Russian Fuel and Energy Complex Decreases its Dependence on Imports Rather Actively

18 april 2018 | Rossiyskaya Gazeta

Energy companies substitute imports unevenly, but quickly, writes Rossiyskaya Gazeta referring to Mr. Oleg Kolobov, expert of the Analytical Center. Since 2014, the industry's dependence on imports decreased from 60 to 52%, but sectors show different trends caused by different conditions - the share of foreign equipment, development level of domestic competencies, financial capabilities of companies, etc.

Oleg Kolobov
Oleg Kolobov
Department for Fuel and Energy Sector

Among successful areas, Mr. Kolobov mentioned decreased dependence on imported catalysts in oil refining, where the share of imports dropped from 62% in 2014 to 39% in 2016. In the same year, almost 100% import substitution was achieved for large diameter pipes for the oil and gas industry.

"On the contrary, significant dependence is observed in the liquefied natural gas (LNG) production technology: in 2014, the share of imports was from 50 to 100% and for exploration, drilling, mining and processing software - 95-100%. Another problem area is the production of heavy-duty gas turbines," said the expert.

There are some problems that complicate reducing the dependence of the fuel and energy complex on imports. Mr. Kolobov thinks that one of them is limited capabilities of the state to provide financial support to companies and their limited access to "long" money. Another serious problem is an asymmetry of information that prevents from efficient interaction among energy companies, scientists and industrial facilities that may duplicate their efforts and costs.

Back in 2016, the survey of the Analytical Center showed that a considerable import substitution potential existing in their industry was mentioned by 68% of companies representing the key segments of the energy equipment market. "They want to produce competitive products, first of all, for the domestic market, the capacity of which may enable them to reach industrial production scales. In power engineering, this may be supported by the large-scale program of the Ministry of Energy to upgrade the electric power industry until 2030, in particular, through inclusion of localization requirements in project selection conditions," said Mr. Kolobov.

Science plays a key role in creating new technologies, believes Mr. Kolobov. "Copying imported equipment and technologies or localizing them will not solve the problem relating to technological inferiority of Russia," he thinks. "It is necessary to develop conditions for development of own advanced technologies." However, it should be understood that R&D results themselves will not help to get rid of the dependence on imports without their commercialization, warns the expert.

"We need a smoothly running system for bringing new technologies from the development stage to their field testing and further scaling of commercially efficient technological solutions by domestic companies. High costs relating to implementation of pilot projects, especially in the oil and gas industry, need providing financial incentives (tax benefits and deductions, direct governmental financing) both for research & development organizations that create technologies and for companies that apply them in practice," he thinks.

Source: Rossiyskaya Gazeta