O2DIESEL WINS MAJOR SUPPLY CONTRACT IN KINGDOM OF SAUDI ARABIA.

O2Diesel Corporation (Amex: OTD), Newark, Del., a provider of ethanol-diesel technologies, has entered into a supply agreement with Al-Obayya Corp., a commercial entity owned by HRH Prince Turki Bin Abdullah Bin Abdul Aziz Al Saud, a prominent member of the Royal family of Saudi Arabia.

Under terms of the agreement, O2Diesel will deliver between 10,000 to 20,000 metric tons (m/t) of its proprietary fuel technology that will enable the blending and use of O2Diesel(tm), the company's clean burning ethanol-blended diesel fuel, throughout Saudi Arabia and other Middle Eastern states.

Al-Obayya Corp. will work closely with O2Diesel and clients such as Saudi Aramco, the world leader in crude oil production, to distribute and market O2Diesel's cleaner-burning diesel fuel in Saudi Arabia and throughout the Middle East.

"Saudi Arabia is a large consumer of diesel fuel and we are very excited at the prospect of it becoming a strong market for us. We are working closely with Al-Obayya Corp. to begin delivering product by the fourth quarter of this year," said Alan Rae, president and CEO of O2Diesel. "We view this agreement as an opportunity to demonstrate the effectiveness of our cleaner-burning fuel technology in this new market, and consider this a positive step in our efforts to build brand recognition and world-wide acceptance for O2Diesel."

Commenting on the agreement, Tarek Obaid of Al-Obayya Corp. said, "We are very pleased to have reached this agreement with O2Diesel and look forward to taking the lead in introducing O2Diesel's unique fuel technology into The Kingdom of Saudi Arabia and its neighbors, which falls under Al-Obayya's environment clean policy. This agreement is a critical first step in recognizing the market opportunity and importance for the region of O2Diesel's environmentally friendly solutions."

About Alobayya Corp

Al-Obayya Corporation is a well established group of companies in the Kingdom of Saudi Arabia. With its 8 subsidiary companies, Al-Obayya covers a large spectrum of sectors, including defense, real-estate, technology, and financial services. Al-Obayya represents over 30 internationally known brands, and has worked with the world's leading companies on various projects in the Kingdom of Saudi Arabia. Al-Obayya Corp offers unique and precise access to the Saudi and GCC markets -- some of the world's most closed markets.

For more information, visit http://www.alobayya.com.sa.

About O2Diesel

O2Diesel Corporation, and its U.S. subsidiary O2Diesel, Inc., is a pioneer in the commercial development of a revolutionary cleaner-burning diesel fuel alternative that provides exceptional performance and environmental qualities for centrally-fueled fleets and off-road equipment of all kinds. Engineered and designed for universal application, O2Diesel(tm) is an ethanol-diesel blend that substantially reduces harmful emissions without sacrificing power and performance. Extensive laboratory and field tests have demonstrated the effectiveness of O2Diesel and the introduction of this cost-effective, cleaner diesel fuel is now underway in the United States and other global markets.

For more information, visit http://www.o2diesel.com or call 212/896-1272.