Kazan motor builders gain Power of Siberia
Kazan Motor-Building Production Association (KMPO) in alliance with St. Petersburg won tenders for the development of one of the largest fields in Russia for the production of oil, gas and gas condensate
As it became known to Realnoe Vremya, the Kazan producer, KMPO JSC, has firmly established itself as the main supplier of Russian oil and gas companies that produce in the most distant fields of the country. Next year, KMPO will complete the execution of the first contract for the supply of several gas pumping units (GPU) Volga for the subsidiary Gazpromneft-Zapolyarye worth 2,2 billion rubles. NK-16-18-ST ground-based gas turbine engines of average power, as shown by the tenders of the fuel and energy complex, still remain the first choice equipment for gas producers. However, KMPO does not disclose who became the supplier partner of the compressor under the terms of the contract, but analysts believe that it may be REP Holding JSC (part of Gazprom Energoholding) from St. Petersburg, with which several contracts were previously executed for about 10 billion rubles.
Volga GPU will be supplied to Yakutia
KMPO has signed a contract in principle for the supply of the first GPU for the Chayandinsky oil and gas condensate field — the largest in the East of Russia, it is being developed by Gazpromneft-Zapolyarye in Yakutia. It is believed that it will become a resource base for the Power of Siberia gas pipeline. By the size of reserves (B1+B2), Chayandinskoye is classified as unique — about 1,2 trillion cubic metres of gas and about 61,6 million tonnes of oil and condensate. Besides, a new Russian gas production centre is being opened here.
On the territory of the Chayandinskoye field, discovered in 1983, the infrastructure is currently being developed. In this regard, KMPO participated in the tender for the supply of GPU for gas transportation and won. The deal between KMPO JSC and Gazpromneft-Zapolyarye worth 2,199 billion rubles was approved by the board of directors of the Kazan enterprise, and soon a contract was signed.
“Under the terms of the contract, KMPO will perform the installation and commissioning works," Damir Karimullin explained.
He did not name the exact number of gas pumping units supplied to the Arctic, however, according to analysts, we can talk about at least four GPUs.
“To date, the shipment of equipment is underway. The end of the delivery period is the second quarter of 2021," the head of KMPO said.
Since the beginning of the year, the Kazan enterprise has shipped 16 sets of Volga GPUs, which will allow it to reach the planned target in terms of sales at the level of 11,5 billion rubles, Karimullin added.
Earning contracts from Gazprom's subsidiaries
It should be noted that KMPO began to win tenders for the development of hard-to-reach eastern fields in 2015. As a rule, they are developed by project JVs between Gazprom subsidiaries and independent oil companies. KMPO for the first time won such competition from Northgaz CJSC (NOVATEK and Gazprom JV), concluding a contract for 2,2 billion rubles. Then we were talking about the supply of three GPUs based on NK-16ST engines with general station equipment. They are operated at the Severo-Urengoy gas condensate field.
Following this, KMPO signed a contract with Arktikgaz (joint venture between Gazprom and NOVATEK) worth 4,5 billion rubles. Two years ago, the Kazan enterprise shipped four complete gas pumping units based on NK-16ST engines and general station equipment for the second stage of the Yaro-Yakhinsky oil and gas condensate field, as well as performed the installation and commissioning works.
Most of the contracts won by KMPO relate to new fields in the farthest points of the country, whose development fell during the period of US sanctions against the Russian fuel and energy sector. Did the sanctions affect the increase in oil companies' interest in Russian equipment?
“Yes, they did, and it should be noted that Russia has long been under the influence of sanctions," said Director General of KMPO Damir Karimullin. “The restrictions affected the cooperation of Russian companies with foreign ones. Oil and gas companies purchase Russian equipment as part of the import substitution programme. The price of Russian equipment is usually less than its foreign counterparts, and it is easier to maintain it.”
Since the start of the serial production, KMPO has supplied 181 GPUs for 48 compressor stations. For 11 months of 2020, the plant produced 9 new engines and 93 repair ones for customers.
Smoothing out failures
As a result, it turns out that KMPO works more under contracts of Russian oil companies than of Gazprom. Novatek, Gazpromneft, and Rosneft are engaged not only in oil production but also in gas production. And they need BCS (booster compressor stations), for which the equipment produced by KMPO is intended," Damir Karimullin explained to Realnoe Vremya.
Thus, according to the company, Volga gas pumping units with a capacity of 16 MW (Volga GPU-16) were put into commercial operation at the Booster Compressor Station, which is located at the construction site “Arrangement of the Yaro-Yakhinsky oil and gas condensate field”.
These contracts with independent oil and gas companies helped at that time to compensate KMPO for a temporary decline in orders from gas monopolists. “At the time, when there was a sharp decline in orders from Gazprom, we strengthened our work with oil and gas companies that are not part of Gazprom's structure. Thus, we could compensate for the decrease in order volumes. Today, we have an almost equal ratio of orders from Gazprom and other companies. For us, each customer is very important," the head of the Kazan enterprise said.
He added that cooperation with the production divisions of Gazprom PJSC, of course, continues but did not disclose details: “Unfortunately, we can not announce the terms and subject of contracts, all information is confidential.”
They repair more than they buy new ones
However, the largest contract this year was signed by KMPO with Gazprom Invest. In June of this year, the company's board of directors approved this transaction worth 8,79 billion rubles for the repair of gas pumping equipment. The contract is valid until December 2022. How many units of equipment will be repaired, again, is not disclosed: “Under the terms of the contract, all information is confidential, and KMPO cannot disclose it," Karimullin said.
“NK-16-18-ST ground-based gas turbine engines of medium-capacity are still the first choice equipment for gas companies, as they are equipped with a third of Gazprom's GPU structures," Dmitry Kumanovsky, the head of the analytical department of Investment Company LMS CJSC, explained the demand for Kazan gas pumping equipment.
According to Gazprom itself, at the beginning of 2016, 4,559 GPUs with a total capacity of more than 50 million kW were operated, and the main part of the gas pumping equipment is concentrated in linear compressor stations. The basis of the GPU fleet of Gazprom PJSC is made up of units with a nominal capacity of 10 MW (1,235 units) and 16 MW (1,358 units) — 57%.
In tandem with REP Holding JSC
However, KMPO cannot ship GPUs without a supplier partner of the compressor unit. However, KMPO does not disclose who became the supplier partner of the compressor under the terms of the contract, but analysts believe that it may be REP Holding JSC (part of Gazprom Energoholding) from St. Petersburg, with which several contracts were previously executed for about 10 billion rubles.
“Approximately 60% is accounted for by the gas turbine unit, and the rest — the compressor unit," said the expert. “Therefore, for many years, GPUs were not localised in Russia, but were purchased in the West, until there was a threat of sanctions. But after a while, gas companies will face that the production of these engines can be stopped.
Therefore, it is possible that Gazprom energoholding will also look closely at KMPO products, he believes. Meanwhile, the management of the Kazan enterprise assesses the competition in the GPU market as “incredibly high”.
“Despite the complexity of the products and the complexity of the production process, competition in the production of gas turbine engines and equipment for the gas and energy market is incredibly high. The main market players, in addition to KMPO JSC, are enterprises belonging to state corporations, such as United Engine Corporation JSC," says Damir Karimullin. “At the same time, competitive advantages are obtained by manufacturers who produce reliable products with an attractive price that meet the customer's requirements. The supplier is always selected based on the results of the competition. Besides, it should be noted that more and more operators in the oil and gas market, in order to optimise costs and minimise risks, prefer to conclude contracts for the supply of turnkey equipment with one supplier who performs a full cycle of work: design, manufacture and supply of equipment, as well as supervision and commissioning.
Power of Siberia needs more power
Analysts believe that those who get into major projects of Gazprom have a great prospect.
“Long-term projects, such as Power of Siberia and TurkStream, will be enetred by those who are ready to master turbines of greater capacity — from 31 to 40 MW," says Dmitry Kumanovsky. “REP Holding has a GPU with a capacity of more than 25MW. And now, within the framework of import substitution, the units from 32 to 40 MW are becoming more and more in demand. But the UEC does not produce them. And it turns out that REP Holding is the only one that can perform this task for Gazprom.
Gazprom has repeatedly announced that it is going to build the second Power of Siberia-2 project. Plans were announced to pull the gas pipeline to India, the source reminds the publication. Based on this, there is a large market for this equipment, which will be in demand in the next decade.
“But whether KMPO is ready to master the GPU of greater capacity is a question. On the other hand, it is clear that in order to enter large projects, they will have to do this and invest. It is necessary," the expert concluded.