A Russian Company May Become a New Pipe Supplier for the Sakhalin-2 Project

Yuzhno-Sakhalinsk, 19 May 2014 – Sakhalin Energy and TMK have signed a Memorandum of Understanding. The Memorandum provides for productive cooperation within the project intended to implement a qualification and certification process on TMK’s tubular products to determine if they comply with Sakhalin Energy’s requirements.

Under the Memorandum, Sakhalin Energy plans to carry out an audit and a technical evaluation of TMK production subsidiaries Volzhsky Pipe Plant and Taganrog Metallurgical Works, as well as to engage third party technical experts, including Shell Group experts, to take part in the pipe tests. Should the tests be successful, a roadmap will be designed to enable Sakhalin Energy to view TMK as a potential vendor of tubular goods for the Project.

“Sakhalin Energy seeks to maximize Russian content in the Sakhalin-2 Project”,   says Roman Dashkov, Sakhalin Energy’s CEO. – Some Russian vendors supplied tubular goods for the Sakhalin-2 Project in the past. However, some of the technically most complicated pipeline sections, as well as drilling pipes, were new to Russia and were purchased from foreign manufacturers. Among other things, that was due to the absence, until recently, of an engineering capability in Russia for manufacturing premium threaded pipes which would comply with the highest safety and environmental standards. The appearance of a capable manufacturer in Russia will enable our Company to carry out its qualification assessment and, perhaps, to award to them a contract in the future”.

The signing of the Memorandum has become yet another step towards further development of Russian companies by Sakhalin Energy in the course of Sakhalin-2 operations. The Company aspires to achieve Russian content level of 70% over the project’s lifetime. The total value of contracts executed between Sakhalin Energy and Russian companies exceeded $18 billion as at the end of 2013.

“The planned partnership with the operator of a major oil and gas project, advanced and extremely complex from the technical point of view, represents the recognition of TMK as a manufacturer of top-quality, high-technology products for oil and gas industry. We expect that after successful completion of all necessary certification procedures and tests, ТМК will join the pool of Sakhalin Energy’s vendors and will have an opportunity to make a contribution into the development of Sakhalin island together with other industry leaders”, said Director General of TMK Alexander Shiryaev.


Information for editors:

Sakhalin Energy Investment Company Ltd. (“Sakhalin Energy”) is the operator of Sakhalin-2, one of the world’s largest integrated oil and gas projects, which has developed major infrastructure for hydrocarbon production, transportation and processing. The Company exports crude oil produced in the Sea of Okhotsk and LNG produced at Russia’s first LNG plant built by Sakhalin Energy in the south of Sakhalin. The Company’s shareholders are Gazprom (50% + 1 share), Royal Dutch Shell (27.5% - 1 share), Mitsui and Co. Ltd. (12.5%) and Mitsubishi Corporation (10%).

The project’s infrastructure created by the Company includes, among other things, three offshore ice resistant platforms, the Trans-Sakhalin Pipeline System, which comprises 300 km long offshore pipelines, an onshore gas pipeline and an onshore oil pipeline, 800 km long each, the Onshore Processing Facility (OPF), the Oil Export Terminal (OET), and Russia’s first and so far only LNG plant.

ТМК is one of the world's leading suppliers of tubular products for the oil and gas industry. ТМК incorporates 28 companies located in Russia, USA, Rumania and Kazakhstan, as well as two research centers in Russia and USA. In 2012, ТМК for the fourth time ranked first among other pipe manufacturers in terms of volume of shipments. Threaded oilfield pipes make up the biggest share in the company’s sales. ТМК products are also used in chemical, power, machine building, construction industries, in agriculture and in other sectors of economy.