ABB awarded major EPC contracts for Sakhalin 1 project in Russia

The total value is approximately $987 million

BLOOMFIELD, New Jersey, July 22, 2002 -- ABB has been awarded contracts by Exxon Neftegas Limited, operator for the Sakhalin 1 Consortium, for the engineering, procurement and construction of the Chayvo and Odoptu onshore processing and well site support facilities for the Sakhalin 1 project in the Russian Far East. The value of the contracts is $987 million. It is anticipated that the majority of the work associated with these contracts will be subcontracted to qualified Russian companies on a competitive bid basis.

The scope of work for the major contracts includes detailed engineering and design work, procurement of equipment and materials, and subcontracted construction of the facilities. Key technical issues to be addressed for this challenging project include the harsh arctic environment, international supply, and transport logistics with a narrow weather window in which construction work can be carried out.

ABB Lummus Global will be the overall project manager with direct engineering, procurement and construction (EPC) responsibility for two onshore production facilities for the Chayvo and Odoptu fields, and support facilities for three land-based well sites. ABB Lummus Global Moscow and VNIPIneft, a leading Russian design institute and an ABB affiliate, will be responsible for onshore facilities design, permitting, coordination with other Russian design institutes, translation, procurement, and construction activities.

According to Stephen Solomon, president of ABB Lummus Global, awarding this major contract to a company with such established Russian links underlines the Sakhalin 1 Consortium’s commitment to maximizing the Russian content of the Sakhalin 1 project.

“ABB will work with Exxon Neftegas to pre-qualify as many Russian subcontractors as possible who can supply the necessary skills and services at a competitive cost. It is expected that Russian nationals will provide 90 percent of the labor and services.”

The contribution of the two Russian contractors, ABB Lummus Global Moscow and VNIPIneft, comprise a substantial portion of the EPC effort. Their significant participation further demonstrates ABB’s commitment to the Sakhalin 1 co-venturers’ aim of having significant Russian participation in the project. To help achieve this, the bid packages for procurement of equipment and materials and construction subcontracts will be structured in such a way as to maximize the use of Russian design, equipment supply, fabrication and construction capabilities, where they can supply these services at a quality and cost comparable with other suppliers. ABB has already placed Russian subcontracts with Sak NIPI and VNIPIneft for design development, Pan-CMS for logistics, SMNMAK for civil construction and AMUR Shipbuilding Plant for storage tanks.

The Sakhalin 1 project is being developed in four phases with first oil production from the Chayvo field scheduled to commence at the end of 2005. The Sakhalin 1 Consortium members are Exxon Neftegas Limited; Sakhalin Oil and Gas Development Co., Ltd.; ONGC Videsh Ltd.; Sakhalinmorneftegas-Shelf; and RN-Astra.

The ABB Oil, Gas and Petrochemicals Division focuses on systems, products and services for oil and gas exploration and development, refineries and petrochemical plants worldwide. The division employs approximately 13,000 people. ABB (www.abb.com) is a global leader in power and automation technologies that enable utility and industry customers to improve performance while lowering their environmental impacts. ABB has some 152,000 employees in more than 100 countries.

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