New US sanctions may ban General Electric from servicing equipment in Russia

Extended U.S. sanctions, effective June 18, could close off the last opportunity for Western power equipment manufacturers to maintain a presence in Russia. The new ban on the provision of engineering services, in particular, will affect the American General Electric (GE), which continues to service gas turbines at TPPs with a total capacity of 5 GW in the Russian Federation. The interlocutors of Kommersant are afraid of stopping the supply of original spare parts and the refusal of foreign engineers from repairs. At GE, they are still “conducting an impact assessment.”

Extended U.S. sanctions banning U.S. companies from providing engineering services in Russia went into effect June 18. The restrictions, according to Kommersant’s sources in the Russian fuel and energy complex, will affect, in particular, the American GE, which continued to service gas and steam turbines at Russian thermal power plants, as well as other equipment in the industrial sector. The service contract usually includes remote monitoring, consulting, inspections with the involvement of foreign engineers, repair and replacement of spare parts.

GE confirmed to Kommersant that the company would no longer be able to provide engineering services in Russia. “We are conducting a comprehensive assessment of the impact of the new US sanctions package on our work in the region and continue to interact with the competent authorities in terms of compliance with restrictions, rules and legislation,” they said. Russian energy companies using GE machines do not comment on the situation. According to Kommersant’s information, they did not receive official clarifications from GE.

One of Kommersant’s interlocutors says that American companies will close access to drawings and databases, without which foreign specialists will not be able to carry out inspections and repairs on the territory of the Russian Federation. Other sources in the industry fear that GE will stop supplying original spare parts, which have no analogues in Russia.

This happened, for example, when German Siemens ceased to provide services on its own initiative: now components for its turbines have to be sought in friendly countries. At the same time, the EU and the US have not yet imposed direct sanctions on the supply of spare parts for power gas turbines.

Over the past year, many turbine maintenance competencies, including high-power ones, have been tested and developed in the Russian Federation, the source of Kommersant in the industry clarifies. “In Russia and friendly countries there are specialists and organizations with similar experience,” he explains. “If necessary, you can work even without refurbishment and cope with existing personnel, but if there are sets of hot parts.”

The total capacity of TPPs based on foreign turbines in the Russian Federation is about 22 GW (approximately 9% of the installed capacity of the Unified Energy System of Russia). The total capacity of Siemens turbines is about 9 GW, and GE turbines are about 5 GW, Alexey Zhikharev, head of the analytical company Ensolve, calculated. GE turbines operate both powerful state district power plants and relatively small urban thermal power plants, which are important for heat supply, notes independent analyst Yuri Melnikov. In particular, GE machines are installed at the power units of Surgutskaya GRES-2 and Shaturskaya GRES (Unipro), Voronezh CHP-1 (Quadra), Kaliningrad TPPs (Rosneftegaz and Inter RAO), Yuzhno-Sakhalinskaya CHPP-1 and Vostochnaya CHPP (RusHydro).

In total, in Russia, including the oil and gas industry and other sectors of industry, more than 1.7 thousand foreign turbines of various capacities have been installed, follows from the estimates of the Ministry of Industry and Trade, which Kommersant has read. Russian companies can service 1.3 thousand turbines, while the rest require “extension of repair potential.”

“Build repair competencies” is required for ten turbine models, including the most powerful 9F and 9HA (GE) frames. For owners of rare cars (two or four in the country), the Ministry of Industry and Trade suggests switching to domestic analogues. We are talking, for example, about 9E and LMS 100 (GE), as well as some models of Rolls-Royce, Ansaldo, Kawasaki. The bottleneck in the service of turbines in the Russian Federation is the creation of domestic materials for the manufacture of spare parts, according to the Ministry of Industry and Trade. In addition, the need for high-precision casting of blades must be assessed.

Ekaterina Makeeva, a partner at the A-Pro law firm, notes that the UK and the EU introduced restrictions on the provision of architectural and engineering services in the fall of 2022. Representatives of professional associations then drew attention to the fact that the provision of services in the Russian Federation could become the basis for a ban on professional activities. Synchronization of sanctions regulation is logical, notes lawyer Artem Kasumyan from Delcredere. New US sanctions prohibit the provision of architectural and engineering services to any person in the Russian Federation, the expert emphasizes, there are no exceptions for the energy sector in the OFAC explanations.

Polina Smertina, Tatyana Dyatel