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Statoil renews long-term contracts worth $1.23 billion

Norwegian Statoil (ticker: STO) announced today that the company has renewed long-term contracts with an estimated value of NOK11 billion ($1.23 billion). The contracts are with Beerenberg Corp As and Prezioso Linjebygg AS, and cover insulation, scaffolding and surface treatment services, according to a press release from Statoil.

The two companies will service 20 of Statoil’s 29 installations on the Norwegian continental shelf (NCS) after the contract takes effect later this quarter. The contracts cover a 15-year period and replace the two existing contracts Statoil has with the two suppliers regarding NCS services.

Statoil said in its press release that both suppliers were sensitive to the importance of improving costs over the long-term. “The suppliers understand the industry challenges and want to help solve them,” said Senior Vice President for Procurements Jon Arnt Jacobsen. “[Both companies] during the renegotiations expressed that they focus on permanent improvements as well as quality and cost.”

$2.69 billion of contracts announced last month

In addition to the announcement today, Statoil has also awarded NOK24 billion ($2.69 billion) in maintenance and modification contracts last month. The contracts, made with Aibel AS, Aker Solutions AS, Apply Sorco AS, Reinertsen AS, and Wood Group Mustang Norway AS, compirese a six year period plus a four-year extension option.

Again, competitive pricing played a major role in Statoil’s decision. “The procurement we have made is part of the effort of creating a more competitive industry,” said Jacobsen in a press release.  “The importance of making continuous improvements and changing our working methods has run as a thread through the whole process.”

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