Nord Stream Decides on Second Pipe Tender

Source: www.gulfoilandgas.com 1/22/2010, Location: Asia

Nord Stream will commission Europipe (Germany), OMK (Russia) and Sumitomo (Japan) with the supply of 1 million tons of steel pipes for the construction of the second pipeline of the Nord Stream project. The contract value is approximately 1 billion euros of which German Europipe will be awarded 65 percent, the Russian pipe company OMK 25 percent, and Japanese Sumitomo 10 percent.

The tender award for the second 1,220 kilometres gas pipeline from Vyborg in Russia to Lubmin in Germany will ensure timely delivery of the pipes in line with the logistic requirements of the Nord Stream project. The decision was made by the Shareholder’s Committee today following thorough evaluation of bids from German, Japanese and Russian companies.

“We are happy to have Europipe and OMK, the suppliers of the first pipeline, as well as Sumitomo, a newcomer to our project, on board. Sumitomo has a solid track record in offshore projects,” says Henning Kothe, Project Director at Nord Stream. “With 1 billion euros, the total volume of the contracts is below the price level of the first line reflecting the current market development of increased competition and more available capacity. Three times the amount of steel pipes required was quoted.”

All Major Contracts Finalised
The tender for line 2 was completely independent of the 2007 tender of the first line. Procurement of the steel pipes for the second line was the last outstanding significant decision regarding the requirements for the project as well as for the overall budget. With the contracts for the second line, which are expected to be signed within the next weeks, Nord Stream secures the pipes at the current price level. Delivery of the pipes for the second pipeline is scheduled to start in May 2010.

World-Wide Call for Tender
The world-wide call for tender for the supply of pipes was made in February 2009. Six manufacturers from Japan, Russia and Germany had prequalified to participate and were invited to bid. Pre-qualification is either by track record for experienced suppliers or by trial production. All potential suppliers had to show they were capable of supplying large-diameter, high-pressure-proof steel pipes for offshore use that met international quality standards.

Project on Track
Construction of the first line of the Nord Stream Pipeline is scheduled to commence on 1 April 2010; construction of line two is planned to start in spring 2011. Nord Stream has received permits for its project by the states whose waters it crosses (Russia, Finland, Sweden, Denmark, and Germany) towards the end of 2009.


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