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August 9, 2002

Now United Heavy buys a shipyard
Russia's United Heavy Machinery--which was the surprise buyer of naval architect Friede & Goldman back in May--has now bought the SSRZ III, Astrakhan, shipyard as part of a drive to meet demand for offshore drilling platforms in the Caspian Sea.

"We've nearly reached our goal to acquire all the necessary capacity to build offshore drilling platform oil rigs in the Caspian Sea," the Moscow Times quotes financial director Mikhail Kosolapov as saying United Heavy (known by its Russian acronym of OMZ) took 20 percent of the SSRZ III International shipyard in a share swap and paid in cash another stake of about 50 percent, said spokesman Andrei Onufriyev. The share swap involved a small portion of the 10 percent of OMZ's stock that held as treasury shares, which OMZ has set aside to use to make strategic investments. He said OMZ valued the shipyard at several million dollars.

With the acquisition of the Astrakhan shipyard, OMZ can now assemble prefabricated blocks into full platforms on site, thus lowering costs, reports the Moscow Times

Onufriyev said OMZ's transportation costs will be significantly lower than the usual 15 percent of the cost of a platform.

Drilling platforms cost from $200 million to $300 million each, and OMZ sees demand for eight to 10 in the Caspian region. Platforms have a 20-to 30-year life span.

"OMZ has a strong position in the Caspian because it is the only platform company that can supply there and Caspian oil projects appear to be developing," the Moscow Times quotes Vladimir Titkov, metals and machinery analyst at Renaissance Capital as saying. Titkov said another plus is that the business is less politically sensitive than some of OMZ's other activities -- namely, nuclear power plants and submarines.

OMZ has not yet signed any contracts for full drilling platforms, although it already designs, engineers and builds separate components and can now do subcontracting at the shipyard. "It's like choosing on a restaurant menu," Onufriyev is quoted as saying.

OMZ expects that the first contracts for entire offshore drilling platforms will be signed by 2005.

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