ECC-VECO Wins Sakhalin-1 Civil Works Project

ECC-VECO, a Russian-registered Sakhalin-Alaska joint venture, has concluded a contract to start on the Civil Works portion of the Chayvo Oil Production Facility (OPF) for the Sakhalin-1 project operated by Exxon Neftegas Limited and located off the northeast coast of Sakhalin Island in the Russian Far East.

The work scope includes earthworks, grading, piling, foundation work, construction of support facilities, warehouse support and site road maintenance for the 250,000 bpd oil processing facility. Total value of the contract will be approximately US$ 70 million. Construction activity will commence in June 2004 and run through 2006, with anticipated manpower peaking at 400.

To maximize local content, most of these jobs will be supplied by prime contractor Sakhalinmorneftemontazh (SMNM). SMNM has already participated in the site preparation at Chayvo over the past two years, and their resources and experience in Arctic construction is another key component of the award.

Training of personnel is a key strategy of ECC-VECO. SMNM has developed and utilized a specialized training program for employees engaged in construction. This category includes welders, fitters, and machine and equipment operators. The Joint Venture will continue to upgrade the local workforce throughout the contract term.

ECC-VECO is a 100% Russian company, registered in Sakhalin, comprised of LLC Eastern Construction Company (ECC), a subsidiary of Rosneft and LLC VECO Caspian (VECO), subsidiary of VECO Corporation (Alaska, USA). LLC ECC-VECO was formed specially to participate in the construction bids for Sakhalin shelf projects. The Company's major offices are located in Yuzhno-Sakhalinsk and Okha.

The Alaska partner, VECO Corporation, has significant experience in the execution of similar projects in Alaska, where climate and ecological conditions are comparable to the North of Sakhalin. This capability, teamed with the ability of ECC to mobilize Sakhalin resources such as SMNM, SakhNipiMorNeft Institute, Sakhalin Ecological Company, Sakhalin Shelf Service, and others, provides confidence that the work will be executed at the highest level of quality and within the time schedule.