Potential for oil and gas companies procurements efficiency enhancement

27 february 2015

Experts of the Analytical Center Tatyana Radchenko and Alexander Kurdin spoke at the panel session of the Advisory Board on oil and gas sector companies cooperation with related industries for the State Duma Committee on Energetics.

Speaking on reserves of the oil companies procurements efficiency enhancement, experts pointed out that in response to  structural and foreign policy factors Russia’s economic growth forecasts  are deteriorating, and the change in energy prices aggravates the situation (in January 2015 gas prices  fell as well). "The oil and gas sector, which usually generates large infrastructure projects, shows symptoms of the recession that threatens by consumption and prices declines both in foreign and domestic markets. Infrastructure projects themselves are factors of the investment demand and hence economic growth", said Mr. Kurdin.

Experts of the Analytical Center see following problems in the regulation of the industry - the budget deficit becomes chronic in the run up to 2020, and the industry stops when faces structural barriers even without sanctions. It is necessary to create favorable conditions for projects’ participants with significant multiplier effects with no competitive incentives’ loss. "One of the tools is the reduction of costs “at the crossroads” of customers and performers such as Fuel and Energy Sector and Metallurgy. Lessons from a series of antitrust "trumpet cases" against iron and steel companies and Gazprom are those: it is necessary to form the lot sizes in such a way that direct producers will be able to participate in biddings, take up international experience and specifics of each auction", said the expert.

Experts named following mechanisms to improve the implementation of infrastructure projects: the introduction of advance payments in the payment scheme, the liberalization of requirements for the financial assurance and the strategic planning.