SOURCE: O2Diesel Corporation

August 14, 2007 11:28 ET

Seville Bus Fleet Is First to Use O2Diesel™ in Spain

NEWARK, DE--(Marketwire - August 14, 2007) - O2Diesel Corporation (AMEX: OTD) today announced that it will commence the first use of its proprietary clean burning ethanol diesel blend O2Diesel™ in Spain in conjunction with TUSSAM (Transportes Urbanos de Sevilla Sociedad Anónima Municipal) who operate the collective urban transport system in Seville, Spain.

This demonstration program is aimed at verifying O2Diesel™ as a viable solution to Tussam's need to reduce the environmental contamination from its fleet and contribute towards a sustainable air quality improvement for the benefit of the inhabitants of Seville. The program is being implemented by a project group consisting of O2Diesel's Spanish subsidiary, O2Diesel R&D SPA SL, Abengoa Bioenergia Nuevas Tecnologias (a subsidiary of Abengoa Bioenergy SA, Europe's largest ethanol producer) and TUSSAM.

TUSSAM operates a fleet of over 400 buses serving a population of 700,000 and cover a total of 15 million kilometers (9.5 million miles) with 84 million rides per year. During the demonstration program a minimum of 20 buses which will initially run on O2Diesel™ and will be monitored for emissions by O2Diesel and Abengoa Bioenergia in collaboration with the University of Castilla-La-Mancha. It is expected that a successful demonstration will lead to TUSSAM adopting O2Diesel™ for its entire 8.5 million litres (2.25 million gallons) of diesel fuel usage.

The announcement of the this program follows over one year of sustained effort by O2Diesel and Abengoa Bioenergia to achieve the homologation and regulatory approvals needed to blend and utilize O2Diesel™ in the 23.25 billion litre (6.15 billion US gallon) Spanish diesel fuel market.

"Diesel represents 75% of Spain's transport fuel market. This fact combined with the countries emphasis on Introducing biofuels makes it a substantial opportunity for O2Diesel™. Together with Abengoa Bioenergia, we have worked hard to achieve the approvals needed to commence this program with TUSSAM," said Alan Rae, CEO of O2Diesel Corporation. "We believe this will be the first of many O2Diesel customers in Spain, further emphasizing the market potential for O2Diesel to play an important role in EU's drive towards 5.75% energy replacement from Biofuels by 2010."

As part of the program the TUSSAM buses have been fitted with a high speed refueling and vapor recovery system developed by O2Diesel and Abengoa Bioenergia. This system allows a reduction in refueling time while ensuring that no fuel or vapor escape during the process, further improving the environmental impact of the program.

More About O2Diesel: The Company and Its Fuel Technology

O2Diesel Corporation (AMEX: OTD), and its U.S. subsidiary O2Diesel, Inc., is a pioneer 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, failure to capitalize upon access to new markets and failure in obtaining the quality and quantity of ethanol necessary to produce our product at competitive prices. 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.