Frame agreement for subsea systems

Norsk Hydro has entered into a frame agreement for subsea systems with FMC Kongsberg Subsea. The agreement is valid for a period of three years, with options for another three plus three years extensions. The agreement covers engineering, procurement and construction of subsea X-mas Tree systems with associated structures, manifolds, control systems and tie-in equipment for control cables and flowlines, as well as service and installation support for the same systems. Technology development within the area of subsea systems is also covered by the frame agreement.

ABB Offshore Systems, Kværner Oilfield Products and FMC Kongsberg Subsea have tendered for this frame agreement. These three Norwegian-based groups are considered to be at the forefront of the international market for subsea technology. The frame agreement was awarded on the basis of a combined technical and economical evaluation of the three tenders.

In the future, it is expected that a majority of the field developments, both on the Norwegian Continental Shelf and internationally, will be based on subsea solutions. A long term relationship with one supplier through a frame agreement leads to more predictable field development cost and technical solutions, shorter development times, more focused technology development and also cost savings.

The frame agreement is applicable for use world wide. It must be competitive and approved by the partnership in the respective production licenses where Hydro is operator. The frame agreement can also be used on licences where Hydro is a non-operating partner.

Hydro has also signed a letter of intent with Kværner Oilfield Products (KOP) for an Expanded Subsea Service Agreement. This agreement shall cover service and installation support for subsea systems delivered by KOP to the Troll, Oseberg, Visund and Njord fields on the Norwegian Continental Shelf. Further, this agreement opens for additional deliveries of subsea equipment to these fields. It is expected that the parties will enter into a formal contract in the near future. This agreement will be valid for three years, with options for another three plus three years extensions.

The combined value of the two agreements over the next three years is expected to be approximately NOK 1 billion.