Russia’s NLMK expects the new Power of Siberia gas pipeline project to boost its slab sales dramatically, and has strategically increased its exposure to the pipe-making sector, a company spokesman tells Kallanish. 

In November 2013, NLMK signed a long-term cooperation agreement with Russian pipemaker, OMK (United Metallurgical Company). It is currently shipping slab for large-diameter pipe (LDP) to OMK at an annualised rate of 650,000-750,000 tonnes, he notes: “Before 2012, we didn’t have this business.”

The 2013 agreement between the two companies provides for slab shipments of over 2mt, which NLMK will deliver to OMK’s Vyksa Steel Works (VMZ). There, they are rolled into wide plate at the VMZ Mill-5000, after which they go to VMZ electric-weld pipe workshop No 4. In the 18 months or so after NLMK and OMK signed their first supply contract, the steelmaker has already shipped over 1mt to OMK, Kallanish hears.

“We were previously long in slabs, so these tonnages have been redirected away from the export market,” the spokesman notes.

Meanwhile, the vast Power of Siberia project is expected to require about 4mt of LDP, Russian sources in Moscow tell Kallanish. “This is just a guideline figure, because they are still calculating the parameters of the project,” says one.

In July and August, OMK delivered over 30,000t of LDP to the Power of Siberia, and notes that by so doing, it has fully met its early contractual obligations with Gazprom for LDPs for the Power of Siberia. The larger, key tenders are expected later, Kallanish hears. “This fully localises the production of pipes for this strategic project in Russia,” adds OMK.

OMK’s initial pipes were 12-meter long with a diameter of 1420mm, 21.7mm thick walls, and with an inner and outer polyethylene coating.

Power of Siberia was officially launched last month in Yakutsk, the main city of the Sakha republic (Yakutia), in Russia’s Far East. The first ceremonial weld for the gas pipeline was attended by president Vladimir Putin and the first vice premier of China's State Council, Zhang Gaoli. The line will carry gas from the Yakutia and Irkutsk gas fields further eastwards, and to China.

The Power of Siberia gas pipeline will run nearly 4,000km through five Russian regions: Irkutsk, Yakutia, Amur, the Jewish autonomous region and the Khabarovsk territory. It will have an annual capacity of 38 billion cubic meters of gas, explains Gazprom.

By late 2018, a 2,200km section will be built to connect the Chayandinskoye field in Yakutia to the city of Blagoveshchensk on the Russian-Chinese border. It is also planned to build sections from the Kovyktinskoye field in the Irkutsk region to the Chayandinskoye field (around 800km), and from the town of Svobodny in the Amur region to the city of Khabarovsk (around 1,000km). In this way, Power of Siberia will be connected to the Sakhalin-Khabarovsk-Vladivostok gas transmission system, Gazprom adds.