Sakhalin II Reaches Local Content Milestone

Contracts totaling more than $10 billion have been awarded to Russian companies under the Sakhalin II Project. This outstanding event clearly demonstrates the company’s adherence to the principle of high levels of involvement of Sakhalin, Far Eastern and Russian companies in the Project implementation.

Starting in 1996, the Russian Federation companies’ activities have totaled to 191 million man-hours, which is 80% of the total number spent on the Project, and 9.7 million tons of Russian materials, that equals 91% of the total volume of materials. At peak this year the project has employed some 20,000 Russians. Although the method specified in the Sakhalin II Project PSA calculates the Russian Content based on materials and equipment scope as well as the number of man-hours, Sakhalin Energy also aims to maximize Russian Content in money terms of the total value of contracts awarded.

Mr Andrey Galaev, Sakhalin Energy Deputy CEO, said: "On the one hand, the Sakhalin II Project offers Russian companies unique opportunities to adopt technologies which have never been used in Russia before, as for many of them the experience they have gained during the Project implementation can become a stepping stone to the international services market, where they will be able to compete successfully with well-known and established international companies. On the other hand, we would have never achieved such success in the implementation of this global energy project without highly qualified Russian contractors.

One such contract, which has contributed to Sakhalin Energy breaking through the $10 billion contract milestone, was the recently awarded contract to FIAS Amur Ltd. (Komsomolsk-na-Amour) to provide Sakhalin Energy with procurement services.

Ms Kira Voytik, Director of FIAS-Amur Ltd., said: "This contract opens vast perspectives for our young company in the international oil and gas market and is a good incentive for further success".