SOURCE: O2Diesel Corporation

July 19, 2005 11:00 ET

Second Brazilian Sugar Miller CORURIPE S/A Begins Use of O2Diesel™

NEWARK, DE -- (MARKET WIRE) -- July 19, 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 USINA CORURIPE AÇUCAR E ÁLCOOL S/A (CORURIPE), one of Brazil's leading sugar and ethanol producers, has begun using O2Diesel's proprietary ethanol-diesel fuel blend, known as O2Diesel™, in its 300-vehicle truck fleet.

CORURIPE is the second largest agricultural group after COSAN S/A to use O2Diesel™ fuel in a pilot program. CORURIPE processes more than 13 million tons of sugar cane per year in its four mills located in the Brazilian states of Minas Gerais and Alagoas.

CORURIPE is fueling an initial 10-vehicle pilot fleet in its mill located at Iturama, Minas Gerais and plans to use O2Diesel™ in all of its mills after the conclusion of the three-month test. CORURIPE's 300 diesel powered vehicles consume around 4 million gallons of diesel fuel per year. CORURIPE blends O2Diesel™ fuel in its own tank farm thereby benefiting from significant fuel cost savings as well as emissions reductions.

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. It was noted in a recent New York Times article that over the next five years domestic ethanol consumption in Brazil is expected to increase another 50 percent to an estimated 4.5 million gallons, further emphasizing Brazil's commitment to ethanol as a motor fuel.

"O2Diesel began forging relationships in Brazil several years ago, and we are pleased to see the results of our efforts to expand O2Diesel™ in the Brazilian market," said Alan Rae, President and CEO of O2Diesel. "With its nearly 300 mills and more than 15,000 diesel-powered trucks, tractors, harvesters and other equipment, Brazil's sugar and ethanol industry offers outstanding marketing opportunities for O2Diesel™ technology."

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.

More About O2Diesel: The Company and Its Fuel Technology

O2Diesel Corporation (AMEX: OTD) and its subsidiaries 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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