ban was placed on the supply of high-
tech equipment for oil extraction in the
Arctic, on the deep-marine shelf and the
extraction of shale gas. Debt financing of
Rosneft, Transneft and Gazpromneft has
also been prohibited.
The Russian trunk pipeline system for
oil and petroleum products transmission
highly depends on foreign supplies of
certain types of equipment (pumps,
metering devices for measuring quantity
and quality of oil and petroleum products,
chemicals for improvement of maximum
pipeline capacity and anti-corrosion coatings). For instance,
96% of all trunk and booster pumps have been imported. This
equipment is of considerable significance for the system of
oil-trunk pipelines and petroleum products pipelines. Thus, the
efforts of the Russian energy transporters are aimed at reducing
this dependence.
Transneft has prepared a programme for foreign production
localisation in the Russian Federation and is now implementing
it. The programme aims to set up companies with full
localisation of production cycles of equipment and materials to
reduce the dependence on foreign components and materials
by attracting alternative manufacturers, particularly, those from
the Asian-Pacific countries.
Implementation of this programme will provide the
necessary level of technological security for trunk transmission
system of oil and petroleum products in Russia. By 2020 the
localisation programme is supposed to reduce the share of
imports being used by Transneft down to 3%.
8
An ongoing battle
It is important to emphasise that Russia did not just start
dealing with the import substitution issue today (this idea is
best exemplified by the production of large diameter pipes
that was previously described). For instance, Transneft has
already been implementing the policy of substitution of
imports for domestic products for 10 years. The share of
imports in the structure of the company’s procurement is now
10% of the total volume. Moreover, import substitution has
allowed Russians to eliminate the procurement of pipes, metal
structures, tank equipment, isolation valves and control valves,
cable and wiring products, motor controllers, transformer
substations and equipment for firefighting systems.
It seems that the import substitution problem concerning
manufacturing of equipment for the pipeline transport will
be solved in the foreseeable future, even if the economic
situation does not ensure a reasonable balance of Russia’s own
production and international co-operation.
However, improvement of capacity of the pipeline system
and its modernisation are not only connected with import
substitution. A number of negative factors also affect the
upgrading. Some of these factors are the shortcomings of
the legislative base that regulates enterprises that transport
energy carriers. The status of oil and gas trunk pipelines has not
been fixed legally yet. The State Duma has been considering
the federal bill ‘On Trunk Pipeline Transport’ since 2006.
The legislative regulation of trunk pipeline transport is well
developed abroad. Certain laws have been
adopted in the USA, Germany, France,
Austria, England and many other countries.
This situation leads to loss of time
and financial resources when land is being
allocated (including taking land from
citizens) for the construction of new
pipelines or overhaul and modernisation of
the existing ones. It also results in the fact
that illegal tie-ins to the trunk pipelines
are virtually unpunishable. It was only in
2014 when the federal law of 12 March
2014, 31-FZ, ‘About Amendments on Code
of Administrative Violations of the Russian Federation to ensure
the security of trunk pipelines’ was adopted. According to this
law, prohibited actions within protected zones of trunk pipelines
or reconstruction work without the permission or notice of
pipeline transport enterprises will result in a fine (for legal
entities – a fine or administrative suspension of activity for up
to 90 days).
Thus, both external and internal factors are negatively
impacting the pipeline industry. The sanctions are causing damage
not only to Russian enterprises that extract and transport gas and
oil, but also to the industrial equipment suppliers from Germany,
Great Britain, France and a number of other countries. However,
these sanctions are connected with political reasoning of the
ruling elites of these countries. Meanwhile, red tape of Russian
lawmakers that accompanies adopting of the necessary laws is
difficult to explain with common sense. After all, acceleration
of licensing procedures is a direct path to solution of the
strategic development problems of the pipeline industry and the
processing plants connected with it.
It is important to add that the legislative base that
stimulates import substitution includes a number of preferences
for the processing industry, including concessional lending and
state guarantees on loans.
However, the lack of proper legal status of the industry
that is most crucial for the country’s export potential, takes
place in Russia. Firstly, this absurdity does not allow Russians
to develop targeted preferential mechanisms for the industry,
which loses this industry’s necessities among those of many
others. Secondly, it extends the production cycle of the new
pipelines’ design and construction, which undoubtedly affects
investment attractiveness of the hydrocarbons’ transport
infrastructure.
Abolition of anti-Russian sanctions does not depend on
Russian lawmakers. Meanwhile, improvement of the legislative
base that ensures proper operation of the pipeline transport is a
way to overcome the consequences of these sanctions, increase
the efficiency of the industry and tighten the economic security
of the country in general.
References
1.
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8.
Table 5. Complete overhaul of trunk gas
pipelines in the Russian Federation (km)
Year Total length Repair of insulation
coatings
2009 2384
1921
2010 2427
1820
2011 2437
1806
2012 2487
1840
2013 1818
1258
Source:
production/transportation/reliability/
24
World Pipelines
/
MARCH 2016
