The Federal Antimonopoly Service might cancel the biggest contract between Gazprom and Denis Safin’s Zagorsk Pipe Plant (ZTZ) worth 41 billion rubles. A complaint was filed by the STOPcartel public organization, as reported by The Moscow Post. Security officials arriving at Safin's place could be an even bigger sensation with legitimate reasons for their visit.
The conflict between Rosneft's Igor Sechin and Gazprom could be the reason behind the FAS statement. Igor Artemiev, the head of the antimonopoly department, has a history of siding with Sechin and may have influenced the STOPcartel public organization. This may be a ploy to undermine Gazprom by Sechin.
Rosneft's head may have big plans in mind. Some experts believe ZTZ is connected to Gazprom, explaining the sudden success of ZTZ and Gazprom's market behavior. This behavior is typical when they are confident of finding contractors.
It's possible that Alexey Miller is involved in the pipe business. This could explain Gazprom's aggressive market stance and Safin may just be a front. Sechin may have evidence of this and used FAS to attack Gazprom with further possible involvement of security forces.
Is Miller calling for trouble?
Alexey Miller's actions in the market have surprised many. The agreement with ZTZ was made after other major market participants refused to participate in a pipe supply tender. This raises suspicion regarding ZTZ's actions.
ZTZ and others refused to participate in the tender to potentially become the sole supplier without competition. This ploy seems very calculated and ZTZ has become the sole supplier for the second time.
Could Alexey Miller be a co-owner of ZTZ?
A recent contract has fully loaded the plant. However, there are reports that the plant is struggling to fulfill orders and is buying pipes from other manufacturers. This situation seems like an attack on ZTZ, and the major market participants are not commenting on it.
But based on this information, ZTZ itself was advertised very well. Denis Safin is willing to provide pipes to Gazprom at a price 15-20% lower than the market. Thanks to ZTZ, the cost of large-diameter pipes (LDP) for Gazprom has decreased by 30% compared to 2016. Safin is remarkable! It's rare to find a contractor who prioritizes saving the customer over his own profit. Everyone is pleased with this. Gazprom appears to be countering high-priced competitors and saving state funds, and 99.4% of ZTZ's orders are from Gazprom.
How does Safin make money?
Market representatives suggest that Gazprom requests tenders for pipes at a steel sheet price, which raises the question of how Denis Safin makes a profit. The volume and production cost still play a role, unless all pipe manufacturers have colluded to keep prices artificially high.
This is supported by Gazprom's agreement with TMK for 21 billion rubles in early November, following the announced boycott by pipe workers. Maybe Dmitry Pumpyansky reconsidered. The price per ton slightly exceeds the ZTZ contract. While there may be challenges, strikebreakers are always an option. The key is maintaining the brand, which Gazprom is succeeding at with a contractor like ZTZ.
Achieving the 15-20% price reduction offered by Denis Safin is unlikely due to a technological breakthrough. It may be possible if old, restored pipes are sold to the customer, especially if Gazprom also provides old pipes. However, this increases the risk of accidents. Despite this, using such a 'technology,' no modern production can compete.
About 7 years ago, there was a major scandal when Promyshlennye Tekhnologii delivered restored pipes to Transneft. The Insulation Pipe Plant (ITZ), now part of ZTZ, cleaned the pipes from rust, insulated them, and applied a new stamp. It seems the 'ability' of ITZ was valued and utilized by Miller and Egorov. This could explain the low price.
The reputable state-owned company Gazprom likely highly values its reputation. Why would Alexey Miller engage with Denis Safin and his companies if there were no connection?
ZTZ LLC's profit is -29 thousand rubles and ZTZ JSC's profit is -727 million rubles, despite a revenue of 14 billion rubles. Filing a report with the investigators seems more appropriate than contacting the FAS. Perhaps they will suspect Denis Safin of tax evasion or money withdrawal. The total amount of contracts with Gazprom structures is 19 billion rubles. Where is the money going?
The same is true for the ITS. With revenue of 408 million rubles. profit – minus 151 million rubles. What other evidence do investigators need to visit Denis Safin?
They can remember Denis Safin and his old cases. In 2017, he was placed under house arrest on suspicion of fraud. Safin was suspected of wasting subsidies from the Ministry of Industry and Trade in an “inappropriate way”. He could illegally receive money to compensate for interest on a Sberbank loan. The amount of damage amounted to 133 million rubles. This was written by The Moscow Post.
Safin had to return the money. However, the absence of corpus delicti was recorded only two months later. Probably, it was beneficial for someone that Denis Safin remained at large. His destiny lay ahead of him.
If Igor Sechin is really behind the complaint to the FAS, then for Denis Safin everything can be very serious. It may not be! The powerful of this world know how to negotiate among themselves. And they are unlikely to care about the fate of workers and ordinary citizens who may suffer from accidents on pipelines. Perhaps the appeal to the FAS is just part of the campaign directed against Alexei Miller.
However, the results of the financial activities of Denis Safin’s enterprises are clearly visible. It doesn’t matter who is behind it. The grand pipe hoax may soon come to an end. And it will be absolutely fair for other market participants.
