Increased Norwegian Content for Johan Sverdrup Platform

Maritime Activity Reports, Inc.

March 31, 2016

An illustration of the utility- and living quarters topside

An illustration of the utility- and living quarters topside

Today, Kvaerner and its sub-contractors cut the first steel plates for the utility- and living quarters (ULQ) topside for the Johan Sverdrup field. The topside construction starts on schedule and budget. The Johan Sverdrup development is being executed with a high degree of Norwegian value creation.

Kvaerner's efforts to improve competitiveness have resulted in a large portion of the work for the ULQ platform to be executed in Norway. This gives Kvaerner and Norwegian subcontractors a steady activity and also a continued high number of apprentices.

In June 2015, Kvaerner in a joint venture with KBR won the contract for the complete delivery of the utility and living quarter (ULQ) topside. The platform also includes the advanced control room and the sental systems all installations on the field. In addition, Kvaerner is responsible for complete deliveries of three of the four steel jacket substructures for this phase of the Johan Sverdrup development.

The main scope of the steel jackets will be constructed at Kvaerner's specialised facility in Verdal, Norway. For the complete delivery of the 19 000 tonnes topside, a large portion of the work will be executed at the company's facility at Stord, while the construction of the living quarter will be executed by Kvaerner and KBR's subcontractor Apply at Stord and in Gothenburg, Sweden.

It has been evaluated if  some of the sections for the topsides' box girder and  the clusters for the three steel jacket substructures should be fabricated abroad or in Norway. The evaluation has documented that Kvaerner's efforts to improve costs, execution security and quality makes it efficient to construct the fundaments for one of the steel jackets as well as more than 1 000 tonnes of the steel frame at Kvaerner's facilities at Verdal and Stord respectively. This work comes in addition to Kvaerner at Verdal also delivering the steel jackets and Kvaerner at Stord also assembling all parts of the topside and other work.

We have since the project started determinedly worked to implement further improvements for productivity and cost level. This means that we in Norway have improved our competitiveness for even more parts of the platform work. For Kvaerner, this results in an increase of more than 200 man years involved in the work with the topside and steel jackets. At peak, around 2 000 employees will be involved in Kvaerner's Johan Sverdrup deliveries. This will at the same time result in positive effects for our subcontractors in Norway, says Jan Arve Haugan, President & CEO of Kvaerner.

Kvaerner has for many years been one of the companies in Norway educating the most apprentices. In 2015, Kvaerner had 121 apprentices.

Future value creation and competitiveness for Norway and for the whole oil and gas sector is dependent on that we continually develop competence with new generations. As such, it is important for us that we are able to plan the execution of the Johan Sverdrup contracts in a way that parts of the work to be performed in Norway is suitable for apprentices. We have now accomplished that, when Kvaerner in a challenging market is going to have more than 100 apprentices in both 2016 and 2017, Haugan says.

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