Russia to Provide $490mn to Support Local Content

Russia plans to provide more than rubles 30bn ($490mn) in subsidies and other forms of state support by 2024 for the development of domestic oil and gas equipment manufacturing, industry minister Denis Manturov said on January 10.

The government embarked on an import substitution drive in 2014, after US and EU sanctions were imposed preventing Western companies from supplying technology and equipment to deepwater, offshore Arctic and shale oil and gas projects.

As a result of these efforts, the Russian oil and gas industry lowered its dependence on imported equipment from 60% in 2014 to 45% last year, and a further decrease to 43% is expected in 2020, Manturov told the energy ministry’s Energy Policy magazine.

He noted that the industry ministry and state-owned Gazprom had received rubles 3.5bn to date for joint development of offshore production equipment. Russia will need to localise the manufacturing of 300 components of subsea systems by 2035 to meet the needs of Gazprom, Lukoil and Rosneft, he said.

The three companies have also reached a preliminary deal to work together to develop technology and equipment for LNG production, which is currently 50% reliant on imports.

“The agreement envisages supplies of Russia-made equipment, created under a new research support programme, which will be implemented from 2020,” Manturov said.

However, Novatek is already working with the state nuclear energy company on liquefaction equipment using Russian technology. The first such train at Yamal LNG, at 900 metric tons/yr, was due to start late last year. The two are working on a bigger train for other projects, including Ob LNG.