On May 4, the executive board of OJSC “Gazprom” approved “The guidelines for improvement of procurement system of OJSC “Gazprom” and agreed to purchase tubular goods at higher prices.  Beginning June, OJSC “Gazprom” will buy domestic large diameter pipes at a 20 percent higher price.

Earlier, the Coordinating Council of oil and gas equipment users that includes procurement executives of Gazpromneft, Slavneft, RussNeft, Surgutneftegaz, Rosneft, TNK-BP and other oil producing companies protested against the price increase. The statement says, “The oil and gas industry is the main customer for a large group of Russian manufacturing companies. Specifically, the industry consumes more than half of pipes supplied by Russian plants.  In recent years, there emerged a persistent trend for reduction of purchases of imported  equipment and pipes, and oil and gas producers expanded the use of competitive domestic products.  However, today the oil and gas producing companies face a sharp increase in prices for tubular goods. Domestic pipe manufacturers intend to increase prices for their products by 20 percent. Suppliers attribute  the dramatic price increase to the rising cost of raw materials. The Coordinating Council is concerned over the situation that may affect implementation of oil companies’ production programs, and finally lead to reduction in equipment purchases”.