OMK’s LDP production complex voted Russia’s best import replacement project of 2015

United Metallurgical Company (OMK Joint Stock Company, based in Moscow) has won the “Leaders of Russian Business: Dynamics and Responsibility” in the 2015 All-Russian competition in the “Best Import Replacement Project” category.

The competition was organized by the Russian Union of Industrialists and Entrepreneurs (RSPP). Vladimir Markin, Deputy Chairman of the Board at OMK, received an honorary award and a certificate from Alexander Shokhin, President of RSPP. The award was presented during the Union’s congress, which took place in Moscow, on March 24, 2016, as part of the 2016 Russian Business Week. Russian President Vladimir Putin and members of the government delivered speeches at the event.

RSPP’s honorary award marked the results of OMK’s 15-year long effort to implement a large-scale industrial import replacement project. Owing to the company, central Russia today boasts Vyksa Steel Works (VSW Joint Stock Company, based in the Nizhny Novgorod region, part of OMK), one of the world’s most state-of-the-art large diameter pipe facilities, capable of producing items of any level of complexity. OMK has invested over 125 billion rubles into projects aimed at developing the production of steel, rolled stock, and pipes, which provide jobs for 15,000 employees.

“OMK’s project is one of the earliest and most successful examples of import replacement initiated by a private business and supported by consumers. Creating a globally unique production facility has to a large extent allowed our county in the past ten years to switch from exporting hydrocarbons along the “gas in exchange of pipes” principle used in 1970s and 1980s to fully supporting the operation of the Russian oil and gas complex with domestically manufactured pipes for all service conditions. We are grateful to our consumers, Gazprom, Transneft, and other companies, for whom we developed this project. It would also be impossible to have implemented it without the honest and painstaking work of OMK’s staff,” said Vladimir Markin, Deputy Chairman of the Board of United Metallurgical Company.

REFERENCE

In 2005, OMK was the first in the country to launch production facilities for making pipes for main pipelines with diameters of up to 1420 mm and up to 48 mm thick walls; this was achieved through Vyksa Steel Works. Such pipes used to be exclusively imported. In 2009, the factory’s LDP facilities were expanded.

To be independent of steel pipe sheets deliveries, including imports, OMK used VSW’s site in 2011 to build Thick Plate Mill 5000. A long-term agreement with NLMK was signed to ensure supplies of steel billets.

Additionally, starting in 2015, domestically manufactured materials have been used to apply anti-corrosion polyethylene coating for LDPs. Today, Vyksa Steel Works manufactures an overwhelming majority of pipes for the largest oil and gas transport projects using exclusively Russian materials, from “ore to pipe.” The share of VSW LDP amounted to 32% on the Russian market in 2014. Another promising import replacement project is setting up the production of special purpose ball valves. OMK plans to fully localize the production of ball valves in Russia by the end of 2021, which Gazpom currently imports.

OMK is actively progressing with import replacement in its factory procurements. In particular, in 2015, Vyksa Steel Works stepped up the procurement of materials and parts from Russian suppliers by 40%, or 2 billion rubles, and is set to continue along this path.

The size of the domestic pipe maker reached 10.8 million tons in 2015, including 3.3 million tons of LDPs. According to the Foundation for Development of the Tube Industry, 365,000 tons of pipes were imported into Russia in 2015, including 29,000 tons of LDPs, or just 0.9% of the consumed amount. Chinese made OCTG seamless pipes accounted for a major part of the import, while an anti-dumping duty has been introduced as a protective measure.