December 22, 2020
PAO Severstal, one of the world’s leading vertically integrated steel and
mining companies, has published a presentation on its outlook for LDP demand in
key markets and its strengthened offer for Energy customers. Severstal’s energy
sector focus is a core pillar of the Group’s growth strategy, representing 9%
of sales in 2019, with significant opportunities for further expansion.
Key market outlook summary
The LDP market in Russia is expected to grow to approximately 2,500kt in
2022 (2020: 1,375kt) driven by trends including a new investment cycle
announced by Gazprom, Transneft’s pipeline modernization programme and
increased exploration by oil and gas companies. Severstal’s share of the
Russian market was 17% in 2019.
In Europe, the LDP market is expected to grow to 600kt in 2024 (2020:
350kt), following trends to develop LNG infrastructure and the energy
transition focus, which will lead to the prioritization of renewable energy
projects and hydrogen production and transportation projects. Severstal’s share
of the European market was 2-3% in 2019.
In MENA, the LDP market is expected to stabilize at 2,200kt in 2023 (2020:
1,560kt), with near term growth driven by projects delayed during the pandemic.
The Company sees a particular trend for sustainable pipe solutions required for
oil and gas reserves containing high levels of sulphur compounds.
Severstal’s highly competitive offering
Severstal’s USPs for oil and gas customers include its ability to offer
tailored products, superior customer service and cost-effective solutions. The
full vertical integration of Severstal offers significant competitive
advantages for Energy sector clients. Severstal has total quality and cost
control across the value-chain, from the production of pig iron, to the
production of LDP. This enables it to provide cost-efficient solutions for its
clients and on-time deliveries.
Severstal is focused on innovation and the development of products tailored
to customer needs. The Company can bring these very quickly to market, thanks
to highly developed internal R&D and advanced engineering capabilities. The
Company has a unique product range. As one example, Severstal’s Izhora Pipe
Mill produces 18m LDP, compared to the conventional 12m pipes offered by the
market. Using these longer pipes can reduce the costs of pipeline construction
for Severstal’s customers by up to 15%.
Dmitry Goroshkov, Director, Sales and Business Development, Energy,
Severstal, said:
“In 2019 we started intensively exploring international regions for our oil
and gas pipe products. Now, we see growth opportunities for our large-diameter
pipes in all three of our key Energy markets. In Russia, our clients have
announced significant new oil and gas projects, in the European market we hope
to increase our market share by supplying pipes for the construction of gas
interconnectors and planned pipeline modernization programmes, and in the
Middle East market we expect energy majors to revive delayed oil and gas
projects.
We took advantage of reduced oil and gas project activity in 2020 to build
up our agency network, get closer to our customers, and further develop our
technology. For example, we can now sell advanced corrosion-resistant pipes of
different sizes and steel grades, which are particularly important for MENA
customers. This work has ensured Severstal is well positioned to qualify for
future key project tenders and to be the supplier of choice for Energy
customers in our key markets.”
Please find the presentation available of Severstal’s website:
https://www.severstal.com/files/21307/Severstal_for_Energy_Industry.pdf
