GE expands strategic partnerships in Russia

General Electric (NYSE: GE) has reaffirmed its commitment to the company’s growth plans in Russia by launching a $1 billion sourcing program and signing a series of agreements with its Russian strategic partners at the 17th GE Oil & Gas Annual Meeting in Florence. The new initiatives are aimed at accelerating GE’s localization of advanced technology solutions across the oil & gas, power, and transportation industries, as well as driving demand for local suppliers.

GE will work with Russian businesses to develop up to $1 billion in sourcing opportunities by 2020 to better meet its global manufacturing needs by capitalizing on the increased competitiveness of Russian fabrication, forging, and casting. The company is currently working on several key infrastructure projects with Russian producers that meet GE quality and safety standards.

Expanding the scope of their 2013 strategic partnership, GE and Rosneft, Russia’s largest oil company, will jointly develop local expertise and advanced solutions, including in marine propulsion and oilfield equipment manufacturing.

In marine:

  • GE and Rosneft will proceed with preparations for joint work at an industrial shipbuilding cluster in Vladivostok. The cluster is planned to locally produce electrical equipment and steerable pod thrusters based on GE technology – as well as service marine diesel engines produced by a GE‑Transmashholding joint venture – for Rosneft’s fleet and other Russian civil vessels.

  • At the meeting in Florence, GE, Rosneft, and Transmashholding signed a Letter of Intent providing for the local production of GE V250 marine diesel engines by the GE-Transmashholding JV in Penza, Russia. The delivery of the first units to Rosneft is expected in early 2018.

In oil and gas:

  • GE and Rosneft will further explore development plans for a facility in Murmansk, Russia to locally assemble GE oil & gas equipment to support Rosneft’s production activities.

  • The companies will continue joint work on artificial lift technology, with deliveries of GE electric submersible pumps (ESPs) already underway to Rosneft and its subsidiaries for testing and evaluation.

  • Advancing their collaboration on small-scale LNG technologies, GE and Rosneft’s subsidiary Itera will move forward with development plans for the first small-scale LNG plant in Russia.

  • The companies will cooperate on a pilot project to leverage GE digital technologies for remote monitoring and control to further optimize operations at Rosneft’s largest refinery, located in Ryazan, Russia.

  • GE and Rosneft will also evaluate the potential of stationary distributed power solutions based on diesel engines locally produced by GE and Transmashholding in Penza.

Also in Florence, GE and Transmashholding (TMH), a Russian rail equipment producer, signed a strategic business plan providing for the launch of a 50-50 joint venture, pending final regulatory approvals, to localize manufacturing of advanced GEVO diesel engines at a new facility in Penza, Russia. The project is aimed at addressing the locomotive needs of Russian Railways, as well as providing engine solutions for marine vessels and distributed power applications.

The companies plan to invest over $70 million in the plant and related equipment, training, and technology. The GEVO engines to be produced at the new facility will incorporate GE technologies to lower lifecycle operating costs, while increasing efficiency, reliability, ease of maintenance, and time between overhauls. The agreement envisages initial production of up to 250 engines per year in the 2,900–4,700 kW class, with the potential to expand the venture’s production capacity and product portfolio according to future market demand. The companies also agreed that a priority goal for the joint venture will be identifying export opportunities for its products.

GE’s new agreements with its strategic partners in Russia accelerate the company’s commitment to invest $1 billion in the Russian oil and gas, power, and transportation industries by 2020.

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