Evropeyskaya Elektrotekhnica is preparing for new deals in the Oil&Gas market in the Near East: the first results of the business trip to Lebanon

Evropeyskaya Elektrotekhnica is preparing for new deals in the Oil&Gas market in the Near East: the first results of the business trip to Lebanon

November 20, 2018. Moscow — PJSC Evropeyskaya Elektrotekhnica (hereinafter, the "Company"), a leading company in the Russian engineering market, represented by its subsidiary ROG-Engineering LLC, reports on the business meetings held in November 2018 with business representatives and representatives of the state administration in the Lebanese Republic (hereinafter, "Lebanon").

During Habir Kilmuhametov's visit to Lebanon, the General Director of ROG-Engineering, meetings were held with the management of the following Lebanese organizations:

• PrimeSouth – a large contractor in the field of construction of electric power facilities in Lebanon, and operator of such facilities. In compliance with the agreement concluded with Electricte Du Liban, the company is currently an operator of two 450 MW electric power plants in Lebanon. PrimeSouth is one of the largest buyers of combustibles and lubricants in the country, diesel fuel included.

Lebanon imports diesel fuel from Algeria; this fuel is of poor quality, and requires treatment to remove water and solids. There is also the problem of recycling the earlier accumulated sludge, which consists of a significant volume, while extracting diesel fuel from it (up to 20% of the sludge) and eliminating environmental hazards caused by its remaining components.

• The Ministry of Energy and Water of Lebanon — provides Lebanese consumers with a supply of gasoline, diesel fuel, and fuel oil, and regulates the internal fuel market in the country.

There has been interest in delivering low-tonnage facilities to Lebanon for fuel oil conversion to obtain gasoline, diesel fuel and furnace oil.

The Russian delegation visited a CHPP located in North Lebanon. The host party gave a tour of the facility, and potential options for cooperation at the CHPP were discussed, including a sludge recycling project.

Habir Kilmuhametov, General Director of ROG-Engineering, noted the following after the visit: "The Oil&Gas market in the Near East is of interest to our company for several reasons. In the countries in this region, there is currently high demand for low-tonnage facilities in the Oil&Gas sector. This is partly due to the fact that there are no oil refineries at all in Lebanon.

In addition, suppliers of this kind of process equipment are not able to offer their equipment in the low-tonnage market segment, or are extremely cautious about working with customers from this challenging region. 

During the visit, we held productive business meetings, discussed in detail the needs of relevant local structures, and made a draft plan for further action. The Lebanese party provided us with analytical information on the subjects of cooperation. Our associates from the Near East are expecting technical and commercial offers from us for our produced equipment, whose technological characteristics fully cover the needs of the local market."

REFERENCE: Lebanon's energy sector

Electric power consumption in Lebanon has been steadily growing since the beginning of the 1990s, and amounted to 16 bln KWh in 2015 (source: The U.S. Energy Information Administration). As of 2018, the state of the electric power supply system is far from stable, with hours-long blackouts occurring several times a day. The situation hasn't improved since the Lebanese Civil War at the beginning of the 1990s. Both individuals and businesses have to acquire their own diesel generators.

This year, the Lebanese Government is making additional provisions for fuel procurement in order to reduce interruptions in the country's electric power supply (USD 430 mln). However, this is no easy task for a country with a significant budget deficit, current account deficit, and major external debt, which will amount to 155% of the country's GDP by the end of 2018 (as assessed by the World Bank).

There is a high possibility that the country has significant amounts of natural gas in offshore fields in the West Mediterranean. The volume of undiscovered gas reserves in the Leviathan Oil&Gas field could amount to about 3.5 tln m³, as well as about 1.7 bln barrels of oil (source: The US Geological Survey). In May 2018, the Lebanese Government announced the start of the first stage of oil and gas exploration at the offshore field near the border of Israel.

The exploratory drilling plan for the offshore field was presented by the French company Total, the Italian company ENI and the Russian group of companies Novatek. The first well is planned to be drilled in 2019. That said, Lebanon's gas plans may be opposed by Israel, who considers some of the territories where exploration of hydrocarbon reserves is planned to belong to Israel.

Russian Oil&Gas companies are actively cooperating with the Lebanese Government. For example, Gazprom obtained authorization for carrying out geological exploration work in Lebanon back in 2007.

About the Group of Companies PJSC Evropeyskaya Elektrotekhnica

PJSC Evropeyskaya Elektrotekhnica (MOEX: EELT) provides comprehensive services in the sphere of creating energy and electric power supply systems, electric lighting systems, and low current systems at all types of facilities, as well as industrial electric heating systems.

The Company has been working in the electrical engineering market since 2004, and at present has its own engineering and production facilities. The Company is one of the leading distributors of electrical equipment in Russia, offering customers a wide range of products made both in Russia and abroad. Thanks to a well-organized and efficient logistics system, the Company is able to supply products (including oversize loads) all over Russia, including to hard-to-reach areas of the North, as well as Belarus, Kazakhstan, Turkmenistan, Kyrgyzstan and Uzbekistan. The company established its own production of transformer substations, electric switchboard equipment of any complexity (up to 6300 A), electric lighting systems and electric heating systems.

The Company implements projects in the oil and gas sector, electric power sector, nuclear industry, metal industry, mining industry, and manufacturing industry and at transport infrastructure facilities. Evropeyskaya Elektrotekhnica's customers include companies such as Rosneft, Gazprom, NOVATEK, LUKOIL, and Nizhnekamskneftekhim. The Company's projects include Power of Siberia, Yamal LNG, Smolensk NPP, Data Center of Sberbank of Russia, and the Domodedovo, Sheremetyevo, and Pulkovo airports, etc.

Since 2018, the Company has been producing highly efficient modular process equipment for clients in Oil&Gas and petrochemical markets at the site of its subsidiary ROG-Engineering, a research and production Company in Ufa (Republic of Bashkortostan, Russia).

Key financial indicators of PJSC Evropeyskaya Elektrotekhnica (IFRS):

The number of employees is about 400 (as of June 30, 2018). Since September 2017, common shares of PJSC Evropeyskaya Elektrotekhnica are traded on the Moscow Exchange with trading code EELT.

In June 2018, the Company was named "Leader of Import Substitution" at the "Leader of Competitive Sales" annual national awards, in which 450 domestic suppliers from various industries took part. 

Contacts:

PJSC Evropeyskaya Elektrotekhnica

Tel .: +7 (495) 640-93-48

Mailing address: Building 3, 1 Lyotchika Babushkina St., Moscow, 129344

Press contact                Contact for investors and analysts

press@euroet.ru           IR@euroet.ru

www.euroet.ru               www.euroetpao.ru

For more information, please contact:

Stanislav Martyushev

Director for Corporate Communications and Investor Relations

PJSC Evropeyskaya Elektrotekhnica

Tel. +7 (495) 640-93-48, ext. 164       

ROG-Engineering LLC (www.rogeng.ru) performs the full range of services including:

- survey of existing Oil&Gas production facilities with presentation of engineering and process recommendations;

- engineering, design and construction of newly build projects;

- reconstruction and modernization of existing equipment and plants;

- design, fabrication and supply of complete process train equipment, modular process equipment, different types of pumping stations, mobile well-test and development units, flares and combustion systems, gas separator, gas treatment units and other types of Oil&Gas process equipment;

- design and implementation of hardware and software for Automated Process Control Systems;

- installation supervision;

- commissioning and start-up, designer's field supervision.

ROG-Engineering LLC designs and fabricates wide range modular process equipment with fully automated controls including:

- booster pumping stations BPS for any capacity;

- preliminary water knock-out units of vessel and tubular design with capacity up to 30 000 m3/day;

   Perfomance indicators of preliminary water knock-out units:

   • water cut of oil at inlet: up to 95% and greater;

   • water cut of oil at outlet: 0.5% to 5%;

   • content of petroleum products and solids in treated water: 5 to 50 mg/l.

- oil treatment plants with capacity of 0.2 to 4 million tons per year;

- produced water treatment units or separate vessels such as settlers of vessel or tubular design with volume of 10 to 200 m3 and with quality of water treatment of 5 to 50 mg/l;

- packaged well pad pumping station with capacity of 20 to 180 m3/hour;

- inlet separators for oil with high gas-oil ratio up to 2000 m3/m3;

- modernized separators and settlers with increased capacity of vessel and tubular designs;

- mobile well-test and development units;

- oil-well separation units;

- test separators for oil with normal and high gas-oil ratios up to 2000 m3/m3;

- associated petroleum gas treatment;

- gas treatment units;

- low pressure gas recovery units;

- gas dehydration units;

- combustion systems including flare KO drums, condensate drums, LP and HP flare risers, flare systems with tips for smokeless combustion;

- flare systems with demountable tips;

- flare systems with demountable flare stacks;

- horizontal flares for combustion LP and HP gases;

- horizontal flares for combustion of industrial waste gases;

- horizontal flares for combustion of liquid hydrocarbons and other combustible liquids;

- mobile filtration units;           

- various types of pumping stations;

- auxiliary and utilities equipment including modular buildings for control rooms, motor control centers and others.