Opportunities and challenges in Russia
Russian helicopters are exported mainly to Latin America, Europe, Central and South Africa, and South-East Asia. Russian Helicopters Holding occupies a leading position in the fast-growing markets of India and China and is rapidly expanding its presence in South and Central America, the Middle East and Africa. The Company established services centres in Egypt and Iran, and is also working on the development of centres in other countries, including China, Peru, Brazil, South Korea and Kazakhstan.
Russian coastline is about 38.5 thousand kilometres long, and while helicopters are deployed more often, the need of special equipment for offshore flights is growing. Gradual development of the offshore oil and gas fields in Russia resulted in a surge of demand for transport helicopters, which in turn convinced core operators to add foreign helicopters to their current Russian made fleet (mainly the Kа-26, Mi-2, Mi-8, Mi-8АМТ and Mi-171A). While UTair Aviation and PANH are the largest helicopters operators for the Russian oil and gas industry, a large number of smaller operators play a very important role in oil and gas missions in Russia. Gazprom Avia, ordered in 2010 ЕС135 helicopters from Airbus Helicopter with Russian made avionics and Rosneft ordered AW189 from Augusta Westland.
On the other side, the dominating demand for light helicopters is attributed to the Russian helicopters fleet structure, which was formed in the previous century and overbalanced towards medium Mi-8 family helicopters. Now, most helicopters operations can be managed by light helicopters. Leonardo Helicopters AW119 and Bell 505 Jet Ranger X, which entered the Russian market in 2018, are perfectly suited.
Like all industries in Russia, Helicopter industry policy is driven by the import substitution policy (импортозамещающие программы) intimated in 2014 by the Ministry of Industry and Trade . This policy consists of minimising the use of foreign components.However, European companies are all to enter Russian Market :
- European equipment may be more competitive, offering higher reliability, lifetime and quality standards and use more advanced technologies;
- Orders for Russian helicopters by some foreign customers may also include requests for specific Western made on-board equipment as a contract requirement obliging Russian manufacturers to procure abroad;
- Wrt Western helicopters manufacturers already present in the Russian market to supply parts;
- In the context of modern economic conditions, the helicopters operators strive to get the most out of their helicopters fleets. Therefore, the demand for additional equipment capable of expanding the helicopters fleets potential is growing worldwide. Russia has been no exception. Helicopters are deployed more often and the need of special equipment for offshore flights is growing.
Leading sub-sectors are Cabin furniture and specific equipment, MRO and infrastructures needs.
The import substitution policy is strongly impacting the Russian Market and institutional market is more and more reserved to local products. However the space sector still represent huge opportunities for foreign companies in terms of sales of space and ground equipment. to develop a strong position on the Russian foreign companies shall either rely on quality and reliability of their products, specific competencies, and when more and ore often on local partnerships ensuing market access or local productions. The major European space actors in Russia have both created joint ventures with their local partners. Other opportunities can be found in development and procurement of specific technologies which are not available in Europe or for which Russia can, thanks to its lower labour hourly rate and highly qualified engineers, offer competitiveness.
CMZ-Consulting is providing tailored solutions to your needs. Based on its deep experience of the RussianSpace industrial network and proximity to the main actor, CMZ-Consulting can develop your marketing activities in Russia and establish the necessary contacts at all levels required, market your products and secure your sales. Western companies having local activities require to adapt to the local culture and rules while applying their management and quality standards. Our engineers can ensure these tasks and provide a flexible and efficient interface with your Russian suppliers, or partners. Thanks to its strong knowledge of the Russian industrial network, we can identify sources for technology or products you could be willing to procure in Russia.
Oil and gas production and transport including refining industry represent 2% of the market and employ about 2,000,000 people.The Russian government supports large projects and Russia plans to spend more than $120 billion in Russia’s oil production and export with 20 major oil and gas projects expected in the 2018 to 2025 time frame.Among others are NordStream2, Yamal LNG, Artic LNG including continued development of the Russian Far East production (increase by 250% in the next decades) including major Sakhalin oil and gas project and the « Power of Siberia » gas pipeline to China. All these projects represent huge opportunities for foreign companies.
In addition, chemical production facilities, using natural gas, will likely be built along the new pipeline routes including methanol, ammonia and fertilizer products. These new projects will require procurement of equipment and machinery to support their production.