TPT May 2007

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Maintaining a consistent policy throughout the entire supply chain, the conclusion of long-term cooperation agreements with the biggest consumers of tube products is also vital. In doing so, the companies can secure the correct operational characteristics at an acceptable price. The tube companies in return receive the guaranteed volumes of distribution of their products within the home market.

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Protective and proactive role of the Fund

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The Fund’s top priority is to protect Russia’s tube market from the conditions of unprincipled competition from foreign producers

The Development Fund of the Tube Industry of Russia, a non-profit organisation, was established in 1999 by nine tube enterprises, among them Taganrog and Vyksa metallurgical plants, Volzhsky, Seversky, Sinarsky and Pervouralsk tube plants, and Chelyabinsk tube rolling plant. The Fund’s objectives are to represent the interests of tube enterprises in the state authorities, non-government organisations, and professional associations. The fund also aims to coordinate the activity of the metallurgical and tube divisions of the industry to increase product competitiveness. Furthermore, the Fund operates to improve and develop market relations within the Russian network of mining and smelting. In particular, the Fund operates to provide the conditions for consolidation of all enterprises’ manufacturing, financial, technical and intellectual potential. The Fund’s endeavours are directed at the creation of a corporate management structure according to world standards. The Fund’s top priority is to protect Russia’s tube market from the conditions of unprincipled competition from foreign producers, with the necessary regulation of access into the Russian market. The Fund participates in the definition of regulations according to the Federal statute ‘About the technical regulation’. This involves joint meetings of Russia’s tube sector and fuel/energy industry representatives, with an agenda to identify and consolidate cooperative measures across the board. The representatives of the fuel and energy organisations (the main consumers of tube products) are the members of the Fund’s working group. The Development Fund is a member of the Chamber of commerce of the Russian Federation and the International Metallurgical Guild. The Fund takes an active part in the work of corporate authorities as well as the Russian manufacturers’ and employers’ guild, and specialised scientific-research institutes. The Development Fund of the Tube Industry of Russia (FRTP) – Russia Tel/fax : +7 495 955 00 72/73 Email : frtp@frtp.ru Website : www.frtp.ru

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Russia’s 2020 energy development strategy

The quality improvement and increasing competitiveness of products has been achieved within the program framework of Russia’s 2020 energy development strategy. The expansion at Vyksa Metallurgical Works and the introduction of new equipment at Izhora tube plant has led to state-of-the-art capabilities for the production of 3.2 million tons of competitive large diameter pipes per year. This will ensure an additional production increase of up to 4.4 million tons per year in 2008. There have been further quality improvement plans at Vyksa Metallurgical Works, with the production of tubes according to the international standards for underwater pipelines DNV. Several investment projects have also been completed at metallurgical complexes. Special manufacturing equipment for the improvement of liquid steel quality has been installed at SeverStal, NTMK, and Magnitogorsk Iron and Steel Works. The reconstruction of ingot continuous casting machines has also been achieved. A new slab casting machine with a capacity of 1.8 million tons was put into operation at NTMK. Metallurgists have thus achieved a radical improvement of liquid steel quality. Casting

technology is now highly advanced for the production of the required size billets and strip, with adherence to the strictest standard requirements for production of high quality large diameter pipes. The specialists of Russia’s tube industry have faced the challenge of solving the technical issues of tube products for fuel and energy applications. A great deal of volatility has been caused by the absence of a reliable construction schedule for the ground-based and underwater components of the North- European Gas Pipeline, East Siberian – Pacific Ocean, and Shtokman field. However, the consumption of large diameter pipes is sure to increase in the coming years. This is why in 2006 several leading Russian metallurgical and tube companies began the large-scale construction of ‘5000’ rolling mills. These continuous mills with PQF technology are intended for the production of highly precise seamless tubes.

fi Smoking out the competition: the Russian tube industry has benefitted from a unified approach, combining R&D and technical improvements with strategic agreements and protectionism

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M ay /J une 2007