TNK-BP Initiates Major New Rig Tender

TNK-BP announced the opening of tenders for the long term supply of up to 60 dedicated drilling rigs for use in its upstream oil and gas operations across Russia.

Contract terms will range up to 5 years (with options to extend beyond this period) and total value of all contracts let under this tender program could exceed $2 billion.

This is the largest long term rig tender called in the Russian industry and reflects TNK-BP's commitment to expand its appraisal and production drilling activities, both in its mature fields as well as in its developing green field projects and new license areas.

Contractors will be requested to tender advanced rig designs which utilize upgraded, efficient and environmentally friendlier operating systems and equipment.

A group of more than 20 companies (of whom approximately two thirds are Russian firms), has already been pre-qualified to participate in the tender.

Successful bidders are expected to be notified in October with a view to rigs being in place in January 2008.

This rig tender process follows the successful long term partnership arrangement with leading Russian pipe producer TMK and long term hydro-fraccing contracts at Samotlor, Orenburg and Nyagan. Under each of these landmark, long term arrangements, TNK-BP's performance, and costs have improved.

By the end of 2007, more than one third of all of TNK-BP's goods and services provided by third parties will be under long term contracts.

"This is a progressive step forward in an area vital to the success of our operations over the next three to five years", said TNK-BP Chief Operating Officer, Tim Summers. "Such long term contracts demonstrate our confidence in our upstream investment program and also help our contractors invest in their rig fleets to improve the quality and efficiency of their services to the Russian oil industry. This is also very much about raising safety and environmental standards."

The tendered rigs will complement the rigs and services currently provided by TNK-BP's oil field services division which will continue to supply a significant proportion of TNK-BP's ongoing drilling needs – currently about 40% of drilling demand.