| OMK abandoned plans to produce “Russian size” pipes Rumors about the freezing of the Alliance-1420 project have been confirmed. United Metallurgical Company (OMK) has officially announced that it is suspending participation in a joint project with Severstal. Alliance 1420, which cost between $220 million and $300 million, launched in June last year. His main goal was to create a production of large-diameter pipes (1420 mm) in Russia. It was assumed that the main consumer of these products would be Gazprom, whose needs for so-called “Russian size” pipes were then estimated at 600-800 thousand tons per year.
According to OMK General Director Igor Yaroslavtsev, the refusal to continue the project was caused by two reasons. Firstly, it turned out that Gazprom’s real needs for such pipes are much lower (200-250 thousand tons per year). Moreover, this entire volume is covered by supplies from Germany and Ukraine. Secondly, the recent abolition of special duties on Ukrainian pipes has opened up, according to Mr. Yaroslavtsev, “additional opportunities for importing their pipes at low prices” for manufacturers from the neighboring country.
In addition, negotiations between OMK and Gazprom were unsuccessful: representatives of the concern refused to provide information about the real need for pipes. “We agreed with Gazprom on all the technical details of pipe production, but we were unable to move forward,” said Svetlana Vidgof, head of the OMK press service.
Gazprom officially refused to comment on the situation with the cessation of the activities of Alliance-1420. According to a high-ranking source in the concern for the Vremya Novostei newspaper, Gazprom’s policy is simple: “We purchase exactly as many pipes as needed. Therefore, it is incorrect to say that we have anything to do with the suspension of Alliance-1420. It was their decision."
According to independent analysts, in addition to the above reasons for the termination of the activities of Alliance-1420, there could have been at least one more. “OMK invested part of the capacity of its Vyksa Metallurgical and Chelyabinsk Pipe Rolling Plants (ChTPZ) into the project. But in October, ChelPipe left OMK, and this could have caused certain difficulties in implementing the project,” said Alexander Agibalov, vice-president of Aton Investment Company.
However, official representatives of ChelPipe did not confirm this information. According to Sergei Moiseev, adviser to the general director of the plant, “the company continues to participate in the project.”
It is unknown how long Alliance-1420 will officially exist, but Severstal has already announced that it will look for new partners for the project. Representatives of their main competitor, Evrazholding, which is building a large-diameter pipe plant in Nizhny Tagil, reacted with sympathy to the suspension of Alliance-1420. “We can only express regret that there is one less investment project in Russia,” emphasized the head of the holding’s press service, Alexander Karlashov. Dmitry PONOMAREV |
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