Russia Signs Memorandum Creating New Oilfield Services State-Owned Enterprise

According to reports, the Russian government has decided — and signed a preliminary Memorandum — to create a new state-owned enterprise in the area of engineering and oilfield services, in part, in response to the rounds of recent sanctions.  It is expected that companies, such as Rimera, Geotech and OMZ would be involved in this company in some capacity, which would be based on state company Uralvagonzavod.  Another report indicated that the new company will be based on the assets of Rosgeologia, a state-owned agency that currently comprises of three dozen state-controlled exploration service companies, as well as 15 other companies involved in shelf exploration.

There are reports that it will be called the “National Engineering Service Company.”  There are reportedly plans to consolidate more than 200 independent companies under this new initiative.  The main goal of the new company would reportedly be import substitution.  On Tuesday, September 23, 2014, Deputy Minister of Energy Kirill Molodtsov said, “Most technologies have their analogues and in the frameworks of the import substitution program, Russian companies are able in the next 3 to 4 years to meet the challenge we are facing.”  Russian companies have the capacity to substitute “in a short period of time a large amount of technology equipment which has got into the [western] sanctions list.”