After the scandal with the supply of Siemens gas turbines to the occupied Crimea in spite of sanctions had broken out, the company officially appealed to the arbitral court. What does that point to? Has Russia really deceived Siemens?
Now we see a spectacle, a show that is being played with the participation of two parties: Siemens and its Russian counterparts. It is unlikely that a company with a history of more than a century and a half is so naive that it did not take into account possible moves of the Russian side. Moreover, in Russia, Siemens has been present since the 19th century. And it knows imperial, Soviet, post-Soviet, and current Putin's Russia.
Therefore, all this is a fairy tale for certain procedures in the spin-doctoring mode, when it is necessary to wash off reputation of Siemens, since it is obvious that serious reputational damage for the company was caused by its own activities.
Another important aspect: Siemens does a lot of moves to show the crowd that it has been cheated, but! - has not withdrawn the license that it provided to "Power Machines" for 20 years yet in 2007 (together with "Power Machines" Siemens created a joint venture "Siemens Technologies of Gas Turbines", which brought turbines instead of Taman to the Crimea - ed.).
If it had withdrawn the license immediately, then this would have proved sincerity of intentions and the fact that the company was really cheated. But so, we see actually in the format of PR-actions an appeal to the court, clarification of circumstances, etc.
But formally they (Siemens - ed.) added a point to the agreement, which emphasized that these units should be supplied to "Taman" TPP, and not to Sevastopol or Simferopol, didn't they?
Nobody saw the text of the agreement. We can only believe the word that it contains a corresponding point. But even if it is so, we do not know how it is formulated. And we do not know how Siemens and Russia interpret it. Interpretations can be as far apart as the poles.
We do not see any party referred to any authority to find out how to interpret a particular provision. Siemens has now appealed to the court, but again - in Moscow. We know how the Russian court system works, especially commercial one. Therefore, I think this is an element of the scenario.
With what could Russia persuade Siemens to take the risk of "Crimean sanctions"? Is the contract for four turbines so attractive for the company?
I think there is a certain, perhaps "gentleman", but perhaps somehow formalized, agreement between Siemens and the Russian government that Siemens will assume certain risks, including reputational ones, instead of receiving a "sweet" order.
For example, within the "Nord Stream 2" project, where there will be needed a lot of different electrical equipment. There is also a "Turkish Stream". In its substance, the contract for supply of four turbines is not too attractive considering Siemens calibre and does not generate a powerful financial flow.
The four turbines against the background of the 380 turbines, which Siemens has already manufactured and serviced, is not such a big contract.
In addition, the current leadership of the company, including its head, was and is among those seeking to mitigate or lift the sanctions regime against Russia.
When the occupation was going on, when the Crimea was being annexed, Siemens top manager visited Moscow, where he met with Putin. After the visit, the federal government of Germany somewhat adjusted the position of the company, having noted that all German companies should comply with the imposed sanctions regime. The company retroactively declared its obedience to law, but actually continued, as we see, to do what had been agreed with the Russians at that time.
We wrote about the technology of circumvention of sanctions in December 2015. Just with the element of the so-called "Taman Thermal Power Plant", which was only a virtual point of the assembly. We predicted that it would turn out then that there would be no construction (Taman TPP - ed.), but turbines were here, and they needed to be settled somewhere.
At the beginning of the scandal, the Russian side claimed that the gas turbines, spotted in the Crimea, were, in fact, either of own Russian production, or the used Siemens units purchased on the secondary market.
Okay, they bought them presumably on some secondary market. Show from whom. As I said, 380 turbines of this class had been made. It's not three millions, and not thirty thousand. You can show where they were taken from. But they have not shown. This is an element of the game that divert attention from Siemens and creates effect of non-participation.
But, 65% of shares in the joint venture with "Power Machines" near St. Petersburg is a controlling stake. Almost 46% of Siemens shares is in the "INTERAUTOMATIKA" company, which should install turbines.
That is, Siemens a priori could not be aware; this would be a sign of worthlessness and unfoundedness of this company. But, given the 160 years of Siemens history, it's hard to believe.
It is not so easy to instal, customize, and start up modern turbines. Moreover, they can be operated remotely. In theory, can the company, for example, not allow the use of aggregates in the Crimea even in the current situation?
Definitely, the turbines will be mounted and started up, it is not a problem. Russia has experience in turbine construction, and quite good experience. In this case, it is said that they will not function normally, at full capacity. In case of confirmation of the version of fraud, Siemens will be able to remotely ensure instable work of these power plants.
By the way, a number of industry-specific Russian specialists warned the Russian government at an early stage, in 2015: there is no sense to deal with import supplies during implementation of these projects (construction of the TPP in the occupied Crimea - ed.), since the problem is not only with sanctions, the problem is with service, with scheduled maintenance.
After all, the Siemens turbines are rather capricious, they are high-quality ones, they are almost the best in the world, but require special care. The Germans will not provide their maintenance in the Crimea, so the Russians made themselves a shot in the eye, because nothing indicates that the projects near Sevastopol and Simferopol will work normally.
No one in Europe, no one in the West will forgive Siemens for this reckless scheme. Because the problem is not in the company itself, but in the fact that the EU sanctions regime, which is being carefully monitored in the USA, has been violated.
Does the fact that it was essential for Russia to bring to the Crimea precisely such turbines - powerful and modern - indicate an energy deficit on the peninsula which is cut off from Ukrainian grid? Is Moscow afraid of repeating the blackout?
Of course, the Crimea is not self-sufficient. 83-85% of electricity, consumed in the Crimea, was supplied from the united power system of Ukraine (until the end of electricity supply to the peninsula in the fall of 2015 - ed.). And only one seventh part was produced by four TPPs in the peninsula - Simferopol, Saky, Kamysh-Burun and Sevastopol ones. Of course, it is the issue for Russia how to offset deficit.
Currently, there are two options: cable through the Kerch Strait with its unstable soils and the risk of breaking, and the second, more stable in Moscow's imagination - construction of own power plants. But, again, four power units on two new TPPs should receive gas. Through the pipeline through the same Kerch Strait. One unreliability is multiplied by another. Why is this done?
In essence, excessiveness of the Crimean energy sector has been projected by developing an energy bridge and installing powerful generators at the TPPs. The reserve is created for a reason, it is the result of militarization of the peninsula, expansion of existing and creation of new military infrastructure that will require more energy.
Ideally, it will be produced almost twice as much energy as the Crimea needs. Because there is no new industry, no plans for construction of some serious industrial energy-intensive objects there.
