KCA DEUTAG Opens New Head Office in Tyumen

KCA DEUTAG last week welcomed over 200 guests at the official opening of the company's new $1.7 million Russian Head Office in Tyumen, Western Siberia on October 13, 2005.

Claus Chur, KCA DEUTAG Director for Russia, Europe and the Middle East said, "We chose Tyumen as the location for our Russian Regional head office because of its excellent personnel resources, transport connections, infrastructure, and the availability of services. As the leading independent drilling contractor in the rapidly emerging markets of the former Soviet Union we believe there are significant development opportunities for KCA DEUTAG in Russia, and we have already established a growing presence in Western Siberia."

"As well as the new office, the complex also includes a logistics center, and workshops. We expect to employ around 400 people, the majority of whom will work directly on the company's rigs.

"We have received excellent support from the Tyumen Regional Governor, Sergey Sobyanin, who signed the original co-operation agreement with KCA DEUTAG in January this year, and I am delighted that he has been able to attend the opening ceremony.

"Russia is a key strategic growth area for KCA DEUTAG, and the Tyumen office will be supporting and managing all of our operations in Western Siberia. We will also maintain our office in Moscow to stay in close contact with our major clients," explained Chur.

"Our strategy is to provide safe, effective and fit for purpose drilling rigs for the Russian market. We are collaborating with our sister company Bentec in the manufacturing of two HR-5000 series rigs. They combine proven Russian rig building technology with advanced western rig components such as top drives, solid controls and SCR's. This concept has received very positive feedback from major operators, and the first rig of this type will commence operations early next year."

In March 2004 KCA DEUTAG won a four-year contract for the provision of drilling services for the development of Salym, West Siberia by Salym Petroleum Development N.V; a 50-50 joint venture between Shell and OAO Evikhon. Two BU-3900 series rigs were commissioned by KCA DEUTAG. Both rigs have been manufactured to meet arctic conditions and have now successfully commenced drilling operations.

KCA DEUTAG's 2000hp T-2000 rig, the most advanced western rig in Russia, has completed its operations with Schlumberger/RITEK in the Nadym area of Western Siberia. This rig has already proven its superior performance capabilities drilling horizontal wells in the Nojabrsk district for Sibneft. The rig has now been awarded a contract by Urals Energy for drilling in Sakhalin. Drilling operations are due to begin in Q4 2005.

Together with 3 platform contracts on Sakhalin Island, far eastern Russia, KCA DEUTAG is now mobilizing and operating 8 rigs in Russia.

"None of this would be possible without the continuous support of our highly motivated and skilled personnel, and I would like to take this opportunity to thank all of them," said Chur.