South Stream awards supply contract

South Stream awarded a contract for three pipe mills to supply over 75,000 steel pipes for the first line of the South Stream Offshore Pipeline.

Europipe from Germany will supply 50% of the pipes, Russia's OMK and Izhora Pipe Mill will supply 35% and 15%, respectively. The contracts, with a total value of about US$1.37 billion, were signed during a ceremony at the headquarters of South Stream Transport B.V. in Amsterdam.

The South Stream Offshore Pipeline will be made up of four parallel pipelines of 931km each, with a diameter of 32in. and steel walls 39mm thick. The contracts cover production of over 75,000 steel pipes of 12m for the first pipeline. A tender for the second pipeline is still ongoing, with the aim of awarding the contracts in the first quarter of this year.

Competitive tender to ensure high-quality pipe supply

In June 2013, South Stream Transport launched a tender procedure for the supply of pipes for the first line, involving pipe mills from Europe and Asia. In order to qualify as a potential supplier, each bidder had to prove its technical capability and go through a pre-qualification process which included production of multiple pipe samples.

“We witnessed the production and tested samples from each company that participated in the tender, and each bid was evaluated by a team of international experts, Grégoire Richez, commercial director of South Stream Transport, said.  “As a result, we could contract sufficient quantities of pipe at competitive prices, while ensuring that our high quality standards are met.”

Following the contract award, production will start. The first pipes will be delivered to storage yards at the Bulgarian coast of the Black Sea in the summer of 2014. Each pipe segment will be tested with water at high pressure before it leaves the factory floor to ensure it is of sufficient quality to be used for the offshore pipeline.

Construction of the landfall of the South Stream Offshore Pipeline will commence in the summer of 2014. Following delivery and stockpiling of pipes at the Black Sea coast, offshore construction will start in autumn 2014. The first offshore pipeline is scheduled to start operations by the end of 2015.