Russian Market

Oil and gas pipes and premium connections

Russia and the CIS remain our major markets with a steady demand stimulated by active upstream operations in the oil and gas industry and construction of new pipelines. As existing oil and gas fields become depleted, exploration and development of new deposits shift towards less conventional environments leading to expansion of horizontal and directional drilling and sinking of vertical wells. These trends call for a more efficient oil and gas production technology, and drive demand for high-tech pipes and premium connections resistant to aggressive environments and pressure.

The new regions driving oil and gas reserve replacement are Eastern Siberia, Far East, North Caucasus and the Caspian region.

According to our estimates Russian seamless OCTG market increased by 7% in 2012

Permafrost, aggressive environments and extremely deep wells in new production regions set rigid requirements for technology and quality of the pipes used. Following the trend, TMK shipped the first batch of unique vacuum insulated tubing (VIT), launched manufacturing of super-chrome casing pipes, and developed new drill pipes with TMK TDS joints in 2012.

In 2012, our sales of seamless OCTG pipes and line pipes (seamless and welded) grew by 15% and 10% year-on-year respectively.

Demand for premium threaded connections grew considerably. TMK is currently a leading producer in this segment in Russia.

Segment of seamless pipes for different industry applications, including power, nuclear and automotive industries is a high‑tech and high-margin

Large diameter pipes

Completion of several major gas pipelines in 2011 resulted in a shrinking market for large diameter pipes in 2012. Our sales in the segment decreased by 33% to 408 thousand tonnes in 2012.

Nevertheless, TMK started pipe shipments for the onshore part of Gazprom's South Stream pipeline. Alongside the South Stream project, we shipped our products to Bovanenkovo- Ukhta and Zapolyarye-Purpe pipelines, and increased shipments of large diameter pipes to Turkmenistan and Uzbekistan.

Industrial pipes

We strive to increase our sales of seamless pipes for different industry applications, including power, nuclear and automotive industries, as this is a high-tech and high-margin segment.

Welded industrial pipes are not our priority due to the low margins of the segment.

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