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Gazprom Going on with Comprehensive Efforts on Import Substitution by Russian Prototypes

Source: 9/28/2015, Location: Asia

The Gazprom Board of Directors took notice of the information about the ongoing minimization of dependence on the foreign equipment supply.

It was highlighted that the Company had been pursuing a comprehensive import substitution strategy for years. As a result, the share of home-produced equipment accounted for about 95 per cent in Gazprom Group’s procurement portfolio.

The Company approved a list of essential products that had to be substituted and produced domestically. Based on this list, the ways of launching competitive import substitution were studied, as well as the critical areas and reasonable timeframes for further minimization of import dependence were defined.

The import substitution objectives are achieved, for instance, by establishing technology partnerships with Russian producers of oil and gas equipment.

Thus, Gazprom has long-standing cooperation with machine building and pipe companies, aimed, inter alia, at mastering cutting-edge technologies and initiating production of domestic equipment not inferior to its foreign analogues for Gazprom’s needs. Among the Company’s partners are Cryogenmash, United Metallurgical Company, OMZ, REP Holding, Severstal, Pipe Metallurgical Company TMK and Chelyabinsk Pipe Rolling Plant.

The meeting pointed out that close interaction with Gazprom enabled Russian leading machine building and pipe companies to start the mass production of cutting-edge and unique pipes for gas trunklines, high-tech inspection, transmission and other types of home-produced equipment.

The Company is in close liaison with Russian region authorities; thus, Gazprom and 19 constituent entities are implementing roadmaps for a wider application of locally manufactured products and technologies, including the import substituting ones, at Gazprom’s facilities. After acceptance, these domestic technologies are permitted to be used by Gazprom and may be purchased via a tendering procedure.

The ‘New Technologies in Gas Industry’ Association of Equipment Manufacturers has been established and successfully coordinates activities of national enterprises. The list of imported products recommended for substitution by Russian manufacturers can be found on Gazprom’s official website.

In a while, Gazprom is going to try a new way of cooperation with potential manufacturers of import substitution products: long-term agreements will stipulate that Gazprom guarantees to buy a fixed amount of equipment to be produced, supplied and maintained by domestic manufacturers. Several pilot projects will test this new way of business relations.

Dealing with import substitution, Gazprom uses a comprehensive approach, which includes technical regulation, i.e. national and corporate standardization, compliance assessment and quality control. The Company has developed over a thousand of in-house standards, most of them are related to oil and gas equipment, and they contain even more stringent reliability and safety requirements than their national and international counterparts.

In addition, Gazprom and Russia’s Ministry of Industry and Trade signed the Import Substitution Program for industrial products needed by Gazprom, its subsidiaries and affiliates. According to the document, manufacturers may receive some state support, including subsidy assistance and favorable lending rates.

The Management Committee is tasked to annually submit a progress report on import substitution projects to the Board of Directors.

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