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Russia’s Power Plant Plans In Crimea Hit Sanction Snag

Russia’s plans to build two electricity plants in Crimea to provide power to the annexed peninsula are being derailed by the sanctions that the EU and the U.S. have imposed on Moscow over that very same annexation, Reuters reported on Thursday, quoting sources familiar with the plans.

The $1.3-billion project is to have two new high-tech plants in Crimea to ensure electricity supply to the residents who have been suffering power outages since the annexation. The plants have been partially built, but have been designed to operate with gas turbines made by a unit of Germany’s engineering group Siemens, according to Reuters’ sources.

However, Siemens – whose officials have always said that there were no plans to provide such turbines – risks violating the EU sanctions against Russia, which state that “goods and technology for the transport, telecommunications and energy sectors or the exploration of oil, gas and mineral resources may not be exported to Crimean companies or for use in Crimea.”

Earlier this month, Russian Energy Ministry Alexander Novak told Russia’s Parliament that “work is continuing despite problems related to the delivery of equipment from a Western company.”

“We are working on buying other equipment,” the minister said, without giving the name of the Western company in question.

Now the Russian project is facing delays because it has to either alter designs to accommodate other types of Russia-manufactured turbines, or try buying turbines from Iran, or use turbines from Western companies that are already in Russia, according to Reuters’ sources.

However, Russia has lost the capability to manufacture such turbines over the past two decades. If Moscow opts for Iran-sourced turbines, those would be either acquired from a big international company or built in Iran under license from one—this could make any big international firm reluctant to agree, because of potential violation of the sanctions. As for the third option of using West-made turbines, it would also require the manufacturer to send engineers to Russia, which would also breach the sanctions.

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The company that is building the power stations, Technopromexport, is itself on the U.S. list of sanctions on Russian individuals and entities.

According to a Technopromexport spokesman who sent an emailed statement to Reuters, the timetable for the Crimea power plants would likely be pushed further, but it was not due to the turbines delivery.

By Tsvetana Paraskova for Oilprice.com

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  • Jean Hebert on April 29 2017 said:
    This is not a real problem since Russia makes many different large gas turbines. It's just a matter of adjusting the gearbox connection and redesigning the controls.
  • Naomi on April 28 2017 said:
    If Russia and Iran get adventurous then drop the oil price to $25/bbl again.

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