SOURCE: O2Diesel Corporation

May 31, 2005 01:00 ET

Municipal Trash Fleet in Rio de Janeiro Is the First On-Road Fleet to Use O2Diesel™ in Brazil

NEWARK, DE -- (MARKET WIRE) -- May 31, 2005 -- O2Diesel Corp. (AMEX: OTD), a pioneer in the development of a cost-effective, cleaner burning diesel fuel for centrally fueled fleets, today announced that Comlurb, the municipally owned trash collection company serving Rio De Janeiro, Brazil, has begun using O2Diesel's proprietary ethanol-diesel fuel blend, known as O2Diesel™, in its fleet of trash hauling vehicles.

Comlurb's use of O2Diesel™ represents the first time that ethanol-diesel fuel has been used in a commercial on-road truck application in Brazil.

Brazil is the world's largest producer of ethanol, and every gallon of gasoline sold in the country contains a minimum of 20% of this renewable fuel which is produced from sugar cane. Ethanol has been used as a motor fuel in Brazil for over 30 years.

Comlurb, one of several municipal fleets, was selected by Rio de Janeiro as the pilot fleet to verify the suitability of O2Diesel™ for all municipal captive fleets. The initial verification process is expected to last approximately three months, and involve 15 diesel-powered trucks. Comlurb operates 300 diesel powered vehicles consuming around 2 million gallons of diesel fuel annually. The O2Diesel™ fuel used by Comlurb is blended and delivered by state-owned Petrobras/BR, the largest oil and fuel distribution Company in Brazil.

"O2Diesel began forging relationships in Brazil several years ago, and we are pleased to see the results of our efforts starting to validate O2Diesel™ in the Brazilian market," said Alan Rae, President and CEO of O2Diesel. "With its nearly 7 million residents, and more than 10,000 diesel-powered buses, the air quality in Rio de Janeiro could benefit substantially from wide spread use of O2Diesel™. Brazil is recognized globally as a world leader for ethanol fuel implementations, which we believe makes Brazil an important market for O2Diesel Corp."

In 2004 the University of Sao Paulo published an environmental impact study which estimated the substantial health benefits of converting half the diesel fleet in the city of Sao Paulo to O2Diesel™. A copy of this report can be downloaded from www.o2diesel.com/links.php .

In January 2005, O2Diesel received approval from Brazil's National Petroleum Agency ("ANP") to become the first and only government-approved alternative diesel fuel in the country. According to a recent New York Times article, domestic ethanol consumption in Brazil is expected to increase 50 percent in the next five years, signaling a growing commitment to ethanol fuel.

More About O2Diesel: The Company and Its Fuel Technology

O2Diesel Corporation (AMEX: OTD) and its U.S. subsidiary, O2Diesel, Inc., are pioneers in the commercial development of a 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™ is an ethanol-diesel blend that substantially reduces harmful emissions without sacrificing power and performance. Extensive independent and government-recognized laboratory and in-use field tests have demonstrated the effectiveness of O2Diesel™ -- the introduction of this cost-effective, cleaner-burning diesel fuel is now underway in the United States and other global markets. For more information please refer to www.o2diesel.com.

Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding O2Diesel Corporation's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation, the failure to obtain adequate financing on a timely basis and other risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements, as a result of either the matters set forth or incorporated in this report generally or certain economic and business factors, some of which may be beyond the control of O2Diesel. These factors include adverse economic conditions, entry of new and stronger competitors, inadequate capital, unexpected costs, failure to gain product approval in the United States or foreign countries for the commercialization and distribution of our products and failure to capitalize upon access to new markets. O2Diesel disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. "O2Diesel" and "CityHome" are trademarks of O2Diesel Corporation.

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