SakhalinMorNefteMontazh Alaska Projects Awarded Civil Construction Work Contract for Sakhalin-1
Yuzhno-Sakhalinsk, Russia, 22 May 2003 -- Exxon Neftegas Limited (ENL), Operator of the Sakhalin-1 Project, today announced the awarding of a major contract to OOO SakhalinMorNefteMontazh Alaska Projects (SMNMAK), a Russia-U.S. joint venture, for civil work at the Chayvo and Odoptu wellsites.The value of the contract is approximately US$70M. It is part of the detailed engineering, procurement and construction (EPC) work for onshore facilities for the Sakhalin-1 Project.
The contract scope includes civil work at the Chayvo and Odoptu wellsites. Work will include clearing and preparation of the construction sites; early construction work, including installation of underground piping and piling for foundations; provision of temporary facilities, including camps, equipment and warehouses erection; maintenance of roads leading to the Chayvo and Odoptu onshore wellsites; and supply of materials and general services. The contract involves a significant mobilization of additional construction equipment, including pile drivers, dozers, graders, and trucks, sourced from Russia and Alaska.
"This contract award is another example of ENL's comprehensive Russian content strategy to identify and contract qualified local companies and organizations. This latest contract adds to the significant portfolio of work awarded to Russian companies, which totals approximately US$ 1.7 billion," said Sakhalin-1 Project Executive Steve Terni.
Terni added that the Sakhalin service industry has many strengths, including knowledge of Federal and local regulatory requirements and construction experience specific to the harsh Arctic environment.
Founded in 1994, OAO SakhalinMorNefteMontazh (SMNM), the largest construction company on Sakhalin Island, specializes in civil, municipal, and industrial projects. Recent activities include the construction of oil and gas transportation and process facilities, utilities, buildings and upgrades to the Okha airport. In September 2002, ENL awarded a contract to SMNM to construct the Nogliki airport facilities.
SNMN and Alaska Interstate Construction, LLC, the largest resource development contractor in Alaska, joined forces in 2001 to create SMNMAK. Both companies have significant experience operating in remote locations and extreme cold weather conditions.
The Sakhalin-1 Project, the largest greenfield foreign direct investment project in Russia, includes the Chayvo, Odoptu and Arkutun-Dagi fields. It is anticipated that approximately 2.3 billion barrels (307 million metric tons) of oil and 17 trillion cubic feet (485 billion cubic meters) of gas will be recovered. The Sakhalin-1 Consortium plans to develop the project in four phases. The first phase, with development costs of around US$4.6 billion, will focus on planned oil production, with limited gas supplies available to help meet Russian domestic demand. First oil production from the Chayvo field is scheduled to commence at the end of 2005, and reach a daily production rate of around 250,000 barrels (approximately 12 million metric tons per year).
In addition to ENL (30% interest, operator), the Sakhalin-1 Consortium members are the Japanese company Sakhalin Oil and Gas Development Co., Ltd. (30%), Indian company ONGC Videsh Ltd. (20%) and two Russian companies, Sakhalinmorneftegas-Shelf (11.5%) and RN-Astra (8.5%).
For more information, please contact Glenn Waller (Moscow 095 564 8950) or Michael Allen (Yuzhno-Sakhalinsk 4242 46 88 12) or logon to www.sakhalin-1.ru