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Outside View: Russian energy firms align

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by Tatyana Sinitsyna
Moscow (UPI) Feb 25, 2008
Two major state-owned Russian companies building energy projects -- Atomstroyexport, with a nuclear focus, and Technopromexport, which builds other power plants -- have agreed to develop a strategic partnership and establish a joint venture.

Atomstroyexport will have the controlling interest -- 51 percent. The new joint venture will build energy facilities and operate them both in Russia and abroad.

The gist of this ambitious step is pragmatic. The memo on cooperation, adopted by the partners on Feb. 19, reads: "It is necessary to create a major national player in order to strengthen each other's positions in the market."

The new joint venture will allow Russia to enhance its status abroad and at home. This is required by the logic of economic progress.

Building alliances is one of the most effective ways of using economic resources. In France, for example, the following three companies have set up an alliance -- AREVA (nuclear plants construction), SUEZ (nuclear plants operation), and the oil company Total, which operates in the Saudi market. Having united, they are keeping their positions in the region and supporting their partnership's reputation.

The Russian energy alliance is borrowing from foreign experience. It will proceed from common interests and offer comprehensive solutions, while profile specialists will carry out projects. Atomstroyexport can share with Technopromexport technologies for building thermal power plants; in turn, it can borrow from the experience of its partners in new markets.

Having consolidated the available resources (finances, engineering, management and international experience), the new player is going to be active both at home and abroad. But what are the chances of the two companies? What are their assets?

Atomstroyexport is implementing foreign contracts for the construction of nuclear power plants. It is the world's only company simultaneously building five energy units abroad (in India, Iran and Bulgaria). In 2007 it commissioned two energy units of the Tianwan nuclear plant in China.

Technopromexport is also well known. Its specialty is construction of energy facilities. It is Russia's biggest engineering plant specializing in turn-key projects of any level and type -- thermal, steam-gas, gas-turbine, geothermal, diesel, and hydroelectric plants, power transmission lines, and boosters.

The alliance between the two companies has been produced by the effective operation of the nuclear industrial sector in the last two years. The military component of Russia's nuclear industry has always been immune to interference -- everyone understands the measure of responsibility. But in the civilian nuclear industry many plants were privatized. By now, Russia has re-established government control over it.

The new alliance is a product of its modernization. Its tremendous potential will make Russia more confident in the foreign markets. Today, Russian experts are conducting negotiations on the construction of nuclear power plants with 20 countries. Some of them are closer than others to the conduct of a tender for economic, moral or legal reasons. Russia can choose its construction sites and partners.

Next-door neighbors are high on the list of priorities -- Ukraine, Belarus and Kazakhstan. Turkey, Egypt and Morocco are interested in cooperation.

But the Chinese are again the closest partners. As a result of effective cooperation, China received in 2007 two powerful VVER-100 megawatt units (water-water power reactor) for the Tianwan nuclear power plant. Now Russia and China have signed a contract for the construction of a third and fourth units.

India has recently signed a memo with Russia on the building of new reactors in Kudankulam. Tehran has long been hinting that if it dares increase the number of its nuclear power plants, it will choose Russian projects.

(Tatyana Sinitsyna is a RIA Novosti commentator. This article is published with permission from RIA Novosti. The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.)

(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

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