1. Sudoverf DV, LLC.
Production development for steel structures fabrication and shipbuilding projects execution
Vladivostok 2017

2. New production development plans :
Sudoverf DV, LLC, as a resident of the Free Port of Vladivostok, makes decision on creation of universal production in Vladivostok to fulfill orders in the areas of shipbuilding, steel structures fabrication for oil & gas projects plus delivering products for onshore and offshore projects implemented on the Russian Far East shelf, including installations and infrastructure.
The Project covers creation of the block of workshops, consisting of three spans, to produce the above products. One of the spans will have larger dimensions: it is connected with the necessity to fabricate large non-standard structures in terms of their weight and dimensions to be used in offshore projects as elements of subsea (seabed) system of oil and gas production.
The aim of this project is to create production facilities of the enterprise, specializing in steel structures fabrication, plus the market share gain in the area of steel processing
Sudoverf DV, LLC is planning to perform a wide range of works including:
Designing, fabrication and installation of steel structures and pipelines;
Nondestructive evaluation;
Storage and delivery of critical structures to the facilities of onshore and offshore oil & gas infrastructure;
Reviewing and approval of the documents by authorized agencies.

3. New production development plans:
Areas and spans of the block of workshops and their characteristics:
1. Storage area for sheet and profile steel.
Dimensions: 40m x 30m x 20m
2. The first span of the main workshop includes blanking production.
Dimensions: 150m x 30m x 30m. Gates: 28m x 28m.
3. The second span of the main shop is designed for assembly and welding.
Dimensions: 150m x 30m x 30m. Overhead crane, 50t.
4. High-rise span is intended for preassembly, testing and acceptance of non-standard items for subsea development of offshore fields.
Dimensions: 72m x 40m x 30m. Gates: 38m x 28m. Overhead crane 50t.
5. Paint cabinet is designed for operation-by-operation painting of the finished items: steel structures and ships sections.
Dimensions: 42m x 40m x 27m. Gates: 38m x 25m.

4. New production development plans:
In the process of new production development, special attention will be paid to the issue of equipping. It is planned to purchase the following equipment:
Self-propelled hydraulic transporter for transportation of marine and superheavy sections up to 200t;
Telescopic boom lift for NDT, installation and painting works performing at the height of up to 25 m;
Scissor lift for works at the height of up to 11,8 m;
Hydraulic trolleys, available in overall lifting capacity up to 1 000t;
Bending tools for 6m wide tanks and structures;
Steel processing equipment;
Welding equipment: Kemppi semiautomatic welding machines and ESAB automatic welding machines;
Lifting cranes, 5-50t.

5. Project analysis:
At present the industrial installations are being actively constructed, plus the commercial premises are being erected. Taking into consideration the fact that the steel structures involvement in this branch is far from being on a large-scale basis compared with other countries (approximately 5-10 times less than in Europe and Asia), the perspectives are crystal clear.
The main consumers in the far-eastern market of steel structures are the companies involved in construction of various industrial facilities, purchasing more than one thirds of all the products. One fourths approximately is purchased by road infrastructure building companies. Plus this product is in demand with oil & gas companies involved in new projects implementation.
It is necessary to possess the integrated programs, with the help of which not only proper personnel training would be ensured, but new production methods and technologies could be developed.
Russian steel structures market is in demand of more active branding of products. As it is known, the branch transparency is mainly determined by the participants’ level of responsibility. The majority of Russian manufactures prefers to work without a registered brand so far, the fact does not ensure the buyers trust growth.
In the bottom line we can say that Sudoverf DV, LLC has vast knowledge in this area and is committed to become a leading company in the industrial market in terms of fabrication and installation of various steel structures.

6. Our competitive advantages:
Successful experience in similar projects implementation;
High quality of the products issued;
Experience in cooperation with the Customers and Partners, including worldclass foreign companies: Aker Solutions/Kvaerner, ExxonMobil, MI-SWACO Drilling Fluids (Schlumberger);
Developed technological infrastructure, modern equipment, trained highly qualified personnel;
Quality Management System ISO 9001:2008 certified by Det Norske Veritas and CA Russian Register;
Unique logistics scheme of materials delivery and shipment of non-standard items;
Specialization extension for fabrication of steel structures and pipelines for Oil & Gas projects;
Geographical location, close to the target markets;
High level of HSES arrangement.

7. The Project implementation territory:
To implement this Project, Sudoverf DV, LLC is planning to lease a piece of land, belonging to Gelikon, LLC, as the owner. Gelikon, LLC is a founder of Sudoverf DV, LLC. The piece of land is 16 799 m², it is located at the following address: 3 Bosphor Street, Vladivostok, Primorsky krai.

8. Legal form of Sudoverf DV, LLC:
The founders of Sudoverf DV, LLC are two companies, i.e. Gelikon, LLC and Dalzavod, LLC. We would like to elaborate on the latter:
Dalzavod, LLC is a production company, specializing in oil & gas projects, shipbuilding and ship repair, which is the leader in these areas in the Russian Far East.
Dalzavod, LLC has vast experience in large-scale projects implementation with such Customers as Aker Solutions/Kvaerner, ExxonMobil, MI-SWACO Drilling Fluids (Schlumberger), Fluor Enterprises, Inc.
Dalzavod, LLC adheres to international standards of Quality Management System and possesses certificates of DNV-GL and AS Russian Register for conformance with ISO 9001 requirements, plus international HSES standards.
The main finished projects are:
Repair of the floating dock “Pallada” with the lifting capacity of 13,5 thousand tons;
Steel structures for the federal company “Rosatom”;
Fabrication of a series of the heavy-duty floating berths, the project #15163;
The length of the floating part (without landing bay) is 154,2 m;
Overall width: 14,3 m;
Light displacement of the berth: 1131,5 m.
5 floating docks PM61M1;

9. Legal form of Sudoverf DV, LLC:
Construction of the floating dock, consisting of six pontoons, lifting capacity t;
Fabrication of 19 horizontal steel tanks for American service company Fluor Daniel Eurasia, Inc., the prime customer was Exxon Neftegas, Ltd, within Sakhalin-1 Odoptu Stage 2 Project;
Fabrication of steel structures for the Liquid Mud Plant and the plant installation on turn-key basis in Kholmsk, within Sakhalin-2 Project, the Customer was MI Drilling Fluids (Moscow branch), the Owner of the Project was Sakhalin Energy Investment Company, LTD;
Participation in the construction of the Gravity Based Structure within Sakhalin-1 Arkutun Dagi Project, the customer was Aker Contracting Russia, the Owner of the GBS Project was Exxon Neftegas Limited
The total weight of the steel structures prefabricated: 2 313t;
The total weight of the steel structures installed on-site: t.
Fabrication of the steel structures for the ship repairing yard “Zvezda-DSME”.

10. Quality Management System:
Quality Management System of our Company will be in compliance with ISO 9001 and GOST RV
In future the following certificates will be obtained:
Quality Management System Certificate issued by “Det Norske Veritas”:
design, development, engineering, fabrication and commissioning of structural steel, pipelines, electrical and mechanical outfitting, containers, technological modules for onshore and offshore installations of oil and gas market;
Certificate issued by Certification Association “Russian Register”:
designing and construction of sea-going vessels;
refitting, modernization and repair of ships;
fabrication and repair of marine equipment, mechanisms, devices and items
of marine machinebuilding.
NONDESTRUCTIVE EVALUATION:
It is further planned to perform the following types of evaluation:
Ultrasonic testing (UT);
Radiographic testing (RT);
Magnetic testing (MT);
Visual testing (VT).

11. Financial and economic part:
When reaching the full operation capacity in the 1st quarter of 2020, the planned quantity of the steel structures prefabricated will be 6000 tons a year. After the workshops commissioning in 2019, the scheduled production ratio for the 1st year will be 50% of maximal capacity or 3000t a year.

12. The Project’s effectiveness analysis:
The Project’s Net Present Value (NPV)
RUB191 
Internal Rate of Return (IRR)
30,21 %
Pay-Back Period (PBP)
4,8 years
Based on the analysis it can be seen that the Project is financially effective with the payback period of 4,8 years.

13. Amount and investment procedure by years:
To implement this investment project it is necessary to draw the amount equal to RUB in accordance with the business plan. This amount covers construction of all infrastructure and purchase of equipment for effective work.
Investment table arranged by years
Period
Amount to be invested in RUB
Amount to be invested, percent
2017
30 %
2018
50 %
2019
20 %

14. Sudoverf DV, LLC as a resident of Free Port of Vladivostok:
Sudoverf DV, LLC is a resident of the Free Port of Vladivostok, and within this status it has the following preferences:
FINANCIAL PREFERENCES:
7,6 % Insurance premium rate during 10 years;
0 %Income tax during the first 5 years (onward 5 years 12 %)
0 % Property tax during 5 years (onward 5 years 0,5 %)
0 % Land tax for the first 5 years.
ADMINISTRATIVE PREFERENCES:
Permission for foreign workforce: the share is up to 20 % for all residents of the Free Port of Vladivostok. More than 20 % based on the decision made by the supervisory board – WITHOUT QUOTAS;
Reduced time for scheduled inspections – NOT MORE THAN 15 DAYS;
Reduced time for unscheduled inspections – NOT MORE THAN 15 DAYS.
CUSTOMS PREFERENCES:
FREE CUSTOMS ZONE is accessible for the residents of the Free Port of Vladivostok. This mode is competitive in comparison with similar forms of economic support in other countries. For example, the mode of free customs zone implies duty-free and tax-free import, storage and consumption of foreign goods.
SIMPLIFIED VISA SCHEMES:
The Free Port of Vladivostok stipulates the simplified entry procedure. Foreign citizens, arriving in RF through the border entry points located on the territory of the Free Port of Vladivostok, may stay up to 8 days without visa processing.

15. THANK YOU FOR YOUR ATTENTION
Contact person: Contact details:
Olga L. Kolobova Sudoverf DV, LLC.
General Director Dalzavodskaya Street
Vladivostok
Phone: +7(423)
Phone/fax: +7(423)