Sakhalin-1
Sakhalin-1

LOCAL CONTENT STATEGY IN ACTION -
US$ 5 BILLION AWARDED TO RUSSIAN COMPANIES


The Russian content of contracts awarded to date for the Sakhalin-1 Project is over US$ 5 billion, or about two-thirds of the total. ENL and its contractors currently employ hundreds of Russian nationals for field development. Nearly 500 Russian citizens currently work in the Yuzhno-Sakhalinsk operations office to support the Project; many of them have received and will continue to receive professional training in Russia and abroad. During the peak of the Project construction activities at Chayvo in summer 2005 the Project employed approximately 8,000 people, including direct employees and contractors. As further workers are trained, Russian nationals are projected to increase to 90 percent of the Sakhalin-1 workforce.

STRATEGY TO INVOLVE RUSSIAN COMPANIES


The Sakhalin-1 Consortium is committed to a high level of Russian content and is working to contract with as many local companies as possible. While striving to maximize Russian content opportunities, preference is given to vendors that are able to effectively support the project objectives, including safety and health, environmental and regulatory compliance, quality, maximizing profitability and control cost, and achieving scheduled completion.


One of the key criteria in the Sakhalin-1 contracting process is Russian content. The bid evaluation teams for the major contract packages, which include all Consortium representatives, assess the Russian content plans in all bids and proposals, along with other important commercial and technical factors.

Exxon Neftegas Limited (ENL), Sakhalin-1 Project Operator, the Sakhalin Oblast Administration and the Ministry of Economic Development and Trade of the Russian Federation have established a Joint Committee on Russian Content. The main objective of the Joint Committee is to assist in maximizing the involvement of Russian subcontractors and Russian suppliers of goods and services in the Project. Other recent initiatives to maximize local content include:
  • Training and development of Russian suppliers to strengthen their qualifications. Russian contractors seminars were held in Khabarovsk, Yuzhno-Sakhalinsk and Moscow to inform Russian suppliers and subcontractors about the project status, design codes and standards, qualification and bidding procedures, and project objectives.
  • Launch of a website (sakhalin1.com or sakhalin1.ru). This regularly updated website informs Russian contractors and vendors about major contracting opportunities and upcoming tenders. It outlines the procurement process, primary selection criteria, and key project contacts, as well as the Vendor Registration Form and Employment Registration Form.
  • Identification and Qualification of Russian Suppliers. In conjunction with the Petroleum Advisory Forum-chartered Russian Sourcing Industry Work Group, ENL surveyed over 100 Russian suppliers. Analysis of these assessments helped identify which Russian suppliers were qualified to provide goods and services to the project at the required standards, and those that required further work to qualify.

  • Development of the Vendor Database. A comprehensive Vendor Database maintained by ENL includes approximately 3,500 companies. Information on the vendors and subcontractors comes from a variety of sources, including Exxon Neftegas Limited; Consortium members; Sakhalin Oblast Department of Petroleum Industry; government entities of the RF; EPC Contractors; direct inquiries to ENL from interested parties. This database is used by ENL and its main contractors to identify possible suppliers and subcontractors to participate in the project. The Vendor Registration Form, available on the website, allows vendors to register in the Vendor Database (www.sakhalin1.com or www. sakhalin1.ru).
  • Involvement of the Russian Design Institutes. RDIs have been extensively involved in the development of Project Specific Design Codes for Sakhalin-1. Their expertise has been invaluable in melding Russian codes and standards with international codes and standards.
  • Design of Contract Packages to Facilitate Russian Content. The major contract packages are tailored to encourage the participation of Russian contractors and suppliers in many different ways - as primary suppliers and contractors, subcontractors or in joint ventures with international partners.

 
© 2007 by Ruski Supply Chain Integrators (RSCI)