South Stream Transport Signs Contracts for Supply of Pipes

Europipe, OMK and Severstal
to deliver pipes for the first line of the South Stream Offshore Pipeline
Total contract value of approximately 1 billion euros

29 January 2014  + + +  South Stream Transport has contracted three pipe mills to supply over 75,000 steel pipes for the first line of the South Stream Offshore Pipeline. Europipe from Germany will supply 50% of the pipes, OMK from Russia 35%, and Severstal’s Izhora Pipe Mill in Russia another 15%. The contracts, with a total value of approximately 1 billion euros, were signed during a ceremony at the headquarters of South Stream Transport B.V. in Amsterdam.

The South Stream Offshore Pipeline will be made up of four parallel pipelines of 931 kilometres each, with a diameter of 32 inch (approximately 813 mm) and steel walls 39 mm thick. The contracts cover production of over 75,000 steel pipes of 12 metres for the first pipeline. A tender for the second pipeline is still ongoing, with the aim of awarding the contracts in the first quarter of this year.

Competitive tender to ensure high-quality pipe supply

In June 2013, South Stream Transport launched a tender procedure for the supply of pipes for the first line, involving pipe mills from Europe and Asia. In order to qualify as a potential supplier, each bidder had to prove its technical capability and go through a pre-qualification process which included production of multiple pipe samples.

	From left to right: Dr. Michael Gräf, CEO of Europipe, Dr. Oleg Aksyutin, CEO of South Stream Transport and Alexander Soboll, Managing Director of Europipe
	Dr. Oleg Aksyutin, CEO of South Stream Transport, and Vladimir Markin, CEO of OMK, sign a pipe supply contract
	Dr. Oleg Aksyutin, CEO of South Stream Transport, and Vitaly Motorin, General Director of Severstal’s Izhora pipe mill, sign a pipe supply contract

Grégoire Richez, Commercial Director of South Stream Transport: “We witnessed the production and tested samples from each company that participated in the tender, and each bid was evaluated by a team of international experts. As a result, we could contract sufficient quantities of pipe at competitive prices, while ensuring that our high quality standards are met.”

Following the contract award, production will start. The first pipes will be delivered to storage yards at the Bulgarian coast of the Black Sea in the summer of 2014. Each pipe segment will be tested with water at high pressure before it leaves the factory floor to ensure it is of sufficient quality to be used for the offshore pipeline.

Construction of the landfall of the South Stream Offshore Pipeline will commence in the summer of 2014. Following delivery and stockpiling of pipes at the Black Sea coast, offshore construction will start in autumn 2014. The first offshore pipeline is scheduled to start operations by the end of 2015.

+ + +

The South Stream Offshore Pipeline through the Black Sea is the offshore component of the South Stream Pipeline System which will increase the security of supply of natural gas from Russia to Central and South-Eastern Europe as it creates a new supply route and provides additional transport capacity. The Project will contribute to European energy security in a safe, reliable and environmentally responsible way and will help the EU member states meet their CO2 reduction targets.

The South Stream Offshore Pipeline will have a length of 931 km. It will connect the world’s largest natural gas reserves in Russia with consumers in the European Union. The South Stream Offshore Pipeline will originate on the Russian Black Sea shore in the area of Anapa, cross the Turkish Exclusive Economic Zone in the Black Sea and land on the Bulgarian coast near Varna. Commercial operations are scheduled to start by the end of 2015. When fully operational, the South Stream Offshore Pipeline will consist of four pipeline strings and reach an annual capacity of 63 billion cubic metres.

South Stream Transport B.V. is an international joint venture established for the planning, construction and subsequent operation of the offshore gas pipeline through the Black Sea. The Russian company OAO Gazprom holds a 50% stake in the joint venture. The Italian company Eni S.p.A. has a 20% stake. The French energy company EDF and the German company Wintershall Holding GmbH (BASF Group) each hold 15%.

For further information, please visit: www.south-stream-offshore.com
Posted Jan 29, 2014

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