September 12, 2012 / 2:50 PM / 5 years ago

TNK-BP looks overseas for $2bln steel pipe needs

MOSCOW, Sept 12 (Reuters) - Russian oil firm TNK-BP is planning to hold a $2 billion tender by the end of the year for the supply of steel pipes from overseas suppliers, Interfax quoted a company executive as saying on Wednesday.

TNK-BP, half owned by BP, which previously spent an average of $500 million a year on pipes from domestic producers, has decided to import tubes from China and Japan in the next five years, making use of Russia’s accession to the World Trade Organisation, vice president Olga Malyshkina said.

“We are ready to acquire the whole volume of pipes from abroad, if the prices are lower, the quality is higher and the logistics are more acceptable,” she said. “China is near, it is improving its quality, Japan looks interesting in terms of logistics.”

The announcement comes at a troubled time for Russia’s steel pipe makers, who have lost a big chunk of sales this year after key customer Gazprom slashed purchases of pipes for its pipeline projects.

Russian steel firms have heavily invested in production ahead of Russia’s WTO entry last month.

Analysts say that the key challenge for domestic companies is to ensure that their products can compete in terms of quality with imports which have now got greater access to the Russian market.

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