Kværner ASA: Kvaerner awarded major onshore contract for Shell

19 April 2012 - Kvaerner has received a letter of award from A/S Norske Shell for Engineering, Procurement, Construction and Management (EPCM) for modifications and projects at the Ormen Lange/Nyhamna onshore facilities on the west coast of Norway. The contract is a framework agreement with duration of six years, and options for additional two plus two years. The estimated contract value is NOK 6 billion, excluding options.  

"This is a major onshore contract, and the largest of its kind in Norway this year. We are proud to have won this important contract, which we believe demonstrates a faith in our project execution model and ability to deliver complete solutions to the client," says Kvaerner President & CEO Jan Arve Haugan.

"Kvaerner has a strong HSE performance, which was an important factor in the tender process. We are particularly pleased that key personnel with significant experience from similar operations and projects will be made available for us by Kvaerner", says A/S Norske Shell's Project Director Bernt Granås.

The Nyhamna gas plant processes natural gas from the Ormen Lange gas field located in the Møre Basin in the southern part of the Norwegian Sea. The contract scope includes all modifications and projects on the Ormen Lange/Nyhamna facility and is established to meet the expected, significant increased project activity over the next five to ten years. This includes the facilities at Nyhamna for gas from new fields such as Linnorm and Aasta Hansteen (formerly Luva).

Several locations involved
Front end engineering and design (FEED) will commence immediately. The FEED work will take place integrated with Shell in their offices in Aberdeen, and is expected to run until engineering starts at the end of 2012. Meanwhile, a site team will be mobilized to begin some minor modification work at Nyhamna.

The project organisation will be located at several places. Engineering and project management activities will be conducted by Kvaerner at Stord and engineering and modification work will be delivered by Aker Solutions' offices in Oslo, Kristiansund and Tromsø. When finalised, the sub-contract with Aker Solutions is expected to represent approximately NOK 850 to 950 million. In addition, a large number of suppliers from Mid Norway will be involved in various project activities.

Once fully mobilized, at least 500 employees are expected to be working in rotation on site at Nyhamna. In addition, more than 200 engineers and management will be working on the contract throughout the period. Of these, around 80 will, by the end of next year, be working out of Tromsø.

"It is our ambition to establish a presence in central and northern Norway, and to strengthen our ties with companies and communities in these regions. The oil and gas business is migrating north, and this contract will contribute to the exciting developments in the Norwegian Sea and the Barents Sea," says Haugan.

 "We are pleased that Kvaerner as part of this contract strengthens its presence in Mid Norway and that they have chosen to locate much of the engineering work through Aker Solutions' offices in Tromsø, which we hope will create significant ripple effects in North Norway", says Granås.

Back to Nyhamna
This is not the first time Kvaerner will be present at Nyhamna. In 2003 and 2004 the company was awarded three large contracts for the initial construction of the gas plant. Around 11 000 people were involved in the projects that lasted from 2005 to 2007. The projects were completed on 30 November 2007, with good HSE results and satisfied clients.

"We will benefit from our previous experience at Nyhamna. We know the site, the facilities and have maintained contact with a number of suppliers in the area," says Kvaerner Executive Vice President Lars Eide.

Valuable experience
"In addition, we have gained valuable new experience from other onshore projects, such as the Kollsnes gas plant upgrade, that will be very beneficial once we get started at Nyhamna," says Eide. 

Conducting work at a plant when in full production is fundamentally different from working at facilities where production is halted or has not yet started. It poses challenges both related to HSE, and to carrying out the work in a manner that is not disrupting the everyday production.

"It is important with a delivery model that ensures an optimal balance of prefabrication off site and work on site, as well as documented systems and an uncompromising attitude towards HSE. We have the expertise and experience in both respects," Eide concludes.  

Contract partner is Kvaerner subsidiary Kværner Stord AS.

Press meeting
Media is welcome to a press meeting at 1 PM today (Thursday 19 April). Representatives from both client and contractors will be present.

Location:  Telenor-senteret, Snarøyvn 30, TelenorExpo, entrance D

Overview of Nyhamna
Pictures of Nyhamna available for download:
Overview 1 (Photo: Shell/Øyvind Leren)
Overview 2 (Photo: Shell/Øyvind Leren)
Hoil oil tanks at Nyhamna (Photo: Shell/Fred Jonny Hammerø)
Press photos also available on Flickr: http://flic.kr/s/aHsjyZAR5j 



For further information, please contact:

Mariken Holter, SVP Corporate Communications, Kvaerner, Tel: +47 67 52 74 35, Mob: +47 917 87 358.

Investor relations:
Ingrid Aarsnes, SVP Investor Relations, Kvaerner, Tel: +47 67 59 50 46, Mob: +47 950 38 364

About Kvaerner:
With more than 3 200 HSE-focused and experienced employees, Kvaerner is a specialised provider of engineering, procurement and construction (EPC) services for offshore platforms and onshore plants. Kværner ASA, through its subsidiaries and affiliates ("Kvaerner"), is an international contractor that plans and realises some of the world's most demanding projects as a preferred partner for upstream and downstream oil and gas operators, industrial companies and other engineering and fabrication contractors.

In 2011, the Kvaerner group had aggregated annual revenues of more than NOK 13 billion and the company had an order backlog at 31 December 2011 of more than NOK 10 billion. Kvaerner was publicly listed with the ticker "KVAER" at the Oslo Stock Exchange on 8 July 2011. For further information, please visit www.kvaerner.com.

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.