There is a review article about Russian engineering development published in Economics section at which makes reference to PETON as a company taking the lead in the engineering market of petroleum industry.


Western Companies Out of Game.

The sanctions promote industrial revival in Russia: PETON Ufa enterprise gets the upper hand.

Western sanctions imposed against Russia have brought a number of unintended consequences which become apparent over time and put pressure primarily on Western businesses. Restrictions on the use of technologies and funding played a cruel joke on the Western businesses. Russia has reached out to its tech businesses which turned out to be not in such a bad condition as they were considered to be. Here, PETON Technological Engineering Holding is a prime example.

Wind if Change

A number of hi-tech markets with high added value, according to experts, have been always occupied by the Western companies, and the gap in progression of Russian businesses was never believed to be closed. Whole industries lacking State support were forced to adjust to the Western global playing field. Needless to say that any expansion to closed markets is performed through the officials of a certain country, Russia is not an exception. Part of the State apparatus gave support to some Western players who in the ‘90th wanted to gain a foothold in Russia and, apparently, that support was not without consideration.

Suffice it to mention the aircraft industry with a score of enterprises and design offices found themselves on the verge of extinction. Power engineering turned out to be almost ruined, such significant activities as IT and pharmacology were deliberately thrown back. Due to the unique Russian resource base the oil & gas equipment and technologies market happened to be one of the most attractive for almost every big foreign company to get to.

Decades later Russia having taken an advantage of fundamental changes in the world political system, chose to get the HVA product markets back with the systemic support of local manufacturers and what we see is the Western businesses’ resistance and their flat unwillingness to lose this share of the market as well as to allow any business rivals to get there. Even after considerable price declines for hydrocarbons and introduction of sanctions none of the oil and gas companies has left Russia, not to mention service and engineering giants which make the use of all their lobbying resources available to stand their ground including doubtful competitive fighting methods.

Upstream Economy

A course for import substitution has been set even before the sanctions were introduced on the understanding of purposes and objectives of national development. The sanctions just showed that the process initiated on industrial renewal and the trend to strengthening technological self-sufficiency was correct. A number of officials and managers one way or another have become the influence agents of the global Western companies. As for now, any problems of foreign companies have remain their own problems which should be handled delicately since it is necessary to go against the tide. This is where the well-known media propaganda techniques are used in.

A recent example is the last month unease at the contractors of Gazprom, one of the largest oil producers which holds a monopoly on a natural gas pipeline export to third countries. The company, most likely, have revised the risks associated with engagement of foreign engineering companies and chosen to diversify a pool of contractors in favour of local companies. As a result, imported equipment and services which Gazprom acquired last year accounted for around 5% having dropped to its historic lows.

During the same period large contracts for services in the engineering field were allocated between the Russian companies which promote their own competencies in engineering of oil and gas companies, having their own storage and supply facilities, skilled staff and technologies rivalling to the world analogues.

On Trends

This refers to some large-scale projects in gas processing and gas chemistry fields which are capable of changing the power dynamics in the Russian and international fuel and energy industry. The intention would be to set out a strategy of focusing on the upstream economy which unlike gas exports would be able to create within Russia a new technological capacity reserve, high-skilled jobs and above all to retain billions of dollars that just ended up in foreign businesses before.

Specialists of PETON Ufa company, for instance, are engaged in a construction project of Amur Gas Processing Plant (GPP) which is one of the major construction sites in Russia. The Amur GPP will play a key role in development of petroleum industry in Russia over the coming years. The matter is that gas transported to China through the Power of Siberia is to be processed at just these facilities. 38 billion cubic meters of Russian gas is to be supplied annually over this gas trunkline. The first supplies of raw materials are to begin in the coming years. The project is delivered as part of import substitution programme.

Petroleum engineering trends to engage Russian companies in customizing of global technologies, equipment locating and project managing by local contractors. This is how the large construction project of Achimov deposits condensate stabilization unit located in Nadym-Pur-Taz region of Yamal is being delivered: not only building and installation works but also hardware supply are expected to be Russian-manufactured. Russian contractors to be officially engaged in the import substitution programme along the entire production chain cannot be completely to the liking of those who offered the foreign equipment and services to deliver such projects.

Russian companies are already deeply integrated into such projects as: construction of the Urengoy Condensate Pre-transportation Preparation Plant (ZPKT), Power of Siberia Gas trunkline, renovation of the Astrakhan GPP, Orenburg GPP, Omsk Refinery and a number of other facilities of the fuel and energy industry.

Growth Pointing to Fuel & Energy Industry

In order to appreciate the scope of changes which is taking place in the Russian fuel and energy industry it must be said that some 1.5 trillion roubles is annually invested in this industry. This comes to some 2 percent of the national GDP. In the Western countries this figure as a percentage to GDP may be as high as 20 percent. When scaled to the advanced country levels it would be possible for Russia to arrive to 15 trillion of annual investments. It will be a science-intensive and advanced driver of the future national growth. The import substitution programme for the Russian market in this respect is an opportunity that must be exploited to make the service encourage the Russian science advancement, production and technological development.

LNG marketing infrastructure with its outlets to the Black and Baltic seas is of particular importance for Gazprom. These are the plants and port infrastructures which will enable sales of gas to be diversified through the piping network and the country to become a global player in the world gas market. From here on the rivalry is brought to the political level. If Russia is able to develop LNG infrastructure domestically by involving local contractors, then any sanctions and trade wars under political pressure will prove ineffective.

Hereafter the local contractors assigned by Gazprom become to be of paramount concern. The charges relate to contracts that they allegedly win without tendering. Yet no one for some reason ever said that nevertheless competitive tendering is always held and Gazprom imposes full scope of qualifying requirements to the companies. As for non-admission of foreign contractors to some contracts, all technologically advanced countries including the USA and EU countries extend preferences over their local technology developers and producers of services in strategic areas. This is to ensure protection of national interests.

Eventually we have to deal with a textbook case of external influence on the Russian market for services in fuel and energy industry which Russia has chosen to retain, and even not so much to have a room for maneuver in case of further sanctions as rather to create another growth point in the Russian area of high technology.

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