Welcome to Oil&Gas Eurasia's annual 'Pipes & Pipelines' issue. Each February, OGE delves into the issue who is doing what to untie the transportation noose that strangles Russian exports and holds back the world's No. 1 producer outside of OPEC from playing a more 'deal maker's' role on the world energy scene. This month, OGE examines supply and demand on both micro and macro levels in markets that are critical to the development of Russia's industrial manufacturing sector and to the realization of major pipeline projects. Both represent commercial opportunities that can put to work Russian know-how, as well as open the door for direct foreign investment and contracts for technology and equipment from other parts of the world. But, there are problems of course - some of them, in fact, the 'Alice Through the Looking Glass' type of problems you find in dealing with an economy that has one foot stepping cautiously into a free market while the other foot remains firmly planted in a planned, Soviet-style economy.

The Russian economy is in transition, and the pain of this transition - regardless of where you have your feet positioned - is apparent in Ivetta Gerasimchuk's cover story analysis of the Russian pipe and tubulars market. You would think that given the number of pipeline construction projects in various stages of planning and development right now, the market for domestically produced large diameter pipes would be soaring. Moreover, you'd expect the same in the drilling tubulars market as well, considering the push that is always on for more and more production (a push which requires more and more drilling).

Pay the Musicians, Call the Tune

Having laid the macroeconomic picture of the market, Bojan Soc moves in with a detailed analysis of how Russian manufacturers are responding to market signals that are creating demand for new production of high quality 1,420 mm pipe. In all ways, the projects driving this demand should be opening up a bonanza for Russian pipe manufacturers to retool, open new lines of production and to 'cash in' on a big opportunity literally in their own back yard.

But for most domestic pipe manufacturers, some very 'Russian' problems remain. Regarding those nagging issues of quality, the devil is always in the details - from Gazprom's point of view, there is still a need to buy some types of pipes from Japan and Europe because Russia can't make 'exactly' what Gazprom wants to buy. And then there is the issue of price. Gazprom is (and rightly so) taking advantage of the new market economy to foster competition among domestic producers of pipe to drive down prices. But Russia's domestic pipe manufacturers also need to make enough money, not only to survive, but to also invest in new technologies and equipment to enable them to compete against imports.

Here you have a common problem of the post-Soviet economy. Gazprom is taking advantage of a free market to get a better deal, while many other rules of the game in Russia - including some of Gazprom's rules - remain 'old style.' The loser is Russian manufacturing which, for the health and benefit of the Russian economy as a whole, needs (and quite frankly, deserves) help and consideration.

The Demand Side of the Equation

Finally, we look at the drivers of this manufacturing opportunity - the numerous oil and gas and petroleum products pipeline projects that are in various stages of planning and development. Ivan Gogolev tells us all about these projects in a special 'projects survey,' which updates you, our reader, with the latest on what's going on with state crude oil pipeline operator Transneft and Russia's natural gas monopoly, Gazprom. As part of this special report, OGE also interviews Sergey Maslov, head of Transnefteprodukt, which operates Russia's pipeline network for petroleum products, particularly light products such as gasoline and diesel. As a former president of LUKOIL International, Maslov knows what he's talking about when it comes to Russian refined products exports, and he tells OGE what Transnefteprodukt is doing to boost the volume of shipments to Europe of high quality value-added petroleum fuels from Russia.

For your convenience, we are featuring in this issue a special center-fold map that gives you a real picture of the grandeur of these projects. When you look at this map, keep in mind that you are looking at the world's largest landmass, an area that stretches across a dozen time zones and impacts markets from Europe to the Middle East, to South Asia and to China and the Far East. Russia is, in fact, the only country in the world that from, a regional perspective is planning projects to supply crude oil and LNG both to the East coast of the United States (from the Barents Sea) and the West coast of the United States (from Sakhalin) simultaneously.

We hope you like this presentation and we invite your e-mail comments at [email protected]. We at OGE need to know what our readers think so we can better serve you in the future. And speaking of that future, don't forget what Olga Grigorieva has to say this month about drilling. OGE visits two themes - Russia's drilling rig market and special muds for horizontal drilling. OGE continues in this vein in March with its twice a year focus on Óoiled tubing (CT) technologies. In March, OGE will visit the question of CT drilling and rigs and what Russian producers think about using advanced CT technologies in various projects. The issue will be circulated in Houston at the annual U.S. Coiled Tubing Roundtable organized by the Society of Petroleum Engineers (SPE) and the International Coiled Tubing Association (ICoTA).

Stay Tuned:
Coiled Tubing in March

Did you know that Russia is already the home of the most advanced coiled tubing drilling project ever done? It happened on Sakhalin Island, a former Czarist place of exile and Soviet gulag which in the 21st century is attracting the likes of ExxonMobil, Halliburton, Parker Drilling and others who drilled and completed the longest ever extended-reach, horizontal well with the longest ever produced single string of coiled tubing. What's exciting about this project is that it is not a one-off, nor is it a realm reserved for world majors and international service companies. Russian companies are embracing coiled tubing methods and some of them, Surgutneftegaz, for example, are quite advanced.

OGE will tell you all about these trends in the coiled tubing industry and more in March when we also look at OPEC and its relationship with Russia. Though there's been a lot of flirtation back and forth - and in fact OPEC would like Russia as a member - we at OGE think that Russia's refusal to attend the most recent OPEC meeting says a lot. Russia will always go its own way. This has been the country's historical legacy whether those in power have been the Czar, the Soviets or an elected president. Size has a lot to do with this behavior and a geographical positioning that forces Russia to look both East and West at the same time.

We at OGE are dedicated to helping you, our readers and our advertisers, understand what's happening, and why, so that you can do business more intelligently in this exciting and rapidly developing market. Please don't forget to write us at and let us know how we're doing!