Oslo occupies an arc of land at the northernmost end of the Oslofjord . The fjord , which is nearly bisected by the Nesodden peninsula opposite Oslo, lies to the south; in all other directions Oslo is surrounded by green hills and mountains. There are 40 islands within the city limits, the largest being Malmøya ( km 2 or sq mi), and scores more around the Oslofjord. Oslo has 343 lakes, the largest being Maridalsvannet ( km 2 or sq mi). This is also a main source of drinking water for large parts of Oslo.