Steel piping framework agreements

May 18, 2007, 10:30 CEST

New framework agreements worth an estimated NOK 13.2 billion will secure Statoil's need for casings, tubing and pipeline steel for the next five years.

The deliveries cover the entire group's needs for piping on new developments and drilling operations on the Norwegian continental shelf, as well as options for supply of piping on international operations and include two two-year extension options.

"The demand for steel has increased significantly on a global scale in recent years," says Odd K Nøland, vice president for steel procurements in the Technology & Projects (T&P) business area.

"This has led to higher prices and limited availability of raw materials critical to Statoil's projects and drilling operations. With these frame agreements we have secured access to strategic equipment at competitive prices."

The pipeline steel deals form the biggest part of the framework agreements, followed by casing and tubing contracts. Deliveries will come from countries such as Japan, Germany, France and Argentina from the suppliers Sumitomo, Mitsui, Tenaris, V&M, Metal One/JFE, Itochu Marubeni/JFE, Butting and Europipe Gmbh, respectively.

Statoil's best practice procurement (BPP) corporate initiative forms the basis for the frame agreements. The initiative's purpose is to gather management of all Statoil procurements into 64 group-wide equipment categories, the aim being to reduce annual procurement expenditure by NOK 6.4 billion.

"The signed steel deals will be a significant contributor to achieving this goal," Mr Nøland says.