E.On Starts Building Mega Plant

SURGUT, Khanty-Mansiisk Autonomous District — Germany's E.On began building two 400-megawatt turbines at a power station in the country's oil heartland, which when completed would make it the largest station in the world, the utility said Thursday.

The construction is part of a 76 billion ruble ($3.29 billion) investment program that E.On plans to carry out at newly acquired power generator OGK-4, by the end of 2011.

Construction of the two combined cycle gas turbines will cost 19 billion rubles ($821.8 million) and is being carried out by General Electric in partnership with Turkish engineering firm Gama. When the two turbines are finished, Surgut Power Station No. 2 will have a total capacity of 5.6 gigawatts, OGK-4 said.

The power station is located in the oil-rich region of Khanty-Mansiisk, and the city of Surgut is home to Surgutneftegaz, the country's fourth-largest oil company.

"This is a vital place to build new capacity," said Andrei Kitashyov, OGK-4's general director.

Unlike its main competitors in the Russian electricity sector, E.On is not seeking to vertically integrate electricity generation, supply and grid assets, focusing instead on power production.

Kitashyov said OGK-4 had secured long-term gas supply contracts to fuel the new turbines, including from Gazprom and independent suppliers Novatek and Surgutneftegaz.