Gas turbines

Siemens pulls out of power plant venture with Russia after gas turbine scandal

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Siemens has said it will exit its power plant joint venture with Russia after a scandal that saw four gas turbines it sold for use in Russia turn up in Crimea, a region subject to EU sanctions on energy technology.

The Munich-based group said on Friday it had not yet uncovered any indication of violations of export-control regulations, but said it did now have credible information that the four of the turbines were in Crimea.

“This development constitutes a blatant breach of Siemens’ delivery contracts, trust and EU regulations,” it said in a statement. “Siemens will fully divest its minority interest in the Russian company Interautomatika.”

The turbines had reportedly been moved to Crimea with the assistance of Russia’s ZAO Interautomatika, in which Siemens holds a minority stake. 

Siemens said it had reviewed its licensing agreements with Russian companies associated with the matter, and was reviewing potential collaboration between its subsidiaries and other entities around the world regarding deliveries to Russia.

It renewed its offer to buy back the turbines and cancel the original contract with Technopromexport (TPE), against whom it is taking legal action intended to stop further deliveries to Crimea and to return the turbines to their original destination of Taman in southern Russia.

No Russian company has ever got a Siemens turbine working without the help of the manufacturer.

In this case, Siemens said the turbines were shipped to Crimea behind its back and is refusing to be involved, leaving Moscow to work out how to start them up to fulfil President Vladimir Putin’s promise to give Crimea a stable power supply.

If Russia can somehow get the turbines operating at the two new power plants under construction, having already irked Europe by delivering them, it will again demonstrate its ability to thumb its nose at the sanctions.

Industry specialists have said that starting up the turbines without engineers from Siemens or its partners would be a tough test of the country’s engineering resourcefulness, fraught with technical problems, expensive and a legal minefield.

“Without Siemens it will be very hard to do it,” said an industry source.

But the majority of the specialists said it can be done—even if it has never been attempted before.

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