In January-June of this year, the Ukrainian industrial company Interpipe increased supplies of Oil Country Tubular Goods (OCTG) to the United States due to a surge in activity in the oil and gas sector amid rising prices for hydrocarbons, First Deputy CEO of Interpipe Denys Morozov has said in an interview with Metal Expert publication.
According to him, this is a positive moment – American companies have resumed drilling, and now is the “right time” for Interpipe to increase supplies of threaded OCTG pipes, including premium and semi-premium products.
“We are actively engaged in its production and promotion. In the first half of 2021, Interpipe has already increased the supply of OCTG pipes to the United States. We expect that positive dynamics will continue in the second half of this year,” Morozov said.
At the same time, he pointed out a number of restrictions on the supply of pipes to the United States. Thus, the U.S. Department of Commerce intends to impose duties on seamless line pipes at a rate of 23.75%.
At the same time, he said that Interpipe continues supplies to the U.S. market, but in the future it will study their economic efficiency with the hope that new relations will be built with new U.S. President Joe Biden. Accordingly, Ukraine will be able to re-start negotiations on the abolition of section 232, which is a significant barrier to the growth of supplies.
The first deputy CEO added that last year the company took a number of steps to promote its products in the Middle East region, the goal is to get into the league of premium pipe suppliers.
“In the Middle East, we continue to implement our strategy aimed at expanding our presence, looking for new niches, customers and increasing supplies. This year we plan to complete prequalification from the Emirati giant ADNOC. In general, the Middle East is a region with traditionally stable oil production and stable pipe consumption. Therefore, it is only natural that we expect sales growth in both segments: both OCTG and line pipes,” Morozov said.
According to him, the main problem in the markets of the countries of Central Asia is great difficulties with financing projects, since local companies do not have enough money to implement all projects at once. Now, amid high oil prices, the financing situation has improved somewhat. Accordingly, pipe consumers in Uzbekistan, Turkmenistan and Azerbaijan resumed purchases. The positive dynamics is expected to continue in the second half of the year.
Concerning supplies to the EU, he said that at the moment it is impossible to increase sales to the EU countries due to quotas, despite the presence of deferred demand in this market. The company chooses the pipe quota allocated to Ukraine, but after its use the supplies stop. From time to time it is possible to use part of the other countries quota, but these are small amounts.
In Ukraine, Interpipe has completed several contracts for the supply of UPJ-M, UPJ-P and UPJ-F premium pipes for domestic private oil and gas companies. But the volume of drilling and consumption of OCTG pipes in the country increased insignificantly.
In 2021, the volume of supplies to the Ukrainian market did not decrease. Moreover, it is likely that even a slight increase will be recorded by the end of the year. But if we compare with the results of 2018-2019, then consumption has not yet returned to the pre-crisis level. For example, if in 2018 Ukrgazvydobuvannia purchased about 70,000 tonnes of threaded pipes, and half of them were of premium assortment, now the total consumption by this state-owned company is 20,000 tonnes.
“We hope that the current relatively high gas prices will stimulate oil and gas companies to increase the volume of drilling and consumption of our pipes. Perhaps, in the second half of the year we will see improvements, but so far these are only our forecasts,” Morozov said.
According to the expert, there is no significant growth in the machine-building segment either; consumption by machine-building companies is correlated with the growth / decline of the country’s GDP. Interpipe does not forecast any sharp surges until the end of the year, so the sales of machine-building pipes are likely to remain at last year’s level.
The market is expected to stabilize in the near future and the Novomoskovsk plant will resume normal operations. In turn, the company sold a record amount of steel billets to third customers this year.