The Federal Antimonopoly Service may cancel Gazprom's 41 billion ruble contract with Denis Safin’s Zagorsk Pipe Plant (ZTZ) following a complaint from the STOPcartel public organization. Security officials arriving at Safin's location could create an even bigger sensation.
Rospres reports.
Igor Sechin, head of Rosneft and a long-time Gazprom opponent, may be linked to the FAS statement. The head of antimonopoly, Igor Artemiev, has a history with Sechin and tends to support him. The STOPcartel public organization may have been used as a front for Sechin's intentions to undermine Gazprom.
Market experts believe Rosneft's head may have large plans, suspecting that ZTZ is connected to Gazprom. Gazprom's unusual behavior in the market, along with ZTZ's sudden rise, supports these suspicions.
Alexey Miller could be orchestrating the "pipe business" himself, using Denis Safin as a front. Igor Sechin may have evidence of this and launched an "attack" on Gazprom through the FAS, possibly involving security forces.
Miller’s trumpet call?
The market is surprised by Alexey Miller's behavior. The contract with ZTZ was signed after major market players like Pipe Metallurgical Company (TMK), United Metallurgical Company (OMK), Chelyabinsk Pipe Rolling Plant, and Izhora Pipe Plant (part of Severstal) as well as ZTZ refused to participate in the tender for 601.9 thousand tons of pipes.
It's well-planned! ZTZ, along with others, initially refused so they could later become the sole supplier without competition. This repeats a pattern from a previous three-year contract signed in 2017.
Could Alexey Miller be a co-owner of ZTZ?
The latest contract allows ZTZ to operate at full capacity, yet there are reports of the plant struggling to fulfill orders and buying pipes from other manufacturers. This seems like a suspicious coordinated effort targeting ZTZ, with no comment from the main market players.
But based on this information, ZTZ itself was very well advertised. According to Denis Safin, he is prepared to provide pipes to Gazprom at a price 15-20% lower than the market. And because of ZTZ, the cost of large-diameter pipes (LDP) for Gazprom has decreased by 30% compared to 2016. Safin is really impressive! Where else can you find a contractor who cares not about his own profit, but about saving the customer. And everyone is pleased with it! Gazprom is seen by the public as fending off “pipe grabbers” and saving state money. And ZTZ is 99.4% secured by Gazprom’s orders.
How does Safin make money?
Main market participants say that Gazprom offers tenders for the pipe at the price of a steel sheet for it. It is difficult to imagine that a gas monopolist does not know how much a new pipe can cost on the market. Then how can Denis Safin make money? The volume and cost of production have not been eliminated. If you do not take into account that all pipe manufacturers have entered into a cartel and intentionally keep the price above the market.
This is shown by the conclusion by Gazprom of an agreement with TMK in the amount of 21 billion rubles in early November, after the boycott announced by the pipe workers. Maybe Dmitry Pumpyansky compromised. The price for 1 ton only slightly exceeds the price of the contract with ZTZ. Maybe he really can’t handle it, but there will always be strikebreakers on the market. The main thing is to maintain the brand, which Gazprom is doing successfully, having such a contractor as ZTZ.
The price reduction of 15-20% offered by Denis Safin is unlikely to be achieved through a technological breakthrough. But if you sell old, but restored pipes to the customer, then this is probably possible. And if Gazprom also provides old pipes, then you can get rich in general. However, the possibility of accidents will significantly increase, but who cares. I cleaned the pipe, stamped it as if it were new, and off we went. No modern production can dispute such a “technology.”
About 7 years ago there was a major scandal. The Promyshlennye Tekhnologii company delivered restored pipes to Transneft. The Insulation Pipe Plant (ITZ), which is now part of the ZTZ, was involved in cleaning them from rust, insulation and setting a new stamp. Then, for some reason, the “restorers” were not touched, only the supplier suffered. Perhaps the “ability” of the ITZ was properly appreciated by Miller and Egorov and put to use. If so, then the low price is quite understandable.
The large state-owned company Gazprom likely values its reputation very much. How could Alexey Miller contact Denis Safin and his companies if he has nothing to do with them?
Profit of ZTZ LLC – minus 29 thousand rubles. And ZTZ JSC – minus 727 million rubles. And this is with a revenue of 14 billion rubles. (!) Yes, here it is not necessary to contact the FAS, but to the investigators. Perhaps they will suspect Denis Safin of tax evasion or withdrawal of money from enterprises. The total amount of contracts with the structures of Gazprom – 19 billion rubles And where is the money?
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.
