Litigation Proceedings

RNS Number:9122M
Kvaerner PLC
9 November 2001


Kvaerner involved in litigation over project disputes
LONDON, 9 NOVEMBER 2001: Kvaerner, the international engineering and
construction Group, today said that it is involved in litigation proceedings
on two project disputes within its E&C business area.

The first project is for the engineering and construction management of a
steel plant for IPSCO Steel in Alabama, USA.   The project was completed in
April 2001 and the plant is producing as expected.  Kvaerner initiated
litigation proceedings to recover US$14 million in bonuses for cost under-runs
within Kvaerner's scope of supply.  However, the customer has lodged a claim
for payment of up to US$66 million from Kvaerner for alleged cost-overruns on
the project.  These costs were incurred as a result of default by a
subcontractor engaged on the project, together with the repair of deficiencies
in the process equipment purchased directly by the customer from a vendor. 

The customer claims that Kvaerner should pay these excess costs, whilst the
customer seeks reimbursement from the subcontractor and vendor involved, as
well as the project specific insurance policy on which claim has been made. 
Kvaerner denies any responsibility for these extra costs.

The second project is for the engineering, procurement and construction of a
copper mine in Nevada, USA, for Equatorial Tonopah, Inc.  In the ongoing
arbitration, Kvaerner has increased its claim against the customer to over
US$13 million for outstanding contract payments and a recent draw on a letter
of credit of US$4.3 million.  As previously advised, the customer has filed a
litigation claiming US$145 million in damages, alleging that the recoveries of
copper from the mine ore are lower than expected.   The Group maintains that
the customer's claim is without merit as Kvaerner did not assume, but
specifically disclaimed, any responsibility for anticipated recoveries.  
Hearings on both claims are not expected until late 2002 at the earliest.  


For further information:
Paul Emberley, Vice President, Group Communications, [phone] or 
[phone] [e-mail] .

Note to editors:  Kvaerner is a world-class international engineering and
construction group. The Group's activities are organised in two core business
areas: E&C (engineering and construction), and Oil & Gas.  It also has
interests in shipbuilding and the provision of services to the pulping
industry.  The Group has annual revenues of more than US$6 billion, with some
35,000 permanent staff located in almost 35 countries throughout Europe,
Africa, Asia and the Americas.