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INTSOK 12th Annual Russian-Norwegian Oil & Gas Conference

Kvaerner Concrete Solutions for Arctic Exploration Drilling, LNG and Oil & Gas Production Platforms

By Erik Gulbrandsen

Vice President Business Development, Russia

Kvaerner Moscow Branch

22.01.2014

© Kvaerner 2013 15.08.2013

Agenda for the presentation

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1. Kvaerner experience and contribution to the Russian Oil & Gas Industry

2. Current Arctic platforms and the potentials in Russian Arctic areas

3. Opportunities and challenges in Arctic areas

4. Kvaerner concrete solutions for Arctic areas

5. Actual GBS projects designed and developed by Kvaerner

6. Kvaerner’s contribution to Russian Content in Russia

7. Cost effective Project Execution

8. Requirement for infrastructure supporting Offshore development projects

9. Summary of Presentation and Concluding Remarks

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© Kvaerner 2013 15.08.2013

Concrete substructure solutions

GBS (Gravity Based Structure)

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In Arctic Areas

© Kvaerner 2013 15.08.2013

Topsides, floaters & onshore facilities

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In Arctic Areas

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© Kvaerner 2013 15.08.2013

The Kara Sea and Sea of Okhotsk Potentials

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The size of North Sea: Norwegian and UK Sector

Source TU

The size of North Sea: Norwegian and UK Sector

Meaning: 1 installation in place per month in 30 years !!

© Kvaerner 2013 15.08.2013 6 6

ExxonMobil

Exxon

SEIC/Gazprom

SEIC/Gazprom

SEIC/Rosneft

Exxon/Rosneft

Exxon/Rosneft

7 in Russia and 2 in Canada Kvaerner’s contribution is 5 out of 9 Platforms

World wide Arctic Platforms

in operation, at location or currently in fabrication

Prirazlomnaya

Gazprom

Varandei

Lukoil

Sakhalin 2 PAB

Sakhalin 2 LUN-A

Sakhalin 1 Berkut Sakhalin 2 Moliqpack

Sakhalin 1 Orlan

Hibernia

Hebron

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© Kvaerner 2013 15.08.2013

Opportunities and challenges in design of

Exploration Drilling and Production Platforms in Arctic Areas

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1. Soil conditions and water depth

1. Limited soil data available

2. Relatively new settlements at the sea bed

3. Weak soil with limited capacity, however, feasible.

4. Water depth 5-60 meter

2. Ice loading

1. Ice conditions severe with stamukha, fresh water ice ridge action and level ice

2. Open water vary with seasons.

3. Sizing of substructure base slab versus ice loading

3. Environmental awareness

1. Sensitive to consequences of pollution

2. Rescue operations require zero tolerance

4. Logistic

1. Sizing of Topside storage areas including winterization

2. Ice management issues

3. Transportation of material and personnel

© Kvaerner 2013 15.08.2013

Advantages and features of concrete substructures

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Robustness for the Arctic environment

Tailored made for fixed or floating structures

Support large topside weight

Spare capacity for topside weight increase

Integrated oil, diesel and drill fluid storage

Protection of risers, j-tubes, pipes

Minimum maintenance (low lifecycle cost)

Significant Local Content

Independent of heavy lift vessels

Year around drilling and relocateable GBS

Sakhalin 1 Adriatic LNG terminal Sakhalin 2

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© Kvaerner 2013 15.08.2013 Page 9

Atshore: Nakhodka / Vostochney Site establishment

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© Kvaerner 2013 15.08.2013 10

Sakhalin 2 - delivered in 2005 to SEIC & Gazprom

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Concrete works in minus 20 C degrees

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© Kvaerner 2013 15.08.2013

Adriatic re-gas facility delivered in 2009 to Exxon

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Principle concept also applicable for LNG plants

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LNG concept alternatives

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Conventional onshore concept Barge Float-in concept

Near-shore, non-arctic concept Arctic Concept

Near-shore FLNG concept

Cost and schedule lucrative with minimum in place

hook up & commission. Plus substantial Russian Content

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© Kvaerner 2013 15.08.2013

Sakhalin I – delivered in 2012 to ENL & Rosneft

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© Kvaerner 2013 15.08.2013

Hebron GBS – ongoing (Canada) for Exxon

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© Kvaerner 2013 15.08.2013 Slide 15

Cement

Aggregate

Sand

Rebar

Formwork

Mechanical

Post-Tensioning

Materials (weight ratio)

3% - Imported

97%

Purchased

In RUSSIA

Manpower

8% - Expats

92%

Russian content

Concrete Gravity Base Structures gives: High National Content (Sakhalin 2 data)

■ All rough materials: cement, sand, aggregate, rebar, steel profile etc.

■ All trucks (exception – dumpers for basin digging), earthmoving equipment, mobile cranes and construction fleet (floating crane, tugs, barges, vessels)

■ All personnel transportation services

■ All Fuel, Wood, Electricity, Water, Telecommunication, Tools and majority of other consumables

95% Russian Content for GBS structures built in Russia

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© Kvaerner 2013 15.08.2013

Kvaerner: EPCI contractor delivery model

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Long-term presence in strategic regions

Local partnership/JV approach in

regions of operation for project

execution and construction

Engineering management, execution by

long term partners

Self performing construction in regions

of operation

Significant local Russian content

Successful project execution is all about people

VOSTCO yard, Nakhodka, Russia

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© Kvaerner 2013 15.08.2013

Aker Kvaerner

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Concept selection + FEED

Ice resistant Exploration Drilling Platform

Fabrication

Topside/GBS

Integration

Hook-up Detail Engineering

Procurement

E Engineering

P Procurement

C Construction

Commissioning

Studies

Concept

FEED

Approval Process with Russian Authorities

Project development and execution in sequence:

Period for a concept selection study: 6 month

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© Kvaerner 2013 15.08.2013

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© Kvaerner 2011

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Norwegian Coastline Infrastructure

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Coastline HSE

Training (10)

Major Coastline

Supply Bases (8)

Coastline Main

Rescue Helicopter

Centers (5)

Major Fabrication

Yards for Modules

and assembly of

Topsides (9)

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© Kvaerner 2013 15.08.2013 19

CHALLENGES when developing a new O&G industry

ROGALAND REGION: POPULATION: ~0,4 mill people

NUMBER OF SUPPLIERS: >500

ARKHANGELSK & MURMANSK REGIONS: POPULATION: ~3 mill people

NUMBER OF SUPPLIERS: <50

© Kvaerner 2013 15.08.2013

Norwegian Content in Oil & Gas projects

0

20000

40000

60000

80000

100000

0 5 10 15 20Years after start of the Norwegian sector

Num

ber

of

em

plo

yees

Total Suppliers Norwegian Suppliers

SOURCE: HYDRO SURVEY, SSB

1972

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After 10 years: 60% Norwegian Content

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© Kvaerner 2013 15.08.2013

Marine operations from a Dry Dock in Far East

Russia to Kara Sea

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Sannikov Strait

13m

Sources: Norwegian Mapping Authority and Arctic Marine Shipping Assessment

Kara Gate

21m

Yugorskiy Shar

13m

Laptev Strait

12m

50m

Bering Strait

30m

Nakhodka bay

exit channel 11-22m

Kamchatka Strait

300 m

100+m

Murmansk

PROSPECTS:

Dry Dock in

Murmansk

20-40m

100+m Murmansk fjord

exit channel

330mw x 100mwd Ob-Taz fjord

11+m

Northern Sea Route

From To Distance Tow

time

VOSTCO

yard

Sakhalin 1,2 fields 1,021 nm 14 days

Magadan fields 1,290 nm 18 days

Kara Sea fields 4,950 nm 67 days

37m Ice limit

March

Vilkitsky Strait

32m

20m

De Long Strait

20m

33m

La Peruz Strait

20+m

500 m

Ice limit

March

Ice limit

August - September

Ice limit

March

Ice limit

August - September

100+m

Tow at speed of average 3 knots

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© Kvaerner 2013 15.08.2013

Summary of Presentation

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1. Kvaerner is an EPCI contractor that offers both Substructure and Topside:

Feasibility Studies and Front End Engineering Design (FEED)

and

Detail Engineering, Procurement, Construction, marine towing and Installation

for

Exploration and Production Platforms in Russian Arctic Areas

2. A Concrete Gravity Based Structure (GBS) is a durable solution in Arctic Areas

3. GBS fabrication leaves ~90% Russian content to the local Industry

4. Topside integration and mating with a GBS sub-structure is possible in Russia

5. A Re-locatable Exploration Drilling Platform will soon be concluded for operation in

year around Russian Arctic Areas

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© Kvaerner 2013 15.08.2013

Copyright

Copyright of all published material including photographs, drawings and images in this document remains vested in Kvaerner and third party contributors as appropriate.

Accordingly, neither the whole nor any part of this document shall be reproduced in any form nor used in any manner without express prior permission and applicable

acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction.

Disclaimer

This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to

differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the

regions and industries that are major markets for Kværner ASA and Kværner ASA’s (including subsidiaries and affiliates) lines of business. These expectations, estimates and

projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates” or similar expressions. Important factors that could cause actual

results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets

for Kvaerner’s businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange

rates and such other factors as may be discussed from time to time in the Presentation. Although Kværner ASA believes that its expectations and the Presentation are based

upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Kværner ASA is

making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Kværner ASA nor any of its directors,

officers or employees will have any liability to you or any other persons resulting from your use.

Copyright and disclaimer

Copyright

Copyright of all published material including photographs, drawings and images in this document remains vested in Kvaerner and third party contributors as appropriate.

Accordingly, neither the whole nor any part of this document shall be reproduced in any form nor used in any manner without express prior permission and applicable

acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction.

Disclaimer

This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to

differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the

regions and industries that are major markets for Kværner ASA and Kværner ASA’s (including subsidiaries and affiliates) lines of business. These expectations, estimates and

projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates” or similar expressions. Important factors that could cause actual

results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets

for Kvaerner’s businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange

rates and such other factors as may be discussed from time to time in the Presentation. Although Kværner ASA believes that its expectations and the Presentation are based

upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Kværner ASA is

making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Kværner ASA nor any of its directors,

officers or employees will have any liability to you or any other persons resulting from your use.

Copyright and disclaimer

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