Capital Markets Day 10 January 2013

Time Topic Speaker

09.00 Introduction Jan Arve Haugan, President & CEO
09.20 Concept / Front End, Janne H. Rasten, EVP Project Support
Engineering and Tony Allen, EVP International
Procurement
09.55 Construction Sverre Myklebust, EVP Jackets
Tony Allen, EVP International
Jim Miller, EVP E&C Americas
10.35 Q&A part I
10.45 Break
11.00 Completion and Lars Eide, EVP North Sea
Decommissioning
11.15 Arctic opportunities Bjrn Gundersen, EVP Concrete Solutions
11.35 Financial update Eiliv Gjesdal, CFO
11.55 Summary and Q&A part II
Lunch
Kvaerner 2013 10.01.2013
Copyright and disclaimer
Copyright
Copyright of all published material including photographs, drawings and images in this document remains vested in Kvaerner and third party contributors as appropriate.
Accordingly, neither the whole nor any part of this document shall be reproduced in any form nor used in any manner without express prior permission and applicable
acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction.

Disclaimer
This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to
differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the
regions and industries that are major markets for Kvrner ASA and Kvrner ASAs (including subsidiaries and affiliates) lines of business. These expectations, estimates and
projections are generally identifiable by statements containing words such as expects, believes, estimates or similar expressions. Important factors that could cause actual
results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets
for Kvaerners businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange
rates and such other factors as may be discussed from time to time in the Presentation. Although Kvrner ASA believes that its expectations and the Presentation are based
upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Kvrner ASA is
making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Kvrner ASA nor any of its directors,
officers or employees will have any liability to you or any other persons resulting from your use.

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Concept / Front End, Engineering

and Procurement
Janne H. Rasten, EVP Project Support
Tony Allen, EVP International
Capital Markets Day
10 January 2013
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The project journey

Project timing and estimated value1

2-3 months 6-8 months 36 months 6-8 months 122 months

Concept FEED Engineering Procurement Construction Completion Decommissioning

NOK NOK NOK NOK NOK

~10 - 20 ~30 - 60 ~6 000 8 000 ~400 - 500 ~1502
million million million million million

Analysis Concept Requirements Materials Construction Installation Onshore disposal

development management
Concept Design Labour Hook-up
selection Definition elements Construction
Sub-contractors Pre-start up
Cost estimate Detailed
engineering

(1) Approximate values for a generic topside of ~20 000 tonnes

(2) Typical time requirement for Kvaerners target scope; e.g., onshore deconstruction and disposal

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Concept selection is subject to evaluations in

the concept phase

Drivers1
Functional Oil/gas/water quantity and quality
requirements
Pressure
Temperature
Topside
Production rate
Injection requirements
Drilling requirements
Safety
Location Remoteness Substructure
Environmental conditions
Water depth
Edvard Grieg
Soil
Proximity to existing infrastructure Export solution

(1) Illustrative, not exhaustive

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The front end process within Kvaerner

Opportunity Feasibility Concept

Appraisal studies Selection

Concepts Most cost Selected System and Improved

most likely to efficient concept discipline level execution
succeed concepts

FRONT END (Pre FEED) FEED

EPC
Concept screening & selection Concept Definition

~2-3 years ~0.5-1 year

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EPC project experience is embedded in our

front end work

Concept FEED Engineering Procurement Construction Completion Decommissioning

Front end work EPC execution phase

Extensive experience data base with as

built data (e.g., technical solutions, weight,
cost, schedule)
Strong knowledge of clients design basis
Construction resources involved
throughout the process
Understanding of full lifecycle of a field

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Engineering influences all EPC project phases

Engineering in different phases Engineering numbers for an EPC contract
Proxy figures for 20 000 tons topside

C F E P C C D

System and area

engineering

Engineering for
procurement

Engineering for
fabrication 350 engineers at peak manning
Engineering for
completion, testing 35 000 engineering design documents
and operation
150 purchase orders

15 000 supplier documents

2 500 GB data stored

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Procurement is complex and require close focus

throughout the project

2 500 tonnes pipes

4 900 tonnes
mechanical 6 800 valves
equipment
Ormen Lange example

11 500 tonnes 340 000

metres of cable
structure steel
installed

250 companies 25+ nationalities

involved

Total of 3 500
~3 900 000
people involved in the
working hours on site
project

Note: Picture and figures from the Gja project delivered by Kvaerner in 2010

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Kvaerner has engineering and procurement presence

around the world
Kvaerner engineering and procurement locations

Norway,
Oslo
Stord
Verdal Russia,
Trondheim Arkhangelsk

Finland,
US, UK, Ulvila
Canonsburg London
Houston

China,
Beijing

Australia,
Perth

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A flexible delivery model

CONCEPT FEED ENGINEERING PROCUREMENT CONSTRUCTION COMPLETION

ELDFISK (Topside)

Aker Solutions
Aker Solutions as subcontractor

CLAIR RIDGE(Jacket)

SAKHALIN (GBS)

HEBRON (GBS)

+ Peter Kiewit + Peter Kiewit

BROWSE (TLP)
+ COOEC
Aker Solutions
Aker Solutions as subcontractor

CALPINE GARRISON (Gas fired power plant)

WorleyParsons and Calpine Corp. + Parsons Brinckerhoff

Firm contract
11 Kvaerner 2012 Potential agreement; for illustrative purposes
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Controlling engineering

Project management
Full control
Engineering management

Flexibility

Efficient risk mitigation

Engineering disciplines
High quality at lower
price

Controlled by Kvaerner
Flexibility wrt. in-house vs. subcontracting

Kvaerners highly experienced engineers have the expertise to

efficiently manage the engineering phase

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Proven project execution model (PEM)

M1A M1B M1C M1D M2A M2B M2C M3A M3B M3C M3D M4A M4B M4C M5A M5B M5C M5D M6A M6B M6C

Feasibility & System Detailing & Assembly & System Contract

Concept Definition Fabrication Erection completion Completion

TA TB TC TD TE

Tender & Kick-

off

Strategic

Control

Execution

Tools

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Risk mitigation during project execution

Phase timing in months

9-12 12-24 6-12 3-9

Project risk
Project progress

Feasibility System definition Detailing and fabrication Assembly and System

Assembly & System Contract
& System Definition Detailing & Fabrication erection completion
Erection completion Completion
Concept

Note: For illustrative purposes

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A standardised procurement process yields good

returns over time
Supplier Relationship Management activities

Sourcing Procurement

Sourcing Quality Close out

Require- Inquiry Purchasing Material Ware-
Need - Audits surveillance Logistics Performance
ments process process Control housing
- Approvals expediting evaluation

Standardised proven processes ensure risk

control and hence guaranteed delivery

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Strategic segmentation of suppliers to optimise

procurement activities

Sourcing complexity Selective

partnerships Strategic
defined by:
(12 % of total partners
Criticality to project

Sourcing complexity
number of packages (4 %)
progress sourced1)
Lead time
Technology ownership
Supplier power

Simplified Standard
selection procurement
(19 %) process
(65 %)

Impact on project profitability

Impact on project profitability defined by:
Category spend (MNOK)
Category value-add (impact)
(1) Total number of sourced packages on a typical topside project is 150-160

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Equipment constitutes 60-70% of procurement value,

the remainder being bulk
Procurement per category for sample topside project
Percentage of total procurement value

Other bulk Vessels

Equipment
6% 5%
Valves Bulk items
Pumps
9%
14%

Structural
7%

Piping 7%

24%
Generators and compressors
6%
Electrical bulk

21% Typical procurement

Other Equipment value of NOK 3-4 billion

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EPC execution is a close interaction between the

various disciplines

Project management

Critical
Engineering
line
Bid Final info

Prelim Close-out
Purchase
Inquiry info
order documentation

Procurement (vendors)

Delivery of bulk

Delivery of
equipment
Drawings
for
fabrication
Contract
completion

Construction

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