CONTRACTORS FORM MAJOR NEW JOINT VENTURE TO MANAGE £750 MILLION CONTRACT FOR SHELL EXPRO

A new joint venture company, Sigma 3 (North Sea) Ltd, has been set up to support Shell U.K. Exploration and Production (Shell Expro), operators in the U.K. sector of the North Sea on behalf of Shell, Esso and co-venturers. AMEC, Wood Group Engineering (North Sea) and KBR, a business unit of Halliburton Company (NSYE:HAL), have joined forces to form Sigma 3 to provide integrated services for a major 7-year contract on behalf of Shell Expro worth an estimated £750million.

Jerome Lynch, General Manager of Sigma 3 said, "Each company had formed a strong and successful partnership with Shell Expro; by working together in this contract-specific joint venture we will ensure that the combined abilities of our companies will produce exceptional results for our client. The focus of the UKCS oil and gas industry today is about creating and sustaining a viable long-term future. Changing the way we work, being willing to work in partnership and sharing best practise will help to deliver this objective."

The formation of Sigma 3 follows a review last year by Shell Expro of its business strategy for the UKCS, and discussions with AMEC, KBR and Wood Group Engineering (North Sea) on the consolidation of existing integrated service contracts (ISCs). The joint venture will build on the track record that each of the individual contractors has in supporting Shell in delivering outstanding results in support of its key business goals of safety, cost competitiveness and production. However it was recognised that new ways of working and new levels of pan-industry collaboration are required if we are to overcome future challenges of production from a mature basin. Sigma 3 plans to extend this philosophy into closer collaborative relationships with its own suppliers and contractors.

The combined workforce onshore and offshore working on behalf of Sigma 3 will total more than 1400 people. The new organisation, effective immediately, boasts a diverse combination of skills and technology from the three parent companies, particularly in the areas of engineering, construction, maintenance, major capital projects and support services. Sigma 3 will support Shell Expro's four main asset clusters in the Central and Northern North Sea and have an extensive supply chain involving more than 200 suppliers of materials and services.

Mark Carne, Shell Expro Asset Director, said, "A major contract of this nature underlines Shell's long-term commitment to the UKCS. We believe that by combining the strength of these contractor companies in Sigma 3 we will be able to take further strides forward in safety, production and cost competitiveness. This is good news for Shell and good news for the oil industry in Scotland."

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