Izhora Pipe Mill produces record 500 thousand tones of large-diameter pipes for oil and gas projects in 2011

OAO Severstal (‘Severstal’ or the ‘Company’), one of the world’s leading vertically integrated steel and steel related mining companies, announces that its pipe production unit, the Izhora Pipe Mill (IPM), which specializes in the manufacture of large diameter pipes from strips produced by the Cherepovets Steel Mill, part of the Severstal Russian Steel Division, produced over 500,000 tons of large-diameter pipes in 2011, primarily for use in major oil and gas projects in Russia. This represented an impressive 10% increase on 2010 production levels.

Nikolai Skorokhvatov, CEO of IPM, commented: “2011 saw the plant operating at full capacity and, despite a declining market for large-diameter pipes at the end of the year, the Izhora Pipe Mill continued to produce and ship tubular products to our key clients.”

The production increase in at IPM was in part due to the Company supplying major projects by Gazprom and Transneft, two of the Company’s key customers.

IPM supplied the products for Transneft’s East Siberia-Pacific Ocean pipeline system in 2011.

In 2011 IPM products were delivered to Gazprom for use in the construction of the: Gryazovets-Vyborg trunk gas pipelines to ensure gas supplies to the Severny Potok (Nord Stream) gas pipelines and consumers in Russia’s northwest; the Ukhta-Torzhok and Bovanenkovo-Ukhta pipelines to transport gas from the Yamal Peninsula fields; and the Sakhalin-Khabarovsk-Vladivostok pipelines to transport gas from Sakhalin Island to the Primorye and the Far East.

Last year Bovanenkovo-Ukhta was the major project for IPM in terms of volume of product shipments. Some 250,000 tons of large-diameter pipes, which accounted for nearly half of the Company’s total shipments, were delivered there in 2011. A total of more than 600,000 tonnes of pipes have been delivered by IPM for the Bovanenkovo-Ukhta Project since 2007.

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ZАО Izhora Pipe Mill’s key customers are ОАО Gazprom, ОАО JSC Transneft and other oil and gas companies.

As part of their relations with ОАО JSC Transneft, in 2010 Izhora Pipe Mill produced products for the 2nd phase of project Baltic Pipeline System, the 2nd phase of the East Siberia – Pacific Ocean pipeline system, and the Purpe-Samotlor oil pipeline. For OAO Lukoil in 2010 the enterprise produced pipes for the development of the Pyakyakhinsky Gas Condensate Field in the Yamal-Nenets Autonomous District.

Approximately 80% of total orders placed with the Izhora Pipe Mill are deliveries to ОАО Gazprom. IPM pipes are used in the construction of gas pipelines; Gryazovets-Vyborg (to transport gas to gas pipeline Nord Stream), Ukhta-Torzhok, Bovanenkovo-Ukhta (Yamal megaproject) and Sakhalin-Khabarovsk-Vladivostok.