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Nord Stream to Ink LOI with EUPEC for $953M

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Nord Stream AG (Zug) and EUPEC PipeCoatings S.A. (Dunkerque) will sign a Letter of Intent by the end of February 2008 for the supply of concrete weight coating and logistics services to implement the Nord Stream pipeline project. EUPEC will undertake the concrete weight coating for both Nord Stream pipelines at new coating plants to be constructed in Mukran (Germany) and Kotka (Finland). The agreement with EUPEC also includes interim trans-shipment, handling and storage of pipes across the Baltic Region.

The total budget of the coating and logistics contract is about 650 million Euros (about U.S. $953 million). Around 100 million Euros will be invested in establishing the required coating and logistics infrastructure around the Baltic Sea. The remaining budget covers raw materials, trans-shipment and labor costs.

This decision on logistics made by Nord Stream represents an important step for the project's efficient and timely implementation. To ensure that the pipes are properly coated by the time pipelaying starts, Nord Stream is making preparatory investments in the facilities and infrastructure needed for the coating, handling and storage of pipes in several locations.

Result of a world-wide call for tender

EUPEC was chosen on the basis of an international tender process, which was open to all interested service providers. The winning bidder, EUPEC, guarantees the timely delivery of comprehensive weight coating and logistics services. With its headquarters in Dunkerque, France, EUPEC has been providing reliable solutions to both the onshore and offshore pipeline industries for the "end-to-end" to assure total steel pipe protection for more than 40 years.

Logistical challenge

Prior to the tender, Nord Stream prepared a comprehensive logistics concept for implementing the pipeline project. To ensure the Nord Stream pipeline is laid in the most efficient manner possible -- in terms of costs, timing and to protect the environment -- a customized logistics infrastructure in the Baltic Sea region comprising weight coating plants, interim stock yards and trans-shipment facilities is required. As Nord Stream is the first pipeline to be implemented in the Baltic Sea region, with several other pipeline projects being planned, a logistics infrastructure still needs to be developed.

With the aim of minimizing transport distances, Nord Stream has assessed potential logistics locations along the Baltic Sea coast that are technically feasible and environmentally viable. Kotka in the Gulf of Finland and Mukran on the German island of Rugen have been selected as the locations for concrete weight coating and interim stock yards. Slite on the island of Gotland in Sweden is selected as main interim stock yard. The port Hanko on the South of Finland and Karlshamn in Southern Sweden are envisaged as additional interim stock yards in order to reduce transport distances to less than 100 miles. EUPEC as Nord Stream's logistics partner will hold further discussions with the relevant authorities at these locations about the facilities required to ensure delivery of comprehensive weight coating and logistics services.

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