2016 in context

January

Quality management systems (QMS) of Kazankompressormash and NIITK were certified in line with STO Gazprom 9001-2012 requirements in the fields of design, production, delivery, installation and the maintenance of compressors, refrigerating systems and turbo expanders. This certification has confirmed the efficiency of the QMS, which ensures maximum compliance of manufactured compressor equipment with the quality, safety and reliability requirements of Gazprom and other oil and gas companies.

Kazankompressormash manufactured and delivered compressor systems for Tatneftegazpererabotka (TATNEFT). This equipment was produced under the reconstruction project for the crude gas compressor system at the Minnibaevo gas processing plant (GPP) and was delivered as prefabricated units.

February

HMS updated the ratio of the Company’s depositary receipts program: for every five receipts held by depositary receipt holders, they received 1 “new” receipt in return. The issued number of ordinary shares and their nominal value stayed unchanged. Also, according to the terms of the amended deposit agreement with BNY Mellon, the annual depositary fee is equivalent to US$ 0.01 for every “new” DR, instead of the previous US$ 0.03 for every “old” DR, implying a fifteen-fold decrease in such fees.

Kazankompressormash signed a contract for the delivery and installation of a boosting compressor station worth Rub 2.8 billion. In accordance with the contract, the compressor station is to be delivered to the customer’s site. The station is based on three centrifugal-type compressor units with gas-turbine engines and is intended for the compression of low-pressure associated gas.

Sibneftemash’s QMS was certified by Gazprom (STO Gazprom 9001-2012). The Certificate received confirms the management’s high quality and effectiveness in the fields of design, production and delivery of equipment for the development of field infrastructure.

HMS Group supplied ten high-pressure pumps for the project of Yargeo (NOVATEK), which were put into operation at the oil and gas condensate pumping stations on the Yarudeyskoye field. The high-pressure pumping units are based on a retrofitted special application CNSp pump series, with a rated capacity of 180 m³/h and a pressure head of 1050 m. Due to their unique design, the supplied pumps surpass hermetic pumps, occasionally applicable for the transfer of high-pressure oil and gas condensate by a number of parameters. In 2015, the Group supplied a batch of state-of-the-art compressor systems for stripped associated petroleum gas to Yargeo for construction projects at the Yarudeyskoye field.

March

HMS Neftemash signed contracts with a total worth of Rub 3.1 billion for the delivery and installation of complex integrated solutions for the pumping of natural gas liquids, oil, wash-down water and rust preventive chemical. These contracts are a follow-up to another project that has been successfully completed recently.

HMS Group completed the construction of the largest and most high-tech multiphase metrological test flow facility in Russia, which will allow the testing and metrological calibration of up-to-date multiphase metering units. The Federal Agency on Technical Regulating and Metrology of the Russian Federation (Rosstandard) certified the facility and approved it in accordance with the working standard of flow rate unit of liquid-gas mixtures. Representatives from the world’s largest metering unit s producers – Siemens, ABB, Honeywell, Schneider Electric, Weatherford and Emerson – took part in a formal opening ceremony, which was held on March 24, 2016.

Kazankompressormash signed a contract for the delivery and installation of modular screw compressor units for the Novoportovskoe oil & gas condensate field for the next stage of the central production facility (Gazprom Neft). Three highly productive compressor units TAKAT, intended for the compression of natural gas, are to be produced.

Kazankompressormash manufactured and delivered two AEROCOM compressor systems for NLMK. Nitrogen six-stage integrally geared centrifugal compressors of the AEROCOM series have a capacity of 18,000 Nm³/h and 30 bar discharge pressure per unit, and are equipped with a 3,150 kW electric motor. They are intended for the process compressor equipment retrofit project at the oxygen and nitrogen compression area of oxygen shop. Similar compressor systems along with the custom designed, highly efficient 43GC1-210/31 centrifugal oxygen compressor, had been previously delivered to NLMK by Kazancompressormash.

The compressor system manufactured by Kazankompressormash was put into operation at the advanced oil-refining complex at LUKOIL-Permnefteorgsintez. The 5GC1-300/2-12.5 centrifugal compressor system, with a capacity of 26,000 Nm³/h an 11.3 bar discharge pressure and a 6.25 compression ratio, is intended for the compression of unstripped gas as a part of the newly delayed coking processing line. Earlier in 2014-2015, three complete gas compression systems for the compression of dry stripped gas, as well as the centrifugal compressor system for the compression of dry hydrocarbon gas, were successfully put into operation at LUKOIL-Permnefteorgsintez.

April

Kazankompressormash put a high-tech gas compression system into operation at Stavrolen’s boosting compressor station, designated to compress dry stripped gas (LUKOIL). The gas compression system is driven by a gas turbine engine on the basis of a 5GC2-287/15-57 compressor, with a rated power of 25 MW by means of a gearbox. The gas compression system was completed by a steam recovery boiler (with the ability to generate steam up to 310°C and a pressure of 39 bar), plus gas separators, air-cooling units, a fuel gas treatment unit, water treatment units and other processing equipment. The complete gas compression system was manufactured and supplied as part of the project of Stavrolen for the construction of the first phase of the gas processing plant (GPP-1) with a capacity of 2 billion m3/year, designed for the processing of associated petroleum gas supplied from the fields named after Yu. Korchagin and V. Filanovsky.

May

HMS signed an agreement with UniCredit Bank to open a 3-year non-revolving credit line in the amount of Rub 1.2 billion, which matures in May 2019. The credit facility was utilized for general corporate needs.

HMS Group took part in the 2016 Iran Oil Show International Exhibition in Tehran, Iran. A wide range of pumping equipment, manufactured in accordance with the API 610 standard, was presented at HMS Group’s booth. These state-of-the-art pumps are intended for the oil, gas and gas condensate extraction process, as well as for oil refining and petroleum chemistry applications.

NIITK designed and manufactured an integrally geared centrifugal compressor system for the Joint Institute for Nuclear Research (located in Dubna, Moscow Region). The AEROCOM 2-179/18 centrifugal compressor system, with a capacity of 10,600 Nm³/h and a 17.6 bar discharge pressure, is equipped with a 1,600 kW electrical drive and an up-to-date microprocessor automation system and is intended for the compression of nitrogen. The compressor system is a part of the processing unit at the NICA accelerator complex, currently under construction in the Veksler and Baldin Laboratory of High Energy Physics (located in Dubna, Moscow Region). This project became one more example of successful cooperation between the institutes. NIITurbokompressor has already manufactured and supplied rotary screw compressor systems for helium to the Joint Institute for Nuclear Research.

June

HMS Neftemash signed a contract worth Rub 2.1 billion for the delivery and installation of a formation-fluid and low-temperature separation unit. The company will deliver this integrated solution to the customer’s site. The unit, made up of inlet formation-fluid separators, heavy condensate separators, heavy condensate degassers, low-temperature separators, heat exchangers and others, will be installed at an oil and gas condensate deposit located in West Siberia in 2017.

HMS Group signed a contract to retrofit of a batch of water injection pumps that were manufactured by HMS Group and operated at the Vankor oil & gas condensate field. The contract assumed the procurement of complete refurbishment kits, in-depth retrofit works, acceptance tests, installation supervision and the commissioning of CNS 500-1900 and NCN-E-800b-1 pumps operating at modular cluster pumping station №2 in the free-water knockout unit FWKU-South. Hydraulic and performance tests of a single CNS 500-1900 pump were carried out at the premises of Nizhnevartovskremservice, while rest of the pumps were retrofitted on site.

Kazankompressormash put two high-performance Soitaab (Italy) water jet cutters into operation: new WATERLINE 2060-1H-50HP machines with a 2,000x6,000 mm working area and an ability to cut virtually all types of materials without causing mechanical and thermal deformation to the work pieces. One of the machines is equipped with a 3D head for cutting work pieces up to 60-degree angle, providing complex cutting with chamfering. The implementation of this new technology is being carried out under the long-term investment program for the modernization of Kazankompressormash’s manufacturing facilities, which is aimed at increasing the production volume of state-of-the-art and reliable compressor equipment. As a part of the program, the latest generation NC machining centers made by the leading global manufacturers have already been purchased and installed, resulting in a significant increase in the accuracy of machining and a reduction in the lead-time.

July

NIITK designed and manufactured an integrally geared centrifugal compressor system for the Bashkir Soda Company that is aimed at the compression of circulation gas in the vinyl chloride production system.

Kazankompressormash manufactured a complete gas compression system for the project of reconstructing the Yuzhno-Balykskiy Gas Processing Plant (SiburTyumenGaz). This compressor system wascompleted with dry gas seals, redundant air-cooled oil coolers and a bypass valve located within the housing of the compressor system.

August

HMS Livgidromash was certified in line with STO Gazprom’s 9001-2012 requirements. The audit was carried out by experts from one of Russia’s leading certification associations – the Russian Register – and notified by an organization authorized by Gazprom. This certificate confirms that HMS Livgidromash’s quality management system in the engineering, design, manufacture, installation and maintenance of pumps and pumping units fully complies with Gazprom’s requirements and provides a supply of equipment and servicing that meets the customer’s requirements in the areas of performance, reliability and safety.

HMS delivered new generation pumping units to the Southern water treatment plant of Vodokanal of St. Petersburg. This project was implemented under a strategic partnership agreement between HYDROMASHSERVICE and Vodokanal of St. Petersburg in order to provide an increase in energy efficiency for the objects at Vodokanal of St. Petersburg and to enable the citizens of St. Petersburg and the Leningrad Region to have accessible and high quality service of water supply, sewage disposal and waste treatment.

September

Kazankompressormash put two compressor systems into operation at the Yugo-Zapadnaya CHPP Phase 2 that are based on GCM3-107/7-31 integrally geared centrifugal turbochargers with a capacity of 45,996 Nm3/h. The discharge pressure (30 bar) and 3,150 kW electric motor are manufactured with all the necessary accessory equipment, including an automatic control system, a nitrogen station, a compressed air station, and a methane-nitrogen mixture extraction unit. Compressor systems are designed to compress and supply natural gas to the gas turbine of a PGU300 power unit, according to the API 617 standard requirements.

October

Forbes ranked HMS among the Top 200 Largest Private Companies in Russia and among the Top 10 Largest Machine-Building Companies in Russia in 2016. Moreover, Forbes has ranked HMS Group No. 9 in the ranking for Russia’s largest private machine-building company. Companies are ranked by their total revenue for 2015, which totaled Rub 667 billion, down by 19 percent yoy from Rub 825 billion in 2014. Unlike most of the other participants, HMS was one of the few with a revenue growth.

HMS Group signed a Special Investment Contract (SIC) with the Russian Federation (the Ministry of Industry and Trade and the Government of the Orel region) as part of the XV International Investment Forum “Sochi-2016.” The special investment contract is a new tool whose aim is to support import substitution in the form of an agreement between an investor and the Russian Federation. The signed SIC provides HMS Group with a package of state support measures for the realization of the second stage of the company’s localization project, which is aimed at developing manufacturing competences for high-capacity oil refining, oil transport and nuclear pumps in Livny, in the Orel region. The key advantage gained from the conclusion of the contract is the admission of state customers to procure manufactured products based on a SIC without having to hold a tendering process, as long as the product supplier is included in the register of single suppliers.

On October 7, Gazprom’s Deputy Chairman of the Board, V. Markelov, and the President of HMS Group, A. Molchanov, signed a long-term contract for the manufacture and supply of import-substituting products manufactured by Kazankompressormash. According to the contract, Kazankompressormash will provide the serial production, delivery and after-market services of MKU TAKAT (modular compressor systems) based on rotary screw compressors. This new generation of state-of-the-art MKU TAKAT are intended for application as stripper wells and provide a solution for the extraction of low-pressure gas. These systems meet the requirements of the API 619 standard. The compressor systems fully comply with Gazprom’s requirements and demonstrate the best technical performance for this type of equipment.

Kazankompressormash manufactured 5 complete gas compression systems for the project of infrastructure development of additional wells in the East section of the Orenburg oil & gas condensate field (Gazpromneft-Orenburg). The supplied systems are based on high-performance compressors, which are designed in accordance with the API 617 standard and have "back-to-back" type impellers made of titanium alloy that provides a significant reduction in dynamic rotor loads. Energy-efficient NK-16-18ST gas turbine units manufactured by KMPO are applied as compressor drives.

HMS Group signed a contract to supply a modular pumping station at the Novoportovskoe oil & gas condensate field under the project of its infrastructure development. The station is intended for the injection of a working agent into a formation for pressure maintenance.

November

The Group signed a number of credit agreements with Raiffeisenbank, totaling Rub 2.9 billion. HMS has refinanced its previously signed credit lines of Rub 1.8 billion at lower interest rates, which will reach maturity in 2019. Furthermore, the Bank and the company have signed a new 5-year uncommitted loan facility with 3-year tranches in the amount of Rub 1.1 billion rubles, which will reach maturity in 2021. The credit line was utilized for general corporate needs.

HMS supplied a large batch of pumping units for the modernization project at the Gazprom Neft Moscow Refinery. The pumping units will operate as part of the sulfuric-alkaline waste and process condensate treatment system under construction. Single-stage and multistage high-pressure process pumps will feed the system with raw material and will pump out petroleum products and working liquids. The pumps have high-efficiency hydraulics of a flow path and are made of highly resistant stainless steel. The equipment is characterized by its low vibration and ability to operate smoothly. As a result, the refinery will significantly improve its technical and ecological manufacturing features. The fluid catalytic cracking unit will be retrofitted in the beginning of 2017. After the retrofit, the capacity of the unit will rise by 20 percent. In addition, the refining depth and the yield of light petroleum products will increase. The quality and ecological features of the products, as well their energy efficiency, will be improved.

The company signed a contract to supply pumping units the Kola Nuclear Power Plant. AS-1D pumping units for the reactor planned after cooling system and the process water system, as well as the AS-H pumping units for auxiliary systems, will be supplied under the ongoing power generator life extension program at the Kola Nuclear Power Plant. In addition, HMS Group is currently implementing a contract for the batch supply of high and low pressure pumping units for an emergency cooling system of the core section at the Kola Nuclear Power Plant.

December

Fitch Ratings assigned the JSC HMS Group (legal entity, the holder of HMS Group’s assets, located in Russia) a first time Foreign and Local Currency Issuer Default Rating (IDR) of “B+”, with a “stable” outlook.

Two centrifugal compressor units were manufactured by Kazankompressormash after having been successfully tested and put into operation at the booster compressor station of NOVATEK-Yurkharovneftegaz. The 53GC2-188/10-87 compressor units, with a unit capacity of 2.822 mn Nm³/d and a discharge pressure of 87 bar, were designed to be operated as a part of GPA-16 NK-03H Ural’s gas compression systems for the compression of associated petroleum gas. The most advanced and effective technical solutions were used in the development and manufacture of these compressors. The compressors were designed with the ability to operate using one or two compression stages, which ensures the reliable operation of the compressor system in all specified operational cases. The application of dry gas seals eliminates any possibility for leaks of the working gas. The operating mode of compressor units makes it possible to use of a parallel arrangement of casings and an application of three-shaft speed-increasing gears with two output shafts. The advantages of this arrangement are its small size, the flexible operation scheme of compressor units (one compressor casing is operating over the first few years, and in the following years may involve sequential operation of two compressor casings), as well as the system’s high-energy efficiency.

Export Activities in Short

Despite the fluctuations of world’s hydrocarbon prices in 2016, which led to the suspension of many major international oil & gas projects, the export sales revenue of HMS Group still managed to reach about US$ 30 million. At the same time, the export backlog for 2017 increased by 30 percent, equaling US$ 40 million.

In 2016, HMS Group and its manufacturing facilities were prequalified for and enrolled into the list of approved vendors for such significant international customers as Exxon Mobil (the West Qurna-I project), Linde AG, ENEC, MAADEN, the Ministry of Petroleum of Iran, NIGC, ICOFC, and others. Furthermore, the Group continued its extensive cooperation with strategic customers such as BP, ENI, Petrofac, DAELIM, Technip, Tecnimont, Doosan and many others.

In 2016, apart from the above, after the lifting of sanctions, HMS Group re-entered the Iranian market and signed contracts worth around Euro 7.9 million for the supply of API process pumps to Iran’s petrochemical industries.