Knowledge required to enter the

Norwegian Markets

MI14 seminar June 11 2014

Kvaerner Finland Oy

Heidi Palmgren

© Kvaerner 2013 12.06.2013

Contents

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1. HSSE – Just care

2. What is Kvaerner AS and what is Kvaerner Finland Oy?

3. Norwegian market – Great Expectations

4. Experiences

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Health, Safety, Security, Environment

HSSE Awareness

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Safety moment

Risk Observation

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Concrete 33 %

KCI 2 %

Contractors Norway

57 %

0 %

Total worked hours = 1 563 842

May Year to date

0 0 0 0

Total worked hours = 7 790 179

8 Serious incidents or serious near miss

Fatality 0

Serious with disablement 1

Medical Treatment (TRI) 17

Injury (LTI) 1

219 Near miss

25 190Observations

Fatality 0

Serious with disablement 0

Medical Treatment (TRI) 5

Injury (LTI) 0

22 Near miss

4 503Observations

3 Serious incidents or serious near miss

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Concrete 40 %

KCI 2 %

Contractors Norway

52 %

0 %

© Kvaerner 2011

Corporate 0,5%

Jackets 8 % Corporate 0,3% Jackets 5 %

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2. What is Kvaerner AS

© Kvaerner 2013 12.06.2013

An international company

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Kvaerner offices Target markets

Canada

North Sea Barents Sea North West

Russia Far East Russia

Australia

Kvaerner well positioned in booming markets as well as “blue oceans”

Caspian Sea

China/SEA

© Kvaerner 2013 12.06.2013

Kvaerner Profile - Business Areas and product range

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CONTRACTORS NORWAY

Topsides Floaters

Onshore upstream facilities

Leading EPC contractor to the North Sea market

CONTRACTORS INTERNATIONAL

Topsides Floaters

Spearhead for international expansion

CONCRETE SOLUTIONS

Concrete substructures

Russia

Global leader in gravity based

concrete structures

Large steel jackets for oil & gas installations

European leader in steel jackets

JACKETS

© Kvaerner 2013 12.06.2013

Kvaerner - EPC projects in the field development phase

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Licensing Exploration Field Development Production Abandonment

Feasibility, concept, FEED

Procurement

Assembly and Integration

Studies to evaluate potential field development solution Global design of chosen solution

Completion & Commissioning

Engineering

Construction

Marine operations

Engineering management System definition Detailed design/volume engineering Follow on engineering

Technical procurement Commercial procurement Sourcing Labour Subcontractors

Construction management Shop engineering Pre-fabrication Fabrication

Logistics Assembly procedures Assembly Integration

Tow-out Tie-ins HUC

Start up and testing

Seismic data Government auctions and leases to operators

Reservoir info Exploration drilling Appraisal drilling Well completion

Front End EPC projects Ready for operations

Production drilling Field maintenance Reservoir stimulation Logistics and supply

Decommissioning Abandonment (plugging the well)

2-3 years 1-2 years 1-2 years ~4-8 years ~10-40 years

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A focused Front End and EPC organisation

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Project management

Analysis

Concept selection

Concept development

Definition

Cost estimate

Requirements

Design elements

Detailed engineering

Materials

Labour

Sub-contractors

Construction management

Construction

Installation

Hook-up

Pre-start up

Onshore disposal

Concept FEED Engineering Procurement Construction Completion Decommissioning

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© Kvaerner 2013 12.06.2013

2. And what is Kvaerner Finland Oy

Kvaerner Finland Oy, Ulvila

100% owned subsidiary of Kvaerner AS

Founded 2001, part of Kvaerner since 2008, belongs to Contractors International BA

Turnover 4,35 MEur Y2013

33 Employees

DNV ISO 9001:2008 certified

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© Kvaerner 2013 12.06.2013

Finnish Offshore History - Kvaerner Finland background 2000 2008 1995 2011

Kvaerner Finland Oy

Company Sale 1995

Company Sale 2000

Corporate Merger 2002

Aker Offshore Oy

Corporate Demerger 2011

RR Offshore Oy

Company Sale 2008

Corporate Merger 2002

Re-Branding 2008

Spin-Off 2001

Rauma Offshore Contracting Rauma Offshore Works

Aker Rauma Offshore Mäntyluoto Works

CSO Aker Rauma Offshore Mäntyluoto Works

Technip Rauma Offshore Mäntyluoto Works Technip Offshore Finland

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Strategy since April 2012 :

Resource and Service Provider to Kvaerner, Aker and third

party companies

Kvaerner Finland Strategy & key business

Finland Engineering HUB

Finland Resources

Construction management

Shortage of engineers and project management resources

Promote Finnish potential in Norway

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Kvaerner Finland services

Own competence and qualified Finnish network and subcontractors Construction/Project Management

Procurement & logistics, Construction management, Project planning & support/administration, incl. experience in Russian projects

Engineering services Steel structures & Outfitting, Piping:

Engineering, all phases – FEEDs, basic, detail and workshop engineering

© Kvaerner 2013 12.06.2013

3. Norwegian market - Great Expectations

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Growth potential in 2012 but Several North Sea projects were lost in 2012/13

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Topsides Mariner Daewoo/CB&I Martin Linge Samsung HI/Technip Aasta Hansteen Hyundai HI/Technip Ivar Aasen Semcorp Marine/Mustang (Gina Krog) Daewoo/AKSO

Jackets

Mariner Dragados/SNC Lavalin Gina Krog (Dagny) Heerema/SNC Lavalin Ivar Aasen Saipem

Global competition represented by Korean EPC players fastening grip in the North Sea Contracts worth ~40 bn NOK went abroad in 2012 Norwegian contractors 5-40% more expensive than the Koreans

New tender round 2014/2015 Opportunities for Finnish potential

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Project management resources Engineering resources Construction management Project resources Procurement Construction – potential for Finnish yards (modules, assembly etc.) Norwegians – busy Good historical offshore traditions

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Cost awareness - Cut cost level min 15 % - Develop delivery model – COOEC Nyhamna modules to be fabricated at COOEC in China (Oct 2013)

Possibility for Finnish services – deliveries – subcontracting – resources

Turnaround

Subcontracting opportunities In a typical EPC project, procurement represents more than 50% of the total project value

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11 500 tonnes structure steel

4 900 tonnes mechanical equipment

2 500 tonnes pipes

6 800 valves

340 000 metres of cable installed

25+ nationalities 250 companies involved

~3 900 000 working hours on site

Total of 3 500 people involved in the project

Ormen Lange example

Typical procurement value of NOK 3-4 billion

4. Experiences

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Lessons learnt – Entering Norwegian Market

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Why Finland? Existing Offshore tradition High level education Flexibility Firm commitment Quality, reliability Skills Ethics Stableness Cost level

Promote Finnish potential in Norway

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Very limited knowledge on the Finnish potential

Companies struggling with limited marketing resources

Lessons learnt – Entering Norwegian Market

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Need to do Customer Focus – know your Client

Sales skills - Service mind-set

Prepare, do the homework Contact – take actions – fulfil – follow up > take it to the finish Make it easy for the Client

Cost competiveness Korea – Finland – Norway

Competence and Performance

© Kvaerner 2013 12.06.2013

Thank you!

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© Kvaerner 2013 12.06.2013

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 Kværner ASA and Kværner ASA’s (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 Kvaerner’s 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 Kværner 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. Kværner ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Kværner ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.

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 Kværner ASA and Kværner ASA’s (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 Kvaerner’s 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 Kværner 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. Kværner ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Kværner ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.

Copyright and disclaimer

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