Demarche Siemens: what threatens the suspension of cooperation energy

“Drastic measures”

German Siemens said July 21 that it will take “decisive action” and suspended cooperation with the Russian state-owned companies after the scandal with the supply of turbines of its production in the Crimea. The company has received “credible information” that all four gas turbines, which were delivered in the summer of 2016 “Technopromexport” (“daughter” of “Rostec”, is building two power plants in the Crimea) in Krasnodar Krai were “locally modified and illegally moved” to the Peninsula. “This action represents a grave violation of supply contracts to Siemens, it undermined the trust and broke the rules of the EU (sanctions prohibiting the supply of equipment to the Crimea)”, — said the press service of the company.

TurboChannel: how Siemens got into the story with power plants in Crimea


Now Siemens has decided to sell 45.7% of the contractor “Interavtomatika”, which, according to Reuters, involved in the startup of turbines in the Crimea (another co-owner — “the company”) and will withdraw its representatives from the Supervisory Board of the company. Siemens also “launched the process of breaking” the license agreements with Russian companies as Siemens representative said.

Also, the German company has suspended the supply of equipment to Russian state-owned companies. Deliveries will resume after Siemens will develop additional control measures for the supply and installation of equipment specified in the contract. To deliver and install the equipment will now only employees of Siemens, and the new contracts will be able to conclude only “Siemens gas turbine Technology” (65% and Siemens 35% in “Power machines”) and a wholly-owned subsidiary of the group — OOO “Siemens”.

Siemens also suggested that “Tehnopromeksport” sell it back delivered to the Crimea turbines, the company said. The representative of “Rostec” not answered the questions of the RBC, is the company ready to take this step and whether “Tehnopromeksport” to buy a share of Siemens in the “Interavtomatika”. To sell, probably already too late, said a person close to one of the participants of the project. If Siemens really wanted to prevent a delivery to the Crimea and to buy out turbine, there could do it in the fall of 2016, when there was a real opportunity, he said. But then the parties have not agreed on price: Siemens wanted to buy turbines cheaper contract, says another source RBC, close to Siemens. Representative of Siemens does not comment on it.

The contractor will untie the hands

If the German company will be released from the shareholders “Interavtomatika”, the company will get freedom of action: will be able to run the turbines in the Crimea and at the same time not to expose Siemens under attack, said a source close to the “Interavtomatika”. The turbines can be run via controllers — automatic control systems, through which, in particular, regulates the volume of gas supply, says the interlocutor of RBC. However, having sold the share in “Interavtomatika”, Siemens may close the access controllers. Then the Russian experts can write your own software to control the turbines, such cases have already been, according to the source, it may take several months.

Usually, if we set the warranty the Siemens equipment, installation supervision and come to the German experts, but they are only in control of the process: 80% of the work performed by Russians, said a top Manager of a large company. After the exit of Siemens from “Interavtomatika” “Tekhnopromexport” save on run: “to write” foreign “sponsors” is worth several million euros, said a top Manager of another company. The representative of “Interavtomatika” did not respond to a request RBC.

The production of gas turbines Siemens

(Photo: Krisztian Bocsi / Bloomberg)

What Russian companies, Siemens intends to terminate the license agreement, the representative of the group says. We can talk about some ancillary equipment, the main turbine — Siemens produces only the joint venture “Power machines” “Siemens gas turbine Technology”, recalls the Director of the energy development Fund Sergey Pikin. If the auxiliary equipment is produced in Russia, Siemens will still have to put it, but from abroad: the termination of the supply of wind turbines of the question, says Pikin. This will lead to higher prices for supplies of Siemens, that the company will lose to other manufacturers, he said. “Direct analogues of the Siemens turbines are manufactured in Italy by Ansaldo, in Iran for MAPNA plant, turbines of the same class have the American GE and Japanese Mitsubishi” — said to “Interfax” the Chairman of the Board of Directors of the company “Rotek” (enters into group “Renova” Viktor Vekselberg, has been manufacturing electric power equipment) Mikhail Lifshitz.

Do it without Siemens

Siemens decision to freeze the delivery of equipment to state-owned companies does not affect their work, according to the Pikin. Power plant in Russia built under the contracts for supply of power (PDM, guarantee return on investment with a yield of about 14% due to increased payments of industrial consumers), but the PDM program is almost completed, he recalls. According to NP “market Council” in the framework of this programme need to complete the units at 11 power plants, among them objects of state-owned companies RusHydro, Rosenergoatom, “Gazprom energoholding and inter RAO”. But, for example, RusHydro is building a hydroelectric power station on the equipment “Power machines”, reminds pikine. Besides, this company has four new projects in the far East, but there the Siemens turbines are used, says a company representative. “Inter RAO” completes unit at Perm GRES with Siemens equipment, but the turbine was taken there a few years ago. And “Rosenergoatom” does not uses the equipment of the German company, told RBC representative of the holding. “Gazprom energy” discusses construction of a thermal power plant in Grozny, however, a company representative declined to specify which turbines will be used for this project. With high probability it will be machine GE or Mitsubishi, told RBC a source close to the government.

New megascreen in Russia yet, says Pikin. From time to time discussed plans to build a new power plant in the far East, but there are easier and cheaper from the point of view of logistics and maintenance to use Chinese equipment, the expert explains.

No catastrophic consequences for the Russian energy sector from the “decisive action” Siemens will not accept Lifshitz. The government, having decided on the supply of turbines in the Crimea, was ready for the worst eventuality: wrong option when Siemens withdrew completely from the country, says the interlocutor of RBC, close to the office.

The market at $24 billion

While major construction projects in Russia do not, but discussed an ambitious program of modernization, the analyst of Renaissance Capital Vladimir Sklyar. The idea is this: the power company almost completed construction of expensive PDM objects, the increased the payment for which is valid for ten years after entering, but it can not reduce, but at the expense of the money to upgrade all units over 50 years, says the analyst. The energy Ministry plans to adopt normative-legal acts of modernization in 2017, said Minister of energy Alexander Novak (quoted by “Interfax”).

According to Renaissance Capital, modernization can begin in 2019-2020 and affect about 45 GW of power. The cost of this program is $24 billion, with 60% of this amount will have on the equipment, indicates Sklar. Russia could be a massive market for Siemens, while the world enter the power capacity, fossil fuel is shrinking, says analyst. In these circumstances the German company unlikely to sell its stake in the joint venture “Power machines”, he suggests. Representative Siemens has not commented on further steps in the Russian market.