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OGK-1 and TNK-BP Approve an Agreement with the Siemens-Enka Consortium to Start the Project for the Third Power Unit at the Nizhnevartovsk State District Power Plant

TNK-BP OGK-1 and TNK-BP have signed an agreement with the Siemens-Enka consortium to complete the engineering for the initial phase of the project to construct the third power unit of the Nizhnevartovsk state district power plant (GRES). The approved agreement provides for preparation of the design documents, determination of the best logistical scheme for equipment delivery and geotechnical surveys. The cost of work to be done under the agreement amounts to 19.5 million Euro.

Construction of the third power unit a combined cycle gas turbine (CCGT unit) with installed capacity of 800 megawatt is planned to be launched in 2009 and completed in 2012. Under the 15-year agreement, TNK-BP will supply the third power unit of the Nizhevartovsk GRES with pre-treated lean gas. TNK-BP's annual deliveries to two operating power units at the Nizhnevartovsk GRES currently equal 3 billion cubic metres of gas. The new unit will consume an additional 1.2 billion cubic metres of gas per year. TNK-BP will also annually purchase about 6 billion kilowatt per hour of generated electric power from the third unit.

TNK-BP and OGK-1 have established the joint venture NVGRES HOLDING LIMITED for the project realization. TNK-BP owns a 25% stake plus 1 share in the joint venture which the company acquired for $356 million. OGK-1 has paid for its shareholding in the jv by contributing two operating power units of the Nizhnevartovsk GRES.

NVGRES HOLDING LIMITED is the owner and operator of all three power units.

Vladimir Khlebnikov, General Director of OGK-1, said: "OGK-1 and TNK-BP are implementing an innovative project which is unprecedented for Russia. Our objective is to build a major modern power unit and, in addition, to develop a principally new level of managerial decisions for construction of new facilities in the Russian power industry. The Siemens-Enka consortium, an industry leader with an impressive international experience, is capable of demonstrating a consistently high level of project execution".

"The third power unit of the Nizhnevatovsk GRES is important for TNK-BP as a reliable source of power supply to producing facilities with high energy consumption. It also provides TNK-BP with an effective means of associated gas utilization," noted Tim Summers, interim Chief Executive Officer of TNK-BP, "This agreement signals the start of the first phase of the project and is an important milestone in its realization".

Construction of a new power station is an efficient and attractive option for APG utilization, both commercially and technically. TNK-BP's annual power consumption for its own needs in the region is about 8 billion of KWh; by 2010 the level of consumption is expected to grow up to 12 billion KWh.

Posted 14/01/09

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