TMK Launches Oilfield Services Division

OAO TMK announces the launch of TMK Oilfield Services. This new independently managed TMK division is comprised of OAO "Orsky Machine Building Plant", the OOO "Truboplast" pipe coating company, ZAO "TMK Pipe Maintenance Department" and OOO "TMK Central Pipe Yard".

TMK Oilfield Services will assume management of each of these companies before the end of the first quarter of 2008.

The creation of TMK Oilfield Services is part of TMK's strategy to become a global supplier of high-performance products to the oil and gas industry. In addition to increasing production of seamless threaded and line pipe, TMK is also developing its oilfield services division to support its customers' production activities. TMK is further integrating the oil and gas supply chain by producing tool joints and tubing couplings, improving pipe and sucker rod maintenance and repair services, providing coating services, and assisting in the handling and installation of pipe columns in the well.

At first, TMK Oilfield Services will focus on establishing itself in the tubular goods and oilfield services market. It will gradually increase its market share by expanding its range of products and services while enhancing overall quality and acquiring additional assets located directly in oil and gas regions. The newly created services division operates in the Urals-Volga and Western-Siberian oil and gas regions.

TMK Oilfield Services is currently formulating its investment program with the goal of improving and expanding its service offerings. Plans are underway to complete a service facility in the city of Nyagan and modernize other service assets acquired from TNK-BP to increase their cumulative repair and finishing capacity to about 1 million seamless pipes per year.

In 2007, TMK's service subsidiaries showed significant growth. Orsk Machine Building Plant produced 201,700 welded tool joints, an increase of 19% compared to 2006, and 282,400 tubing couplings, a 191% increase on 2006 results. Yekaterinburg based pipe coating company, Truboplast, increased shipments of coated pipes by 12% to 50,300 tonnes. TMK plans to double the volume of its value-added services in 2008 with expected revenues of RUR 3.8 bn. (approximately US $160 million).

"Our reputation as the leading supplier of tubular goods to the Russian and CIS oil and gas industry allows us to enter into strategic partnerships with Russia's largest energy companies. Our joint R&D programs and long-term contracts with oil and gas majors make it possible for us to develop products that meet specific field requirements and provide our customers with advantageous delivery terms and conditions. Our goal is to meet the current demand fuelled by the intensive growth of the industry, including supporting our customers' field equipment operations. Expanding into oil and gas services is a good way for us to diversify our activities and hedge against pricing volatility on commodity markets. It increases the share of added value in our revenue structure", said Konstantin Semerikov, TMK CEO.


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