OREANDA-NEWS. March 22, 2011. Joint Stock Company Chelyabinsk Tube-Rolling Plant (“ChelPipe”), a leading Russian producer of welded and seamless steel pipes and tubes, and supplier of integrated solutions for the Russian oil & gas industry as well as a variety of other industries in Russia, today released its operational results for the twelve month period to end December 2010.

HIGHLIGHTS:

Steel pipe sales increased to 1.485m tonnes, up 31% compared to 1.131m tonnes in 2009. Sales volumes of OCTG, LDP and seamless industrial pipes increased in 2010 by 64%, 54%, 21%, respectively compared to 2009..

 Trunk pipeline systems: hot-formed bends sales increased 101%; pipeline hub sales rose more than seven times; and shipments of nuclear valves totalled 145 units, an increase of 23%.

  The strong performance of steel pipes and trunk pipeline systems’ core products arose due to an increase in demand from ChelPipe’s major oil and gas customers, including Gazprom and Transneft.

Oilfield services: Ni-resist iron ESP sales grew 53% and reached 2,817 units. Sales of grey cast iron ESP totalled 1,126 units, down 59% versus 2009.

Commenting on 2010 results, Alexander Fedorov, ChelPipe CEO, noted:

“Last year ChelPipe put into operation “Vysota 239”, one of the largest and most technologically advanced LDP mills in Europe and we commissioned the new melt shop “Iron Ozon 32”. Our production goals were successfully achieved. As part of our ongoing strategy, we will continue to increase output of high value added pipes and ramp up billet production to full capacity. We estimate that the total production volume in 2011 will reach 2m tonnes of steel pipes, including 1m tonnes of large diameter pipes and 200,000 tonnes of OCTG.”

Olga Naumova, CEO of RIMERA, ChelPipe’s subsidiary, added:

“We believe 2011 will see a recovery in the performance of our OFS and trunk pipeline operations, with shipments of customized components to Gazprom pipelines projects and an increase in the number of wells in service.  In 2011, RIMERA will start an investment program aimed at upgrading the two main shops of ALNAS, which will allow the expansion of ESP assortment and which will increase competitiveness of our products.”

STEEL PIPE PRODUCTS

ChelPipe steel pipe sales reached 1.485m tonnes compared to 1.131m tonnes last year. The increase in sales was mainly due to shipments to Gazprom from our new LDP shop “Vysota 239” in second half of 2010. In Q3, shipments from the LDP shop totaled 5,000 tonnes, compared to Q4 sales of 61,000 tonnes.

In 2010 ChelPipe maintained its position as one of the key LDP suppliers to major Russian pipelines, including ESPO 2 Pipeline, Baltic Pipeline System-2 and Purpe-Samotlor Pipeline projects. In Q4, LDP sales totaled 202,000 tonnes, up 62%, and OCTG sales of 48,000 tonnes increased 11% compared to Q3 sales.

TRUNK PIPELINE SYSTEMS

During 2010 ChelPipe maintained its focus on expanding the scope of its operations beyond its core steel pipe business. With the aim to become a leading supplier of integrated solutions for oil and gas production and distribution in Russia, ChelPipe acquired businesses that produce customized components for pipeline construction.

ChelPipe sales of hot-formed bends totaled 5.77m tonnes, up 101% over 2009, mainly due to shipments to Gazprom’s pipeline project Bovanenkovo. In 2010, ChelPipe shipments of pipeline hubs increased five times and reached 351 tonnes, this increase corresponds[?] to the Yamal Peninsula – “Sakhalin-Khabarovsk-Vladivostok”.

During 2010 ChelPipe sold 2,774 units of ball valves, up 11% over 2009, mainly due to an increase in orders from KoreaGas company.

Sales of hot-formed bends increased by 48%, pipeline hubs by 35% and ball valves increased by 31% in Q4, compared to Q3.

OILFIELD SERVICES

In 2010 ChelPipe reviewed its ESP product portfolio focusing on Ni-resist Iron ESP production.

ChelPipe sold 2,817 units of Ni-resist Iron ESP, a 53% increase over the same period of the last year. 725 units of Ni-resist Iron ESPs were shipped during Q4, compared to 716 units sold in Q3.

As of 31 December 2010 ChelPipe serviced 5,835 oil wells in Russia, which almost fully matches the numbers of wells under service contracts last year.