Nord Stream has announced its €1 billion contract with Europipe, OMK and Sumitomo, to supply 1 million t of steel piping for construction of Nord Stream’s second pipeline.
The tender award for the second 1220 km (parallel) gas pipeline from Vyborg in Russia to Lubmin in Germany is a key part of the Nord Stream Consortium’s logistical plan.
The pipeline contract value is approximately €1 billion, of which German Europipe is awarded 65%, Russian OMK is awarded 25% and Japanese Sumitomo is awarded 10%.
The tender for line two was completely independent of the tender for the first line, which was completed in 2007. Procurement of the pipes for the second line was the last outstanding significant decision regarding the requirements for the project and the overall budget.
The contracts for the second line are expected to be signed within a few weeks, and with this Nord Stream secures the pipes at the current price level. Delivery of the pipes is scheduled to start in May 2010.
“We are happy to have Europipe and OMK, the suppliers of the first pipeline, as well as Sumitomo, a newcomer to our project, on board. Sumitomo has a solid track record in offshore projects,” says Henning Kothe, Project Director at Nord Stream. “With €1 billion, the total volume of the contracts is below the price level of the first line, reflecting the current market development of increased competition and more available capacity. Three times the amount of steel pipes required was quoted.”
The international call-for-tender was made in February 2009. Six manufacturers from Japan, Russia and Germany had prequalified to participate and were invited to bid. Pre-qualification is determined either by track record or by trial production. All potential suppliers had to show that they were capable of supplying large diameter, high-pressure-proof steel pipes for offshore use that met international quality standards.
Construction of the first Nord Stream line is scheduled to commence on 1st April 2010; construction of line two is planned to begin in Spring 2011.