Sibneft Signs Major Outsourcing Deal With Schlumberger

Moscow, 9 November 2001; Sibneft has signed a major contract with international oilfield service company Schlumberger which will enable Sibneft to outsource a larger portion of its service needs.

Under the terms of the three-year deal, Schlumberger will take over a substantial portion of Sibneft's well workover division. Schlumberger will lease heavy workover rigs from Sibneft's wholly-owned Sibneft-Service subsidiary, and most of the unit's workforce will also join the Schlumberger payroll.

The deal will enable Schlumberger to broaden its range of services and carry out projects on an integrated basis. The agreement will also help Sibneft achieve its strategic goal of maximising outsourcing in its exploration and production division.

Sibneft plans to hike spending on services delivered by international oilfield service providers from some $85 million this year to a target of $115 million in 2002. "This pioneering agreement will help improve Sibneft's profitability, leading to the delivery of better services at a lower cost," said Sibneft president Eugene Shvidler.

"This new long-term venture will enable us to deliver the most advanced techniques in support of Sibneft's drive to maintain the fastest rate of production growth in Russia, and at the same time substantially increase our business. This agreement is a further step in the development of a unique partnership between a Russian oil company and an international service company," said Patrick Schorn, vice president and general manager of Schlumberger Oilfield Services in Russia.