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№ 7 (July - August 2011)

MIOGE 2011: Fuel and Energy Sector Under Revamp

   Modernization – one of Russian President Dmitry Medvedev's favorite words – was the leitmotif of the 11th International Exhibition Oil and Gas/MIOGE 2011 and the 9th Russian Petroleum and Gas Congress/RPGC 2011, held in Moscow, which were attended by more than 36 companies from 1,000 countries.

By Alexander Bratersky

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   “The Russian energy sector cannot do without upgrades, and thus, without building more facilities for processing petroleum products to turn them into better ‘light's grades,” Sergei Kudryashov, Deputy Energy Minister of Russia, said in his opening address to Congress.

   According to Kudryashovs' estimates, the energy sector needs investments of 150 billion rubles over 10 years. Plans are underway to create six oil and gas clusters in various parts of the country. “If all these petrochemical projects materialize, the annual contribution to the GDP will be 650 billion rubles,” Kudryashov said in his remarks.

   Much in need of modernization, the Russian fuel and energy sector is promising broad prospects for foreign companies.

This year, the exhibition was attended by dozens of foreign companies, including well-known players such as Caterpillar, CNPC, GE, National Oilwell Varco, Schneider Electric and Siemens.

   And their Russian counterparts are not lagging behind the foreigners. The stands of the leading Russian companies, such as Gazprom, Rosneft, Bashneft, Gazprom Oil, Zarubezhneft, Tatneft, Transneft, were impressive.

   According to the organizers, more than 20,000 specialists visited the exhibition over four days. Although the conclusion of a breakthrough agreement at the exhibition is a rarity, experts say that the availability of such a unique arena helps them best find business partners.

   “The exhibition is a unique opportunity for negotiations. People come, friends and strangers: purchasing managers, sales managers, production engineers, who carefully inspect the die molding; the top people at large enterprises come,” Alexei Haryushin, head of the Chelyabinsk Forge -and-Press Factory (CHKPZ) said sharing his impressions about MIOGE on the company’s web-site.

   Participation in the exhibition brought some good results – CHKPZ succeeded in making 135 contracts.

   For Russian manufacturers, the exhibition offered an opportunity to discuss the situation about protecting intellectual property and the problems of counterfeit equipment. During the conference, as part of the Mechanical Engineering Exhibition, GMS – one of the largest pump manufacturers on the Russian market – presented a report on the subject.

   Many people worry about the problem of protecting one’s good name and brand from fakes and low quality produce flooding the market: “Sometimes you have to compete with companies that manufacture their products literally in the gutter,” one exhibitor who represented Russian manufacturers complained to OGE.

   Relevant topics of the oil and gas sector development were discussed during the Enerkon-2011 conference organized with the support of the Ministry of Energy and held within the framework of the exhibition.

   The main topic of the conference was innovation. In the participants’ opinion, the problems experienced by basic science do not allow any precise predictions, although the ageing fields are no longer able to meet the market needs.

   “A lot of ‘virtual stocks’ have emerged,” said Gennady Schmal, head of the Oil Producers Union, “and this does not reflect the true state of affairs in the industry.”

   “The level of control over the Russian energy sector is very low,” Schmal said assessing the situation in the industry with obvious sadness. The former deputy minister in charge of construction of Soviet oil and gas industry enterprises tried to appeal from the rostrum to a more sober assessment of oil reserves, currently often assessed “without leaving one’s PC”. The views of professionals and industry experts were taken into account in the final conference resolution sent to the government.

   Government officials, experts and oil companies may be able to reach a better understanding following the establishment of the Russian Institute of Oil and Gas (RING), whose roadshow at MIOGE was successful.

   “I hope the Institute becomes a convenient venue for both science and the state,” Mikhail Silin, Vice-Provost for Strategic Development of the Gubkin Russian State University of Oil and Gas, said expressing his hope. As part of the institute established in May at the suggestion of Deputy Prime Minister Igor Sechin, the national library of the FES will be set up, as well as a social network where researchers can exchange academic ideas both among themselves and with business representatives. The institute will include 10 major Russian profile universities, including the famous Gubkin University, and the Siberian Federal University.

   Meanwhile, according to Silin, science and business do not always find a common language in the oil and gas industry: “The scientific community cannot see the big picture – what will businesses pay for?” he complained.

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