LUKoil-Neftegazstroy Selected For Major Sakhalin-1 Pipelines Subcontract: One Of Largest Awarded To Russian Company
Moscow, Russia - October 14, 2002 -- LUKoil-Neftegazstroy (LNGS) today announced it has been selected as the major subcontractor for engineering, permitting, inland transportation, local procurement, construction, installation and commissioning work for pipelines for the Sakhalin-1 Project.According to LNGS General Manager MIKHAILITCHENKO, "This subcontract is one of the largest contracts ever awarded to a Russian company and adds to an already significant proportion of Russian and local content in the Sakhalin-1 Project. The award illustrates the strong partnership between the Sakhalin-1 Consortium and Russian companies. We expect to subcontract some of the work to other Russian companies to assist in the execution of this project. LNGS is pleased to play an important role in this significant oil and gas project." The total value of contracts awarded to Russian contractors and suppliers under the Sakhalin-1 project is estimated to total more than $US1.3 billion.
Critical to the Sakhalin-1 Project, the onshore pipeline and offshore pipeline facilities will transfer hydrocarbons between major onshore and offshore facilities. The onshore and offshore pipelines include flowlines to transport production between the Chayvo Well Site, Orlan Platform, the Odoptu Well Sites, and Offshore Production Facilities (OPF). In addition, the pipelines scope includes the Oil Export line to transfer output from the Chayvo OPF westerly across Sakhalin Island and the Tatar Strait to the Russian Mainland. As the major sub-contractor, LNGS will work closely with the contract manager Nippon Steel Corporation (NSC) and its Russian affiliate NS Nephtegazstroy Limited. Work worth over US$300M, about 70% of the contract package, will be awarded to LNGS and other Russian subcontractors.
LNGS, founded in 1984, holds an International Quality Certificate in accordance with ISO 9000 and has approximately 35,000 employees. LNGS is one of the leading companies in the LUKoil group and interacts with more than thirty subsidiaries and affiliated companies.
The Sakhalin-1 Project, the largest foreign direct investment project in Russia, is expected to recover approximately 2.3 billion barrels of oil and 17 trillion cubic feet of gas. The Sakhalin-1 Consortium plans to develop the project in four phases. The first phase, with development costs of around $US4 billion, will focus on oil production, with limited gas supplies available to help meet the Russian domestic demand. First oil production is scheduled to commence at the end of 2005 and will grow to a rate of around 250,000 barrels per day.
The Sakhalin-1 ?onsortium members include Exxon Neftegas Limited (30% interest, operator), 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 SARUKHANOV Alexander Melikovich: Telephone +7 (095) 973-74-51 or visit www.sakhalin1.ru.