of harm or damage to, the environment;

          (b)  relate to the carriage of Environmentally Sensitive Material or
               to actual or threatened releases of Environmentally Sensitive
               Material;

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          (c)  provide remedies or compensation for harm or damage to the
               environment; or

          (d)  relate to Environmentally Sensitive Materials or health or safety
               matters.

          "ENVIRONMENTALLY SENSITIVE MATERIAL" means (i) oil and oil products
          and (ii) any other waste, pollutant, contaminant or other substance
          (including any liquid, solid, gas, ion, living organism or noise) that
          may be harmful to human health or other life or the environment or a
          nuisance to any person or that may make the enjoyment, ownership or
          other territorial control of any affected land, property or waters
          more costly for such person to a material degree.

          "EVENT OF DEFAULT" means any of the events or circumstances set out in
          Clause 13.1.

          "EXECUTION DATE" means the date on which this Agreement is executed by
          each of the parties hereto.

          "FACILITY" means the reducing revolving credit facility made available
          by the Lenders to the Borrower pursuant to this Agreement.

          "FACILITY OUTSTANDINGS" means the total of all Drawings made at that
          time, to the extent not reduced by repayments, prepayments and
          voluntary reductions.

          "FACILITY PERIOD" means the period beginning on the date of this
          Agreement and ending on the date when the whole of the Indebtedness
          has been repaid in full and the Security Parties have ceased to be
          under any further actual or contingent liability to the Finance
          Parties under or in connection with the Finance Documents.

          "FEE LETTER" means the letters dated 30 August 2006 between the
          Borrower and the Agent and/or the Bookrunners and/or the MLAs as
          applicable setting out any of the fees referred to in Clause 9.

          "FIC" means Fronape International Company of P.O. Box 714, Georgetown,
          Grand Cayman, Cayman Islands.

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          "FINANCE DOCUMENTS" means this Agreement, the Security Documents, any
          Fee Letter and any other document designated as such by the Agent and
          the Borrower and "FINANCE DOCUMENT" means any one of them.

          "FINANCE PARTIES" means the Agent, the Security Agent, the MLAs, the
          Bookrunners and the Lenders and "FINANCE PARTY" means any one of them.

          "FIRST DRAWDOWN DATE" means the date on which the first Drawing is
          advanced under Clause 4.

          "FREE LIQUIDITY" means cash, cash equivalents and marketable
          securities of maturities less than one (1) year to which the Group
          shall have free, immediate and direct access each as reflected in the
          Borrower's most recent quarterly management accounts forming part of
          the Borrower's Accounts.

          "GAAP" means generally accepted accounting principles in the United
          States of America.

          "GROUP" means the Borrower and each of its Subsidiaries.

          "GUARANTEE" means the guarantee and indemnity referred to in Clause
          10.1.3.

          "GUARANTOR" means the Owner and/or (where the context permits) any
          other person who shall at any time during the Facility Period give to
          the Lenders or to the Security Agent on their behalf a guarantee
          and/or indemnity for the repayment of all or part of the Indebtedness.

          "HEAD CHARTER", in respect of NORDIC STAVANGER, NORDIC BRASILIA and
          NORDIC SPIRIT only, means the charter between the Owner and the
          relevant Charterer.

          "HOLDING COMPANY" means, in relation to any entity, any other entity
          in respect of which it is a Subsidiary.

          "INDEBTEDNESS" means the aggregate from time to time of: the amount of
          the Loan outstanding; all accrued and unpaid interest on the Loan; and
          all other sums of any nature (together with all accrued and unpaid
          interest on any of those sums) which from time to time may be payable
          by the Borrower to any of the Finance Parties under all or any of the
          Finance Documents.

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          "INITIAL VESSELS" means the Vessels listed in Schedule 7 Part 1 and
          everything now or in the future belonging to them on board and ashore
          (each an "INITIAL VESSEL").

          "INSURANCES" in relation to a Vessel means all policies and contracts
          of insurance (including all entries in protection and indemnity or war
          risks associations) which are from time to time taken out or entered
          into in respect of or in connection with that Vessel or her increased
          value and (where the context permits) all benefits under such
          contracts and policies, including all claims of any nature and returns
          of premium.

          "INTEREST PAYMENT DATE" means each date for the payment of interest in
          accordance with Clause 7.7.

          "INTEREST PERIOD" means each period for the payment of interest
          selected by the Borrower or agreed by the Agent pursuant to Clause 7.

          "ISM CODE" means the International Management Code for the Safe
          Operation of Ships and for Pollution Prevention.

          "ISM COMPANY" means, at any given time, the company responsible for a
          Vessel's compliance with the ISM Code under paragraph 1.1.2 of the ISM
          Code.

          "ISPS" CODE" means the International Ship and Port Facility Security
          Code.

          "ISPS COMPANY" means, at any given time, the company responsible for a
          Vessel's compliance with the ISPS Code.

          "ISSC" means a valid international ship security certificate for a
          Vessel issued under the ISPS Code.

          "LAW" or "LAW" means any law, statute, treaty, convention, regulation,
          instrument or other subordinate legislation or other legislative or
          quasi-legislative rule or measure, or any order or decree of any
          government, judicial or public or other body or authority, or any
          directive, code of practice, circular, guidance note or other
          direction issued by any competent authority or agency (whether or not
          having the force of law).

          "LIBOR" means:

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          (a)  the applicable Screen Rate; or

          (b)  (if no Screen Rate is available for any Interest Period) the
               arithmetic mean of the rates (rounded upwards to four decimal
               places) as supplied to the Agent at its request quoted by the
               Reference Banks (or by two of them if one is unable to quote) to
               leading banks in the London interbank market,

          at 11.00 a.m. London time two (2) Business Days before the first day
          of the relevant Interest Period for the offering of deposits in
          Dollars in an amount comparable to the Loan (or any relevant part of
          the Loan) and for a period comparable to the relevant Interest Period.

          "LOAN" means the aggregate amount advanced or to be advanced by the
          Lenders to the Borrower under Clause 4 or, where the context permits,
          the amount advanced and for the time being outstanding.

          "MAJORITY LENDERS" means a Lender or Lenders whose Commitments
          aggregate more than sixty six and two thirds per cent (66 2/3%) of the
          aggregate of all the Commitments.

          "MANAGEMENT AGREEMENT" means any agreement(s) for the commercial
          and/or technical management of the Vessels entered into between the
          Owner and a company which is not controlled either by Teekay Shipping
          Corporation or the Borrower.

          "MANAGERS" in relation to each Vessel means a management company which
          is controlled by Teekay Shipping Corporation or such other commercial
          and/or technical managers of the Vessels nominated by the Borrower as
          the Agent acting on the instructions of the Majority Lenders may
          approve such approval not to be unreasonably withheld or delayed.

          "MANDATORY COST" means the percentage rate per annum calculated by the
          Agent in accordance with Schedule 3.

          "MARGIN" means nought point six two five per cent (0.625%) per annum.

          "MATERIAL ADVERSE EFFECT" means a material adverse change in, or a
          material adverse effect on:

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          (a)  the financial condition, assets, prospects or business of any
               Security Party or on the consolidated financial condition,
               assets, prospects or business of the Group;

          (b)  the ability of any Security Party to perform and comply with its
               obligations under any Security Document or to avoid any Event of
               Default;

          (c)  the validity, legality or enforceability of any Security
               Document; or

          (d)  the validity, legality or enforceability of any security
               expressed to be created pursuant to any Security Document or the
               priority and ranking of any such security,

          provided that, in determining whether any of the forgoing
          circumstances shall constitute such a material adverse change or
          material adverse effect for the purposes of this definition, the
          Finance Parties shall consider such circumstance in the context of (x)
          the Group taken as a whole and (y) the ability of the Borrower and the
          Guarantor to perform each of their obligations under the Security
          Documents.

          "MATURITY DATE" means the earlier of (i) the date falling ninety six
          (96) months after the First Drawdown Date and (ii) 31 October 2014.

          "MATERIAL SUBSIDIARY" means:

          any Subsidiary of the Borrower whose assets, as determined in
          accordance with GAAP and as shown from the most recent financial
          statements available to the Agent relating to it, as multiplied by the
          Relevant Percentage in respect of such Subsidiary, equal or exceed 10%
          of the aggregate value of the assets of the Group as determined in
          accordance with GAAP and as shown from the most recently available
          financial statements of the Group,

          provided that:

          (i)  in respect of any Subsidiary of the Borrower, only the value of
               its assets as multiplied by the Relevant Percentage in respect of
               such

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               Subsidiary shall be taken into account in the computation of the
               value of the assets of the Group;

          (ii) a statement by the auditors of the Borrower to the effect that,
               in their opinion, a Subsidiary of the Borrower is or is not or
               was or was not at any particular time a Material Subsidiary
               shall, in the absence of manifest error, be conclusive and
               binding on each of the parties to this Agreement.

          "MAXIMUM AMOUNT" means

          (i)  prior to the Step-up Date, five hundred and twenty million
               Dollars ($520,000,000); and

          (ii) on or after the Step-up Date, nine hundred and forty million
               Dollars ($940,000,000),

          as reduced from time to time in accordance with Clause 3.4 and/or
          Clause 7.9.5.

          THE "MLP" means Teekay Offshore Partners L.P.

          "MORTGAGES" means the statutory mortgages referred to in Clause 10.1.1
          together with the Deeds of Covenants.

          "NECESSARY AUTHORISATIONS" means all Authorisations of any person
          including any government or other regulatory authority required by
          applicable Law to enable it to:

          (a)  lawfully enter into and perform its obligations under the
               Security Documents to which it is party;

          (b)  ensure the legality, validity, enforceability or admissibility in
               evidence in England and, if different, its jurisdiction of
               incorporation, of such Security Documents to which it is party;
               and

          (c)  carry on its business from time to time.

          "OWNER" means Teekay Navion Offshore Loading Pte Ltd, a company
          incorporated according to the law of Singapore with company
          registration no.

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          20041820N whose registered office is at 8 Shenton Way, #44-04 Temasek
          Tower, Singapore 068811 at all times to be a Subsidiary of the
          Borrower.

          "PETROATLANTIC" means Petroatlantic L.L.C. of Trust Company Complex,
          Ajeltake Road, Ajeltake Island, Majuro, The Marshall Islands, MH96960.

          "PETROL GEO" means Petroleum Geo Services ASA of Strandveien 50,
          Postboks 89, N-1324 Lysaker.

          "PETROJARL PRODUCTION" means Petrojarl Production AS of Beddingen 16,
          7405 Trondheim, Norway (formerly known as Golar-Nor Offshore AS).

          "PETROJARL" means Petrojarl ASA of Beddingen 16, 7405 Trondheim,
          Norway.

          "PETRONORDIC" means Petronordic LLC of Trust Company Complex,
          Ajelktake Road, Ajeltake Island, Majuro, The Marshall Islands,
          MH96960.

          "PERMITTED ENCUMBRANCE" means (i) any Encumbrance which has the prior
          written approval of the Agent acting on the instructions of all the
          Lenders or (ii), or any liens for current crews' wages and salvage and
          liens incurred in the ordinary course of trading a Vessel up to an
          aggregate amount at any time not exceeding ten million Dollars
          ($10,000,000).

          "PRE-APPROVED CLASSIFICATION SOCIETY" means any of Det norske Veritas,
          Lloyds Register, American Bureau of Shipping (ABS), Germanischer Lloyd
          or Bureau Veritas or such other classification society acceptable to
          the Majority Lenders.

          "PRE-APPROVED FLAG" means Marshall Islands, Norwegian International
          Ship Registry, Liberia, Panama, Isle of Man, Cayman Islands, Bermuda,
          Bahamas, Singapore or (in the case of "NAVION STAVANGER", "NORDIC
          BRASILIA", "NORDIC SPIRIT" and any other Vessels on charter to
          Transpetro) Registro Especial Brasileiro

          "PROPORTIONATE SHARE" means, at any time, the proportion which a
          Lender's Commitment (whether or not advanced) then bears to the
          aggregate Commitments of all the Lenders (whether or not advanced)
          being on the Execution Date the percentage indicated against the name
          of that Lender in Schedule 1.

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          "QUIET ENJOYMENT LETTERS" means those letters between the Agent and
          the Bareboat Charterer relating to those Vessels subject to Bareboat
          Charters.

          "REDUCTION DATE" means each date falling at consecutive six monthly
          intervals after the earlier to occur of (i) the First Drawdown Date
          and (ii) 31 October 2006.

          "REFERENCE BANKS" means, in relation to LIBOR, the principal London
          offices of each of the MLAs or such other banks as may be appointed by
          the Agent in consultation with the Borrower.

          "RELEVANT DOCUMENTS" means the Finance Documents, the Bareboat
          Charters, the Charterer's Assignments, the Quiet Enjoyment Letters and
          the Management Agreements.

          "RELEVANT PERCENTAGE" means, in respect of any Subsidiary of the
          Borrower at any time, the percentage of the equity share capital or
          the partnership capital, as the case may be, of such Subsidiary which
          is beneficially owned (free from Encumbrances) by the Borrower at such
          time.

          "RELEVANT REDUCTION AMOUNT" means, in respect of each Vessel, a figure
          equal to (x) a fraction in which (i) the numerator is the market value
          of such Vessel (based on the most recent Valuation) and (ii) the
          denominator is the aggregate market value of all the Vessels (based on
          the most recent Valuations) multiplied by (y) the Maximum Amount.

          "REPLACEMENT VESSEL" means a vessel acceptable to the Agent acting on
          the instructions of the Majority Lenders.

          "REQUISITION COMPENSATION" in relation to a Vessel means all
          compensation or other money which may from time to time be payable to
          the Owner as a result of that Vessel being requisitioned for title or
          in any other way compulsorily acquired (other than by way of
          requisition for hire).

          "SAME DAY DRAWING", means, in respect of the first drawing only, a
          Drawing requested by the Borrower prior to 1600 hours (New York time)
          on the day before the First Drawdown Date and made by the Lenders on
          the First Drawdown Date.

          "SCREEN RATE" means in relation to LIBOR, the British Bankers'
          Association Interest Settlement Rate for the relevant currency and
          period displayed on the

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          appropriate page of the Reuters page LIBOR 01 (or such other page or
          pages which replace(s) such page for the purposes of displaying
          offered rates of leading banks, for deposits in Dollars of amounts
          equal to the amount of the relevant Drawing for a period equal in
          length to the relevant Interest Period.

          "SECURITY DOCUMENTS" means the Mortgages, the Deeds of Covenants, the
          Assignments, the Guarantee, or (where the context permits) any one or
          more of them and any other agreement or document which may at any time
          be executed by any person as security for the payment of all or any
          part of the Indebtedness and "SECURITY DOCUMENT" means any one of
          them.

          "SECURITY PARTIES" means at any relevant time, the Borrower, the
          Guarantor and any other person who may at any time during the Facility
          Period be liable for, or provide security for, all or any part of the
          Indebtedness (but for the avoidance of doubt shall not include the
          Charterer or Bareboat Charterer), and "SECURITY PARTY" means any one
          of them.

          "SMC" means a valid safety management certificate issued for a Vessel
          by or on behalf of the Administration under paragraph 13.7 of the ISM
          Code.

          "SMS" means a safety management system for a Vessel developed and
          implemented in accordance with the ISM Code.

          "STEP-UP DATE" means the date on which the Agent confirms that both
          (i) all of the conditions set out in Part III of Schedule 2 have been
          satisfied and (ii) Completion of Syndication has occurred.

          "STEP-UP VESSELS" means the Vessels listed in Schedule 7 Part II and
          everything now or in the future belonging to them on board and ashore
          (each a "STEP-UP VESSEL").

          "SUBSIDIARY" means a subsidiary undertaking, as defined in section 736
          Companies Act 1985 or any analogous definition under any other
          relevant system of law.

          "TAX" means any tax, levy, impost, duty or other charge or withholding
          of a similar nature (including any penalty or interest payable in
          connection with any

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          failure to pay or any delay in paying any of the same) and "TAXATION"
          shall be interpreted accordingly.

          "TKN" means Teekay Norway AS of Verven 4, N-4014, P.O. Box 8035,
          N-4068, Stavanger, Norway.

          "TOTAL DEBT" means the aggregate of:-

          (a)  the amount calculated in accordance with GAAP shown as each of
               "long term debt", "short term debt" and "current portion of long
               term debt" on the latest consolidated balance sheet of the
               Borrower; and

          (b)  the amount of any liability in respect of any lease or hire
               purchase contract entered into by the Borrower or any of its
               Subsidiaries which would, in accordance with GAAP, be treated as
               a finance or capital lease (excluding any amounts applicable to
               leases to the extent that the lease obligations are secured by a
               security deposit which is held on the balance sheet under
               "RESTRICTED CASH").

          "TOTAL LOSS" in relation to a Vessel means:

          (a)  an actual, constructive, arranged, agreed or compromised total
               loss of that Vessel; or

          (b)  the requisition for title or compulsory acquisition,
               nationalisation or expropriation of that Vessel by or on behalf
               of any government or other authority (other than by way of
               requisition for hire); or

          (c)  the capture, seizure, arrest, detention or confiscation of that
               Vessel unless the Vessel is released and returned to the
               possession of the Owner within ninety (90) days after the
               capture, seizure, arrest, detention or confiscation in question.

          "TRANSFER CERTIFICATE" means a certificate substantially in the form
          set out in Schedule 5 or any other form agreed between the Agent and
          the Borrower.

          "TRANSFER DATE" means, in relation to any Transfer Certificate, the
          date for the making of the Transfer specified in the schedule to such
          Transfer Certificate.

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<PAGE>

          "TRANSPETRO" means Petrobras Transporte S.A. - Transpetro of Av
          Presidente Vargas, 328, 20091-060 Rio de Janeiro, R.J. Brazil.

          "TRUST PROPERTY" means:

          (a)  all benefits derived by the Security Agent from Clause 10; and

          (b)  all benefits arising under (including, without limitation, all
               proceeds of the enforcement of) each of the Security Documents,

          with the exception of any benefits arising solely for the benefit of
          the Security Agent.

          "UNS" means Ugland Nordic Shipping AS of P.O. Box 54, 3201 Sandefjord,
          Norway a company formed by the merger under Norwegian law of Ugland
          Nordic Investment AS and Ugland Nordic Shipping AS.

          "VALUATION" means in relation to a Vessel or a Replacement Vessel, the
          written valuation of that Vessel or Replacement Vessel expressed in
          Dollars prepared by one of the Approved Brokers (or such other firm of
          reputable independent shipbrokers as may be acceptable to the Majority
          Lenders) to be nominated by the Borrower, such nomination to be
          subject to the approval of the Agent. Such valuations shall be
          prepared at the Borrower's expense, without a physical inspection, on
          the basis of a sale for prompt delivery for cash at arm's length
          between a willing buyer and a willing seller without the benefit of
          any charterparty or other engagement.

          "VESSELS" means the vessels listed in Schedule 7 (comprising the
          Initial Vessels and the Step-up Vessels and including any Replacement
          Vessel) and everything now or in the future belonging to them on board
          and ashore (each a "VESSEL)".

          "WSJ PRIME RATE" means the "Prime Rate" as published in the printed
          copy of the Wall Street Journal on any particular day as the same may
          be adjusted from time to time.

     1.2  In this Agreement:

          1.2.1 words denoting the plural number include the singular and vice
               versa;

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<PAGE>

          1.2.2 words denoting persons include corporations, partnerships,
               associations of persons (whether incorporated or not) or
               governmental or quasi-governmental bodies or authorities and vice
               versa;

          1.2.3 references to Recitals, Clauses and Schedules are references to
               recitals, clauses and schedules to or of this Agreement;

          1.2.4 references to this Agreement include the Recitals and the
               Schedules;

          1.2.5 the headings and contents page(s) are for the purpose of
               reference only, have no legal or other significance, and shall be
               ignored in the interpretation of this Agreement;

          1.2.6 references to any document (including, without limitation, to
               all or any of the Relevant Documents) are, unless the context
               otherwise requires, references to that document as amended,
               supplemented, novated or replaced from time to time;

          1.2.7 references to statutes or provisions of statutes are references
               to those statutes, or those provisions, as from time to time
               amended, replaced or re-enacted;

          1.2.8 references to any Finance Party include its successors,
               transferees and assignees;

          1.2.9 a time of day (unless otherwise specified) is a reference to New
               York time.

     1.3  OFFER LETTER

          This Agreement supersedes the terms and conditions contained in any
          correspondence relating to the subject matter of this Agreement
          exchanged between any Finance Party and the Borrower or their
          representatives prior to the date of this Agreement.

                                       17

<PAGE>

2    THE LOAN AND ITS PURPOSES

     2.1  AMOUNT Subject to the terms of this Agreement, each of the Lenders
          agrees to make available to the Borrower its Commitment of a revolving
          credit in an aggregate amount not exceeding the Maximum Amount at any
          one time.

     2.2  FINANCE PARTIES' OBLIGATIONS The obligations of each Finance Party
          under the Finance Documents are several. Failure by a Finance Party to
          perform its obligations under the Finance Documents does not affect
          the obligations of any other party to the Finance Documents. No
          Finance Party is responsible for the obligations of any other Finance
          Party under the Finance Documents.

     2.3  PURPOSES The Borrower shall apply the Loan for the purpose referred to
          in the Recital.

     2.4  MONITORING No Finance Party is bound to monitor or verify the
          application of any amount borrowed under this Agreement.

3    CONDITIONS OF UTILISATION

     3.1  CONDITIONS PRECEDENT Before any Lender shall have any obligation to
          advance any Drawing under the Facility the Borrower shall deliver or
          cause to be delivered to or to the order of the Agent all of the
          documents and other evidence listed in Part I of Schedule 2.

     3.2  FURTHER CONDITIONS PRECEDENT The Lenders will only be obliged to
          advance a Drawing if on the date of the Drawdown Notice and on the
          proposed Drawdown Date:

          3.2.1 no Default is continuing or would result from the advance of
               that Drawing; and

          3.2.2 the representations made by the Borrower under Clause 11 are
               true in all material respects.

     3.3  DRAWING LIMIT The Lenders will only be obliged to advance a Drawing
          if:

          3.3.1 no other Drawing has been made on the same Business Day;

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<PAGE>

          3.3.2 that Drawing will not result in there being more than seven
               Drawings outstanding at any one time;

          3.3.3 that Drawing is not less than five million Dollars ($5,000,000)
               and in an integral multiple of one million Dollars ($1,000,000);
               and

          3.3.4 that Drawing will not increase the outstanding amount of the
               Loan to a sum in excess of the Maximum Amount.

          The First Drawdown Date must occur on or before 31 October 2006 or
          such later date as the Majority Lenders shall agree.

     3.4  FACILITY REDUCTION

          3.4.1 The amount of the Facility available to the Borrower for drawing
               under this Agreement shall, subject to the provisions of Clause
               3.4.5, be five hundred and twenty million Dollars ($520,000,000)
               prior to the Step-up Date and nine hundred and forty million
               Dollars ($940,000,000) during the period from the Step-up Date
               until the first Reduction Date. On the Reduction Dates the amount
               of the Facility available for drawing shall be reduced by the
               amounts set out in Schedule 8 (the "INITIAL REDUCTION AMOUNTS").
               On the Maturity Date the Facility available shall be reduced to
               zero. Subject to the proviso hereto, the mandatory reductions in
               the amount of the Facility available for drawing required
               pursuant to this Clause will be made in the amounts and at the
               times specified whether or not the Maximum Amount is reduced
               pursuant to Clause 3.4.2, Clause 3.4.3, Clause 3.4.4, Clause 6.1
               or Clause 7.9. PROVIDED ALWAYS THAT any reductions pursuant to
               Clause 3.4.2 (voluntary reductions), Clause 3.4.3 (sale) or
               Clause 3.4.4 (Total Loss) shall be applied to the remaining
               mandatory reductions hereunder on a pro rata basis.

          3.4.2 The Borrower may voluntarily cancel the Maximum Amount in whole
               or in part in an amount of not less than five million Dollars
               ($5,000,000) such amount to be in integral multiples of one
               million Dollars ($1,000,000) (or as otherwise may be agreed by
               the Agent), provided that it has first given to the Agent not
               fewer than five (5) Business Days' prior written notice expiring
               on a Business Day (the "CANCELLATION DATE") of

                                       19

<PAGE>

               its desire to reduce the Maximum Amount; such notice once
               received by the Agent shall be irrevocable and shall oblige the
               Borrower to make payment of all interest and Commitment
               Commission accrued on the amount so cancelled up to and including
               the Cancellation Date together with any Break Costs in respect of
               such cancelled amount if the Cancellation Date is not the final
               day of an Interest Period. Any such reduction in the Maximum
               Amount shall not be reversed. If, as a result of any such
               cancellation, the Loan outstanding would exceed the Maximum
               Amount, the Borrower shall, on the Cancellation Date, prepay such
               amount of the Loan as will ensure that the Loan outstanding is
               not greater than the Maximum Amount.

          3.4.3 In the event of a sale or disposal of a Vessel or the Agent
               having received not less than 5 Business Days' notice from the
               Borrower requesting that the security relating to a Vessel be
               released and discharged (a "RELEASED VESSEL"), the Maximum Amount
               shall be reduced by the Relevant Reduction Amount applicable to
               that Vessel, such reduction to be applied on a pro rata basis
               against the Initial Reduction Amounts as reduced from time to
               time in accordance with this clause 3.4. Such reduction shall be
               made in the case of a sale or disposal of such Vessel on the date
               of such sale or disposal and in the case of a Released Vessel on
               the date proposed by the Borrower for release and discharge of
               the security relating to that Vessel unless the Vessel or
               Released Vessel in question is replaced on or prior to the sale,
               disposal or release with a Replacement Vessel and in such case of
               replacement any security held by the Agent (whether directly or
               indirectly) from the Owner and over such Vessel or Released
               Vessel is reconstituted immediately after the sale to the new
               owner or after the release and discharge of security (as the case
               may be) or over the Replacement Vessel in substantially identical
               form, and the Agent obtains favourable legal opinions in respect
               of such reconstituted security. If, as a result of any reduction
               in the Maximum Amount pursuant to this Clause, the Loan
               outstanding would exceed the Maximum Amount, the Borrower shall,
               on the date of the sale, disposal or replacement, prepay such
               amount of the Loan as will ensure that the Loan outstanding is
               not greater than the Maximum Amount. Any such prepayment shall
               oblige the Borrower to

                                       20

<PAGE>

               make payment of all interest and Commitment Commission accrued on
               the amount so reduced up to and including the date of reduction
               together with any Break Costs in respect of such reduced amount
               if the date of such reduction is not the final day of an Interest
               Period. Any such reduction in the Maximum Amount shall not be
               reversed.

          3.4.4 In the event that any Vessel becomes a Total Loss, on the
               earlier to occur of (a) the date of receipt of the proceeds of
               the Total Loss and (b) the date falling one hundred and eighty
               (180) days after the occurrence of the Total Loss (the "REDUCTION
               DATE"), the Maximum Amount shall (subject to the proviso hereto)
               be reduced by the Relevant Reduction Amount in respect of such
               Vessel. Any such reductions in the Maximum Amount shall not be
               reversed. If, as a result of any reduction in the Maximum Amount
               pursuant to this Clause the Loan outstanding would exceed the
               Maximum Amount, the Borrower shall, on the earlier to occur of
               (i) the date on which the Owner receives the proceeds of such
               Total Loss and (ii) the one hundred and eightieth day after the
               date of such Total Loss occurring, prepay such amount of the Loan
               as will ensure that the Loan outstanding is equal to or less than
               the Maximum Amount. Any such prepayment shall not be reborrowed
               and Clause 8.3 shall apply to any such prepayment. PROVIDED
               ALWAYS that if there is an investment in a Replacement Vessel on
               or prior to the Reduction Date, and a guarantee from the owner of
               the Replacement Vessel (in substantially the same form as the
               Guarantee or such other form as the Majority Lenders may require
               at that time) and security over such Replacement Vessel
               acceptable to the Majority Lenders in their absolute discretion
               is also executed and delivered either prior to or on the
               Reduction Date, then the reduction in the Maximum Amount shall
               not apply.

          3.4.5 To the extent that repayments or prepayments made by the
               Borrower to the Agent in accordance with this Agreement reduce
               the Loan outstanding to less than the Maximum Amount, the
               Borrower shall again be entitled to make Drawings up to the
               Commitment Termination Date in accordance with and subject to the
               terms of this Agreement. Any part of the Facility which is
               undrawn on the Commitment Termination Date shall be automatically
               cancelled.

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<PAGE>

          3.4.6 Simultaneously with each reduction of the Maximum Amount in
               accordance with Clause 3.4.1, Clause 3.4.2, Clause 3.4.3 or
               Clause 3.4.4 (as the case may be), the Commitment of each Lender
               will reduce so that the Commitments of the Lenders in respect of
               the reduced Maximum Amount remain in accordance with their
               respective Proportionate Shares.

     3.5  TERMINATION DATE No Lender shall be under any obligation to advance
          all or any part of its Commitment after the Commitment Termination
          Date.

     3.6  CONDITIONS SUBSEQUENT The Borrower undertakes to deliver or to cause
          to be delivered to the Agent:

          3.6.1 on, or as soon as practicable after, the First Drawdown Date the
               additional documents and other evidence listed in Part II of
               Schedule 2; and

          3.6.2 on, or as soon as practicable after, the Step-up Date the
               additional documents and other evidence listed in Part IV of
               Schedule 2.

     3.7  NO WAIVER If the Lenders in their sole discretion agree to advance a
          Drawing to the Borrower before all of the documents and evidence
          required by Clause 3.1 have been delivered to or to the order of the
          Agent, the Borrower undertakes to deliver all outstanding documents
          and evidence to or to the order of the Agent no later than the date
          specified by the Agent.

          The advance of all or any part of the Loan under this Clause 3.7 shall
          not be taken as a waiver of the Lenders' right to require production
          of all the documents and evidence required by Clause 3.1.

     3.8  FORM AND CONTENT All documents and evidence delivered to the Agent
          under this Clause 3 shall:

          3.8.1 be in form and substance reasonably acceptable to the Agent; and

          3.8.2 if reasonably required by the Agent, be certified, notarised,
               legalised or attested in a manner acceptable to the Agent.

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<PAGE>

4    ADVANCE

     4.1  DRAWDOWN REQUEST The Borrower may request a Drawing to be advanced in
          one amount on any Business Day prior to the Commitment Termination
          Date by delivering to the Agent a duly completed Drawdown Notice not
          more than ten (10) and not fewer than three (3) Business Days before
          the proposed Drawdown Date save in respect of a Same Day Drawing.

     4.2  LENDERS' PARTICIPATION Subject to Clauses 2 and 3, the Agent shall
          promptly notify each Lender of the receipt of a Drawdown Notice,
          following which each Lender shall advance its Proportionate Share of
          the relevant Drawing to the Borrower through the Agent on the relevant
          Drawdown Date.

5    REPAYMENT

     5.1  REPAYMENT OF EACH DRAWING The Borrower agrees to repay each Drawing to
          the Agent for the account of the Lenders on the last day of the
          Interest Period in respect of that Drawing unless the Borrower selects
          a further Interest Period for that Drawing in accordance with Clause 7
          provided that the Borrower shall not be permitted to select such a
          further Interest Period if a Default has occurred and shall then be
          obliged to repay such Drawing on the last day of its then current
          Interest Period. The Borrower shall on the Maturity Date repay to the
          Agent as agent for the Lenders all Facility Outstandings.

     5.2  REBORROWING Amounts of the Loan which are repaid or prepaid shall be
          available for reborrowing in accordance with Clause 3 prior to the
          Commitment Termination Date.

6    PREPAYMENT

     6.1  ILLEGALITY If it becomes unlawful in any jurisdiction for a Lender to
          fund or maintain its Commitment as contemplated by this Agreement or
          to fund or maintain the Loan:

          6.1.1 that Lender shall promptly notify the Agent of that event;

          6.1.2 upon the Agent notifying the Borrower, the Commitment of that
               Lender (to the extent not already advanced) will be immediately
               cancelled; and

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<PAGE>

          6.1.3 the Borrower shall repay that Lender's Proportionate Share of
               any Drawing on the last day of its current Interest Period or, if
               earlier, the date specified by that Lender in the notice
               delivered to the Agent and notified by the Agent to the Borrower
               (being no earlier than the last day of any applicable grace
               period permitted by law) and the Maximum Amount shall be reduced
               by the amount of that Lender's Commitment in the Loan. Prior to
               the date on which repayment is required to be made under this
               Clause 6.1.3 the affected Lender shall negotiate in good faith
               with the Borrower to find an alternative method or lending base
               in order to maintain the Facility.

     6.2  VOLUNTARY PREPAYMENT OF LOAN The Borrower may prepay the whole or any
          part of a Drawing (but, if in part, being an amount that reduces that
          Drawing by a minimum amount of five million Dollars ($5,000,000))
          provided that it gives the Agent not less than three (3) Business
          Days' prior notice.

     6.3  RESTRICTIONS Any notice of prepayment given under this Clause 6 shall
          be irrevocable and, unless a contrary indication appears in this
          Agreement, shall specify the date or dates upon which the relevant
          prepayment is to be made and the amount of that prepayment.

          Any prepayment under this Agreement shall be made together with
          accrued interest on the amount prepaid and, subject to any Break
          Costs, without premium or penalty.

          If the Agent receives a notice under this Clause 6 it shall promptly
          forward a copy of that notice to the Borrower or the Lenders, as
          appropriate.

     6.4  MANDATORY PREPAYMENT If at any time the Facility Outstandings shall
          exceed the Maximum Amount the Borrower shall immediately prepay to the
          Agent on behalf of the Lenders such amounts as will ensure that the
          Facility Outstandings do not exceed the Maximum Amount and shall pay
          to the Lenders all interest accrued on the amount prepaid up to and
          including the date on which such prepayment occurred.

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<PAGE>

7    INTEREST

     7.1  INTEREST PERIODS The period during which each Drawing shall be
          outstanding under this Agreement shall be an Interest Period of one,
          three or six months' duration, as selected by the Borrower in the
          Drawdown Notice in respect of the Drawing in question, or such other
          duration as may be agreed by the Agent (acting on the instructions of
          all the Lenders). Not more than five one (1) month Interest Periods
          may be selected by the Borrower in each twelve (12) month period.

     7.2  BEGINNING AND END OF INTEREST PERIODS The first Interest Period in
          respect of each Drawing shall begin on the Drawdown Date of that
          Drawing and shall end on the last day of the Interest Period selected
          in accordance with Clause 7.1. Any subsequent Interest Period selected
          in respect of each Drawing shall commence on the day following the
          last day of its previous Interest Period and shall end on the last day
          of its current Interest Period selected in accordance with Clause 7.1.

     7.3  INTEREST PERIODS TO MEET MATURITY DATE If an Interest Period for a
          Drawing would otherwise expire after the Maturity Date, the Interest
          Period for that Drawing shall expire on the Maturity Date.

     7.4  NON-BUSINESS DAYS If an Interest Period would otherwise end on a day
          which is not a Business Day, that Interest Period will instead end on
          the next Business Day in that calendar month (if there is one) or the
          preceding Business Day (if there is not).

     7.5  INTEREST RATE During each Interest Period interest shall accrue on the
          relevant Drawing at the rate determined by the Agent to be

          (i)  the WSJ Prime Rate in the case of a Same Day Drawing; or

          (ii) in all other cases the aggregate of (a) the Margin, (b) LIBOR and
               (c) the Mandatory Cost, if applicable.

     7.6  FAILURE TO SELECT INTEREST PERIOD If the Borrower at any time fails to
          select or agree an Interest Period in accordance with Clause 7.1, the
          interest rate applicable shall be three (3) months.

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<PAGE>

     7.7  ACCRUAL AND PAYMENT OF INTEREST Interest shall accrue from day to day,
          shall be calculated on the basis of a 360 day year and the actual
          number of days elapsed (or, in any circumstance where market practice
          differs, in accordance with the prevailing market practice) and shall
          be paid by the Borrower to the Agent for the account of the Lenders on
          the last day of each Interest Period and, if the Interest Period is
          longer than three months, on the dates falling at three monthly
          intervals after the first day of that Interest Period.

     7.8  DEFAULT INTEREST If the Borrower fails to pay any amount payable by it
          under a Finance Document on its due date, interest shall accrue on the
          overdue amount from the due date, subject to any applicable grace
          period, up to the date of actual payment (both before and after
          judgment) at a rate which is one point five per cent (1.5%) higher
          than the rate which would have been payable if the overdue amount had,
          during the period of non-payment, constituted a Drawing for successive
          Interest Periods, each selected by the Agent (acting reasonably). Any
          interest accruing under this Clause 7.8 shall be immediately payable
          by the Borrower on demand by the Agent. If unpaid, any such interest
          will be compounded with the overdue amount at the end of each Interest
          Period applicable to that overdue amount but will remain immediately
          due and payable.

     7.9  CHANGES IN MARKET CIRCUMSTANCES If at any time the Agent determines
          (which determination shall be final and conclusive and binding on the
          Borrower) that, by reason of changes affecting the London interbank
          market, adequate and fair means do not exist for determining the rate
          of interest on a Drawing for any Interest Period:

          7.9.1 the Agent shall give notice to the Lenders and the Borrower of
               the occurrence of such event; and

          7.9.2 the rate of interest on each Lender's Commitment in the relevant
               Drawing for that Interest Period shall be the rate per annum
               which is the sum of:

               (a)  the Margin; and

               (b)  the rate notified to the Agent by that Lender as soon as
                    practicable, and in any event before interest is due to be
                    paid in respect of that Interest Period, to be that which
                    expresses as a

                                       26

<PAGE>

                    percentage rate per annum the cost to that Lender of funding
                    its Commitment in the relevant Drawing from whatever source
                    it may reasonably select; and

               (c)  the Mandatory Cost, if any, applicable to that Lender's
                    Commitment,

          PROVIDED THAT if the resulting rate of interest on any Commitment is
          not acceptable to the Borrower:

          7.9.3 the Agent on behalf of the Lenders will negotiate with the
               Borrower in good faith with a view to modifying this Agreement to
               provide a substitute basis for determining the rate of interest
               which is financially a substantial equivalent to the basis
               provided for in this Agreement;

          7.9.4 any substitute basis agreed pursuant to Clause 7.9.3 shall be
               binding on all the parties to this Agreement and shall apply to
               all Commitments in the relevant Drawing; and

          7.9.5 if, within thirty (30) days of the giving of the notice referred
               to in Clause 7.9.1, the Borrower and the Agent fail to agree in
               writing on a substitute basis for determining the rate of
               interest in respect of the relevant Drawing, the relevant Lender
               shall cease to be obliged to advance its Proportionate Share of
               that Drawing, but, if it has already been advanced, the Borrower
               will immediately prepay that Proportionate Share of that Drawing,
               together with any Break Costs, and the Maximum Amount shall be
               reduced by the amount of that Lender's Proportionate Share of
               that Drawing.

     7.10 DETERMINATIONS CONCLUSIVE The Agent shall promptly notify the Borrower
          of the determination of a rate of interest under this Clause 7 and
          each such determination shall (save in the case of manifest error) be
          final and conclusive.

8    INDEMNITIES

     8.1  TRANSACTION EXPENSES The Borrower will, within fourteen (14) days of
          the Agent's written demand, pay the Agent (for the account of the
          Finance Parties) the amount of all reasonable out of pocket costs and
          expenses (including legal fees

                                       27

<PAGE>

          and Value Added Tax or any similar or replacement tax if applicable)
          reasonably incurred by the Finance Parties or any of them in
          connection with:

          8.1.1 the negotiation, preparation, printing, execution and
               registration of the Finance Documents (whether or not any Finance
               Document is actually executed or registered and whether or not a
               Drawing is advanced);

          8.1.2 any amendment, addendum or supplement to any Finance Document
               (whether or not completed); and

          8.1.3 any other document which may at any time be required by a
               Finance Party to give effect to any Finance Document or which a
               Finance Party is entitled to call for or obtain under any Finance
               Document.

     8.2  FUNDING COSTS The Borrower shall indemnify each Finance Party, by
          payment to the Agent (for the account of that Finance Party) on the
          Agent's written demand, against all losses and costs incurred or
          sustained by that Finance Party if, for any reason due to a default or
          other action by the Borrower, a Drawing is not advanced to the
          Borrower after the relevant Drawdown Notice has been given to the
          Agent, or is advanced on a date other than that requested in the
          Drawdown Notice.

     8.3  BREAK COSTS The Borrower shall indemnify each Finance Party, by
          payment to the Agent (for the account of that Finance Party) on the
          Agent's written demand, against all documented costs, losses, premiums
          or penalties incurred by that Finance Party as a result of its
          receiving any prepayment of all or any part of a Drawing (whether
          pursuant to Clause 6 or otherwise) on a day other than the last day of
          an Interest Period for that Drawing, or any other payment under or in
          relation to the Finance Documents on a day other than the due date for
          payment of the sum in question, including (without limitation) any
          losses or costs incurred in liquidating or re-employing deposits from
          third parties acquired to effect or maintain all or any part of a
          Drawing, and any liabilities, expenses or losses incurred by that
          Finance Party in terminating or reversing, or otherwise in connection
          with, any interest rate and/or currency swap, transaction or
          arrangement entered into by that Finance Party with any member of the
          Group to hedge any exposure arising under this Agreement, or in
          terminating or reversing, or otherwise in connection with, any open
          position arising under this Agreement.

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<PAGE>

     8.4  CURRENCY INDEMNITY In the event of a Finance Party receiving or
          recovering any amount payable under a Finance Document in a currency
          other than the Currency of Account, and if the amount received or
          recovered is insufficient when converted into the Currency of Account
          at the date of receipt to satisfy in full the amount due, the Borrower
          shall, on the Agent's written demand, pay to the Agent for the account
          of the relevant Finance Party such further amount in the Currency of
          Account as is sufficient to satisfy in full the amount due and that
          further amount shall be due to the Agent on behalf of the relevant
          Finance Party as a separate debt under this Agreement.

     8.5  INCREASED COSTS (SUBJECT TO CLAUSE 8.6) If, by reason of the
          introduction of any law, or any change in any law, or any change in
          the interpretation or administration of any law, or compliance with
          any request or requirement from any central bank or any fiscal,
          monetary or other authority occurring after the date of this
          Agreement:

          8.5.1 a Finance Party (or the holding company of a Finance Party)
               shall be subject to any Tax with respect to payment of all or any
               part of the Indebtedness (other than Tax on overall net income);
               or

          8.5.2 the basis of Taxation of payments to a Finance Party in respect
               of all or any part of the Indebtedness shall be changed; or

          8.5.3 any reserve requirements shall be imposed, modified or deemed
               applicable against assets held by or deposits in or for the
               account of or loans by any branch of a Finance Party; or

          8.5.4 the manner in which a Finance Party allocates capital resources
               to its obligations under this Agreement or any ratio (whether
               cash, capital adequacy, liquidity or otherwise) which a Finance
               Party is required or requested to maintain shall be affected; or

          8.5.5 there is imposed on a Finance Party (or on the holding company
               of a Finance Party) any other condition in relation to the
               Indebtedness or the Finance Documents;

          and the result of any of the above shall be to increase the cost to a
          Finance Party (or to the holding company of a Finance Party) of that
          Finance Party making or

                                       29

<PAGE>

          maintaining its Commitment, or to cause a Finance Party to suffer (in
          its opinion) a material reduction in the rate of return on its overall
          capital below the level which it reasonably anticipated at the date of
          this Agreement and which it would have been able to achieve but for
          its entering into this Agreement and/or performing its obligations
          under this Agreement, then, subject to Clause 8.6, the Finance Party
          affected shall notify the Agent and the Borrower shall from time to
          time pay to the Agent on demand for the account of that Finance Party
          the amount which shall compensate that Finance Party (or the relevant
          holding company) for such additional cost or reduced return. A
          certificate signed by an authorised signatory of that Finance Party
          setting out the amount of that payment and the basis of its
          calculation shall be submitted to the Borrower and shall be conclusive
          evidence of such amount save for manifest error or on any question of
          law.

     8.6  EXCEPTIONS TO INCREASED COSTS Clause 8.5 does not apply to the extent
          any additional cost or reduced return referred to in that Clause is:

          8.6.1 compensated for by a payment made under Clause 8.10; or

          8.6.2 compensated for by a payment made under Clause 17.3; or

          8.6.3 compensated for by the payment of the Mandatory Cost; or

          8.6.4 attributable to the wilful breach by the relevant Finance Party
               (or the holding company of that Finance Party) of any law or
               regulation.

     8.7  EVENTS OF DEFAULT The Borrower shall indemnify each Finance Party from
          time to time, by payment to the Agent (for the account of that Finance
          Party) on the Agent's written demand, against all losses and costs
          incurred or sustained by that Finance Party as a consequence of any
          Event of Default.

     8.8  ENFORCEMENT COSTS The Borrower shall pay to the Agent (for the account
          of each Finance Party) on the Agent's written demand the amount of all
          costs and expenses (including legal fees) incurred by a Finance Party
          in connection with the enforcement of, or the preservation of any
          rights under, any Finance Document including (without limitation) any
          losses, costs and expenses which that Finance Party may from time to
          time sustain, incur or become liable for by reason of that Finance
          Party being mortgagee of a Vessel and/or a lender to the Borrower, or
          by reason of that Finance Party being deemed by any court or authority
          to be an

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          operator or controller, or in any way concerned in the operation or
          control, of a Vessel. No such indemnity will be given where any such
          loss or cost has occurred due to gross negligence or wilful misconduct
          on the part of that Finance Party; however, this shall not effect the
          right of any other Finance Party to receive such indemnity.

     8.9  OTHER COSTS The Borrower shall pay to the Agent (for the account of
          each Finance Party) on the Agent's written demand the amount of all
          sums which a Finance Party may pay or become actually or contingently
          liable for on account of the Borrower in connection with a Vessel
          (whether alone or jointly or jointly and severally with any other
          person) including (without limitation) all sums which that Finance
          Party may pay or guarantees which it may give in respect of the
          Insurances, any expenses incurred by that Finance Party in connection
          with the maintenance or repair of a Vessel or in discharging any lien,
          bond or other claim relating in any way to a Vessel, and any sums
          which that Finance Party may pay or guarantees which it may give to
          procure the release of a Vessel from arrest or detention.

     8.10 TAXES The Borrower shall pay all Taxes to which all or any part of the
          Indebtedness or any Finance Document may be at any time subject (other
          than Tax on a Finance Party's overall net income) and shall indemnify
          the Finance Parties, by payment to the Agent (for the account of the
          Finance Parties) on the Agent's written demand, against all
          liabilities, costs, claims and expenses resulting from any omission to
          pay or delay in paying any such Taxes.

9    FEES

     9.1  COMMITMENT FEE The Borrower shall pay to the Agent (for the account of
          the Lenders in proportion to their Commitments) a fee computed at the
          rate of thirty two point five per cent (32.5%) of the Margin on the
          undrawn and uncancelled amount of the Maximum Amount from time to time
          from the date of this Agreement until the Commitment Termination Date.
          The accrued commitment fee is payable on the last day of each
          successive period of three months from the Execution Date and on the
          Commitment Termination Date.

     9.2  OTHER FEES The Borrower shall pay to the Agent the fees in the amount
          and at the times agreed in a Fee Letter.

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10   SECURITY AND APPLICATION OF MONEYS

     10.1 SECURITY DOCUMENTS As security for the payment of the Indebtedness,
          the Borrower shall execute and deliver to the Security Agent or cause
          to be executed and delivered to the Security Agent the following
          documents in such forms and containing such terms and conditions as
          the Security Agent shall require:

          10.1.1 a first priority statutory mortgage over each of the Vessels
               together with a collateral deed of covenants;

          10.1.2 a first priority deed or deeds of assignment of the Insurances,
               Earnings, Charter Rights (if applicable) and Requisition
               Compensation of each of the Vessels, and of the benefit of any
               relevant Charterer's Assignment; and

          10.1.3 an on demand guarantee and indemnity from the Guarantor;

     10.2 REMITTANCE OF EARNINGS Immediately upon the occurrence of an Event of
          Default the Borrower shall procure that all Earnings are paid to such
          account(s) as the Agent shall from time to time specify by notice in
          writing to the Borrower.

     10.3 GENERAL APPLICATION OF MONEYS Whilst an Event of Default is continuing
          unremedied and unwaived the Borrower irrevocably authorises the Agent
          and the Security Agent to apply all sums which either of them may
          receive:

          10.3.1 pursuant to a sale or other disposition of a Vessel or any
               right, title or interest in the Vessel; or

          10.3.2 by way of payment of any sum in respect of the Insurances,
               Earnings, Charter Rights or Requisition Compensation; or

          10.3.3 otherwise arising under or in connection with any Security
               Document,

          in accordance with Clause 3.4.3 or Clause 3.4.4 (if relevant) or
          otherwise in or towards satisfaction, or by way of retention on
          account, of the Indebtedness, as follows:-

          (i)  first in payment of all outstanding fees and expenses of the
               Agent and the Security Agent;

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<PAGE>

          (ii) secondly in or towards payment of all outstanding interest
               hereunder;

          (iii) thirdly in or towards payment of all outstanding principal
               hereunder;

          (iv) fourthly in or towards payment of all other Indebtedness
               hereunder;

          (v)  fifthly the balance, if any, shall be remitted to the Borrower or
               whoever may be entitled thereto.

11   REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants to each of the Finance Parties at the
     Execution Date and (by reference to the facts and circumstances then
     pertaining) at the date of each Drawdown Notice, at each Drawdown Date and
     at each Interest Payment Date as follows (except that the representation
     and warranty contained at Clause 11.6 shall only be made on the First
     Drawdown Date and that the representations and warranties contained at
     Clause 11.2 and 11.21 shall only be made on the Execution Date):-

     11.1 STATUS AND DUE AUTHORISATION Each of the Security Parties is a
          corporation or limited partnership duly incorporated or formed under
          the laws of its jurisdiction of incorporation, organisation or
          formation (as the case may be) with power to enter into the Security
          Documents and to exercise its rights and perform its obligations under
          the Security Documents and all corporate and other action required to
          authorise its execution of the Security Documents and its performance
          of its obligations thereunder has been duly taken.

     11.2 NO DEDUCTIONS OR WITHHOLDING Under the laws of the Security Parties'
          respective jurisdictions of incorporation or formation in force at the
          date hereof, none of the Security Parties will be required to make any
          deduction or withholding from any payment it may make under any of the
          Security Documents.

     11.3 CLAIMS PARI PASSU Under the laws of the Security Parties' respective
          jurisdictions of incorporation or formation in force at the date
          hereof, the Indebtedness will, to the extent that it exceeds the
          realised value of any security granted in respect of the Indebtedness,
          rank at least pari passu with all the Security Parties' other
          unsecured indebtedness save that which is preferred solely by any
          bankruptcy, insolvency or other similar laws of general application.

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     11.4 NO IMMUNITY In any proceedings taken in any of the Security Parties'
          respective jurisdictions of incorporation or formation in relation to
          any of the Security Documents, none of the Security Parties will be
          entitled to claim for itself or any of its assets immunity from suit,
          execution, attachment or other legal process.

     11.5 GOVERNING LAW AND JUDGMENTS In any proceedings taken in any of the
          Security Parties' jurisdiction of incorporation or formation in
          relation to any of the Security Documents in which there is an express
          choice of the law of a particular country as the governing law
          thereof, that choice of law and any judgment or (if applicable)
          arbitral award obtained in that country will be recognised and
          enforced.

     11.6 VALIDITY AND ADMISSIBILITY IN EVIDENCE As at the date hereof, all
          acts, conditions and things required to be done, fulfilled and
          performed in order (a) to enable each of the Security Parties lawfully
          to enter into, exercise its rights under and perform and comply with
          the obligations expressed to be assumed by it in the Security
          Documents, (b) to ensure that the obligations expressed to be assumed
          by each of the Security Parties in the Security Documents are legal,
          valid and binding and (c) to make the Security Documents admissible in
          evidence in the jurisdictions of incorporation or formation of each of
          the Security Parties, have been done, fulfilled and performed.

     11.7 NO FILING OR STAMP TAXES Under the laws of the Security Parties'
          respective jurisdictions of incorporation or formation in force at the
          date hereof, it is not necessary that any of the Security Documents be
          filed, recorded or enrolled with any court or other authority in its
          jurisdiction of incorporation or formation (other than the Registrar
          of Companies for England and Wales or the relevant maritime registry,
          to the extent applicable) or that any stamp, registration or similar
          tax be paid on or in relation to any of the Security Documents.

     11.8 BINDING OBLIGATIONS The obligations expressed to be assumed by each of
          the Security Parties in the Security Documents are legal and valid
          obligations, binding on each of them in accordance with the terms of
          the Security Documents and no limit on any of their powers will be
          exceeded as a result of the borrowings, granting of security or giving
          of guarantees contemplated by the Security Documents or the
          performance by any of them of any of their obligations thereunder.

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     11.9 NO WINDING-UP Neither the Borrower, the Guarantor nor any Material
          Subsidiary have taken any corporate or limited partnership action nor
          have any other steps been taken or legal proceedings been started or
          (to the best of the Borrower's knowledge and belief) threatened
          against the Borrower, the Guarantor or any Material Subsidiary for its
          winding-up, dissolution, administration or reorganisation or for the
          appointment of a receiver, administrator, administrative receiver,
          trustee or similar officer of it or of any or all of its assets or
          revenues which might have a material adverse effect on the business or
          financial condition of the Group taken as a whole.

     11.10 SOLVENCY

          11.10.1 Neither the Borrower, the Guarantor nor the Group taken as a
               whole is unable, or admits or has admitted its inability, to pay
               its debts or has suspended making payments in respect of any of
               its debts.

          11.10.2 Neither the Borrower, the Guarantor nor any Material
               Subsidiary by reason of actual or anticipated financial
               difficulties, has commenced, or intends to commence, negotiations
               with one or more of its creditors with a view to rescheduling any
               of its indebtedness.

          11.10.3 The value of the assets of each of the Borrower, the Guarantor
               and the Group taken as a whole is not less than the liabilities
               of such entity or the Group taken as a whole (as the case may be)
               (taking into account contingent and prospective liabilities).

          11.10.4 No moratorium has been, or may, in the reasonably foreseeable
               future be, declared in respect of any indebtedness of the
               Borrower, the Guarantor or any Material Subsidiary.

     11.11 NO MATERIAL DEFAULTS

          11.11.1 Without prejudice to Clause 11.11.2, neither the Borrower, the
               Guarantor nor any Material Subsidiary is in breach of or in
               default under any agreement to which it is a party or which is
               binding on it or any of its assets to an extent or in a manner
               which might have a material adverse effect on the business or
               financial condition of the Group taken as a whole.

                                       35
<PAGE>

          11.11.2 No Event of Default is continuing or might reasonably be
               expected to result from the advance of any Drawing.

     11.12 NO MATERIAL PROCEEDINGS No action or administrative proceeding of or
          before any court, arbitral body or agency which is not covered by
          adequate insurance or which might have a material adverse effect on
          the business or financial condition of the Group taken as a whole has
          been started or is reasonably likely to be started.

     11.13 BORROWER'S ACCOUNTS All financial statements relating to the Group
          required to be delivered under Clause 12.1, were each prepared in
          accordance with GAAP, give (in conjunction with the notes thereto) a
          true and fair view of (in the case of annual financial statements) or
          fairly represent (in the case of quarterly accounts) the financial
          condition of the Group at the date as of which they were prepared and
          the results of the Group's operations during the financial period then
          ended.

     11.14 NO MATERIAL ADVERSE CHANGE Since the publication of the last
          financial statements relating to the Group delivered pursuant to
          Clause 12.1, there has been no change that has a Material Adverse
          Effect.

     11.15 NO UNDISCLOSED LIABILITIES As at the date to which the Borrower's
          Accounts were prepared neither the Borrower, the Guarantor nor any
          Material Subsidiary had any material liabilities (contingent or
          otherwise) which were not disclosed thereby (or by the notes thereto)
          or reserved against therein nor any unrealised or anticipated losses
          arising from commitments entered into by it which were not so
          disclosed or reserved against therein.

     11.16 NO OBLIGATION TO CREATE SECURITY The execution of the Security
          Documents by the Security Parties and their exercise of their rights
          and performance of their obligations thereunder will not result in the
          existence of nor oblige the Borrower or the Guarantor to create any
          Encumbrance over all or any of their present or future revenues or
          assets, other than pursuant to the Security Documents.

     11.17 NO BREACH The execution of the Security Documents by each of the
          Security Parties and their exercise of their rights and performance of
          their obligations under any of the Security Documents do not
          constitute and will not result in any breach of any agreement or
          treaty to which any of them is a party.

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<PAGE>

     11.18 SECURITY Each of the Security Parties is the legal and beneficial
          owner of all assets and other property which it purports to charge,
          mortgage, pledge, assign or otherwise secure pursuant to each Security
          Document and those Security Documents to which it is a party create
          and give rise to valid and effective security having the ranking
          expressed in those Security Documents.

     11.19 NECESSARY AUTHORISATIONS The Necessary Authorisations required by
          each Security Party, are in full force and effect, and each Security
          Party is in compliance with the material provisions of each such
          Necessary Authorisation relating to it and, to the best of its
          knowledge, none of the Necessary Authorisations relating to it are the
          subject of any pending or threatened proceedings or revocation.

     11.20 MONEY LAUNDERING Any amount borrowed hereunder, and the performance
          of the obligations of the Security Parties under the Security
          Documents, will be for the account of members of the Group and will
          not involve any breach by any of them of any law or regulatory measure
          relating to "money laundering" as defined in Article 1 of the
          Directive (91/308/EEC) of the Council of the European Communities.

     11.21 DISCLOSURE OF MATERIAL FACTS The Borrower is not aware of any
          material facts or circumstances which have not been disclosed to the
          Agent and which might, if disclosed, have reasonably been expected to
          adversely affect the decision of a person considering whether or not
          to make loan facilities of the nature contemplated by this Agreement
          available to the Borrower.

     11.22 USE OF FACILITY The Facility will be used for the purposes specified
          in the Recital.

     11.23 REPRESENTATIONS LIMITED The representation and warranties of the
          Borrower in this Clause 11 are subject to:

          11.23.1 the principle that equitable remedies are remedies which may
               be granted or refused at the discretion of the court;

          11.23.2 the limitation of enforcement by laws relating to bankruptcy,
               insolvency, liquidation, reorganisation, court schemes,
               moratoria, administration and other laws generally affecting or
               limiting the rights of creditors;

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<PAGE>

          11.23.3 the time barring of claims under any applicable limitation
               acts;

          11.23.4 the possibility that a court may strike out provisions for a
               contract as being invalid for reasons of oppression, undue
               influence or similar; and

          11.23.5 any other reservations or qualifications of law expressed in
               any legal opinions obtained by the Agent in connection with the
               Facility.

12   UNDERTAKINGS AND COVENANTS

     The undertakings and covenants in this Clause 12 remain in force for the
     duration of the Facility Period.

     12.1 GENERAL UNDERTAKINGS

          12.1.1 FINANCIAL STATEMENTS The Borrower shall supply to the Agent as
               soon as the same become available, but in any event within one
               hundred and fifty (150) days after the end of each of its
               financial years, its audited consolidated financial statements
               for that financial year, together with a Compliance Certificate,
               signed by a duly authorised representative of the Borrower,
               setting out computations as to compliance with Clause 12.2 as at
               the date as at which those financial statements were drawn up.

          12.1.2 REQUIREMENTS AS TO FINANCIAL STATEMENTS Each set of financial
               statements delivered by the Borrower under Clause 12.1.1:

               (a)  shall be certified by an authorised signatory of the
                    Borrower as fairly representing its financial condition as
                    at the date as at which those financial statements were
                    drawn up; and

               (b)  shall be prepared in accordance with GAAP.

          12.1.3 INTERIM FINANCIAL STATEMENTS The Borrower shall supply to the
               Agent as soon as the same become available, but in any event
               within ninety (90) days after the end of each quarter during each
               of its financial years, its unaudited consolidated quarterly
               financial statements for that quarter together with a Compliance
               Certificate, signed by a duly authorised representative of the
               Borrower, setting out computations as to compliance with Clause
               12.2 as at the date such financial statements were drawn up.

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<PAGE>

          12.1.4 MAINTENANCE OF LEGAL VALIDITY The Borrower shall obtain, comply
               with the terms of and do all that is necessary to maintain in
               full force and effect all authorisations, approvals, licences and
               consents required in or by the laws and regulations of its
               jurisdiction of formation and all other applicable jurisdictions,
               to enable it lawfully to enter into and perform its obligations
               under the Security Documents and to ensure the legality,
               validity, enforceability or admissibility in evidence of the
               Security Documents in its jurisdiction of incorporation or
               organisation and all other applicable jurisdictions.

          12.1.5 NOTIFICATION OF DEFAULT The Borrower shall promptly, upon
               becoming aware of the same, inform the Agent in writing of the
               occurrence of any Event of Default and, upon receipt of a written
               request to that effect from the Agent, confirm to the Agent that,
               save as previously notified to the Agent or as notified in such
               confirmation, no Event of Default has occurred.

          12.1.6 CLAIMS PARI PASSU The Borrower shall ensure that at all times
               the claims of the Finance Parties against it under the Security
               Documents rank at least pari passu with the claims of all its
               other unsecured creditors save those whose claims are preferred
               by any bankruptcy, insolvency, liquidation, winding-up or other
               similar laws of general application.

          12.1.7 MANAGEMENT OF VESSELS The Borrower shall procure that the Owner
               shall ensure that each of the Vessels is at all times technically
               and commercially managed by a management company controlled by
               Teekay Shipping Corporation or the Borrower or such other
               management company as may be acceptable to the Agent acting on
               the instructions of the Majority Lenders.

          12.1.8 CLASSIFICATION The Borrower shall procure that the Owner shall
               ensure that each of the Vessels maintains the highest
               classification required for the purpose of the relevant trade of
               such Vessel which shall be with a Pre-Approved Classification
               Society, in each case, free from any overdue recommendations and
               conditions affecting that Vessel's class.

                                       39

<PAGE>

          12.1.9 CERTIFICATE OF FINANCIAL RESPONSIBILITY The Borrower shall
               procure that the Owner shall obtain and maintain a certificate of
               financial responsibility in relation to any Vessel which is to
               call at the United States of America.

          12.1.10 NEGATIVE PLEDGE The Borrower shall procure that the Owner does
               not create, or permit to subsist, any Encumbrance (other than
               pursuant to the Security Documents) over all or any part of the
               Vessels or the Insurances other than a Permitted Encumbrance.

          12.1.11 REGISTRATION The Borrower shall procure that for the duration
               of the Facility Period the Owner shall not change or permit a
               change to the flag of the Vessels other than to a Pre-Approved
               Flag or under such other flag as may be approved by the Agent
               acting on the instructions of the Majority Lenders, such approval
               not to be unreasonably withheld or delayed.

          12.1.12 ISM AND ISPS COMPLIANCE The Borrower shall procure that the
               Owner shall ensure that the relevant Company complies in all
               material respects with the ISM Code and the ISPS Code or any
               replacements thereof and in particular (without prejudice to the
               generality of the foregoing) shall procure that the Owner shall
               ensure that the Company holds (i) a valid and current Document of
               Compliance issued pursuant to the ISM Code, (ii) a valid and
               current SMC issued in respect of each Vessel pursuant to the ISM
               Code, and (iii) an ISSC in respect of each Vessel, and the
               Borrower shall promptly, upon request, supply the Agent with
               copies of the same.

          12.1.13 NECESSARY AUTHORISATIONS Without prejudice to Clause 12.1.12
               or any other specific provision of the Security Documents
               relating to an Authorisation, the Borrower shall (i) obtain,
               comply with and do all that is necessary to maintain in full
               force and effect all Necessary Authorisations if a failure to do
               the same may cause a Material Adverse Effect; and (ii) promptly
               upon request, supply certified copies to the Agent of all
               Necessary Authorisations.

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<PAGE>

          12.1.14 COMPLIANCE WITH APPLICABLE LAWS The Borrower shall comply with
               all applicable laws to which it may be subject if a failure to do
               the same may have a Material Adverse Effect.

          12.1.15 LOANS AND GUARANTEES The Borrower shall be permitted to make
               loans and grant credit upon such terms as it may determine to any
               other member of the Group or to any of the Borrower's
               shareholders or unitholders and may otherwise give any guarantee
               or indemnity to procure financing for other members of the Group,
               but shall not otherwise make any loans or grant any credit (save
               in the ordinary course of business) or give any guarantee or
               indemnity (except pursuant to the Security Documents); Provided
               that the Borrower shall not make any such loans following the
               occurrence of an Event of Default which is continuing unremedied
               or unwaived.

          12.1.16 FURTHER ASSURANCE The Borrower shall at its own expense,
               promptly take all such action as the Agent may reasonably require
               for the purpose of perfecting or protecting any Finance Party's
               rights with respect to the security created or evidenced (or
               intended to be created or evidenced) by the Security Documents.

          12.1.17 OTHER INFORMATION The Borrower will promptly supply to the
               Agent such information and explanations as the Majority Lenders
               may from time to time reasonably require in connection with the
               operation of the Vessels and any reasonable financial information
               in connection with the Borrower, and will procure that the Agent
               be given the like information and explanations relating to all
               other Security Parties.

          12.1.18 INSPECTION OF RECORDS The Borrower will permit the inspection
               of its financial records and accounts on reasonable notice from
               time to time during business hours by the Agent or its nominee.

          12.1.19 VALUATIONS The Borrower will deliver to the Agent a Valuation
               of each of the Vessels (i) on the due date for delivery of the
               annual Borrower's Accounts pursuant to Clause 12.1 (ii) on a sale
               or Total Loss of any Vessel to determine the Relevant Reduction
               Amount for the purposes of clauses 3.4.3 and 3.4.4 respectively
               and (iii) following the occurrence of

                                       41

<PAGE>

               an Event of Default which is continuing unremedied and unwaived
               on such other occasions as the Agent may request.

          12.1.20 INSURANCE The Borrower shall procure that the Owner shall
               ensure at its own expense throughout the Facility Period that the
               Vessels are insured and operated in accordance with the
               provisions set out in the relevant Security Documents.

          12.1.21 CHANGE OF CONTROL The Borrower shall procure that throughout
               the Facility Period:

               (a)  Teekay Shipping Corporation owns a minimum of fifty one
                    percent (51%) of the voting rights in Teekay Offshore GP
                    L.L.C, the general partner in the MLP;

               (b)  Teekay Shipping Corporation or the MLP owns a minimum of
                    fifty one percent (51%) of the voting rights in Teekay
                    Offshore Operating GP L.L.C., the general partner in the
                    Borrower;

               (c)  there is no change in the legal or beneficial ownership of
                    the Guarantor from that advised to the Agent at the date of
                    this Agreement without the Agent's prior written consent
                    provided that the Agent's consent shall not be required if
                    the change of Guarantor shareholding arises from a corporate
                    reorganisation of the Group and the legal and beneficial
                    ownership of the Guarantor remains wholly owned within the
                    Group following such re-organisation.

          12.1.22 "KNOW YOUR CUSTOMER" CHECKS If:

               (a)  the introduction of or any change in (or in the
                    interpretation, administration or application of) any law or
                    regulation made after the date of this Agreement;

               (b)  any change in the status of the Borrower after the date of
                    this Agreement; or

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<PAGE>

               (c)  a proposed assignment or transfer by a Lender of any of its
                    rights and obligations under this Agreement to a party that
                    is not a Lender prior to such assignment or transfer,

               obliges the Agent or any Lender (or, in the case of (c) above,
               any prospective new Lender) to comply with "know your customer"
               or similar identification procedures in circumstances where the
               necessary information is not already available to it, the
               Borrower shall promptly upon the request of the Agent or any
               Lender supply, or procure the supply of, such documentation and
               other evidence as is reasonably requested by the Agent (for
               itself or on behalf of any Lender) or any Lender for itself (or,
               in the case of (c) above, on behalf of any prospective new
               Lender) in order for the Agent or that Lender (or, in the case of
               (c) above, any prospective new Lender) to carry out and be
               satisfied it has complied with all necessary "know your customer"
               or other similar checks under all applicable laws and regulations
               pursuant to the transactions contemplated in the Finance
               Documents.

          12.1.23 INTERCOMPANY BORROWINGS The Borrower will only borrow from
               other members of the Group on a subordinated and unsecured basis.

     12.2 FINANCIAL COVENANTS

          Throughout the Facility Period the Group shall:-

          12.2.1 maintain a Free Liquidity together with undrawn committed
               revolving credit lines available to the Group (including under
               this Agreement but excluding undrawn committed revolving credit
               lines with less than six (6) months to maturity) of not less than
               seventy five million Dollars ($75,000,000); and

          12.2.2 ensure that the aggregate of the Free Liquidity and undrawn
               committed revolving credit lines available to be drawn by members
               of the Group (including under this Agreement, but excluding
               undrawn committed revolving credit lines with less than six (6)
               months to maturity) will not be less than five per cent (5%) of
               the Total Debt of the Group.

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<PAGE>

               PROVIDED THAT following any change in the applicable accounting
               policies for the Borrower from GAAP the Agent (acting on the
               instructions of the Majority Lenders and in consultation with the
               Borrower) may require an amendment to this Clause 12.2 as the
               Agent deems logical and necessary having regard to the nature of
               such changes in policy and the intended substance of this Clause
               12.2.

13   EVENTS OF DEFAULT

     13.1 EVENTS OF DEFAULT Each of the events or circumstances set out in this
          Clause 13.1 is an Event of Default.

          13.1.1 BORROWER'S FAILURE TO PAY UNDER THIS AGREEMENT The Borrower
               fails to pay any amount of principal due from it under this
               Agreement at the time, in the currency and otherwise in the
               manner specified herein provided that, if the Borrower can
               demonstrate to the reasonable satisfaction of the Agent that all
               necessary instructions were given to effect such payment and the
               non-receipt thereof is attributable solely to an error in the
               banking system, such payment shall instead be deemed to be due,
               solely for the purposes of this paragraph, within three (3)
               Business Days of the date on which it actually fell due under
               this Agreement (if a payment of principal), five (5) Business
               Days (if a payment of interest) or ten (10) Business Days (if a
               sum payable on demand); or

          13.1.2 MISREPRESENTATION Any representation or statement made by any
               Security Party in any Security Document to which it is a party or
               in any notice or other document, certificate or statement
               delivered by it pursuant thereto or in connection therewith is or
               proves to have been incorrect or misleading in any material
               respect, where the circumstances causing the same give rise to a
               Material Adverse Effect; or

          13.1.3 SPECIFIC COVENANTS A Security Party fails duly to perform or
               comply with any of the obligations expressed to be assumed by or
               procured by the Borrower under Clauses 12.1.4, 12.1.6, 12.1.10 or
               12.1.21; or

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          13.1.4 FINANCIAL COVENANTS The Borrower is in breach of the Borrower's
               financial covenants set out in Clause 12.2 at any time; or

          13.1.5 OTHER OBLIGATIONS A Security Party fails duly to perform or
               comply with any of the obligations expressed to be assumed by it
               in any Security Document (other than those referred to in Clause
               13.1.3 or Clause 13.1.4) and such failure is not remedied within
               30 days after the Agent has given notice thereof to the Borrower;
               or

          13.1.6 CROSS DEFAULT Any indebtedness of any Security Party or any
               Material Subsidiary is not paid when due (or within any
               applicable grace period) or any indebtedness of any Security
               Party or any Material Subsidiary is declared to be or otherwise
               becomes due and payable prior to its specified maturity where (in
               either case) the aggregate of all such unpaid or accelerated
               indebtedness (i) of the Borrower is equal to or greater than
               fifty million Dollars ($50,000,000) or its equivalent in any
               other currency; or (ii) of the Guarantor, or any Material
               Subsidiary is equal to or greater than twenty five million
               Dollars ($25,000,000) or its equivalent in any other currency; or

          13.1.7 INSOLVENCY AND RESCHEDULING A Security Party or a Material
               Subsidiary is unable to pay its debts as they fall due, commences
               negotiations with any one or more of its creditors with a view to
               the general readjustment or rescheduling of its indebtedness or
               makes a general assignment for the benefit of its creditors or a
               composition with its creditors; or

          13.1.8 WINDING-UP A Security Party or a Material Subsidiary takes any
               corporate action or other steps are taken or legal proceedings
               are started for its winding-up, dissolution, administration or
               re-organisation or for the appointment of a liquidator, receiver,
               administrator, administrative receiver, conservator, custodian,
               trustee or similar officer of it or of any or all of its revenues
               or assets or any moratorium is declared or sought in respect of
               any of its indebtedness; or

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          13.1.9 EXECUTION OR DISTRESS

               (a)  Any Security Party or a Material Subsidiary fails to comply
                    with or pay any sum due from it (within 30 days of such
                    amount falling due) under any final judgment or any final
                    order made or given by any court or other official body of a
                    competent jurisdiction in an aggregate (i) in respect of the
                    Borrower equal to or greater than fifty million Dollars
                    ($50,000,000) or its equivalent in any other currency; or
                    (ii) in respect of the Guarantor or a Material Subsidiary
                    equal to or greater than twenty five million Dollars
                    ($25,000,000) or its equivalent in any other currency, being
                    a judgment or order against which there is no right of
                    appeal or if a right of appeal exists, where the time limit
                    for making such appeal has expired.

               (b)  Any execution or distress is levied against, or an
                    encumbrancer takes possession of, the whole or any part of,
                    the property, undertaking or assets of a Security Party or a
                    Material Subsidiary in an aggregate amount (i) in respect of
                    the Borrower equal to or greater than fifty million Dollars
                    ($50,000,000) or its equivalent in any other currency; or
                    (ii) in respect of the Guarantor or a Material Subsidiary
                    equal to or greater than twenty five million Dollars
                    ($25,000,000) or its equivalent in any other currency, other
                    than any execution or distress which is being contested in
                    good faith and which is either discharged within 30 days or
                    in respect of which adequate security has been provided
                    within 30 days to the relevant court or other authority to
                    enable the relevant execution or distress to be lifted or
                    released.

               (c)  Notwithstanding the foregoing paragraphs of this Clause
                    13.1.9, any levy of any distress on or any arrest,
                    condemnation, confiscation, requisition for title or use,
                    compulsory acquisition, seizure, detention or forfeiture of
                    a Vessel (or any part thereof) or any exercise or purported
                    exercise of any lien or claim on or against a Vessel where
                    the release of or discharge the lien or

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                    claim on or against such Vessel has not been procured within
                    30 days; or

          13.1.10 SIMILAR EVENT Any event occurs which, under the laws of any
               jurisdiction, has a similar or analogous effect to any of those
               events mentioned in Clauses 13.1.7, 13.1.8 and 13.1.9; or

          13.1.11 INSURANCES Insurance is not maintained in respect of any
               Vessel in accordance with the terms of the relevant Security
               Document in respect of that Vessel; or

          13.1.12 CLASS A Vessel has its classification withdrawn by the
               relevant classification society PROVIDED THAT if such withdrawal
               is (in the opinion of the Agent in its absolute discretion)
               capable of remedy such Event of Default shall only occur if the
               Vessel's classification is not reinstated to the satisfaction of
               the Agent within twenty one (21) days; or

          13.1.13 ENVIRONMENTAL MATTERS

               (a)  Any Environmental Claim is pending or made against the Owner
                    or any of the Owner's Environmental Affiliates or in
                    connection with a Vessel, where such Environmental Claim has
                    a Material Adverse Effect.

               (b)  Any actual Environmental Incident occurs in connection with
                    a Vessel, where such Environmental Incident has a Material
                    Adverse Effect; or

          13.1.14 REPUDIATION Any Security Party repudiates any Security
               Document to which it is a party or does or causes to be done any
               act or thing evidencing an intention to repudiate any such
               Security Document; or

          13.1.15 VALIDITY AND ADMISSIBILITY At any time any act, condition or
               thing required to be done, fulfilled or performed in order:

               (a)  to enable any Security Party lawfully to enter into,
                    exercise its rights under and perform the respective
                    obligations expressed to be assumed by it in the Security
                    Documents;

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               (b)  to ensure that the obligations expressed to be assumed by
                    each of the Security Parties in the Security Documents are
                    legal, valid and binding; or

               (c)  to make the Security Documents admissible in evidence in any
                    applicable jurisdiction

               is not done, fulfilled or performed within 30 days after
               notification from the Agent to the relevant Security Party
               requiring the same to be done, fulfilled or performed; or

          13.1.16 ILLEGALITY At any time it is or becomes unlawful for any
               Security Party to perform or comply with any or all of its
               obligations under the Security Documents to which it is a party
               or any of the obligations of the Borrower hereunder are not or
               cease to be legal, valid and binding and such illegality is not
               remedied or mitigated to the satisfaction of the Agent within
               thirty (30) days after it has given notice thereof to the
               relevant Security Party; or

          13.1.17 MATERIAL ADVERSE CHANGE At any time there shall occur a change
               in the business or operations of a Security Party or a change in
               the financial condition of any Security Party which, in the
               reasonable opinion of the Majority Lenders, materially impairs
               such Security Party's ability to discharge its obligations under
               the Security Documents in the manner provided therein and such
               change, if capable of remedy, is not so remedied within 15 days
               of the delivery of a notice confirming such change by the Agent
               to the relevant Security Party; or

          13.1.18 QUALIFICATIONS OF FINANCIAL STATEMENTS The auditors of the
               Group qualify their report on any audited consolidated financial
               statements of the Group in any regard which, in the reasonable
               opinion of the Agent, has a Material Adverse Effect; or

          13.1.19 CONDITIONS SUBSEQUENT if any of the conditions set out in
               Clause 3.6 is not satisfied within thirty (30) days or such other
               time period specified by the Agent in its discretion; or

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          13.1.20 REVOCATION OR MODIFICATION OF CONSENTS ETC. if any Necessary
               Authorisation which is now or which at any time during the
               Facility Period becomes necessary to enable any of the Security
               Parties to comply with any of their obligations in or pursuant to
               any of the Security Documents is revoked, withdrawn or withheld,
               or modified in a manner which the Agent reasonably considers is,
               or may be, prejudicial to the interests of a Finance Party in a
               material manner, or if such Necessary Authorisation ceases to
               remain in full force and effect; or

          13.1.21 CURTAILMENT OF BUSINESS if the business of any of the Security
               Parties is wholly or materially curtailed by any intervention by
               or under authority of any government, or if all or a substantial
               part of the undertaking, property or assets of any of the
               Security Parties is seized, nationalised, expropriated or
               compulsorily acquired by or under authority of any government or
               any Security Party disposes or threatens to dispose of a
               substantial part of its business or assets; or

          13.1.22 REDUCTION OF CAPITAL if the Borrower reduces its committed or
               subscribed capital; or

          13.1.23 CHALLENGE TO REGISTRATION if the registration of any Vessel or
               any Mortgage becomes void or voidable or liable to cancellation
               or termination; or

          13.1.24 WAR if the country of registration of any Vessel becomes
               involved in war (whether or not declared) or civil war or is
               occupied by any other power and the Agent reasonably considers
               that, as a result, the security conferred by the Security
               Documents is materially prejudiced; or

          13.1.25 NOTICE OF TERMINATION if the Guarantor gives notice to the
               Agent to determine its obligations under the Guarantee.

     13.2 ACCELERATION If an Event of Default is continuing unremedied or
          unwaived the Agent may (with the consent of the Majority Lenders) and
          shall (at the request of the Majority Lenders) by notice to the
          Borrower cancel any part of the Maximum Amount not then advanced and:

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          13.2.1 declare that the Loan, together with accrued interest, and all
               other amounts accrued or outstanding under the Finance Documents
               are immediately due and payable, whereupon they shall become
               immediately due and payable; and/or

          13.2.2 declare that the Loan is payable on demand, whereupon it shall
               immediately become payable on demand by the Agent; and/or

          13.2.3 declare the Commitments terminated and the Maximum Amount
               reduced to zero.

14   ASSIGNMENT AND SUB-PARTICIPATION

     14.1 LENDERS' RIGHTS A Lender may assign any of its rights under this
          Agreement or transfer by novation any of its rights and obligations
          under this Agreement to any other branch or Affiliate of that Lender
          or (subject to the prior written consent of the Borrower, such consent
          not to be unreasonably withheld but not to be required at any time
          after an Event of Default which is continuing unremedied and unwaived)
          to any other bank or financial institution, and may grant
          sub-participations in all or any part of its Commitment.

     14.2 BORROWER'S CO-OPERATION The Borrower will co-operate fully with a
          Lender in connection with any assignment, transfer or
          sub-participation by that Lender; will execute and procure the
          execution of such documents as that Lender may require in that
          connection; and irrevocably authorises any Finance Party to disclose
          to any proposed assignee, transferee or sub-participant (whether
          before or after any assignment, transfer or sub-participation and
          whether or not any assignment, transfer or sub-participation shall
          take place) all information relating to the Security Parties, the
          Loan, the Relevant Documents and the Vessels which any Finance Party
          may in its discretion consider necessary or desirable (subject to any
          duties of confidentiality applicable to the Lenders generally).
          Additionally, (but subject to the same duties of confidentiality), any
          Lender may disclose the size and term of the Facility and the names of
          each Security Party to any investor or potential investor in a
          securitisation (or similar transaction of broadly equivalent economic
          effect) of that Lender's rights and obligations under the Finance
          Documents.

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     14.3 RIGHTS OF ASSIGNEE Any assignee of a Lender shall (unless limited by
          the express terms of the assignment) take the full benefit of every
          provision of the Finance Documents benefitting that Lender PROVIDED
          THAT an assignment will only be effective on notification by the Agent
          to that Lender and the assignee that the Agent is satisfied it has
          complied with all necessary "Know your customer" or other similar
          checks under all applicable laws and regulations in relation to the
          assignment to the assignee.

     14.4 TRANSFER CERTIFICATES If a Lender wishes to transfer any of its rights
          and obligations under or pursuant to this Agreement, it may do so by
          delivering to the Agent a duly completed Transfer Certificate, in
          which event on the Transfer Date:

          14.4.1 to the extent that that Lender seeks to transfer its rights and
               obligations, the Borrower (on the one hand) and that Lender (on
               the other) shall be released from all further obligations towards
               the other;

          14.4.2 the Borrower (on the one hand) and the transferee (on the
               other) shall assume obligations towards the other identical to
               those released pursuant to Clause 14.4.1; and

          14.4.3 the Agent, each of the Lenders and the transferee shall have
               the same rights and obligations between themselves as they would
               have had if the transferee had been an original party to this
               Agreement as a Lender

          PROVIDED THAT the Agent shall only be obliged to execute a Transfer
          Certificate once:

          (a)  it is satisfied it has complied with all necessary "know your
               customer" or other similar checks under all applicable laws and
               regulations in relation to the transfer to the transferee; and

          (b)  the transferee has paid to the Agent for its own account a
               transfer fee of three thousand Dollars.

          The Agent shall, as soon as reasonably practicable after it has
          executed a Transfer Certificate, send to the Borrower a copy of that
          Transfer Certificate.

     14.5 FINANCE DOCUMENTS Unless otherwise expressly provided in any Finance
          Document or otherwise expressly agreed between a Lender and any
          proposed

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<PAGE>

          transferee and notified by that Lender to the Agent on or before the
          relevant Transfer Date, there shall automatically be assigned to the
          transferee with any transfer of a Lender's rights and obligations
          under or pursuant to this Agreement the rights of that Lender under or
          pursuant to the Finance Documents (other than this Agreement) which
          relate to the portion of that Lender's rights and obligations
          transferred by the relevant Transfer Certificate.

     14.6 NO ASSIGNMENT OR TRANSFER BY THE BORROWER The Borrower may not assign
          any of its rights or transfer any of its rights or obligations under
          the Finance Documents.

     14.7 TRANSFER OF THE LOAN AGREEMENT BY KFW. Notwithstanding the provisions
          of Clause 14.1 KfW may transfer all its rights and obligations under
          this Agreement to a KfW Subsidiary with effect from 1 January 2008 or
          any later date. By signing this Agreement the Borrower consents to
          such a transfer. KfW or the KfW Subsidiary will inform the Borrower of
          the date on which the transfer of KfW's rights and obligations to the
          KfW Subsidiary takes effect. In this connection the following will
          apply:

          14.7.1 DEDUCTIONS AND INCREASED COSTS. If, by reason of circumstances
               already existing at the transfer date, the Borrower would be
               obliged to make a payment to the KfW Subsidiary under Clauses
               8.5, 17.2 or 17.3, it need pay the KfW Subsidiary only such an
               amount as it would have been obliged to pay KfW if the transfer
               had not occurred.

          14.7.2 COSTS. KfW will pay all costs incurred as a result of or in
               connection with such transfer.

          For the purposes of this Clause KfW Subsidiary means a company which
          within the meaning of section 15 ff. German Stock Corporation Act
          (Aktiengesetz) is directly or indirectly (i) majority owned (im
          Mehrheitsbesitz) by KfW or (ii) controlled (abhangig) by KfW.

     14.8 DISCLOSURE OF INFORMATION. In connection with any transfer under
          Clause 14.7 KfW may disclose confidential information to the KfW
          Subsidiary or its agents or its legal advisors.

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     14.9 MITIGATION If a transfer is to take place under Clause 14.7 then,
          without in any way limiting the rights of KfW under Clauses 8.5, 17.2
          or 17.3, KfW shall take reasonable steps to mitigate any circumstances
          which arise and which would result in any amount becoming payable
          under or pursuant to Clauses 8.5, 17.2 or 17.3 and it shall co-operate
          in completing any procedural formalities necessary for the Borrower to
          obtain authorisation to make any payment under Clauses 8.5, 17.2 or
          17.3 without a deduction or withholding.

15   THE AGENT, THE SECURITY AGENT AND THE LENDERS

     15.1 APPOINTMENT

          15.1.1 Each Lender appoints the Agent to act as its agent under and in
               connection with the Finance Documents and each Lender and the
               Agent appoints the Security Agent to act as its security agent
               for the purpose of the Security Documents.

          15.1.2 Each Lender authorises the Agent and each Lender and the Agent
               authorises the Security Agent to exercise the rights, powers,
               authorities and discretions specifically given to the Agent or
               the Security Agent (as the case may be) under or in connection
               with the Finance Documents together with any other incidental
               rights, powers, authorities and discretions.

          15.1.3 Except where the context otherwise requires, references in this
               Clause 15 to the "AGENT" shall mean the Agent and the Security
               Agent individually and collectively.

     15.2 AUTHORITY Each Lender irrevocably authorises the Security Agent (in
          the case of Clause 15.2.1) and the Agent (in the case of Clauses
          15.2.2, 15.2.3 and 15.2.4) (in each case subject to Clauses 15.4 and
          15.18):

          15.2.1 to execute any Finance Document (other than this Agreement) on
               its behalf;

          15.2.2 to collect, receive, release or pay any money on its behalf;

          15.2.3 acting on the instructions from time to time of the Majority
               Lenders (save where the terms of any Security Document expressly
               provide otherwise)

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               to give or withhold any waivers, consents or approvals under or
               pursuant to any Finance Document; and

          15.2.4 acting on the instructions from time to time of the Majority
               Lenders (save where the terms of any Security Document expressly
               provide otherwise) to exercise, or refrain from exercising, any
               rights, powers, authorities or discretions under or pursuant to
               any Finance Document.

          The Agent shall have no duties or responsibilities as agent or as
          security agent other than those expressly conferred on it by the
          Finance Documents and shall not be obliged to act on any instructions
          from the Lenders or the Majority Lenders if to do so would, in the
          opinion of the Agent, be contrary to any provision of the Finance
          Documents or to any law, or would expose the Agent to any actual or
          potential liability to any third party.

     15.3 TRUST The Security Agent agrees and declares, and each of the other
          Finance Parties acknowledges, that, subject to the terms and
          conditions of this Clause 15.3, the Security Agent holds the Trust
          Property on trust for the Finance Parties absolutely. Each of the
          other Finance Parties agrees that the obligations, rights and benefits
          vested in the Security Agent shall be performed and exercised in
          accordance with this Clause 15.3. The Security Agent shall have the
          benefit of all of the provisions of this Agreement benefiting it in
          its capacity as security agent for the Finance Parties, and all the
          powers and discretions conferred on trustees by the Trustee Act 1925
          (to the extent not inconsistent with this Agreement). In addition:

          15.3.1 the Security Agent and any attorney, agent or delegate of the
               Security Agent may indemnify itself or himself out of the Trust
               Property against all liabilities, costs, fees, damages, charges,
               losses and expenses sustained or incurred by it or him in
               relation to the taking or holding of any of the Trust Property or
               in connection with the exercise or purported exercise of the
               rights, trusts, powers and discretions vested in the Security
               Agent or any other such person by or pursuant to the Security
               Documents or in respect of anything else done or omitted to be
               done in any way relating to the Security Documents other than as
               a result of its gross negligence or wilful misconduct;

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          15.3.2 the other Finance Parties acknowledge that the Security Agent
               shall be under no obligation to insure any property nor to
               require any other person to insure any property and shall not be
               responsible for any loss which may be suffered by any person as a
               result of the lack or insufficiency of any insurance; and

          15.3.3 the Finance Parties agree that the perpetuity period applicable
               to the trusts declared by this Agreement shall be the period of
               eighty years from the date of this Agreement.

     15.4 LIMITATIONS ON AUTHORITY Except with the prior written consent of all
          the Lenders, the Agent shall not be entitled to:

          15.4.1 release or vary any security given for the Borrower's
               obligations under this Agreement; nor

          15.4.2 waive the payment of any sum of money payable by any Security
               Party under the Finance Documents; nor

          15.4.3 change the meaning of the expressions "MAJORITY LENDERS",
               "MARGIN", "COMMITMENT COMMISSION" or "DEFAULT RATE"; nor

          15.4.4 exercise, or refrain from exercising, any right, power,
               authority or discretion, or give or withhold any consent, the
               exercise or giving of which is, by the terms of this Agreement,
               expressly reserved to the Lenders; nor

          15.4.5 extend the due date for the payment of any sum of money payable
               by any Security Party under any Finance Document; nor

          15.4.6 take or refrain from taking any step if the effect of such
               action or inaction may lead to the increase of the obligations of
               a Lender under any Finance Document; nor

          15.4.7 agree to change the currency in which any sum is payable under
               any Finance Document (other than in accordance with the terms of
               the relevant Finance Document); nor

          15.4.8 agree to amend this Clause 15.4.

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<PAGE>

     15.5 LIABILITY Neither the Agent nor any of its directors, officers,
          employees or agents shall be liable to the Lenders for anything done
          or omitted to be done by the Agent under or in connection with any of
          the Relevant Documents unless as a result of the Agent's gross
          negligence or wilful misconduct.

     15.6 ACKNOWLEDGEMENT Each Lender acknowledges that:

          15.6.1 it has not relied on any representation made by the Agent or
               any of the Agent's directors, officers, employees or agents or by
               any other person acting or purporting to act on behalf of the
               Agent to induce it to enter into any Finance Document;

          15.6.2 it has made and will continue to make without reliance on the
               Agent, and based on such documents and other evidence as it
               considers appropriate, its own independent investigation of the
               financial condition and affairs of the Security Parties in
               connection with the making and continuation of the Loan;

          15.6.3 it has made its own appraisal of the creditworthiness of the
               Security Parties; and

          15.6.4 the Agent shall not have any duty or responsibility at any time
               to provide it with any credit or other information relating to
               any Security Party unless that information is received by the
               Agent pursuant to the express terms of a Finance Document.

          Each Lender agrees that it will not assert nor seek to assert against
          any director, officer, employee or agent of the Agent or against any
          other person acting or purporting to act on behalf of the Agent any
          claim which it might have against them in respect of any of the
          matters referred to in this Clause 15.6.

     15.7 LIMITATIONS ON RESPONSIBILITY The Agent shall have no responsibility
          to any Security Party or to any Lender on account of:

          15.7.1 the failure of a Lender or of any Security Party to perform any
               of its obligations under a Finance Document; nor

          15.7.2 the financial condition of any Security Party; nor

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          15.7.3 the completeness or accuracy of any statements, representations
               or warranties made in or pursuant to any Finance Document, or in
               or pursuant to any document delivered pursuant to or in
               connection with any Finance Document; nor

          15.7.4 the negotiation, execution, effectiveness, genuineness,
               validity, enforceability, admissibility in evidence or
               sufficiency of any Finance Document or of any document executed
               or delivered pursuant to or in connection with any Finance
               Document.

     15.8 THE AGENT'S RIGHTS The Agent may:

          15.8.1 assume that all representations or warranties made or deemed
               repeated by any Security Party in or pursuant to any Finance
               Document are true and complete, unless, in its capacity as the
               Agent, it has acquired actual knowledge to the contrary;

          15.8.2 assume that no Default has occurred unless, in its capacity as
               the Agent, it has acquired actual knowledge to the contrary;

          15.8.3 rely on any document or notice believed by it to be genuine;

          15.8.4 rely as to legal or other professional matters on opinions and
               statements of any legal or other professional advisers selected
               or approved by it;

          15.8.5 rely as to any factual matters which might reasonably be
               expected to be within the knowledge of any Security Party on a
               certificate signed by or on behalf of that Security Party; and

          15.8.6 refrain from exercising any right, power, discretion or remedy
               unless and until instructed to exercise that right, power,
               discretion or remedy and as to the manner of its exercise by the
               Lenders (or, where applicable, by the Majority Lenders) and
               unless and until the Agent has received from the Lenders any
               payment which the Agent may require on account of, or any
               security which the Agent may require for, any costs, claims,
               expenses (including legal and other professional fees) and
               liabilities which it considers it may incur or sustain in
               complying with those instructions.

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     15.9 THE AGENT'S DUTIES The Agent shall:

          15.9.1 if requested in writing to do so by a Lender, make enquiry and
               advise the Lenders as to the performance or observance of any of
               the provisions of any Finance Document by any Security Party or
               as to the existence of an Event of Default; and

          15.9.2 inform the Lenders promptly of any Event of Default of which
               the Agent has actual knowledge.

     15.10 NO DEEMED KNOWLEDGE The Agent shall not be deemed to have actual
          knowledge of the falsehood or incompleteness of any representation or
          warranty made or deemed repeated by any Security Party or actual
          knowledge of the occurrence of any Default unless a Lender or a
          Security Party shall have given written notice thereof to the Agent in
          its capacity as the Agent. Any information acquired by the Agent other
          than specifically in its capacity as the Agent shall not be deemed to
          be information acquired by the Agent in its capacity as the Agent.

     15.11 OTHER BUSINESS The Agent may, without any liability to account to the
          Lenders, generally engage in any kind of banking or trust business
          with a Security Party or with a Security Party's subsidiaries or
          associated companies or with a Lender as if it were not the Agent.

     15.12 INDEMNITY The Lenders shall, promptly on the Agent's request,
          reimburse the Agent in their respective Proportionate Shares, for, and
          keep the Agent fully indemnified in respect of all liabilities,
          damages, costs and claims sustained or incurred by the Agent in
          connection with the Finance Documents, or the performance of its
          duties and obligations, or the exercise of its rights, powers,
          discretions or remedies under or pursuant to any Finance Document, to
          the extent not paid by the Security Parties and not arising solely
          from the Agent's gross negligence or wilful misconduct.

     15.13 EMPLOYMENT OF AGENTS In performing its duties and exercising its
          rights, powers, discretions and remedies under or pursuant to the
          Finance Documents, the Agent shall be entitled to employ and pay
          agents to do anything which the Agent is empowered to do under or
          pursuant to the Finance Documents (including the receipt of money and
          documents and the payment of money) and to act or

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          refrain from taking action in reliance on the opinion of, or advice or
          information obtained from, any lawyer, banker, broker, accountant,
          valuer or any other person believed by the Agent in good faith to be
          competent to give such opinion, advice or information.

     15.14 DISTRIBUTION OF PAYMENTS The Agent shall pay promptly to the order of
          each Lender that Lender's Proportionate Share of every sum of money
          received by the Agent pursuant to the Finance Documents (with the
          exception of any amounts payable pursuant to Clause 9 and/or any Fee
          Letter and any amounts which, by the terms of the Finance Documents,
          are paid to the Agent for the account of the Agent alone or
          specifically for the account of one or more Lenders) and until so paid
          such amount shall be held by the Agent on trust absolutely for that
          Lender.

     15.15 REIMBURSEMENT The Agent shall have no liability to pay any sum to a
          Lender until it has itself received payment of that sum. If, however,
          the Agent does pay any sum to a Lender on account of any amount
          prospectively due to that Lender pursuant to Clause 15.14 before it
          has itself received payment of that amount, and the Agent does not in
          fact receive payment within five (5) Business Days after the date on
          which that payment was required to be made by the terms of the Finance
          Documents, that Lender will, on demand by the Agent, refund to the
          Agent an amount equal to the amount received by it, together with an
          amount sufficient to reimburse the Agent for any amount which the
          Agent may certify that it has been required to pay by way of interest
          on money borrowed to fund the amount in question during the period
          beginning on the date on which that amount was required to be paid by
          the terms of the Finance Documents and ending on the date on which the
          Agent receives reimbursement.

     15.16 REDISTRIBUTION OF PAYMENTS Unless otherwise agreed between the
          Lenders and the Agent, if at any time a Lender receives or recovers by
          way of set-off, the exercise of any lien or otherwise from any
          Security Party, an amount greater than that Lender's Proportionate
          Share of any sum due from that Security Party to the Lenders under the
          Finance Documents (the amount of the excess being referred to in this
          Clause 15.16 and in Clause 15.17 as the "EXCESS AMOUNT") then:

          15.16.1that Lender shall promptly notify the Agent (which shall
               promptly notify each other Lender);

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<PAGE>

          15.16.2 that Lender shall pay to the Agent an amount equal to the
               Excess Amount within ten (10) days of its receipt or recovery of
               the Excess Amount; and

          15.16.3 the Agent shall treat that payment as if it were a payment by
               the Security Party in question on account of the sum due from
               that Security Party to the Lenders and shall account to the
               Lenders in respect of the Excess Amount in accordance with the
               provisions of this Clause 15.16.

          However, if a Lender has commenced any legal proceedings to recover
          sums owing to it under the Finance Documents and, as a result of, or
          in connection with, those proceedings has received an Excess Amount,
          the Agent shall not distribute any of that Excess Amount to any other
          Lender which had been notified of the proceedings and had the legal
          right to, but did not, join those proceedings or commence and
          diligently prosecute separate proceedings to enforce its rights in the
          same or another court.

     15.17 RESCISSION OF EXCESS AMOUNT If all or any part of any Excess Amount
          is rescinded or must otherwise be restored to any Security Party or to
          any other third party, the Lenders which have received any part of
          that Excess Amount by way of distribution from the Agent pursuant to
          Clause 15.16 shall repay to the Agent for the account of the Lender
          which originally received or recovered the Excess Amount, the amount
          which shall be necessary to ensure that the Lenders share rateably in
          accordance with their Proportionate Shares in the amount of the
          receipt or payment retained, together with interest on that amount at
          a rate equivalent to that (if any) paid by the Lender receiving or
          recovering the Excess Amount to the person to whom that Lender is
          liable to make payment in respect of such amount, and Clause 15.16.3
          shall apply only to the retained amount.

     15.18 INSTRUCTIONS Where the Agent is authorised or directed to act or
          refrain from acting in accordance with the instructions of the Lenders
          or of the Majority Lenders each of the Lenders shall provide the Agent
          with instructions within three (3) Business Days of the Agent's
          request (which request may be made orally or in writing). If a Lender
          does not provide the Agent with instructions within that period, that
          Lender shall be bound by the decision of the Agent. Nothing in this
          Clause 15.18 shall limit the right of the Agent to take, or refrain
          from taking, any action without obtaining the instructions of the
          Lenders or the Majority Lenders if the Agent in its discretion
          considers it necessary or appropriate to take, or refrain

                                       60

<PAGE>

          from taking, such action in order to preserve the rights of the
          Lenders under or in connection with the Finance Documents. In that
          event, the Agent will notify the Lenders of the action taken by it as
          soon as reasonably practicable, and the Lenders agree to ratify any
          action taken by the Agent pursuant to this Clause 15.18.

     15.19 PAYMENTS All amounts payable to a Lender under this Clause 15 shall
          be paid to such account at such bank as that Lender may from time to
          time direct in writing to the Agent.

     15.20 "KNOW YOUR CUSTOMER" CHECKS Each Lender shall promptly upon the
          request of the Agent supply, or procure the supply of, such
          documentation and other evidence as is reasonably requested by the
          Agent (for itself) in order for the Agent to carry out and be
          satisfied it has complied with all necessary "know your customer" or
          other similar checks under all applicable laws and regulations
          pursuant to the transactions contemplated in the Finance Documents.

     15.21 RESIGNATION Subject to a successor being appointed in accordance with
          this Clause 15.21, the Agent may resign as agent and/or the Security
          Agent may resign as security agent at any time without assigning any
          reason by giving to the Borrower and the Lenders notice of its
          intention to do so, in which event the following shall apply:

          15.21.1 with the consent of the Borrower not to be unreasonably
               withheld (but such consent not to be required at any time after
               an Event of Default which is continuing unremedied and unwaived)
               the Lenders may within thirty (30) days after the date of the
               notice from the Agent or the Security Agent (as the case may be)
               appoint a successor to act as agent and/or security agent or, if
               they fail to do so with the consent of the Borrower, not to be
               unreasonably withheld (but such consent not to be required at any
               time after an Event of Default which is continuing unremedied and
               unwaived), the Agent or the Security Agent (as the case may be)
               may appoint any other bank or financial institution as its
               successor;

          15.21.2 the resignation of the Agent or the Security Agent (as the
               case may be) shall take effect simultaneously with the
               appointment of its successor on

                                       61

<PAGE>

               written notice of that appointment being given to the Borrower
               and the Lenders;

          15.21.3 the Agent or the Security Agent (as the case may be) shall
               thereupon be discharged from all further obligations as agent
               and/or security agent but shall remain entitled to the benefit of
               the provisions of this Clause 15; and

          15.21.4 the successor of the Agent or the Security Agent (as the case
               may be) and each of the other parties to this Agreement shall
               have the same rights and obligations amongst themselves as they
               would have had if that successor had been a party to this
               Agreement.

     15.22 NO FIDUCIARY RELATIONSHIP Except as provided in Clauses 15.3 and
          15.14, the Agent shall not have any fiduciary relationship with or be
          deemed to be a trustee of or for any other person and nothing
          contained in any Finance Document shall constitute a partnership
          between any two or more Lenders or between the Agent and any other
          person.

16   SET-OFF

     A Finance Party may set off any matured obligation due from the Borrower
     under any Finance Document (to the extent beneficially owned by that
     Finance Party) against any matured obligation owed by that Finance Party to
     the Borrower, regardless of the place of payment, booking branch or
     currency of either obligation. If the obligations are in different
     currencies, that Finance Party may convert either obligation at a market
     rate of exchange in its usual course of business for the purpose of the
     set-off.

17   PAYMENTS

     17.1 PAYMENTS Each amount payable by the Borrower under a Finance Document
          shall be paid to such account at such bank as the Agent may from time
          to time direct to the Borrower in the Currency of Account and in such
          funds as are customary at the time for settlement of transactions in
          the relevant currency in the place of payment. Payment shall be deemed
          to have been received by the Agent on the date on which the Agent
          receives authenticated advice of receipt, unless that advice is
          received by the Agent on a day other than a Business Day or at a time
          of day (whether on a Business Day or not) when the Agent in its
          reasonable discretion considers that it is impossible or impracticable
          for the Agent to utilise

                                       62

<PAGE>

          the amount received for value that same day, in which event the
          payment in question shall be deemed to have been received by the Agent
          on the Business Day next following the date of receipt of advice by
          the Agent.

     17.2 NO DEDUCTIONS OR WITHHOLDINGS Each payment (whether of principal or
          interest or otherwise) to be made by the Borrower under a Finance
          Document shall, subject only to Clause 17.3, be made free and clear of
          and without deduction for or on account of any Taxes or other
          deductions, withholdings, restrictions, conditions or counterclaims of
          any nature.

     17.3 GROSSING-UP If at any time any law requires (or is interpreted to
          require) the Borrower to make any deduction or withholding from any
          payment, or to change the rate or manner in which any required
          deduction or withholding is made, the Borrower will promptly notify
          the Agent and, simultaneously with making that payment, will pay to
          the Agent whatever additional amount (after taking into account any
          additional Taxes on, or deductions or withholdings from, or
          restrictions or conditions on, that additional amount) is necessary to
          ensure that, after making the deduction or withholding, the relevant
          Finance Parties receive a net sum equal to the sum which they would
          have received had no deduction or withholding been made.

     17.4 EVIDENCE OF DEDUCTIONS If at any time the Borrower is required by law
          to make any deduction or withholding from any payment to be made by it
          under a Finance Document, the Borrower will pay the amount required to
          be deducted or withheld to the relevant authority within the time
          allowed under the applicable law and will, no later than thirty (30)
          days after making that payment, deliver to the Agent an original
          receipt issued by the relevant authority, or other evidence reasonably
          acceptable to the Agent, evidencing the payment to that authority of
          all amounts required to be deducted or withheld.

     17.5 REBATE If the Borrower pays any additional amount under Clause 17.3,
          and a Finance Party subsequently receives a refund or allowance from
          any tax authority which that Finance Party identifies as being
          referable to that increased amount so paid by the Borrower, that
          Finance Party shall, as soon as reasonably practicable, pay to the
          Borrower an amount equal to the amount of the refund or allowance
          received, if and to the extent that it may do so without prejudicing
          its right to retain that refund or allowance and without putting
          itself in any worse financial

                                       63

<PAGE>

          position than that in which it would have been had the relevant
          deduction or withholding not been required to have been made. Nothing
          in this Clause 17.5 shall be interpreted as imposing any obligation on
          any Finance Party to apply for any refund or allowance nor as
          restricting in any way the manner in which any Finance Party organises
          its tax affairs, nor as imposing on any Finance Party any obligation
          to disclose to the Borrower any information regarding its tax affairs
          or tax computations.

     17.6 ADJUSTMENT OF DUE DATES If any payment or transfer of funds to be made
          under a Finance Document, other than a payment of interest on a
          Drawing, shall be due on a day which is not a Business Day, that
          payment shall be made on the next succeeding Business Day (unless the
          next succeeding Business Day falls in the next calendar month in which
          event the payment shall be made on the next preceding Business Day).
          Any such variation of time shall be taken into account in computing
          any interest in respect of that payment.

     17.7 CONTROL ACCOUNT The Agent shall open and maintain on its books a
          control account in the name of the Borrower showing the advance of the
          Loan and the computation and payment of interest and all other sums
          due under this Agreement. The Borrower's obligations to repay the Loan
          and to pay interest and all other sums due under this Agreement shall
          be evidenced by the entries from time to time made in the control
          account opened and maintained under this Clause 17.7 and those entries
          will, in the absence of manifest error, be conclusive and binding.

18   NOTICES

     18.1 COMMUNICATIONS IN WRITING Any communication to be made under or in
          connection with this Agreement shall be made in writing and, unless
          otherwise stated, may be made by fax or letter or (subject to Clause
          18.6) electronic mail.

     18.2 ADDRESSES The address and fax number (and the department or officer,
          if any, for whose attention the communication is to be made) of each
          party to this Agreement for any communication or document to be made
          or delivered under or in connection with this Agreement are:

                                       64

<PAGE>

          18.2.1 in the case of the Borrower, c/o Teekay Shipping (Canada) Ltd
               Suite 2000, Bentall 5, 550 Burrard Street, Vancouver, B.C.,
               Canada V6C 2K2 (fax no: +1 604 681 3011) marked for the attention
               of Director Finance;

          18.2.2 in the case of each Lender, those appearing opposite its name
               in Schedule 1;

          18.2.3 in the case of the Agent, 200 Park Avenue, 31st Floor, New
               York, New York 10166-0396, United States of America (fax no: +1
               212 681 3900) marked for the attention of Credit, Sanjiv
               Nayer/Erlend Bryn; and

          18.2.4 in the case of the Security Agent, Domshof 17, 28195 Bremen,
               Federal Republic of Germany (fax no: + 49 421 3609 329) marked
               for the attention of Credit Department;

          or any substitute address, fax number, department or officer as any
          party may notify to the Agent (or the Agent may notify to the other
          parties, if a change is made by the Agent) by not less than five (5)
          Business Days' notice.

     18.3 DELIVERY Any communication or document made or delivered by one party
          to this Agreement to another under or in connection this Agreement
          will only be effective:

          18.3.1 if by way of fax, when received in legible form; or

          18.3.2 if by way of letter, when it has been left at the relevant
               address or five (5) Business Days after being deposited in the
               post postage prepaid in an envelope addressed to it at that
               address; or

          18.3.3 if by way of electronic mail, in accordance with Clause 18.6;

          and, if a particular department or officer is specified as part of its
          address details provided under Clause 18.2, if addressed to that
          department or officer.

          Any communication or document to be made or delivered to the Agent
          will be effective only when actually received by the Agent.

          All notices from or to the Borrower shall be sent through the Agent.

                                       65

<PAGE>

     18.4 NOTIFICATION OF ADDRESS AND FAX NUMBER Promptly upon receipt of
          notification of an address, fax number or change of address, pursuant
          to Clause 18.2 or changing its own address or fax number, the Agent
          shall notify the other parties to this Agreement.

     18.5 ENGLISH LANGUAGE Any notice given under or in connection with this
          Agreement must be in English. All other documents provided under or in
          connection with this Agreement must be:

          18.5.1 in English; or

          18.5.2 if not in English, and if so required by the Agent, accompanied
               by a certified English translation and, in this case, the English
               translation will prevail unless the document is a constitutional,
               statutory or other official document.

     18.6 ELECTRONIC COMMUNICATION

          (a)  Any communication to be made in connection with this Agreement
               may be made by electronic mail or other electronic means, if the
               Borrower and the relevant Finance Party:

               (i)  agree that, unless and until notified to the contrary, this
                    is to be an accepted form of communication;

               (ii) notify each other in writing of their electronic mail
                    address and/or any other information required to enable the
                    sending and receipt of information by that means; and

               (iii) notify each other of any change to their address or any
                    other such information supplied by them.

          (b)  Any electronic communication made between the Borrower and the
               relevant Finance Party will be effective only when actually
               received in readable form and acknowledged by the recipient (it
               being understood that any system generated responses do not
               constitute an acknowledgement) and in the case of any electronic
               communication made by the Borrower to a Finance Party only if it
               is addressed in such a manner as the Finance Party shall specify
               for this purpose.

                                       66

<PAGE>

19   PARTIAL INVALIDITY

     If, at any time, any provision of a Finance Document is or becomes illegal,
     invalid or unenforceable in any respect under any law of any jurisdiction,
     neither the legality, validity or enforceability of the remaining
     provisions nor the legality, validity or enforceability of such provision
     under the law of any other jurisdiction will in any way be affected or
     impaired.

20   REMEDIES AND WAIVERS

     No failure to exercise, nor any delay in exercising, on the part of any
     Finance Party, any right or remedy under a Finance Document shall operate
     as a waiver, nor shall any single or partial exercise of any right or
     remedy prevent any further or other exercise or the exercise of any other
     right or remedy. The rights and remedies provided in this Agreement are
     cumulative and not exclusive of any rights or remedies provided by law.

21   MISCELLANEOUS

     21.1 NO ORAL VARIATIONS No variation or amendment of a Finance Document
          shall be valid unless in writing and signed on behalf of all the
          Finance Parties.

     21.2 FURTHER ASSURANCE If any provision of a Finance Document shall be
          invalid or unenforceable in whole or in part by reason of any present
          or future law or any decision of any court, or if the documents at any
          time held by or on behalf of the Finance Parties or any of them are
          considered by the Lenders for any reason insufficient to carry out the
          terms of this Agreement, then from time to time the Borrower will
          promptly, on demand by the Agent, execute or procure the execution of
          such further documents as in the opinion of the Lenders are necessary
          to provide adequate security for the repayment of the Indebtedness.

     21.3 RESCISSION OF PAYMENTS ETC. Any discharge, release or reassignment by
          a Finance Party of any of the security constituted by, or any of the
          obligations of a Security Party contained in, a Finance Document shall
          be (and be deemed always to have been) void if any act (including,
          without limitation, any payment) as a result of which such discharge,
          release or reassignment was given or made is subsequently wholly or
          partially rescinded or avoided by operation of any law.

                                       67

<PAGE>

     21.4 CERTIFICATES Any certificate or statement signed by an authorised
          signatory of the Agent purporting to show the amount of the
          Indebtedness (or any part of the Indebtedness) or any other amount
          referred to in any Finance Document shall, save for manifest error or
          on any question of law, be conclusive evidence as against the Borrower
          of that amount.

     21.5 COUNTERPARTS This Agreement may be executed in any number of
          counterparts each of which shall be original but which shall together
          constitute the same instrument.

     21.6 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 A person who is not a
          party to this Agreement has no right under the Contracts (Rights of
          Third Parties) Act 1999 to enforce or to enjoy the benefit of any term
          of this Agreement.

     21.7 DISCLOSURE OF INFORMATION The Borrower authorises each Lender to
          disclose any information and/or document(s) concerning its
          relationship with such Lender (i) to authorities in any other
          countries where such Lender or any Affiliate is represented and/or
          where any Lender or any Affiliate may be requested information by any
          regulatory authority, when this shall be deemed necessary in order for
          such Lender or any Affiliate to meet its requirements for the
          contribution to reduction or prevention of money laundering, terrorism
          and corruption, and (ii) to any Affiliate of that Lender making it
          possible to consolidate the client's total commitments and offer the
          client any other products offered by that Lender or any Affiliate,
          subject always to the duties of confidentiality on the Lenders set out
          herein.

22   LAW AND JURISDICTION

     22.1 GOVERNING LAW This Agreement shall in all respects be governed by and
          interpreted in accordance with English law.

     22.2 JURISDICTION For the exclusive benefit of the Finance Parties, the
          parties to this Agreement irrevocably agree that the courts of England
          are to have jurisdiction to settle any disputes which may arise out of
          or in connection with this Agreement and that any proceedings may be
          brought in those courts.

     22.3 ALTERNATIVE JURISDICTIONS Nothing contained in this Clause 22 shall
          limit the right of the Finance Parties to commence any proceedings
          against the Borrower in

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<PAGE>

          any other court of competent jurisdiction nor shall the commencement
          of any proceedings against the Borrower in one or more jurisdictions
          preclude the commencement of any proceedings in any other
          jurisdiction, whether concurrently or not.

     22.4 WAIVER OF OBJECTIONS The Borrower irrevocably waives any objection
          which it may now or in the future have to the laying of the venue of
          any proceedings in any court referred to in this Clause 22, and any
          claim that those proceedings have been brought in an inconvenient or
          inappropriate forum, and irrevocably agrees that a judgment in any
          proceedings commenced in any such court shall be conclusive and
          binding on it and may be enforced in the courts of any other
          jurisdiction.

     22.5 SERVICE OF PROCESS Without prejudice to any other mode of service
          allowed under any relevant law, the Borrower:

          22.5.1 irrevocably appoints Teekay Shipping (UK) Ltd of 2nd Floor, 86
               Jermyn Street, London SW1Y 6JD England as its agent for service
               of process in relation to any proceedings before the English
               courts in connection with this Agreement; and

          22.5.2 agrees that failure by a process agent to notify the Borrower
               of the process will not invalidate the proceedings concerned.

                                       69

<PAGE>

IN WITNESS of which the parties to this Agreement have executed this Agreement
the day and year first before written.

SIGNED by                           )  -----------------------------------------
duly authorised for and on behalf   )  [signed]
of TEEKAY OFFSHORE                  )
OPERATING L.P.                      )

SIGNED by                           )  -----------------------------------------
duly authorised for and on behalf   )  [signed]
of DNB NOR BANK ASA (as a Lender)   )

SIGNED by                           )  -----------------------------------------
duly authorised for and on behalf   )  [signed]
of NORDEA BANK NORGE ASA            )
(as a Lender)                       )

SIGNED by                           )  -----------------------------------------
duly authorised for and on behalf   )  [signed]
of FORTIS CAPITAL CORP.             )
(as a Lender)                       )

SIGNED by                           )  -----------------------------------------
duly authorised for and on behalf   )  [signed]
of DEUTSCHE SCHIFFSBANK             )
AKTIENGESELLSCHAFT
(as a Lender)                       )

                                       70

<PAGE>

SIGNED by                           )  -----------------------------------------
duly authorised for and on behalf   )  [signed]
of LANDESBANK HESSEN-THURINGEN      )
GIROZENTRALE                        )
(as a Lender)                       )

SIGNED by                           )  -----------------------------------------
duly authorised for and on behalf   )  [signed]
of DNB NOR BANK ASA (as the Agent)  )

SIGNED by                           )  -----------------------------------------
duly authorised for and on behalf   )  [signed]
of DEUTSCHE SCHIFFSBANK             )
AKTIENGESELLSCHAFT                  )
(as the Security Agent)             )

SIGNED by                           )  -----------------------------------------
duly authorised for and on behalf   )  [signed]
of DNB NOR BANK ASA (as an MLA)     )

SIGNED by                           )  -----------------------------------------
duly authorised for and on behalf   )  [signed]
of NORDEA BANK NORGE ASA            )
(as an MLA)                         )

SIGNED by                           )  -----------------------------------------
duly authorised for and on behalf   )  [signed]
of FORTIS CAPITAL CORP.             )
(as an MLA)                         )

                                       71

<PAGE>

SIGNED by                           )  -----------------------------------------
duly authorised for and on behalf   )  [signed]
of DNB NOR BANK ASA                 )
(as a bookrunner)                   )

SIGNED by                           )  -----------------------------------------
duly authorised for and on behalf   )  [signed]
of NORDEA BANK NORGE ASA            )
(as a bookrunner)                   )

                                       72
<PAGE>

                                                                  CONFORMED COPY

                             DATED 2ND OCTOBER 2006

                         TEEKAY OFFSHORE OPERATING L.P.
                                  (AS BORROWER)

                                     - AND -

                                DNB NOR BANK ASA
                              NORDEA BANK NORGE ASA
                              FORTIS CAPITAL CORP.

                                   AND OTHERS
                                  (AS LENDERS)

                                     - AND -

                                DNB NOR BANK ASA
                                   (AS AGENT)

                                     - AND -

                     DEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT
                               (AS SECURITY AGENT)

                                     - AND -

                                DNB NOR BANK ASA
                              NORDEA BANK NORGE ASA
                              FORTIS CAPITAL CORP.
                          (AS MANDATED LEAD ARRANGERS)

                                     - AND -

                                DNB NOR BANK ASA
                              NORDEA BANK NORGE ASA
                                (AS BOOKRUNNERS)

                                   ----------

                             US$940,000,000 SECURED
                                 LOAN AGREEMENT

                                   ----------

                               STEPHENSON HARWOOD
                            ONE ST. PAUL'S CHURCHYARD
                                 LONDON EC4M 8SH
                               TEL: 020 7329 4422
                               FAX: 020 7329 7100
                                  REF: 819/1138

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
1  Definitions and Interpretation .......................................     1

2  The Loan and its Purposes ............................................    18

3  Conditions of Utilisation ............................................    18

4  Advance ..............................................................    23

5  Repayment ............................................................    23

6  Prepayment ...........................................................    23

7  Interest .............................................................    25

8  Indemnities ..........................................................    27

9  Fees .................................................................    31

10 Security and Application of Moneys ...................................    32

11 Representations and Warranties .......................................    33

12 Undertakings and Covenants ...........................................    38

13 Events of Default ....................................................    44

14 Assignment and Sub-Participation .....................................    50

15 The Agent, the Security Agent and the Lenders ........................    53

16 Set-Off ..............................................................    62

17 Payments .............................................................    62

18 Notices ..............................................................    64

19 Partial Invalidity ...................................................    67

20 Remedies and Waivers .................................................    67
</TABLE>

<PAGE>
<TABLE>
<S>                                                                         <C>
21 Miscellaneous ........................................................    67

22 Law and Jurisdiction .................................................    68

SCHEDULE 1: The Lenders and the Commitments .............................    70

SCHEDULE 2: Conditions Precedent and Subsequent .........................    71
   Part I: Conditions precedent to the First Drawdown Date ..............    71
   Part II: Conditions subsequent to the First Drawdown Date ............    74
   Part III: Conditions precedent to the Step-up Date ...................    75
   Part IV: Conditions subsequent to the Step-up Date ...................    77

SCHEDULE 3: Calculation of Mandatory Cost ...............................    78
SCHEDULE 4: Form of Drawdown Notice .....................................    80

SCHEDULE 5: Form of Transfer Certificate ................................    81

SCHEDULE 6: Form of Compliance Certificate ..............................    84

SCHEDULE 7: The Vessels .................................................    85
   Part I: The Initial Vessels ..........................................    85
   Part II: The Step-up Vessels .........................................    86

SCHEDULE 8: Reductions ..................................................    87
</TABLE><PAGE>

                                                                    EXHIBIT 10.8

DATED: 14 JUNE 2006

BETWEEN:

(1)  PETROJARL JV AS having its registered office at Strandveien 4, PO Box 89,
     N-1325 Lysaker, Norway ("PETROJARL");

(2)  TEEKAY PETROJARL OFFSHORE HOLDINGS L.L.C., a limited liability company
     formed in the Marshall Islands with its registered office at Trust Company
     Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960
     and having a business address at Bayside House, Bayside Executive Park,
     West Bay Street and Blake Road, Nassau, The Bahamas ("TEEKAY"); and

(3)  TEEKAY PETROJARL GP L.L.C. having its principal place of business at
     Bayside House, Bayside Executive Park, West Bay Street and Blake Road, PO
     Box AP-59212, Nassau, Bahamas (the "GP").

PRELIMINARY

A.   Teekay Shipping Corporation and Petrojarl entered into a Heads of Agreement
     dated 20 February, 2006 whereby they agreed to establish a joint venture
     (the "Joint Venture"), either directly or through their respective
     nominees, that will primarily focus on the business of owning and operating
     FPSO's, FSO's and other mobile production solutions for the oil industry
     worldwide.

B.   Teekay Shipping Corporation wishes to pursue the Joint Venture through its
     wholly owned subsidiary Teekay Petrojarl Offshore Holdings L.L.C..

C.   On or about 29 June 2006, Petrojarl will become a wholly owned subsidiary
     of Petrojarl ASA (the "Demerger").

D.   Teekay Petrojarl GP L.L.C. (the "GP") was formed on 13 June 2006 under the
     Limited Liability Company Act as a limited liability company and has, as
     the date of this Agreement, an authorised share capital of one thousand
     Dollars (USD1,000) divided into one thousand shares of one Dollar (USD1)
     each.

E.   Teekay Petrojarl Offshore L.P. (the "LP") was formed on 13 June 2006 under
     the Limited Partnership Act as a limited partnership, with GP as its
     general partner.

<PAGE>

E.   Petrojarl and Teekay propose jointly (a) to own and operate FPSOs, FSOs and
     other mobile production solutions for the oil industry worldwide, (b) that
     those activities should be carried out through the GP and (c) that they
     will hold the issued membership interests in the GP equally, and limited
     partnership interests in the LP equally, all in the manner and on the terms
     set out below.

1    DEFINITIONS AND INTERPRETATION

     In this Agreement unless inconsistent with the context or otherwise
     defined:

     1.1  the following expressions have the following meanings:

<TABLE>
<S>                                             <C>
          "ADDRESS FOR SERVICE"                 :   for Petrojarl means C/O SH
                                                    Process Agents Limited, One
                                                    St Paul's Churchyard, London
                                                    EC4M 8SH and for Teekay
                                                    means C/O Teekay Shipping
                                                    (UK) Limited, 2nd Floor, 86
                                                    Jermyn Street, London SW1Y
                                                    6JD;

          "AFFILIATE"                               any other entity directly or
                                                    indirectly controlling or
                                                    controlled by or under
                                                    direct or indirect common
                                                    control of a party. For the
                                                    purposes of this definition,
                                                    "control" (including, with
                                                    correlative meanings
                                                    "controlling", "controlled
                                                    by", and "under common
                                                    control with") means the
                                                    power to direct or cause the
                                                    direction of the management
                                                    and policies of such party,
                                                    directly or indirectly,
                                                    whether through the
                                                    ownership of voting
                                                    securities, by contract or
                                                    otherwise, it being
                                                    understood and agreed that
                                                    with respect to a
                                                    corporation, limited
                                                    liability company or
                                                    partnership, control shall
                                                    mean direct or indirect
                                                    ownership of more than 50%
                                                    of the voting stock, or
                                                    limited liability company
                                                    interest, general
                                                    partnership interest or
                                                    voting interest in any
</TABLE>

                                        2

<PAGE>

<TABLE>
<S>                                             <C>
                                                    such corporation, limited
                                                    liability company or
                                                    partnership;

          "THIS AGREEMENT"                      :   this agreement (and the
                                                    schedules to it), as varied
                                                    from time to time pursuant
                                                    to its terms;

          "AUDITORS"                            :   Ernst & Young;

          "BOARD"                               :   the board of directors of
                                                    the GP, from time to time;

          "BUDGET"                              :   the annual capital
                                                    expenditure and operating
                                                    budget of the LP, the first
                                                    such budget, in respect of
                                                    the period ending 31
                                                    December 2006, being in the
                                                    form set out in schedule 5;

          "BUSINESS"                            :   the business to be
                                                    transacted by the GP from
                                                    time to time as referred to
                                                    in schedule 2;

          "CEDR"                                :   Centre for Effective Dispute
                                                    Resolution;

          "CHANGE OF CONTROL"                   :   occurs in relation to a
                                                    Joint Venture Partner if:

                                                    (a)  the ultimate Holding
                                                         Company of the Joint
                                                         Venture Partner as at
                                                         the date it acquired
                                                         its Joint Venture
                                                         Interest ceases to have
                                                         directly or indirectly,
                                                         the right or power to
                                                         direct or cause the
                                                         direction of the
                                                         management policies of
                                                         a person either by
                                                         contract or through
                                                         ownership of interests
                                                         or securities carrying
                                                         a majority of the votes
                                                         ordinarily exercisable
                                                         by the holders of such
                                                         interests or securities
                                                         (unless
</TABLE>

                                        3

<PAGE>

<TABLE>
<S>                                             <C>
                                                         such interests or
                                                         securities have been
                                                         acquired by or on
                                                         behalf of the other
                                                         Joint Venture Partner)
                                                         or through the ability
                                                         to appoint the majority
                                                         of the directors or
                                                         other governing
                                                         officers of a person or
                                                         through ownership of
                                                         interests or other
                                                         securities which carry
                                                         the right to receive
                                                         the greater part of the
                                                         income of such person
                                                         (if all its income were
                                                         to be distributed)
                                                         PROVIDED ALWAYS that
                                                         the Demerger shall not
                                                         constitute a Change of
                                                         Control and Petrojarl
                                                         ASA shall thereafter be
                                                         considered the ultimate
                                                         Holding Company of
                                                         Petrojarl; or

                                                    (b)  any action is taken to
                                                         appoint a receiver,
                                                         manager, liquidator or
                                                         similar officer in
                                                         respect of any assets
                                                         of a Joint Venture
                                                         Partner where such
                                                         assets include the
                                                         Joint Venture Interest
                                                         held by the Joint
                                                         Venture Partner;

          "DISPOSE"                             :   (a)  any sale, transfer or
                                                         other disposal or
                                                         alienation of any
                                                         entitlement to or
                                                         legal, beneficial
                                                         interest or right in,
                                                         any Joint Venture
                                                         Interest (including by
                                                         way of gift, trust,
                                                         grant or option or
                                                         creation of any
                                                         Encumbrance);

                                                    (b)  any agreement for such
                                                         sale, transfer or
                                                         disposal;

                                                    (c)  any act or thing, or
                                                         series of acts or
                                                         things which has the
                                                         same or a
</TABLE>

                                        4

<PAGE>

<TABLE>
<S>                                             <C>
                                                         substantially similar
                                                         economic effect as
                                                         anything in (a) or (b)
                                                         above;

          "DOLLARS" and "USD"                   :   means the lawful currency
                                                    for the time being of the
                                                    United States of America;

          "ENCUMBRANCE"                         :   means an interest or power:

                                                    (a)  reserved in or over an
                                                         interest in any asset
                                                         including, but not
                                                         limited to, any
                                                         retention of title; or

                                                    (b)  created or otherwise
                                                         arising in or over any
                                                         interest in any asset
                                                         under a bill of sale,
                                                         mortgage, charge, lien,
                                                         pledge, trust or power;

                                                    (c)  by way of security for
                                                         the payment of a debt
                                                         or any other monetary
                                                         obligation or the
                                                         performance of any
                                                         other obligation and
                                                         includes any agreement
                                                         to grant or create any
                                                         of the above;

          "DUE PROPORTIONS"                     :   in relation to the time
                                                    when, as the case may be,
                                                    any liability referred to in
                                                    clause 6 arises or any
                                                    finance referred to in
                                                    clause 7 is required to be
                                                    provided, such proportions
                                                    as the nominal value of
                                                    partnership interests held
                                                    by each Shareholder bears to
                                                    the aggregate nominal value
                                                    of partnership interests
                                                    issued but for the avoidance
                                                    of doubt the proportion of
                                                    shareholding between the
                                                    Shareholders shall initially
                                                    be 50:50;

          "FAIR MARKET VALUE"                   :   in relation to a Project
                                                    (including the relevant
                                                    Unit) means the fair market
                                                    value
</TABLE>

                                        5

<PAGE>

<TABLE>
<S>                                             <C>
                                                    of that Project (including
                                                    the relevant Unit) based
                                                    upon what a knowledgeable
                                                    and financially capable
                                                    arm's length purchaser
                                                    acting reasonably would be
                                                    prepared to pay for the
                                                    Project (including the
                                                    relevant Unit) as a whole as
                                                    if it were an orderly sale
                                                    in the ordinary course of
                                                    business. The valuation
                                                    shall take into
                                                    consideration the Project's
                                                    past performance and its
                                                    future prospects, and such
                                                    other circumstances as the
                                                    person carrying out the
                                                    valuation considers
                                                    relevant. The valuation
                                                    shall be carried out by the
                                                    firm that is the auditor for
                                                    the time being of the Joint
                                                    Venture, or if such person
                                                    is not available for any
                                                    reason, a valuator appointed
                                                    by the auditors of the Joint
                                                    Venture, and Fair Market
                                                    Value shall be determined as
                                                    of the date on which any
                                                    option is exercised under
                                                    Clause 7.11 to acquire a
                                                    Project and the relevant
                                                    Unit. In so acting the
                                                    valuator is instructed to
                                                    act as an expert and not as
                                                    an arbitrator and the
                                                    decision of the valuator
                                                    shall (save in respect of
                                                    manifest error) be final and
                                                    binding on the Joint Venture
                                                    Partners;

          "FPSOS"                               :   floating production, storage
                                                    and offloading facilities;

          "FSOS"                                :   floating storage and
                                                    offloading facilities;

          "GROUP"                               :   in relation to a company,
                                                    the group of companies
                                                    comprising that company and
                                                    any company which is from
                                                    time to time a holding
                                                    company of that company or a
</TABLE>

                                        6

<PAGE>

<TABLE>
<S>                                             <C>
                                                    subsidiary of that company
                                                    or of such holding company;

          "GUARANTEES"                          :   all guarantees, indemnities
                                                    and covenants of the nature
                                                    referred to in clause 6.1 as
                                                    varied, extended or renewed;

          "INTELLECTUAL PROPERTY RIGHTS         :   means:

                                                    (a)  patents (including
                                                         continuations,
                                                         reissues, and
                                                         extensions), trade
                                                         marks, service marks,
                                                         rights (registered or
                                                         unregistered) in any
                                                         designs, applications
                                                         and rights to apply for
                                                         any of the foregoing,
                                                         trade or business
                                                         names, internet domain
                                                         names and e-mail
                                                         addresses, unregistered
                                                         trade marks and service
                                                         marks, brand names,
                                                         copyrights (including
                                                         rights in computer
                                                         software), database
                                                         rights, know-how,
                                                         rights in designs and
                                                         inventions, software
                                                         (object and source code
                                                         and any related
                                                         documentation),
                                                         business methods and
                                                         trade secrets;

                                                    (b)  rights under licences,
                                                         consents, orders,
                                                         statutes or otherwise
                                                         in relation to a right
                                                         or asset in paragraph
                                                         (a);

                                                    (c)  applications for all
                                                         rights and assets in
                                                         paragraph (a); and
</TABLE>

                                        7

<PAGE>

<TABLE>
<S>                                             <C>
                                                    (d)  rights and means of the
                                                         same or similar effect
                                                         or nature as or to
                                                         those in paragraphs (a)
                                                         and (b),

                                                    in each case in any
                                                    jurisdiction, and which in
                                                    the case of Petrojarl shall
                                                    include but not be limited
                                                    to those described in
                                                    Schedule 7;

          "JOINT VENTURE"                       :   the joint venture created by
                                                    the Joint Venture Partners,
                                                    and includes the Joint
                                                    Venture Entities;

          "JOINT VENTURE ENTITIES"              :   all legal entities
                                                    established for the purpose
                                                    of pursuing the Business and
                                                    jointly owned by the Joint
                                                    Venture Partners and any
                                                    subsidiaries of such legal
                                                    entities including but not
                                                    limited to the GP, the LP,
                                                    the Service Co, and wholly
                                                    or partially owned
                                                    subsidiary companies of any
                                                    of them;

          "JOINT VENTURE INTEREST"              :   100% of the interest of a
                                                    Joint Venture Partner in the
                                                    Joint Venture however
                                                    represented, including all
                                                    issued shares or units in
                                                    the capital of the Joint
                                                    Venture, the GP, the Service
                                                    Co and the Joint Venture
                                                    Entities from time to time
                                                    (of whatever class);

          "JOINT VENTURE PARTNER"               :   Petrojarl or Teekay as the
                                                    case may be;

          "LIMITED LIABILITY COMPANY ACT"           means the Limited Liability
                                                    Company Act of the Republic
                                                    of the Marshall Islands;

          "LIMITED PARTNERSHIP ACT"             :   means the Limited
                                                    Partnership Act of the
                                                    Republic of the Marshall
                                                    Islands;

          "LIMITED LIABILITY COMPANY AGREEMENT"     means the limited liability
                                                    company agreement of the GP
                                                    in the form set out in
</TABLE>

                                        8

<PAGE>

<TABLE>
<S>                                             <C>
                                                    schedule 1, Part B as
                                                    amended from time to time;

          "LIMITED PARTNERSHIP AGREEMENT"           means the limited
                                                    partnership agreement of the
                                                    LP in the form set out in
                                                    schedule 1, Part A as
                                                    amended from time to time;

          "MAJOR DECISION"                      :   any decision which may not
                                                    be delegated by the Board or
                                                    the GP, as provided by
                                                    clause 12.1 and more fully
                                                    described in Schedule 3;

          "PARTIES"                             :   the parties to this
                                                    Agreement; and "Party" means
                                                    any one of them;

          "PETROJARL FPSOS"                     :   those FPSOs currently
                                                    operated by entities within
                                                    the Petrojarl Group and
                                                    listed in Schedule 6(A);

          "PETROJARL GROUP"                     :   (i) prior to the Demerger,
                                                    PGS Production ASA and its
                                                    related bodies corporate
                                                    (but excluding the Joint
                                                    Venture and the Joint
                                                    Venture Entities); and (ii)
                                                    after the Demerger Petrojarl
                                                    ASA and its related bodies
                                                    corporate (but excluding the
                                                    Joint Venture and the Joint
                                                    Venture Entities) and MEMBER
                                                    OF THE PETROJARL GROUP has a
                                                    corresponding meaning;

          "PROJECTS"                            :   any opportunity to tender
                                                    for the provision of mobile
                                                    production solutions to the
                                                    oil industry;

          "SERVICE CO"                          :   Teekay Petrojarl Services
                                                    AS, a company incorporated
                                                    under the laws of Norway;

          "SHAREHOLDERS"                        :   Petrojarl and Teekay and any
                                                    other person who, as a
                                                    transferee of partnership
                                                    interests in the LP, is
                                                    required to enter into a
</TABLE>

                                        9

<PAGE>

<TABLE>
<S>                                             <C>
                                                    covenant to comply with the
                                                    terms of this Agreement
                                                    pursuant to clause 11.6, for
                                                    so long as such persons are
                                                    holders of partnership
                                                    interests; and "Shareholder"
                                                    means any one of them;

          "SUPPORT SERVICES"                    :   engineering, design,
                                                    technical, computer,
                                                    commercial, accounting,
                                                    legal, personnel,
                                                    procurement and other
                                                    management and specialist
                                                    services and equipment
                                                    required by the GP from
                                                    third parties (including the
                                                    Shareholders) for the
                                                    purpose of carrying on the
                                                    Business;

          "TEEKAY FSOS"                         :   those FSOs currently
                                                    operated by entities within
                                                    the Teekay Group and listed
                                                    in Schedule 6(B);

          "TEEKAY GROUP"                        :   Teekay Shipping Corporation
                                                    and its related bodies
                                                    corporate (but excluding the
                                                    Joint Venture and the Joint
                                                    Venture Entities) and MEMBER
                                                    OF THE TEEKAY GROUP has a
                                                    corresponding meaning;

          "UK"                                  :   the United Kingdom of Great
                                                    Britain and Northern
                                                    Ireland;

          "UNIT"                                :   any FPSO, FSO or other
                                                    equipment marketed by the
                                                    Joint Venture;

          "WORKING DAY"                         :   any day (except Saturdays
                                                    and Sundays) on which banks
                                                    are open for general
                                                    business in Oslo and New
                                                    York City.
</TABLE>

     1.2  references to clauses and the schedules are to clauses of and the
          schedules to this Agreement;

     1.3  words importing gender include each gender;

                                       10
<PAGE>

     1.4  references to persons include bodies corporate, firms and
          unincorporated associations;

     1.5  the singular includes the plural and vice versa;

     1.6  clause headings are included for the convenience of the Parties only
          and do not affect its interpretation; and

     1.7  references to all or any part of any statute or statutory instrument
          include any statutory amendment, modification or re-enactment in force
          from time to time and references to any statute include any statutory
          instrument or regulations made under it.

2    PRELIMINARY FORMALITIES

     Forthwith following signature of this Agreement, the Joint Venture Partners
     shall take, or cause to be taken, such steps as are necessary to procure
     that the following provisions of this clause and clause 3, in so far as
     such provisions have not already been implemented, are implemented.

     2.1  The Joint Venture Partners will:

          2.1.1 each become a member of the GP, execute the Limited Liability
               Company Agreement in substantially the form attached in Schedule
               1 hereof, and make initial capital contributions as provided
               therein in cash;

          2.1.2 each become a limited partner of the LP, execute the Limited
               Partnership Agreement in substantially the form attached in
               Schedule 1 hereof, and make initial capital contributions as
               provided therein in cash;

          2.1.3 procure that the GP shall become the general partner of the LP,
               execute the Limited Partnership Agreement in substantially the
               form attached in Schedule 1 hereof, and make initial capital
               contributions as provided therein in cash;

          2.1.4 each subscribe for an equal number of shares in the Service Co
               at par and in cash.

                                       11

<PAGE>

     2.2  The GP will own the capital assets of the Joint Venture, either
          directly or indirectly provided however that a Joint Venture Partner
          shall be entitled to warehouse its interest in a Project in a member
          of its Group during the project development phase and subsequently
          transfer it to the GP or as it may direct when the Project begins to
          generate revenue.

     2.3  The GP will manage assets and operations through the LP as general
          partner of the LP.

     2.4  Teekay Petrojarl Services AS will provide services to the Joint
          Venture, predominantly during the project tendering phase but also
          during the operation phase as determined by the Board.

     2.5  The Joint Venture Partners intend to structure and operate the Joint
          Venture so as to minimize, to the extent reasonably commercially
          possible, the tax payable by the Joint Venture.

3    BOARD OF DIRECTORS OF GP

     3.1  APPOINTMENT AND REMOVAL OF DIRECTORS

          3.1.1 The Board of Directors shall be appointed and removed in
               accordance with the Limited Liability Company Agreement. In their
               capacity as Members of the GP, each Joint Venture Partner shall
               appoint as directors persons who are in good standing in the
               community, of good repute, who have the power to act on behalf of
               the Joint Venture Partner, and who will enhance the reputation
               and prospects of the Joint Venture.

          3.1.2 Any appointor removing a director shall be responsible for and
               shall indemnify and hold harmless the other Shareholder and the
               GP against any claim for unfair or wrongful dismissal or
               otherwise arising out of such removal.

     3.2  DIRECTORS DUTIES

          Although a director shall act in the best interests of the GP, a
          director appointed by a Joint Venture Partner may have regard to and
          represent the interests of that Joint Venture Partner and act on the
          wishes of that Joint Venture Partner in performing

                                       12

<PAGE>

          any of his or her duties or in exercising any power as a director in
          relation to the law.

     3.3  FREQUENCY OF MEETINGS

          The Joint Venture Partners shall procure that the Board shall:

          3.3.1 be responsible for the overall management, guidance and
               direction of the GP, which shall include the preparation of its
               business plan and the review of its objectives, business
               procedures, budgets and cash call mechanisms;

          3.3.2 oversee the business development and sales and marketing
               activities for the GP worldwide;

          3.3.3 identify Projects suitable for the LP;

          3.3.4 develop and approve budgets for Projects;

          3.3.5 optimise the use of existing resources from both Teekay and
               Petrojarl for all aspects of the Business, and endeavour to
               ensure that the contributions of each Joint Venture Partner to
               the GP and other Joint Venture Entities are broadly equivalent by
               reference to the reports delivered pursuant to clause 7.3;

          3.3.6 appoint and supervise project teams from the employees of the
               Joint Venture Partners (via the Service Co) for each Project;

          3.3.7 approve the terms of any bid for a Project; and

          3.3.8 establish an appropriate authorisation matrix setting out the
               appropriate authorisations and signatories required for the
               different aspects of the Business.

     3.4  DIRECTORS' REIMBURSEMENT FOR EXPENSES

          No directors fees shall be paid to persons appointed as directors of
          any Joint Venture Entity, but this provision shall be without
          prejudice to the terms of any contract of services held by any such
          person. All out-of-pocket expenses incurred

                                       13

<PAGE>

          by a director in carrying out his or her duties as a director shall be
          paid by the Joint Venture Partner who appointed that director.

     3.5  DISCLOSURE OF INFORMATION

          Each director shall be entitled to disclose any information relating
          to the Joint Venture Entities and its business, affairs and financial
          position to the Joint Venture Partner which appointed him.

4    MANAGEMENT AND STAFF

     4.1  The managing director of the Service Co shall be appointed by mutual
          agreement between the Joint Venture Partners. Mr. Oystein Huglem shall
          be the first managing director.

     4.2  The GP shall recruit and employ such staff as the Board shall from
          time to time consider necessary for the proper conduct of the
          Business. The present intention of the Joint Venture Partners is that
          the GP will not initially have any direct employees, but shall be
          resourced by secondments from the Joint Venture Partners via the
          Service Co.

     4.3  Each Joint Venture Partner shall (if so requested by the Board) use
          reasonable endeavours to second appropriate personnel to the GP via
          the Service Co on a full time or a part time basis and otherwise on
          terms to be agreed between the Board and that Joint Venture Partner.

     4.4  If a Joint Venture Partner decides that any person seconded pursuant
          to clause 4.3 or the Managing Director appointed pursuant to Clause
          4.1 is not suitable for employment in connection with the Business it
          may require the Service Co to withdraw and replace such person (or, in
          the case of the Managing Director, for the Board to appoint a new
          Managing Director) or to take such other steps as it may deem
          necessary or expedient.

     4.5  All the salaries, wages, allowances, travelling and accommodation
          expenses and other benefits to which such seconded executives may be
          entitled and all necessary employer's pension and national insurance
          contributions in each case relating to the period of such secondment
          shall, except where otherwise agreed, be borne and paid by the GP at
          rates agreed to by the Board, such rates to be established in a manner

                                       14

<PAGE>

          consistent with sound business practices and any applicable transfer
          pricing principles and to form part of the reports delivered pursuant
          to clause 7.3.

5    OBJECTIVE AND CONDUCT OF BUSINESS

     5.1  The principal activities in which the GP shall be engaged shall be as
          described in schedule 2.

     5.2  It is the intention of the Joint Venture Partners that the GP shall
          operate so far as practicable as a self-sufficient unit in the
          contracting and performance of its activities, as specified in clause
          5.1, but where this objective cannot be achieved then, until it is
          possible to do so, each Joint Venture Partner shall use its reasonable
          endeavours to provide Support Services to the GP via the Service Co
          pursuant to the terms of clause 8.1.

     5.3  The GP will ensure that single purpose subsidiaries are established
          for each Project (the "JOINT VENTURE ENTITIES"). The constitution and
          governance of each Joint Venture Entity shall be consistent with the
          terms of this Agreement and with the constitution and governance of
          the GP, save that each Joint Venture Entity shall only be concerned
          with a single Project.

     5.4  It is intended that the Joint Venture should be self-financing and
          that it should obtain additional funds from third parties without
          recourse to the Joint Venture Partners unless otherwise agreed to in
          the Budget. The Joint Venture shall borrow additional funds from third
          parties on the most favourable terms available and which are
          compatible with its needs, as provided for in the Budget, but with the
          intention of raising twenty per cent. (20%) of required capital in the
          form of contributions (in the Due Proportions) of the Joint Venture
          Partners and the balance of eighty per cent. (80%) in the form of
          third party debt.

     5.5  Other than as provided in clause 6, the Joint Venture Partners shall
          not be obliged to guarantee or provide security for any indebtedness
          of the Joint Venture. The liability of the Joint Venture Partners
          under guarantees of the Joint Venture issued pursuant to this clause 5
          shall be several and not joint or joint and several, unless otherwise
          agreed. If a Joint Venture Partner incurs any such liability, that
          Partner shall be entitled to contribution from the other Joint Venture
          Partner to ensure that

                                       15

<PAGE>

          the aggregate liability of the Joint Venture Partners is borne equally
          by the Joint Venture Partners.

     5.6  If a Joint Venture Partner guarantees or provides security for any
          indebtedness of the Joint Venture and thereby reduces the cost of
          borrowing of the Joint Venture, the Joint Venture shall pay to such
          Joint Venture Partner a guarantee fee calculated in accordance with
          transfer pricing principles that the Joint Venture Partners have
          agreed are applicable to the operation of the Joint Venture.

6    GUARANTEES AND INDEMNITIES

     6.1  The GP shall not undertake any activity requiring a bond or guarantee
          or in any way pledging the credit of the Joint Venture Partners or
          either of them without the prior consent of each Joint Venture
          Partner. Where, for the purpose of providing such security, the Joint
          Venture Partners agree that any liability is to be assumed jointly
          and/or severally by them under any guarantee, undertaking or other
          obligation of a similar nature, it is the intention of the Joint
          Venture Partners that:

          6.1.1 the amount of such liability shall be apportioned between them
               in the Due Proportions; and

          6.1.2 Notwithstanding any agreement with the beneficiary of such
               guarantee, undertaking or obligation, they shall be liable to
               make contributions between themselves and indemnify and keep
               indemnified each other so that such liability is ultimately borne
               in the Due Proportions.

     6.2  If any liability incurred is solely attributable to the act or default
          of one Joint Venture Partner then, notwithstanding the terms of clause
          6.1, the whole of such liability shall be borne by such Joint Venture
          Partner who shall indemnify and keep indemnified the other Joint
          Venture Partner accordingly.

     6.3  Neither Joint Venture Partner shall take or receive from the GP or any
          other person any security in connection with the Guarantees without
          the prior written consent of the other Joint Venture Partner. Any
          security so taken or received (or any sum of money received in respect
          of such security) shall be held by the relevant Joint Venture Partner
          as trustee for both Joint Venture Partners so that they shall share
          the benefit of the same in the Due Proportions.

                                       16

<PAGE>

     6.4  Nothing contained in this Agreement shall operate to deprive either
          Joint Venture Partner of any rights or remedies available to it at law
          against the other Joint Venture Partner as co-sureties under the
          Guarantees, except to the extent that any rights or remedies are
          inconsistent with or excluded by the terms of this Agreement.

7    BUDGETS, ACCOUNTS AND FINANCE

     7.1  The Joint Venture shall establish, maintain and duly administer an
          internal control system comprising policies, processes and such other
          features as are necessary or advisable, and in accordance with best
          practices in the industry, to help:

          7.1.1 ensure its effective and efficient operation by enabling it to
               manage significant business, operational, financial, compliance
               and other risks to achieve its objectives;

          7.1.2 ensure the quality of its internal and external reporting; and

          7.1.3 ensure compliance with any applicable laws and regulations
               binding on it and assist in the compliance by the Joint Venture
               Partners (but with any incremental costs of so doing to be
               apportioned in accordance with Clause 7.3.7) with any applicable
               laws and regulations binding on any of them.

     7.2  Subject always to any applicable obligations of confidentiality, the
          Joint Venture shall provide, at the expense of the Joint Venture
          Partner requesting the information, such information and such access
          to persons, premises or books and records as any of the Joint Venture
          Partners shall reasonably require in order to:

          7.2.1 satisfy themselves that the provisions of Clause 7.1 are being
               complied with; and/or

          7.2.2 allow them to comply with any obligations to which they are
               subject under the laws and regulations referred to in Clause
               7.1.3.

     7.3  The Joint Venture Partners shall procure that the Board of the GP
          shall be responsible for proper planning, forecasting and reporting
          and shall, among other things:

          7.3.1 provide the Joint Venture Partners with financial reports of the
               LP, each Project and the Service Co. on a quarterly basis within
               fifteen (15)

                                       17

<PAGE>

               Working Days after the end of each quarter including, but not
               limited to, a balance sheet, profit and loss statement, cash flow
               and forward projections on a rolling twelve (12) month basis
               showing the year-to-date performance against the Budget, and a
               rolling one year forecast of the performance against the Budget
               together with a statement as to the contributions of each
               Shareholder (in the form of seconding employees, provision of
               office space and other services) by reference to agreed rates
               specified from time to time by the Board of the GP;

          7.3.2 prepare each annual Budget for submission to and approval by the
               Joint Venture Partners;

          7.3.3 ensure that audited financial statements of the GP and all Joint
               Venture Entities are prepared in respect of each fiscal year and
               submitted to the Joint Venture Partners not more than sixty (60)
               days after the end of such fiscal year;

          7.3.4 a report from the Board on the financial position and affairs of
               the Joint Venture within ten (10) Working Days after the end of
               each calendar quarter, such report to include a summary of the
               Joint Venture's "long" and "short" positions and a calculation of
               the capital at risk;

          7.3.5 as soon as they are available, reasonable details of any actual
               or prospective material change in the Business or the financial
               position or affairs of the Joint Venture;

          7.3.6 supply such other financial and other information to the Joint
               Venture Partners in such form and at such times as either of them
               may reasonably require in order to conform the Budgets and
               financial reports to the accounting standards and reporting
               obligations of the Joint Venture Partners, and comply with all
               such regulatory requirements as may be required by a Joint
               Venture Partner, it being agreed and acknowledged that any
               additional costs that may be incurred by the Joint Venture in
               meeting accounting or regulatory standards not applicable to the
               Joint Venture Partner shall be for the account of the relevant
               Joint Venture Partner.

                                       18

<PAGE>

     7.4  The GP shall ensure that all accounting records of the Joint Venture
          Entities are maintained in accordance with accounting principles and
          practices generally accepted in the United States of America and such
          records shall be audited annually by the Auditors or such other firm
          of chartered accountants as shall be approved by the Board.

     7.5  All records of the GP and the Joint Venture Entities shall be open to
          examination and audit by either Joint Venture Partner or its duly
          authorised representative, each of whom shall be entitled to such
          further information as it may reasonably require concerning their
          business affairs and financial position.

     7.6  The Joint Venture Partners shall each use reasonable endeavours to
          procure that borrowings from banks and other similar sources shall be
          on the most favourable terms reasonably obtainable as to interest,
          repayment and security.

     7.7  The working capital needs of the GP and LP, as envisaged in any
          Budget, together with any cost over-runs on Projects, shall be
          provided by the Joint Venture Partners in the Due Proportions to the
          extent that such needs are not satisfied from the any such company's
          share capital and reserves and third party borrowing. Such funding
          shall be by way of loan by each of the Joint Venture Partners to the
          GP in each case upon the terms of a note (a "Loan Note") on arm's
          length commercial terms but otherwise in form and substance acceptable
          to each Joint Venture Partner.

     7.8  If (a) any of the GP or other Joint Venture Entities has excess
          working capital needs referred to in clause 7.7 and (b) the GP (or
          other relevant Joint Venture Entity) is unable to fund such excess by
          third party borrowing, then either Joint Venture Partner on behalf of
          the such company may require the Board of the GP to instruct the
          Auditors to confirm that such company is able to pay its debts as they
          fall due without realisation of any of its fixed assets and that the
          assets of such company exceed its liabilities. If the Auditors are
          unable to provide such confirmation they shall calculate and certify
          the amount of further working capital required by such company (the
          "Auditors' Certificate").

     7.9  Unless otherwise agreed, the Joint Venture Partners shall advance to
          the GP or other Joint Venture Entity in the Due Proportions such sums
          as shall be equal in the aggregate to the further working capital
          specified in the Auditors' Certificate for the

                                       19

<PAGE>

          purposes of financing the GP or other Joint Venture Entity on the
          terms of this clause and in the following manner:

          7.9.1 forthwith upon receipt of the Auditors' Certificate the Joint
               Venture Partners shall procure that the Board issues to each of
               the Joint Venture Partners a notice in writing (a "Funding
               Notice"), specifying the amount which each of them is required to
               lend to such company;

          7.9.2 each Joint Venture Partner shall advance to the GP or LP in cash
               the amount stated in such Funding Notice within ten (10) Working
               Days of the date of its receipt; and

          7.9.3 amounts advanced by the Joint Venture Partners to the GP or LP
               shall be loaned in each case upon the terms of a Loan Note.

     7.10 If either Joint Venture Partner (in this Clause 7 the "Defaulting
          Joint Venture Partner") fails to lend any amount properly requested by
          the Board of the GP pursuant to and within the time specified in
          clause 7.9.2, the other Joint Venture Partner (the "Supporting Joint
          Venture Partner") shall be entitled (subject only to its having duly
          loaned any amount properly required from it pursuant to this clause 7)
          to lend to the GP or LP in cash and on arm's length commercial terms
          the amount due to the GP or LP by the Defaulting Joint Venture Partner
          against security over the assets of the Project requiring the
          additional funding. The Defaulting Joint Venture Partner may provide
          its funds to the GP or LP within six (6) months of its initial failure
          to do and in such circumstances the Supporting Joint Venture Partner
          shall have its loan repaid and release any security it might hold for
          such loan.

     7.11 At the end of the six (6) month period referred to in Clause 7.10 (and
          if the Defaulting Joint Venture Partner has not in the meantime
          provided its funds in full to the GP or the LP), the Supporting Joint
          Venture Partner has a further period of the lesser of (a) six (6)
          months from such date and (b) the period until the Unit in the Project
          for which the Defaulting Joint Venture Partner failed to lend goes on
          hire, to exercise an option (which once exercised shall be
          irrevocable) to purchase such Unit and such Project from the Joint
          Venture. The purchase price shall be the lesser of:

                                       20

<PAGE>

          (i)  the Fair Market Value of such Project (including the Unit)
               discounted by twenty per cent (20%) less the amount of loans made
               available for such Project by the Supporting Joint Venture
               Partner; and

          (ii) the actual amounts paid by the Joint Venture in respect of such
               Project (including the Unit) discounted by twenty per cent (20%)
               less the amount of loans made available for such Project by the
               Supporting Joint Venture Partner,

          but in any event shall not be less than zero.

          If the Supporting Joint Venture Partner exercises this option,
          completion of the transfer of the Project and the Unit shall take
          place as soon as may be reasonably practical and the restrictions in
          clause 16 shall not apply to that Project and that Unit.

     7.12 it is acknowledged and agreed that the only recourse and sanction
          against a Defaulting Joint Venture Partner for failing to advance
          funds in accordance with Clause 7.9 shall be as set out in Clauses
          7.10 and 7.11.

8    SUPPORT SERVICES AND SUPPLIES

     8.1  If the GP requires Support Services of a type or kind which either
          Joint Venture Partner is able to supply or provide, then that Joint
          Venture Partner may tender to provide such Support Services (via the
          Service Co) on an arm's length basis but having regard to customary
          transfer pricing principles for the relevant category of Support
          Services.

     8.2  Either Joint Venture Partner may at any time require that the other
          Joint Venture Partner (in this clause a "Supplier") shall provide a
          certificate signed by the auditors for the time being of the Supplier
          stating that the Support Services concerned have been provided on the
          basis referred to in clause 8.1 (or if the auditors will not assist,
          an opinion from an appropriate tax counsel). The Joint Venture
          Partners shall use their respective reasonable endeavours to procure
          that such auditors are allowed access to all papers of the GP, LP, the
          Service Co and of the Joint Venture Partners which may be relevant to
          any enquiries they may make prior to giving a certificate under this
          clause. The costs of such auditors (or tax counsel) shall be borne by
          whichever Joint Venture Partner required such certificate, except
          that, if such

                                       21

<PAGE>

          certificate is not given in the terms required by this clause, the
          costs shall be borne by the Supplier.

9    TAX TREATMENT

     The LP is established under the assumption that it is not considered a
     separate tax subject in any jurisdiction where it might operate or hold
     shares in subsidiaries, whereas any income of the LP for tax purposes will
     flow through to and be taxed at the hand of the Joint Venture Partners in
     accordance with each Joint Venture Partner's ownership percentage in the
     LP. Each of the Joint Venture Partners are separately responsible for their
     own income taxes as well as other taxes or duties imposed on the activities
     performed by the LP, regardless of in which country(ies) such are levied.
     This includes, but is not limited to, any withholding tax on dividends paid
     by companies owned by the LP.

10   DISTRIBUTION OF PROFITS

     As a general rule and unless otherwise decided by the Board of the GP, it
     is the intention of the Joint Venture Partners that, subject to the
     requirements of applicable law, on finalisation and audit of the financial
     statements of the GP and other Joint Venture Entities for each accounting
     period (subject to the due servicing of any loans made to the GP or LP by
     either of the Joint Venture Partners pursuant to this Agreement), the Board
     shall distribute as much as possible of the cash available for
     distribution, having regard to:

     10.1 amounts determined by the Board of the GP to be required (not to
          exceed fifty per cent (50%) of distributable profits) to provide
          sufficient working capital and any reserves (whether required by law
          or otherwise) for the LP; and

     10.2 the taxation position of the LP under the relevant legislation.

11   PARTNERSHIP INTEREST TRANSFERS

     11.1 PROHIBITION

          Neither Joint Venture Partner shall, without the prior written consent
          of the other, directly or indirectly Dispose of its partnership
          interests in the LP or its shares in either the GP or the Service Co
          or any other Joint Venture Entity or the certificates representing any
          of the foregoing now or in the future held by it, except by a transfer
          to a single transferee of the entire legal and beneficial interest in
          all its Joint

                                       22

<PAGE>

          Venture Interest as expressly permitted by Clause 11 or Clause 15 of
          this Agreement or in accordance with Clause 11.3.

     11.2 REGISTRATION OF TRANSFERS

          The Joint Venture Partners hereby covenant and undertake with each
          other to comply with the terms of this Agreement and the Limited
          Liability Company Agreement and the Limited Partnership Agreement
          relating to the transfer of partnership interests and to take all such
          steps as may be required to effect due registration of transfers
          effected in accordance with this Agreement and/or the Limited
          Liability Company Agreement and the Limited Partnership Agreement.

     11.3 Notwithstanding the provisions of this Clause 11, a Joint Venture
          Partner may encumber its Joint Venture Interests as security for any
          financing arrangement with a bona fide commercial bank in the ordinary
          course for business purposes, provided such bank is made aware of the
          terms and conditions of this Agreement.

     11.4 A Joint Venture Partner may transfer all or a portion of its Joint
          Venture Interests to any Permitted Group Transferee as defined in
          clause 11.5 provided that:

          11.4.1 the transferring Joint Venture Partner ("INTRA-GROUP
               TRANSFEROR") gives written notice of the impending transfer
               together with an executed deed referred to in clause 11.6 to the
               other Joint Venture Partner not less than 7 days before the
               transfer is to be effected; and

          11.4.2 the terms of the transfer comply with clause 11.6.

     11.5 For the purposes of this clause, where the Intra-Group Transferor is:

          11.5.1 Petrojarl, the Permitted Group Transferee is any member of the
               Petrojarl Group; and

          11.5.2 Teekay, the Permitted Group Transferee is any member of the
               Teekay Group.

     11.6 As a condition precedent to any transfer under clause 11.4, the
          transferring Joint Venture Partner shall procure that the transferee
          executes a deed in favour of the Joint Venture and each other Joint
          Venture Partner stating that it shall assume as its own and be bound
          by all obligations of the transferring Joint Venture Partner under

                                       23

<PAGE>

          this agreement as if it were a party to it. The transferring Joint
          Venture Partner will not be released from its obligations under this
          Agreement or under the Share Purchase Agreement as a result of such
          transfer or execution of such deed.

     11.7 CHANGE OF CONTROL

          If a Change of Control shall apply to either Joint Venture Partner,
          then the other Joint Venture Partner shall have the right (but not the
          obligation) within ninety (90) days of the Change of Control to
          instigate the procedure set out in clauses 15.7 to 15.9.

12   MUTUAL UNDERTAKINGS CONCERNING THE LP

     MAJOR DECISIONS

     Each Joint Venture Partner undertakes with the other to exercise its voting
     rights with a view to procuring that the GP shall not delegate
     responsibility in respect of anything which shall from time to time be
     declared by the Joint Venture Partners in writing to require the unanimous
     approval of the Board (which at the date of this Agreement shall be those
     matters set out in schedule 3, any of which may be varied at any time by
     the written agreement of the Joint Venture Partners).

     12.1 EXERCISE OF VOTING RIGHTS

          Each Joint Venture Partner undertakes with the other:

          12.1.1 to exercise all voting rights and powers of control available
               to it in relation to the GP, the LP and the other Joint Venture
               Entities so as to give full effect to the terms of this
               Agreement;

          12.1.2 to procure that the directors of the GP and the other Joint
               Venture Entities nominated by it and its other representatives
               will support and implement all reasonable proposals put forward
               at meetings of the Board and other meetings of the GP and the
               other Joint Venture Entities for the proper development and
               conduct of the Business as contemplated in this Agreement;

          12.1.3 (except where specific time periods are referred to in this
               Agreement) to respond to any communication received from the
               other and/or the GP

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<PAGE>

               and/or the other Joint Venture Entities within ten (10) Working
               Days of its receipt;

          12.1.4 to procure that all third parties directly or indirectly under
               its control shall refrain from acting in a manner which will
               hinder or prevent the GP and/or the other Joint Venture Entities
               from carrying on the Business in a proper and reasonable manner;
               and

          12.1.5 generally to use its reasonable endeavours to promote the
               Business and the interests of the GP and/or the other Joint
               Venture Entities.

     12.2 CONFLICTS

          In the event of any conflict between the terms of this Agreement and
          those of the Limited Liability Company Agreement, the Limited
          Partnership Agreement, and/or the constitutional documents of any
          Joint Venture Entity, then the Joint Venture Partners shall each take
          all such steps as lie within their respective powers to procure and
          effect any amendment or alteration to the Limited Liability Company
          Agreement, Limited Partnership Agreement and/or the constitutional
          documents of any Joint Venture Entity as may be necessary, to carry
          out the intention and terms of this Agreement, so far as such
          amendment or alteration is permitted by the applicable laws governing
          the Limited Liability Company Agreement, Limited Partnership Agreement
          and/or the constitutional documents of any Joint Venture Entity.

     12.3 JOINT OBLIGATIONS

          Whenever in this Agreement an obligation is imposed on the GP, such
          obligation shall be construed and applied so as to impose on the Joint
          Venture Partners, as between themselves, a joint obligation
          (additional to that of the GP) to procure, so far as they are able,
          that the GP or the LP shall perform its obligation.

     12.4 GP'S OBLIGATIONS

          Except where to do so would constitute an unlawful fetter on its
          powers, the GP undertakes with each of the Joint Venture Partners to
          be bound by and to comply with the provisions of this Agreement
          insofar as they relate to the GP and to act in all respects in the
          manner contemplated by this Agreement with respect to its own

                                       25

<PAGE>

          business and the business of any other Joint Venture Entity,
          including but not limited to the LP.

     12.5 MARKETING

          Each Joint Venture Partner undertakes to provide all information and
          support as may be reasonably required in order to enable the GP and
          any other Joint Venture Entity to satisfy potential clients as to its
          or their capabilities and shall provide all details of experience,
          trading history, financial resources and other information reasonably
          required for this purpose.

     12.6 PROTECTION OF NAME

          Each Joint Venture Partner undertakes with the other that:

          12.6.1 it shall not at any time use or permit to be used the name
               "Teekay" or the tagline "Teekay - The Marine Midstream Company"
               (in the case of Petrojarl) or "Petrojarl" or "Petrojarl
               Production" (in the case of Teekay) or any similar trading style;
               and

          12.6.2 if the GP goes into liquidation or into Run Off (as defined in
               Clause 15.7) it will join with the other to cause the name of the
               GP to be changed to a name excluding the words Teekay and
               Petrojarl or any similar trading style.

     12.7 SUBSIDIARIES

          The GP shall procure (so far as it is able) that any company which
          becomes a subsidiary of the LP at any time during the term of this
          Agreement shall adopt new articles of association in such form as the
          Board of the GP shall approve in writing.

     12.8 CONDUCT OF CLAIMS

          If any dispute occurs between the GP or LP and a Joint Venture Partner
          or any member of such Joint Venture Partner's Group then (but only in
          relation to matters concerning such dispute):

          12.8.1 such Joint Venture Partner shall not be allowed to exercise its
               voting rights in the GP or LP (as the case may be); and

                                       26

<PAGE>

          12.8.2 the quorum requirements for all or that part of meetings of
               Joint Venture Partners, directors or any committee of directors
               of the GP at which such dispute is to be discussed or in relation
               to which resolutions are to be passed shall be varied accordingly
               so as to permit the other Joint Venture Partner to exercise sole
               control over the GP for all purposes relating to the dispute
               concerned.

13   DELIBERATELY NOT USED

14   COMMENCEMENT AND TERMINATION

     14.1 This Agreement shall become effective on the date of the Demerger,
          subject always to all necessary regulatory approvals, pursuant to
          merger control, antitrust or competition laws, having been obtained
          (whether by decision of the relevant regulatory entity, expiry or
          termination of the waiting periods or otherwise) and/or all necessary
          competition or merger control notifications having been made.

     14.2 Thereafter (subject to the terms of this clause) it shall continue
          until the first to occur of the following dates:

          14.2.1 the date of commencement of the GP's winding up; or

          14.2.2 the date on which the Joint Venture Partners unanimously agree
               to terminate this Agreement; or

          14.2.3 the date of registration of a transfer of partnership interests
               resulting in all partnership interests in the GP or LP being held
               by or on behalf of one Joint Venture Partner;

          subject to (a) the relevant provisions of this Agreement and (b) the
          performance of any obligations or exercise of any rights respectively
          remaining to be performed or exercised after the event and to any
          rights of the Parties in respect of antecedent breaches or
          non-observance of this Agreement.

     14.3 It is agreed and acknowledged that the GP may execute this Agreement
          after it is executed by the Joint Venture Partners. However, as
          between the Joint Venture Partners, it shall be a valid and
          enforceable agreement (in accordance with its terms) from the
          execution of the Agreement by the Joint Venture Partners.

                                       27
<PAGE>

15   DEADLOCK

     15.1 Whenever a matter is submitted to a general meeting of the GP pursuant
          to clause 12.1 and that general meeting is also unable to arrive at a
          decision on the matter by reason of a disagreement between the Joint
          Venture Partners then a deadlock shall be deemed to have occurred in
          relation to that matter.

     15.2 If deadlock arises as to whether or not to bid on a Project then the
          GP will not, and will not cause any Joint Venture Entity to, bid on
          the Project. In such circumstances the Joint Venture Partner not
          wishing to bid on the Project shall not be entitled to tender for that
          Project, either directly or indirectly, alone or together with another
          party, nor shall that Joint Venture Partner assist or participate with
          any other person tendering on that Project except with the express
          written consent of the other Joint Venture Partner. The Joint Venture
          Partner that wishes to bid on the Project shall however be entitled to
          pursue the Project, either by itself or with a third party. For the
          avoidance of doubt if one Joint Venture Partner wishes to offer one of
          its existing Units for a Project it shall be free to do so and the
          Joint Venture may only make a competing bid if both Joint Venture
          Partners wish to do so. If deadlock arises as to the terms on which to
          bid on a Project, the matter should be referred to the Chief Executive
          Officers at such time (the "CEOs") of the ultimate holding companies
          of each Joint Venture Partner. Thereafter procedures set out in
          Clauses 15.4, 15.5 (but with the time limit of twenty (20) Working
          Days, replaced for these purposes only with a time period of five (5)
          Working Days) and 15.6 shall apply. If the CEOs are unable to reach a
          decision by the end of this consultation period, then each Joint
          Venture Partner shall be entitled to bid for the Project alone, and
          the provisions of Clause 16 shall not apply to such bids or any
          resulting contracts.

     15.3 If and whenever a deadlock is deemed to have occurred (other than in
          the circumstances set out in clause 15.2), either Joint Venture
          Partner shall be entitled, within twenty (20) Working Days after the
          date on which the deadlock occurred, by written notice to the other,
          to require the matter to which the deadlock relates to be referred to
          the CEOs.

     15.4 Each of the Joint Venture Partners and the GP shall supply the CEOs
          with any information which they may request.

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<PAGE>

     15.5 The CEOs shall endeavour for a period of twenty (20) Working Days from
          the date of referral of the deadlock to them under Clause 15.3 (the
          "CEO Consultation Period") to decide the course of action which, in
          all the circumstances, it would be appropriate for the GP and the
          Joint Venture Entities to take in its best interests. In reaching
          their decision the CEOs shall, so far as possible, balance the
          interests of each Joint Venture Partner fairly but they shall not put
          the interests of any Joint Venture Partner before those of the GP and
          the Joint Venture Entities.

     15.6 Forthwith upon receiving the CEOs decision each of the Joint Venture
          Partners and the GP shall ensure that the CEOs decision and directions
          are carried out.

     15.7 If the CEOs are unable to reach a decision by the end of the CEO
          Consultation Period, within thirty (30) Working Days thereafter either
          Joint Venture Partner (the "Offeror") may by written notice to the
          other (which once given shall be irrevocable) declare that the Joint
          Venture is in run off ("Run Off").

     15.8 Whilst the Joint Venture is in Run Off:

          (i)  any Projects then being considered by the Joint Venture, but
               prior to any bids having been irrevocably submitted, shall be
               terminated;

          (ii) no new Projects shall be considered by the Joint Venture;

          (iii) all other Projects shall continue to be run in the same manner
               as before until the relevant Unit finishes its then current
               contract, with capital expenditure required to meet obligations
               under such contract still to be funded in accordance with the
               terms of this Agreement;

          (iv) no existing contracts for such Projects may be amended or
               extended or commitments to further capital expenditure made
               (other than as envisaged in paragraph (iii) above) without the
               consent of each Joint Venture Partner;

          (v)  when existing contracts come to an end, the relevant Unit shall
               not be redeployed by the Joint Venture but shall be marketed for
               sale to third parties and sold to the highest bidder (it being
               agreed and acknowledged that each Joint Venture Partner may bid
               for the Unit in its own capacity) on the best available terms;
               the GP will appoint an independent third party to

                                       29

<PAGE>

               manage any such auction process in accordance with then
               prevailing best market practice;

          (vi) neither Joint Venture Partner may solicit employees of the Joint
               Venture; and

          (vii) the provisions of Clause 16 shall be of no further effect, but
               in all other respects this Agreement shall remain in full force
               and effect.

     15.9 Notwithstanding the provisions of Clause 15.8, it is the intention of
          the Parties to enter into good faith negotiations when the Joint
          Venture goes into Run Off to seek an orderly separation of the Joint
          Venture assets and a winding up of the Joint Venture (subject to
          obtaining any necessary third party consents) within three (3) years.

16   RESTRICTIONS

     16.1 In clauses 16.1 and 16.2, the following expressions have the following
          meanings:

<TABLE>
<S>                                             <C>
          "Exceptions"                          :   (i) the contracts as at the
                                                    date hereof relating to
                                                    Petrojarl FPSOs and, Teekay
                                                    FSOs; (ii) any redeployment
                                                    of Petrojarl FPSOs or Teekay
                                                    FSOs; and (iii) any
                                                    exception contemplated by
                                                    clause 7.11 or by clause
                                                    15.2;

          "Prohibited Business"                 :   the Business carried on by
                                                    any Joint Venture Entity as
                                                    at the date in question or,
                                                    if earlier, the Termination
                                                    Date relating to the Joint
                                                    Venture Partner concerned;

          "Prohibited Supply Business"              the business of making
                                                    supplies of the kind made to
                                                    the GP during the Relevant
                                                    Period in relation to any
                                                    Prohibited Business;

          "Relevant Period"                     :   the period from the date
                                                    hereof until the Joint
                                                    Venture goes into Run Off;
</TABLE>

                                       30

<PAGE>

<TABLE>
<S>                                             <C>
          "Restricted Supplier"                 :   any person who was at any
                                                    time in the Relevant Period
                                                    a supplier of the GP or any
                                                    Joint Venture Entity;

          "Termination Date"                    :   in relation to any
                                                    particular Joint Venture
                                                    Partner, the date it ceases
                                                    to hold any partnership
                                                    interests.
</TABLE>

     16.2 Each of the Joint Venture Partners undertakes to the other, and
          separately with the GP, that it will not directly or indirectly on its
          own account or on behalf of any other person and whether as principal,
          Joint Venture Partner, partner, employee, agent or otherwise at any
          time prior to Run Off, (other than in respect of the Exceptions) carry
          on or be concerned or interested or engaged (except as a shareholder
          in a public listed company holding not more than five (5) per cent of
          the share capital, of any class, of such public company) in (a) any
          business competing with the whole or part of the Prohibited Business
          or (b) the setting up of any business which would compete with the
          whole or part of the Prohibited Business.

     16.3 Nothing contained in this clause 16 shall preclude or restrict a Joint
          Venture Partner or any member of such Joint Venture Partner's Group
          from:

          16.3.1 carrying on any activity carried on during the twelve (12)
               month period immediately preceding the date of this Agreement; or

          16.3.2 offering any service or goods similar to those previously
               supplied as part of the Business but subsequently discontinued
               and not supplied by the LP at the time when such similar service
               or goods are offered.

          For the purposes of this clause 16.3 a service or offer of goods shall
          be regarded as discontinued if it has not been provided or offered by
          the GP or any Joint Venture Entity for a twelve (12) month period.

     16.4 The restrictions contained in clause 16.2 are considered reasonable by
          the Parties and are intended to be separate and severable. If any of
          those restrictions are held void but would be valid if part of the
          wording were deleted, such restriction shall apply with such deletion
          as may be necessary to make it valid and effective.

                                       31

<PAGE>

17   REPRESENTATIONS AND WARRANTIES

     17.1 Each of Petrojarl and Teekay represents and warrants to the other
          that:

          17.1.1 it is a corporation or company duly incorporated or formed
               under the laws of its place of incorporation or formation and has
               the corporate power and authority to accept the terms of this
               Agreement and perform its obligations under it;

          17.1.2 its entry into this Agreement has been duly and validly
               authorised and all requisite corporate action has been taken in
               order to make such entry valid and binding upon it in accordance
               with the terms of this Agreement;

          17.1.3 the entry into this Agreement and the consummation of the
               transactions contemplated by it will not:

               (a)  breach or conflict with any provision of its memorandum and
                    articles of association or equivalent or result in a breach
                    of, conflict with or constitute a default under any
                    mortgage, indenture, agreement, other instrument or rules of
                    any relevant stock exchange to which it is a party or by
                    which it, or any of its properties or assets, is bound; or

               (b)  violate any order, judgement or decree of any court or
                    governmental agency to which it is a party or by which it,
                    or any of its properties or assets, is bound.

18   IP RIGHTS

     18.1 Any Intellectual Property Rights held or owned by any Joint Venture
          Partner which are transferred, assigned, licensed or otherwise made
          available by to the Joint Venture shall remain the property of the
          transferring Joint Venture Partner (subject to the terms of the
          transfer, assignment, license or other applicable agreement), and
          shall not be used in any way by, and shall not confer any rights or
          interests on, any other Joint Venture Partner.

     18.2 Any Intellectual Property Rights owned by the Joint Venture shall not
          be made available to a Joint Venture Partner solely by reason of the
          fact that it is a Joint Venture Partner. If the Joint Venture makes
          any such Intellectual Property Rights

                                       32

<PAGE>

          available to a Joint Venture Partner, it shall only do so on
          commercial terms prescribed by the Board.

     18.3 The Joint Venture Partners agree to establish, as soon as reasonably
          possible after the Completion Date, a co-branding strategy for the
          Joint Venture and its business. Each Joint Venture Partner agrees that
          it shall consider the reasonable requests of the Joint Venture to use
          its name, logo and other proprietary identifying marks on a
          non-exclusive basis for the purposes of co-branding, advertising or
          other promotions of the Joint Venture (but such obligation shall only
          be to consider such reasonable request, but not necessarily to grant
          any right in or to the same, the granting or withholding of such
          rights to be in the sole discretion of such Joint Venture Partner, it
          being acknowledged and agreed that all rights to the names "Petrojarl"
          and "Petrojarl Production" are to remain the property of Petrojarl and
          all rights to the name "Teekay" and the tag line "Teekay - The Marine
          Midstream Company" are to remain the property of Teekay).

19   CONFIDENTIALITY

     19.1 For the purposes of this Clause, "CONFIDENTIAL INFORMATION" means:

          19.1.1 the provisions of this Agreement or any document referred to in
               this Agreement;

          19.1.2 in relation to the Joint Venture or a Joint Venture Partner or
               any member of the Teekay Group any information belonging or
               relating to the Joint Venture or a Joint Venture Partner or any
               member of the Teekay Group, its/their business, affairs,
               activities, products or services, which is disclosed by one party
               or an Affiliate (each a "Disclosing Party") to another party or
               an Affiliate (each a "Receiving Party") whether before or after
               the date of this Agreement. To fall within this definition,
               Disclosing Party must specify in writing which information is
               Confidential Information, and any disclosure in oral form shall
               not be subject to this Agreement, unless the oral disclosure is
               memorialized by Disclosing Party in a written document that is
               sent to Receiving Party within ten (10) Working Days from the
               date of disclosure;

                                       33

<PAGE>

     19.2 During the term of this Agreement and for a period of three years
          after termination or expiration of this Agreement for any reason
          whatsoever each Receiving Party shall:

          19.2.1 keep the Confidential Information confidential;

          19.2.2 not disclose the Confidential Information to any other person
               other than with the prior written consent of the Disclosing Party
               or in accordance with Clauses 19.3 and 19.5; and

          19.2.3 not use the Confidential Information for any purpose other than
               the performance of its obligations under this Agreement subject
               to Clauses 19.3 and 19.5.

     19.3 During the term of this Agreement a Receiving Party may disclose the
          Confidential Information to

          19.3.1 its directors, officers, employees, agents and advisers and to
               its Associated Companies and their directors, officers,
               employees, agents and advisers to the extent that it is necessary
               for the purposes of this Agreement or to enforce this Agreement;
               and

          19.3.2 its financiers, the financiers of the Joint Venture, financiers
               to a member of the Teekay Group or the Petrojarl Group;

          (each a "RECIPIENT")

     19.4 The Receiving Party shall procure that each Recipient is made aware of
          and complies with all the Receiving Party's obligations of
          confidentiality under this Agreement as if the Recipient was a party
          to this Agreement.

     19.5 The obligations contained in Clauses 19.1 to 19.4 shall not apply to
          any Confidential Information which:

          19.5.1 is required to be disclosed by law or by a governmental
               authority or other authority with relevant powers to which the
               Receiving Party is subject provided that to the extent reasonably
               possible the disclosure shall be made after consultation with the
               Disclosing Party and after taking into

                                       34

<PAGE>

               account the Disclosing Party's reasonable requirements as to its
               timing, content and manner of making or dispatch;

          19.5.2 is required to be disclosed under the rules of any stock
               exchange on which the Joint Venture Partner or any member of its
               Group or debt instrument thereof are listed provided that to the
               extent reasonably possible the disclosure shall be made after
               consultation with the Disclosing Party and after taking into
               account the Disclosing Party's reasonable requirements as to its
               timing, content and manner of making or dispatch;

          19.5.3 is at the date of this Agreement or at any time after the date
               of this Agreement comes into the public domain other than through
               breach of this Agreement by the Receiving Party or any Recipient;

          19.5.4 can be shown by the Receiving Party to have been known to the
               Receiving Party prior to it being disclosed by the Disclosing
               Party to the Receiving Party;

          19.5.5 subsequently comes lawfully into the possession of the
               Receiving Party from a third party that is not itself under a
               duty to maintain confidentiality; or

          19.5.6 can be shown by the written records of the Receiving Party to
               have been independently developed by employees of the Receiving
               Party acting without access to the Confidential Information.

20   PUBLIC ANNOUNCEMENTS

     20.1 No Joint Venture Partner shall make or send (and shall use reasonable
          endeavours to ensure that no associated company of such Joint Venture
          Partner makes or sends) a public announcement, communication or
          circular concerning the Joint Venture (an "ANNOUNCEMENT") unless it
          has first notified the other Joint Venture Partner.

     20.2 Clause 20.1 shall not apply where a Joint Venture Partner reasonably
          determines that it is required by law or a rule of a stock exchange or
          by a governmental authority to make or send any Announcement prior to
          obtaining the agreement of the other Joint Venture Partner provided
          that the party has taken all reasonable steps

                                       35

<PAGE>

          to provide the other party with an opportunity to comment on the
          Announcement prior to making or issuing the same.

21   ENFORCEMENT OF THE JOINT VENTURE'S RIGHTS

     21.1 The following provisions of this clause 21 apply to any right of
          action which the Joint Venture may have or face in respect of the
          following:

          21.1.1 an alleged breach of any Joint Venture Partner of this
               Agreement or any obligation owed to or by the Joint Venture; or

          21.1.2 any alleged breach by any member of the Petrojarl Group or any
               member of the Teekay Group of a contract entered into between
               that party and the Joint Venture,

          (each a "CONFLICTED ACTION").

     21.2 Each Conflicted Action shall be prosecuted or defended by the
          directors of the Joint Venture appointed by the Non-Defaulting Joint
          Venture Partner and no director appointed by the Defaulting Joint
          Venture Partner shall be entitled to receive any document or other
          information relating to such dispute or any action taken in connection
          with such dispute. The directors appointed by the Non-Defaulting Joint
          Venture Partner shall have full authority on behalf of the Joint
          Venture to negotiate, litigate and settle any claim arising out of the
          alleged breach or exercise of any right of termination arising out of
          the alleged breach and the Joint Venture Partners shall take all steps
          within their power to give effect to the provisions of this Clause.

     21.3 This clause is subject to, and shall not be construed as altering, the
          duties owed by directors to the Joint Venture.

     21.4 In this clause 21:

          "DEFAULTING JOINT VENTURE PARTNER" means the Joint Venture Partner the
          actions of which have given rise to, or which is involved in, the
          matters giving rise to, the cause of action and, where the cause of
          action arises from a breach of a contract between the Petrojarl Group
          or the Teekay Group and the Joint Venture, it means the Joint Venture
          Partner who is a member of that group; and

                                       36

<PAGE>

          "NON-DEFAULTING JOINT VENTURE PARTNER" means the Joint Venture Partner
          who is not the Defaulting Joint Venture Partner in relation to the
          relevant cause of action.

     22   ANCILLARY PROVISIONS

     22.1 EXCLUSION OF LIABILITY

          Except as provided by this Agreement, neither Joint Venture Partner
          shall in any circumstances whatsoever be under any liability to the
          other for any loss, damage or expenses sustained (whether or not
          caused by any negligence, default, want of care or breach of contract
          of such Joint Venture Partner, or of their servants or agents), unless
          and to the extent that such loss, damage, or expense arises as a
          result of any fraud or wilful misconduct committed by a Joint Venture
          Partner or a director nominated by a Joint Venture Partner to the
          Board.

     22.2 WAIVER

          No delay or failure by either Joint Venture Partner or the GP to
          exercise any of its powers, rights or remedies under this Agreement
          shall operate as a waiver of them, nor shall any single or partial
          exercise of any such powers, rights or remedies preclude any other or
          further exercise of them. The remedies provided in this Agreement are
          cumulative and not exclusive of any remedies provided by law. No
          waiver by any Party of any breach by any other Party of any provision
          of this Agreement shall be deemed to be a waiver of any subsequent
          breach of that or any other provision of this Agreement.

     22.3 ASSIGNMENT

          Except as otherwise expressly provided in this Agreement, no Party
          shall assign, encumber, dispose of or otherwise transfer its rights
          under this Agreement or its Partnership Interests, other than as
          permitted by clause 11 or purport to transfer any burden imposed on it
          under this Agreement, without the prior written consent of the other
          Parties, which may be withheld in their absolute discretion.

     22.4 SEVERABILITY

          If any part of this Agreement is found by any court or other competent
          authority to be invalid, unlawful or unenforceable then such part
          shall be severed from the

                                       37

<PAGE>

          remainder of this Agreement which shall continue to be valid and
          enforceable to the fullest extent permitted by law.

     22.5 COSTS AND EXPENSES

          Each Joint Venture Partner shall pay its own costs and expenses
          incurred in the negotiation, preparation, execution, implementation
          and enforcement of this Agreement save that the costs of external
          counsel in establishing the LP and preparing this Agreement shall be
          shared equally by the Joint Venture Partners.

     22.6 VALUE ADDED TAX

          All sums payable under any term of this Agreement are exclusive of
          value added tax.

     22.7 DOCUMENTARY TAXES

          All applicable stamp duties and sales and transfer taxes which arise
          as a result of or in consequence of this Agreement shall be payable by
          the Joint Venture.

     22.8 ENTIRE AGREEMENT

          22.8.1 This Agreement and the documents referred to in it constitute
               the entire agreement and understanding between the Parties in
               relation to its subject matter.

          22.8.2 Each of the Parties agrees that in entering into this
               Agreement, and the documents referred to in it, no Party may rely
               on, and shall have no right or remedy in respect of, any
               agreement, representation, warranty, statement, assurance or
               undertaking of any nature whatsoever (other than those expressly
               set out in this Agreement and the documents referred to in it)
               made by or given by any person prior to the date of this
               Agreement and all conditions, warranties or other terms implied
               by statute or common law are excluded to the fullest extent
               permitted by law. Nothing in this clause shall limit or exclude
               any liability for fraud.

          22.8.3 Except as otherwise permitted by this Agreement, no change to
               its terms shall be effective unless it is in writing and signed
               by or on behalf of each of the Parties.

                                       38

<PAGE>

     22.9 PARTNERSHIP

          Nothing in this Agreement shall create or be deemed to create a
          partnership or the relationship of principal and agent or employer and
          employee between any of the Parties and no Party shall be responsible
          for the acts or omissions of the employees or representatives of the
          other Parties.

     22.10 COUNTERPARTS

          22.10.1 This Agreement may be executed in any one or more number of
               counterparts each of which, when executed, shall be deemed to
               form part of and together constitute this Agreement.

          22.10.2 This Agreement shall be immediately binding and effective when
               each of the Parties has unconditionally executed either this
               Agreement or any of those counterparts, subject always to clause
               14.3.

     22.11 NOTICES

          22.11.1 Any notice or other communication to be given under this
               Agreement shall (unless otherwise provided by this Agreement) be
               in writing and shall either be delivered by hand or sent by a
               generally recognised international courier service (with relevant
               fees prepaid) or facsimile transmission (provided that, in the
               case of facsimile transmission, the notice is confirmed by being
               delivered by hand or sent by recognised international courier
               service within two Working Days after transmission) as follows:

               (a)  (in the case of Petrojarl) to:

                    Address:                Petrojarl ASA
                                            P O Box 82
                                            N-7405 Trondheim
                                            Norway

                    For the attention of:   Helge Krafft

                    Fax:                    +47 73 983014

               (b)  (in the case of Teekay) to:

                    Address:                C/O Teekay Shipping Corporation
                                            Bayside House
                                            Bayside Executive Park

                                       39

<PAGE>

                                            West Bay Street and Blake Road
                                            Nassau
                                            The Bahamas

                    For the attention of:   General Counsel

                    Fax:                    +1224 502 8840

               (c)  (in the case of the GP) to:

                    Address:                c/o Teekay Shipping Corporation
                                            Bayside House
                                            Bayside Executive Park
                                            West Bay Street and Blake Road
                                            Nassau
                                            The Bahamas

                    For the attention of:   General Counsel

                    Fax:                    +1 224 502 8840

          22.11.2 A Party may change the address or facsimile number or the name
               of the person for whose attention notices are to be addressed by
               serving a notice on the others in accordance with this clause
               22.11.

          22.11.3 All notices shall be deemed to have been served as follows:-

               (a)  if delivered by hand, at the time of delivery;

               (b)  if sent (with relevant fees prepaid) by a generally
                    recognised international courier service, at the expiration
                    of two Working Days after the envelope containing the same
                    was delivered into the custody of the relevant international
                    courier; and

               (c)  if communicated by facsimile, six hours after the time of
                    transmission;

                    PROVIDED that where, in the case of delivery by hand or by
                    facsimile transmission, such delivery or transmission occurs
                    after 5p.m. on a Working Day or on a day which is not a
                    Working Day, service shall be deemed to occur at 9 a.m. on
                    the next following Working Day.

                                       40

<PAGE>

          22.11.4 In proving such service it shall be sufficient to prove that
               the envelope containing such notice was properly addressed and
               delivered either to the address shown thereon or into the custody
               of the relevant international courier or that a completed report
               confirming that such notice has been transmitted in full was
               received by the sender as the case may be.

     22.12 GOVERNING LAW

          This Agreement shall be construed and take effect in all respects in
          accordance with English law.

     22.13 JURISDICTION

          The Parties irrevocably agree, subject to the provisions of Clause
          22.14, that the courts of England are to have jurisdiction to settle
          any disputes which may arise out of or in connection with this
          Agreement and that any proceedings may be brought in those courts. The
          Parties irrevocably waive any objection which they may now or in the
          future have to the laying of the venue of any proceedings in any court
          referred to in this Clause, and any claim that those proceedings have
          been brought in an inconvenient or inappropriate forum.

     22.14 MEDIATION

          If any dispute arises in connection with this Agreement, the Parties
          will attempt to settle it by mediation in accordance with the CEDR
          Model Mediation Procedure. Unless otherwise agreed between the
          Parties, the mediator will be nominated by CEDR. To initiate the
          mediation a party must give notice in writing ("ADR notice") to the
          other parties to the dispute requesting a mediation. A copy of the
          request should be sent to CEDR. The mediation will start not later
          than thirty (30) days after the date of the ADR notice. No Party may
          commence any court proceedings in relation to any dispute arising out
          of this Agreement until it has attempted to settle the dispute by
          mediation and either the mediation has terminated or the other party
          has failed to participate in the mediation, provided that the right to
          issue proceedings is not prejudiced by a delay.

                                       41

<PAGE>

     22.15 SERVICE OF PROCESS

          The Parties irrevocably agree that any writ, notice, judgment or other
          legal process shall be sufficiently served on them if addressed to
          them and left at or sent by post to the Address for Service, and in
          that event shall be conclusively deemed to have been served at the
          time of leaving or, if sent (with relevant fees prepaid) by a
          generally recognised international courier service, at 9.00 a.m. on
          the third Working Day after the envelope containing the same was
          delivered into the custody of the relevant international courier.

23   EXCLUSION OF CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

     The parties to this Agreement do not intend any of its terms to be
     enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by
     any person who is not a party to this Agreement.

This Agreement has been signed on the date first stated on page 1 above.

SIGNED by                    )
duly authorised for and on   )
behalf of PETROJARL JV AS    )
in the presence of:          )

SIGNED by                    )
duly authorised for and on   )
behalf of TEEKAY PETROJARL   )
OFFSHORE HOLDINGS L.L.C.     )
in the presence of:          )

TEEKAY PETROJARL GP L.L.C.

By: /s/ Kenneth Hvid, Attorney-in-fact
    ----------------------------------
Name:   Kenneth Hvid
      --------------------------------
Title:  Attorney in fact
       -------------------------------

                                       42

<PAGE>

                                   SCHEDULE 1

                                     PART A

                      (LIMITED PARTNERSHIP AGREEMENT OF LP)

                                       43

<PAGE>

                                   SCHEDULE 1

                                     PART B

                   (LIMITED LIABILITY COMPANY AGREEMENT OF GP)

                                       44
<PAGE>

                                   SCHEDULE 2

                              (BUSINESS OF THE LP)

The owning and operation of FPSOs, FSOs and such other mobile production
solutions as may be required by the oil industry from time to time. This will
include but not be limited to:-

(i)  marketing the LP;

(ii) identifying, defining and tendering for Projects;

(iii) executing, commissioning, operating and decommissioning Projects;

(iv) acquiring assets for Projects, converting such assets if required, and
     disposing of assets following completion of Projects (unless such assets
     are to be redeployed on other Projects);

(v)  providing all related support activities and complying with all applicable
     legislative and regulatory requirements;

(vi) (at the request and cost of the relevant Joint Venture Partner) marketing
     the Petrojarl FPSOs and the Teekay FSOs.

                                       45

<PAGE>

                                   SCHEDULE 3

                                (MAJOR DECISIONS)

1    Decisions to pursue a Project.

2    Decisions as to whether, and if so on what terms, to bid for a Project.

3    Any change in the Limited Partnership Agreement or Limited Liability
     Company Agreement.

4    Any variation, increase, reduction, redemption or repayment of any of the
     share capital or other change in the capital structure of the Joint
     Venture.

5    Any merger or other transaction resulting in a change of majority voting
     control or the sale of all or substantially all of the Joint Venture's
     assets.

6    Entering into any partnership, joint venture or profit-sharing arrangement
     with any person.

7    The making of any composition or arrangement with creditors of the Joint
     Venture or any Joint Venture Entity or the winding up or liquidation of the
     Joint Venture or any Joint Venture Entity or consenting to the appointment
     of a receiver or administrative receiver over the assets of the Joint
     Venture or any Joint Venture Entity.

8    Making any distribution of assets.

9    Altering the agreed dividend policy.

10   Entering into any contractual agreements or financial transactions with any
     member of the Petrojarl Group or any member of the Teekay Group other than
     chartering ships or buying services on arm's length terms.

11   The issue of any new equity, debenture or loan stock (whether secured or
     unsecured), or the granting of options or other instruments that entitle
     the holder to acquire new equity.

12   Any change in the business of the Joint Venture away from the Business.

13   Commencing litigation in the name of the Joint Venture or any Joint Venture
     Entity.

14   Renting or leasing premises for use by the Joint Venture for a term
     exceeding one year;

                                       46

<PAGE>

15   Issuing guarantees as provided in clause 5.

16   Engaging persons as employees of the Joint Venture.

17   Staffing of Projects.

18   Budgets for Projects/annual budgets and dealing with major deviations from
     budgets.

19   Competing with a Petrojarl FPSO or a Teekay FSO being redeployed.

20   Material acquisitions and disposals.

21   Borrowing sums in excess of one million Dollars (USD1,000,000).

                                       47

<PAGE>

                                   SCHEDULE 4

DEED OF COVENANT

DATED: ____________ 200__

BETWEEN:

(1)  [_______] [having its registered office/principal place of business] at
     [_______] (the "Transferor");

(2)  [_______] [having its registered office/principal place of business] at
     [_______] (the "Transferee");

(3)  TEEKAY PETROJARL GP L.L.C. [having its registered office/principal place of
     business] at [_______] (the "GP"); and

(4)  [_______] [having its registered office/principal place of business] at
     [_______] (the "Continuing Joint Venture Partner")

PRELIMINARY

This Agreement is supplemental to and entered into pursuant to clause [11.3] of
the Joint Venture Partners' Agreement.

1    DEFINITIONS AND INTERPRETATION

     In this Agreement, unless inconsistent with the context or otherwise
     defined:

     1.1  the term "Joint Venture Partners' Agreement" means the agreement dated
          [_______] 2006 (with schedules) made between (1) [the Continuing Joint
          Venture Partner/the Transferor] (2) [the Transferor/the Continuing
          Joint Venture Partner] and (3) the GP; and

     1.2  all other words and phrases shall be defined and interpreted in
          accordance with the definitions and interpretation provisions
          contained in the Joint Venture Partners' Agreement.

2    COVENANT AND UNDERTAKING

     2.1  The Transferee confirms that it has been supplied with a copy of the
          Joint Venture Partners' Agreement and covenants with each of the
          Continuing Joint Venture

                                       48

<PAGE>

          Partner and the LP to observe, perform and be bound by all the terms
          of the Joint Venture Partners' Agreement which are capable of applying
          to the Transferee and which have not been performed at the date of
          this Agreement to the intent and effect that the Transferee shall be
          deemed with effect from [_______] to be a party to the Joint Venture
          Partners' Agreement and to be a holder of [_______] shares of
          [_______] each in the GP.

     2.2  The Transferee undertakes with the Transferor that it will enter into
          such Guarantees which the Transferor may have entered into and
          together with the Continuing Joint Venture Partner shall use all
          reasonable endeavours to obtain the release of the Transferor from
          such Guarantees as soon as reasonably practicable. Until such release
          is obtained the Transferee [together with the Continuing Joint Venture
          Partner] undertake[s] [on a joint and several basis] to indemnify and
          hold harmless the Transferor in respect of its continuing liability
          under such Guarantees.

     2.3  Upon the Transferee being deemed to be a party to the Joint Venture
          Partners' Agreement in accordance with clause 2.1, the Transferor
          shall cease to be a party to the Joint Venture Partners' Agreement,
          provided that such cessation shall without prejudice to any rights or
          liabilities of the Continuing Joint Venture Partner, the Transferor or
          the GP which have then accrued.

3    REPRESENTATIONS AND WARRANTIES

     The Transferee represents and warrants to each of the Transferor, the
     Continuing Joint Venture Partner and the GP as follows:

     3.1.1 it is a [company/corporation] duly incorporated under the laws of
          [_______] and has the corporate power and authority to accept the
          terms of this Agreement and perform its obligations under it;

     3.1.2 its entry into this Agreement has been duly and validly authorised
          and all requisite corporate action has been taken in order to make
          such entry valid and binding upon it in accordance with the terms of
          this Agreement;

     3.1.3 the entry into this Agreement and the consummation of the
          transactions contemplated by it will not:

                                       49

<PAGE>

          (a)  breach or conflict with any provision of its memorandum and
               articles of association or equivalent or result in a breach of,
               conflict with or constitute a default under any mortgage,
               indenture, agreement or other instrument to which it is a party
               or by which it, or any of its properties or assets, is bound; or

          (b)  violate any order, judgement or decree of any court or
               governmental agency to which it is a party or by which it, or any
               of its properties or assets, is bound.

4    REMAINING PROVISIONS

     In all other respects, the terms of the Joint Venture Partners' Agreement
     shall continue in full force and effect. The provisions of clauses 22.13,
     22.14 AND 22.15 of the Joint Venture Partners' Agreement shall apply to and
     be deemed to be incorporated into this Agreement.

5    EXCLUSION OF CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

     The parties to this Agreement do not intend any of its terms to be
     enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by
     any person who is not a party to this Agreement

This Agreement has been signed as a deed and delivered on the date first stated
on page 1 above.

TEEKAY PETROJARL GP L.L.C.

By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------

THE COMMON SEAL of             )
THE TRANSFEREE was affixed     )
to this Deed in the presence   )
of:                            )

-------------------------------------
Director

-------------------------------------
Director/Secretary

                                       50

<PAGE>

THE COMMON SEAL of             )
the CONTINUING JOINT           )
VENTURE PARTNER                )
was affixed to this Deed       )
in the presence of:            )

-------------------------------------
Director

-------------------------------------
Director/Secretary

                                       51

<PAGE>

                                   SCHEDULE 5

                                    (BUDGET)

                                       52

<PAGE>

                                   SCHEDULE 6

                                 EXISTING UNITS

(A)  Petrojarl FPSOs

     (i)  Petrojarl Foinaven;

     (ii) Petrojarl I;

     (iii) Ramform Banff;

     (iv) Petrojarl Varg;

     (v)  Che Guavara

(B)  Teekay FSOs

     (i)  Nordic Apollo

     (ii) Karratha Spirit

     (iii) Pattani Spirit

     (iv) Dampier Spirit

     (v)  Su Tu Vang FSO (tbn)

                                       53

<PAGE>

                                   SCHEDULE 7

                   SCHEDULE OF PETROJARL INTELLECTUAL PROPERTY

1    Title: Device by ship for production/test production of oil/gas from a
     field below seabed level

     United States   Patent No. 6,199,500, granted 13 March 2001

     Angola          Patent No. 104, granted 21 September 2001

     Brazil          Pending Application P19808896-3, filed on 10 March 1998

     China           Patent No. ZL98804994, granted 12 March 2003

     Norway          Patent No. 308128, granted 31 July 2000

2    Title: Bearing System for a Turning Means

     United States Patent No. 5,051,035, granted 24 September 1991

3    Title: System for Transferring Fluids from a Piping System in a Ship's Hull
     to a Turning Device, and Vice Versa

     United States Patent No. 5,002,433, granted 26 March 1991

4    Management systems in the form of manuals, graphs etc created for use in
     Petrojarl.

5    Project studies concluded outside of the JV and not for the benefit of the
     JV.

6    Existing contracts between Petrojarl and its customers and vendors.

7    Topsides drawings and engineering studies for previous contracts not with
     the JV.

8    Conversion cost budgets for previous contracts not with the JV.

9    Business plans not relating to the business of the JV.

                                       54

<PAGE>

                                                                  Execution Copy

                               DATED 14 JUNE 2006

     (1)  PETROJARL JV AS

     (2)  TEEKAY PETROJARL OFFSHORE HOLDINGS L.L.C.

     (3)  TEEKAY PETROJARL GP L.L.C.

                                   ----------

                        JOINT VENTURE PARTNERS' AGREEMENT

                                   ----------

                               STEPHENSON HARWOOD
                            ONE, ST PAUL'S CHURCHYARD
                                 LONDON EC4M 8SH
                               TEL: 020 7329 4422
                               FAX: 020 7329 7100
                                    REF: 819

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
1  Definitions and Interpretation........................................     2
2  Preliminary Formalities...............................................    11
3  Board of Directors of GP..............................................    12
4  Management and Staff..................................................    14
5  Objective and Conduct of Business.....................................    15
6  Guarantees and Indemnities............................................    16
7  Budgets, Accounts and Finance.........................................    17
8  Support Services and Supplies.........................................    21
9  Tax treatment.........................................................    22
10 Distribution of profits...............................................    22
11 Partnership Interest Transfers........................................    22
12 Mutual Undertakings Concerning the LP.................................    24
13 Deliberately not used.................................................    27
14 Commencement and Termination..........................................    27
15 Deadlock..............................................................    28
16 Restrictions..........................................................    30
17 Representations and Warranties........................................    32
18 IP Rights.............................................................    32
19 Confidentiality.......................................................    33
20 Public Announcements..................................................    35
21 Enforcement of the Joint Venture's rights.............................    36
</TABLE>

<PAGE>

<TABLE>
<S>                                                                         <C>
22 Ancillary Provisions..................................................    37
23 Exclusion of Contracts (Rights of Third Parties) Act 1999.............    42
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]