Russian Economy General News: #13

Russia has gained turbine independence, by Olga Samofalova for VZGLYAD. 10.11.2024.

Russia's energy sector has achieved technological independence from the West.

Russia has made a huge step towards liberation from critical dependence on Western high-power gas turbines. For the first time, a thermal power plant with such a turbine, developed entirely in Russia, was launched. This is a unique technological achievement of the country, which seemed simply impossible until recently. After all, for so many decades we bought turbines from the Germans and Americans.

Russia has launched the first domestically produced high-power gas turbine GTD-110M. It was installed in the third power unit of the new Udarnaya thermal power plant, which was commissioned in the Krymsk region of Krasnodar Krai with the participation of Russian President Vladimir Putin.

Before this, Russia bought gas turbines of such power from foreign manufacturers. But Western manufacturers left our market – and we were left without such turbines.

“The fact that we are developing new production facilities and that we are becoming independent and technologically sovereign in this segment is very important,” said Vladimir Putin.

Rostec notes that the distinctive features of the high-power gas turbine GTD-110M, compared to foreign analogues, are its smaller weight and dimensions, as well as high fuel efficiency. Its production uses advanced developments and innovative technologies, including the manufacture of combustion chamber parts using the additive method.

The engine will be used in gas turbine power plants and combined cycle power plants with an electrical capacity of 115 MW. Previously, turbines of similar capacity had to be purchased from Western companies, in particular from Siemens, GE and Alstom, which were forced to leave the country due to the conflict in Ukraine.

The first such turbine was delivered to the Udarnaya TPP. The next three GTD-110M turbines will be manufactured and delivered in 2025-2026 for the modernization of the Novocherkassk GRES. Production plans provide for the release of two such turbines per year. However, from 2028, UEC (part of Rostec) plans to double serial production to four power plants per year. This will be possible thanks to the construction of a new mechanical assembly complex in Rybinsk.

HSE experts calculated that Russia's dependence on gas turbine imports in 2022 was more than 90%, which is a critical dependence. But after 2022, the main suppliers Siemens and General Electric stopped working with Russia and withdrew from joint ventures.


Therefore, the task of import substitution of high-power gas turbines has become even more urgent. Russia itself could only make low-power turbines, and attempts to create its own high-power gas turbine had not been successful before.

"The problem of the lack of high-power gas turbines has been recognized for quite a long time, and work in this direction was carried out until 2022. Some of this work was carried out together with our Western partners, in particular with Siemens.

It was decided to use the technology and experience of the German company. As subsequent events showed, this path turned out to be a dead end. However, our own developments were also carried out, and now we see one of their results," says Alexander Frolov, Deputy Director General of the Institute of National Energy, Editor-in-Chief of the industry media InfoTEK.

In addition to Rostec, there are also Power Machines projects to create 65 MW and 170 MW gas turbines. "Rostec's turbine is relatively small. And for the tasks facing the industry, such power should not be limited," Frolov believes.

Because, in his opinion, the demand for such turbines in Russia will be very high in the next 25 years at least. Many power plants in Russia are old, they require modernization or complete replacement, while the growing demand for electricity creates the need to build new gas power plants.

"The installed capacity of all power plants in Russia (not just gas ones) is about 263 Gb. Of this capacity, 30 Gb were built from the early 90s to the early 2010s, and another 50 Gb since the early 2010s. All other power plants are older, many of them were built in the 1960s and 1970s of the last century, some of them need to be updated," says Alexander Frolov. In general, the service life of power plants is very long and is designed for more than one decade.

"By 2030, we need to sort out the 100 Gb power plants. This does not mean that they need to be replaced, but we need to pay maximum attention to them. These are quite old power plants, and we need to understand which of them can be modernized, which can continue to operate smoothly, and which require replacement. Let's say that half or 2/3 of them can still operate until 2030, but by the 2040s and 2050s, they will clearly require replacement. It is clear that these are not only gas power plants, there are also nuclear and coal power plants, but gas power plants dominate here," says Frolov.

At the same time, the demand for electric energy in Russia is not decreasing, but growing and will most likely grow to 1100-1200 billion kilowatt-hours by the end of the decade, the expert adds. This means that in addition to replacing turbines at old stations, it will be necessary to build new power plants. Therefore, there is a risk that the capacity of serial production of such turbines will not be enough to meet all existing demand.

Only eight such turbines will be assembled in four years in 2028 – two per year. From 2028, assembly will increase to four units per year. That is, 18 high-power turbines will be produced by 2030. At the same time, Russia's need for such turbines may amount to more than 40 units.


This is the exact number of turbines that was named in 2022, when Russia agreed to purchase them from Iran.

"There are plans to modernize power plants, and there are plans to produce new gas turbines. If a Russian manufacturer can produce the necessary equipment only in 15 years, then we will have to look for someone else, for example, in Iran and China. Most likely, there will be a shortage of gas turbines in Russia even with our own production. The Russian market is quite large, there will be many who want to sell us their turbines. The same Siemens, which was effectively forced to leave Russia, is not at all delighted with what is happening," says Alexander Frolov.

To understand: there are about 310 gas turbine units operating in Russia, and each of them will require replacement at some point. At the same time, one such turbine can cost 3-4 billion rubles. That is, this market can bring the turbine supplier billions of dollars, not counting the cost of spare parts and scheduled repairs.

Russia needs to learn to build and produce turbines of even greater capacity, the expert believes. In the spring of 2022, before concluding an agreement to purchase 40 gas turbines from Iran, the import duty on MGT-70 gas turbines manufactured by Iranian Mapna was lifted. This suggests that Russia clearly needs such turbines. And the Iranian turbine has more capacity than the Russian GTD-110M - 185 MW versus 115 MW for the Russian turbine.

At the same time, Siemens gas turbines (which caused a scandal in the German concern) of even greater capacity were installed in Crimea. Power Machines has a project for a GTE-170 gas turbine with a capacity of 170 MW, and they have already manufactured the first serial model. In addition, plans are being considered for organizing serial production of gas turbines with a capacity of 300-400 MW, said First Deputy Prime Minister of the Russian Federation Denis Manturov in September.

"A gas turbine is a large object, the size of a small house, which can meet the energy needs of an entire, albeit small, city. The news that Rostec has released the first Russian serial high-power turbine - GTE 110M, is very important. Now we can talk not only about replacing Western products, but also about potential competition with Western analogues. This is an achievement of a qualitatively different order - technological. It is technology that generates economic growth of the country," says Pavel Sevostyanov, Acting State Advisor of the Russian Federation, Associate Professor of the Department of Political Analysis and Socio-Psychological Processes at the Plekhanov Russian University of Economics.

In the long term, Russia has the potential to export its high-power gas turbines. "We have the post-Soviet space, other countries also want to strengthen their energy security. These turbines can become an export product, but this is already a more distant prospect," Frolov concludes.

https://vz.ru/economy/2024/10/11/1291837.html

The ruble has become the main currency for settlements with Asian countries for the first time, 10.15.2024.

Central Bank: Ruble Becomes Main Currency for Payments for Imports from Asia for the First Time.

MOSCOW, 15 Oct — RIA Novosti. The ruble became the main currency for payments for imports of goods and services from Asian countries for the first time in August, according to RIA Novosti’s analysis of data from the Bank of Russia.

At the end of summer, its share in payments reached a record 43.6% against 42.9% a month earlier. At the same time, the share of the ruble exceeded the currencies of friendly countries in August by 0.6 percentage points, which allowed the Russian currency to become the main one for paying for deliveries.

The last time the ruble exceeded the share of friendly currencies in imports from Asian countries was in February 2022, but then the main settlements were made in "toxic" currencies.

The ruble also took a record share in payments for African goods, increasing by 0.5 percentage points to 69.9%, as well as for deliveries from Oceania, where it is used to pay for 84.3%.

Overall, the Russian currency began to be used in imports slightly less in August — 44.7% against 45.9% in July. At the same time, the share of friendly currencies also decreased — by 2.2 percentage points, to 31.2%. But the main beneficiaries were the "toxic" currencies, which began to pay for 24.1% of Russian imports against 20.7% a month earlier.

This was mainly due to an increase in the share of unfriendly currencies in payments for imports from Asia (+1.1 percentage points, 13.3%), America (+8.3 percentage points, 71%) and Europe (+6.9 percentage points, 49.3%).

https://ria.ru/20241015/rubl-1978210545.html

Next, the thing is to prepare for exports, to compete in the world markets with Siemens and GE on the basis of quality/price ratios:

Russia has done the impossible. Again. by Olga Samofalova for RiaNovosti. 10.17.2024.

Few people want to experience crises and military actions. It brings pain and loss. However, without it, it is difficult to imagine the life of both an individual and humanity as a whole. Such events go down in history, they are not forgotten for centuries, they are discussed, assessed, interpreted. And from a height of flight it becomes clear how something new always appears on the destruction of the old. And it seems that such large-scale transformations would be impossible without a crisis and a huge price.

The first antibiotic, which is now a common medicine, was invented by Zinaida Ermolaeva thanks to the Great Patriotic War. In peacetime, people also died after operations and from ordinary wounds due to infections. But the urgent need to reduce the mortality rate of soldiers worked. Medicine became another soldier in the service of the country. The West then invented its own penicillin, but later, when they compared, ours turned out to be more effective.

Even earlier, in the 19th century, the Hungarian obstetrician Semmelweis taught doctors to disinfect their hands with chlorine, for which he received the title of "savior of mothers." But the discovery became possible only after a crisis in the hospital department where the doctor worked. There, many more mothers who had just given birth began to die than in other hospitals. It was no longer possible to attribute this to childbirth fever, as before. The crisis helped to see the error. The cause of death was in the hands of obstetricians, who not only delivered babies, but also performed autopsies.

And Russia is now clearly going through another period of large-scale transformations. They began to happen back in 2014, but accelerated after 2022. One of these achievements, which owes its existence to the conflict in Ukraine , is the creation, construction and launch of serial production of domestic high-power gas turbines GTD-110M. This is a high-tech product the size of a house, which only a few people in the world know how to make. Without such turbines, it is impossible to operate gas power plants, which are needed everywhere: for lighting houses, streets, cities, and for the operation of industrial enterprises. Such turbines are necessary for naval ships and for the operation of large-capacity LNG plants. Without such turbines, it would be difficult to provide the population of Crimea with electricity. It was the Crimean story that first revealed the problem: Russia's critical dependence on Western high-power gas turbines.

Since the 2000s, turbines from German Siemens or American GE have been installed at Russian power plants everywhere, with which joint ventures have even been created. However, when it was necessary to install four turbines at two new power plants in Crimea, it turned out that they could not be supplied even from these joint ventures located in Russia. And in 2022, Siemens and GE left Russia altogether, leaving not only Crimea, but our entire country without gas turbines, which are installed at hundreds of power plants in the country. If it was still possible to cunningly bring four Siemens turbines to Crimea, then this will no longer work with hundreds of thermal power plants throughout the country.

But in two years, Russia has accomplished the impossible — with the help of Rostec, it has delivered its first high-power gas turbine to the Udarnaya TPP in Krasnodar Krai . In technological terms, this looks like a real miracle. It is simply impossible to make such a product so quickly. Russia’s strong competencies in this area, which have remained since Soviet times, helped. And secondly, the turbine was not created from scratch. Attempts to create our own high-power turbines were made back in the 1990s and 2000s, the second stage — after 2014. But the attempts were unsuccessful at the stage of testing the units at TPPs. The turbines needed to be improved. In the 2000s, this idea was abandoned because Western turbines were chosen. And then it might have seemed quite reasonable: the economy was growing, energy consumption was growing too, and it was necessary to quickly put a large number of power plants into operation. At that moment, waiting for our turbines to “mature” seemed more like a waste of time, effort, money, and an increase in the well-being of the population and the country.

But it is important that without those unsuccessful attempts, the event of October 2024, when the first domestic serial gas turbine GTD-110M was delivered to the Udarnaya TPP, would not have happened. Creating from scratch or refining a product that showed problems during testing are two completely different levels of technology proficiency. Thanks to those failures, Russia's competencies in this area did not sink into oblivion. Plus, our country knew how and all this time independently produced small and medium gas turbines. This also made it possible to preserve the accumulated technological, production and human experience, which only remained to be scaled up.

In Soviet times, such high-power gas turbines were produced in Ukraine. After the collapse of the USSR, Kiev, of course, did not share with Moscow, but it also could not maintain its competence and skills in this area (as in many other areas, unfortunately). Russia took the unsuccessful model of the GTD-110 engine from the Nikolaev plant "Zorya-Mashproekt" and improved it to a high level.

Decades of close friendship with Siemens and GE seemed to last forever. And if it weren't for the events of 2014 - and especially 2022, when both Western industrial concerns removed their business from Russia (which they hardly wanted themselves) - such a technological breakthrough in Russia with gas turbines would not have happened. The next challenge for the country is the creation of even more powerful turbines. The GTD-110M has a capacity of 118 megawatts, but Power Machines is already working on a project to create a turbine with a capacity of 170 megawatts. The transformations continue, and they will definitely not be limited to turbines alone.

https://ria.ru/20241017/rossiya-1978379082.html

Japan increases its grain imports from Russia by almost 10 times, 10.17.2024.

Tokyo increased its year-on-year grain imports from Moscow by 998% in September, according to Japanese customs data. Thus, despite the sanctioning pressure and the ban on importing a number of Russian products, Japan fails to refuse to consume grain from the Eurasian giant.

In addition to cereals, its imports of vegetables from Russia also increased (by 100%) and fish - by 21.6%. At the same time, despite the decrease in purchases of iron, steel and non-ferrous metals, those of liquefied natural gas (LNG) increased by 11.7%.

On the whole, there was a relative growth of exports and imports to Russia in September: Japanese shipments amounted to $223.6 million, while purchases totaled $438.5 million.

Since the start of the Russian military operation in Ukraine in February 2022, Japan joined the West's sanctioning pressure on Moscow, approving 1,316 individual and sectoral sanctions against Russia, the database revealed by Castellum.AI .

Specifically, Japan adopted a list of goods and technologies whose export to Russia is prohibited, which already contains about 800 items, and also imposed a ban on importing gold, machines and some types of timber.

However, as Russian experts previously reported, Tokyo "was able to negotiate with Washington the right not to refuse Russian supplies of gas and oil," as well as many agri-food products.

Proof of this is the constant increase in Russian grain imports: according to statistics published by the Japanese Ministry of Finance, in 2023 Japan increased grain imports from Russia by 381.8%.

Yandex Translate from Spanish.

https://noticiaslatam.lat/20241017/japon-multiplica-casi-por-10-sus-importaciones-de-granos-de-rusia--1158304150.html

The Duma adopted the draft federal budget of Russia for 2025 and the planning period of 2026-2027 in the first reading. This was reported by TASS.

According to the plan, next year federal treasury revenues will grow to 40 trillion 296 billion rubles.
At the same time, the share of non-oil and gas revenues should increase to 73%.

Why does the Bank of Russia make money so expensive?, by Olga Samofalova for RiaNovosti. 10.26.2024.

The Bank of Russia surprised the market twice. By raising the rate from 19% to 21% at once, although the market was expecting a softer increase. And by practically directly stating that it would raise the rate again before the New Year, and just as harshly – to 23%. What is forcing the Central Bank to tighten the screws so much?

The Central Bank raised the key rate by 2% at once – from 19% to 21%. Many started talking about a historical record, although in the 1990s the rate reached 150%. Another thing is that at that time this rate was called the refinancing rate, and only in 2013 it was renamed the key rate. In fact, only the name changed. But the key rate of 21% has never been in Russia before.

In general, the market expected its increase, but not such a sharp one (the consensus forecast was 20%). At the same time, the Central Bank also gave the market the toughest signal that the rate could be increased again at the next meeting in December. "The Central Bank's new forecast for the average key rate from October 28 to the end of the year is 21-21.3%, which means that at the next December meeting the rate could be increased to 23%," says Olga Belenkaya, head of the macroeconomic analysis department at FG Finam.

What makes the Bank of Russia act so harshly?

It's all about inflation. Despite all the measures taken, it is higher than the Central Bank's July forecast. Moreover, inflation expectations continue to increase.

“It’s all about the increase in tariffs for housing and communal services, Russian Railways and recycling fees, which have had a significant impact on inflation and increased the inflation expectations of the population.

It was this factor that influenced the decision of the country's leading bankers in addition to the already existing ones - inflation above the planned target and an increase in the rate of lending to the population," says Nikolai Vavilov, a specialist in the department of strategic research at Total Research.

The growth of domestic demand, which significantly outpaces the possibility of expanding the supply of goods and services, is also accelerating inflation. Additional budget expenditures and the associated budget deficit this year are also contributing to the growth of inflation.

In its new forecast, the Central Bank was forced to state not only that inflation will be 8-8.5% this year, rather than 6.5-7% as it expected in July, but also to actually admit that the task of achieving the inflation target (4%) is unachievable in 2025, and its deadline has been postponed again to 2026, Belenkaya notes. That is, it will only be possible to reduce inflation to 4% in 2026.

As for the economic slowdown observed in the second half of the year compared to the first, the Central Bank still attributes this to the fact that supply is limited and cannot keep up with high domestic demand. The market is seeing a shortage of production capacity and a shortage of workers (unemployment is still at historical lows). Domestic demand continues to grow, as household and business incomes, lending and budget expenditures are growing. Salaries continue to outpace labor productivity in terms of growth. At the same time, the high key rate has not yet stopped lending. Retail lending has slowed down, but corporate lending has not.

"On the eve of the New Year, the population actively spends money on gifts, Christmas trips, entertainment, etc. And since inflation processes usually occur with a time lag, the Central Bank will probably want to preemptively raise the rate in December so as not to see more depressing inflation data at the beginning of next year," Vavilov believes.

This meeting and Elvira Nabiullina’s statements turned all further expectations of experts regarding the rate upside down.

"The new forecast of the Central Bank assumes a high probability of a further increase in the key rate by the end of the year and its very slow decrease in 2025. Taking into account the projected average inflation (2024 - 8.2-8.4%, 2025 - 6.1-6.8%), the real key rate is projected to be higher than 10% in 2025, which is very high," says Belenkaya. The real key rate is the nominal key rate minus inflation.

According to Belenkaya, the tension of the situation is connected with the fact that the Central Bank has to compensate with an increasingly strict policy for those inflationary factors in the economy that are beyond its control.

Deposits will become even more profitable: although they have already grown to 20-22% per annum, their yield will soon grow to 23-24%. At the same time, interest rates on loans will also increase by 1-2%. "Against the backdrop of the regulator's decision, we should not expect a rapid reduction in the cost of credit resources; bank interest rates may begin to decline only in the second quarter of next year," says Mikhail Zeltser, an expert on the stock market at BCS World of Investments.

Borrowed money is becoming completely unaffordable. According to Belenkaya, it is not only private companies without a large financial cushion and connections to the state that may not survive a long period of high interest rates. Concerns are already being voiced by the defense industry. Rostec CEO Sergei Chemezov recently said that the high cost of money is a “serious brake on further industrial growth.”

"The risk is that the prohibitively high key rate, combined with an increase in the tax burden on businesses from 2025, could lead to a reduction in private investment and possibly the closure of some businesses. This could negatively affect future supply and economic development and increase the risks of recession or stagflation," warns Belenkaya.

The reaction of the ruble is interesting. Usually, its rate should strengthen against the backdrop of a tougher policy of the Central Bank. However, the ruble at first did not notice the decision of the Bank of Russia, and then even weakened.

"A tough monetary policy is generally in favour of the national currency, since the demand for foreign currency for imports is decreasing and the attractiveness of ruble instruments, the same deposits and money market funds, is increasing. But the ruble is now at its minimums since the end of October 2023, since other factors are putting pressure on it - the easing of the standards for repatriation of exporters' revenues and the weak dynamics of commodity prices," Zeltser explains. According to his assessment, foreign currencies are technically overbought, so we can expect a correction in the yuan, dollar and euro. By the end of the year, the ruble may strengthen by at least one percent, and in another scenario, up to 3%. "At the moment, even before the start of winter, the dollar may temporarily walk under 95, the euro may roll back to 103, and the yuan - closer to 13," Zeltser concludes.

https://vz.ru/economy/2024/10/26/1294475.html

Russian Economy Continues to Grow - Putin, 10.28.2024.

MOSCOW (Sputnik) - The Russian economy continues to grow, and unemployment is record low, Russian President Vladimir Putin said on Monday.

"Despite the fact that GDP dynamics slowed down slightly in the third quarter of this year, the Russian economy continues to grow, nevertheless. According to the Ministry of Economic Development, the GDP increased by 4.2% in January-August," Putin said at a meeting on economic issues.

Difficulties remain in the Russian economy caused by certain conditions, including sanctions and its own structural constraints, including a shortage of personnel and technology, logistics, Putin said.

"Unemployment in Russia has been at a record low of 2.4% for the third month in a row," Putin added.

https://sputnikglobe.com/20241028/russian-economy-continues-to-grow---putin-1120707250.html

Russia’s GDP growth totals 4% in 9M — ministry, 10.30.2024.

According to the Russian Economic Development Ministry’s estimate, GDP growth went up to 2.9% in September 2024 from 2.4% in August.

MOSCOW, October 30. /TASS/. Russia’s GDP growth totaled 4% in January-September 2024 in annual terms, the Economic Development Ministry said in a review on the current situation in the Russian economy.

"According to the Russian Economic Development Ministry’s estimate, GDP growth went up to 2.9% in September 2024 from 2.4% in August. Excluding the seasonal factor growth amounted to half a percent after 0.4% in the previous month. Overall GDP growth totaled 4% in 9M 2024, according to the Russian Economic Development Ministry’s estimate," the review said.

Earlier, the ministry upgraded its GDP growth outlook to 3.9% from 2.8% for 2024 and to 2.5% from 2.3% for 2025.

https://tass.com/economy/1864779

Russia is still infested with 5th column slime. In the above video we have attribution to inflation reduction to Nabiullina and Putin. This is BS.
Before the arrival of Nabiullina, the CBR set rates at around 8% when the inflation was over 12% and the money supply was increasing at about
50% per year. This regime operated for over 10 years and there was no spiral into hyperinflation. It is some sort of miracle that monetarists
were not in charge of the CBR. Russia required money injection into the macro-economy because it was still transitioning out of Soviet command
economics "prices" to actual market prices.

If you follow the BS "logic" of Nabiullina, any price change that is "not small" is inflationary. This includes price changes from command economy
nonsense to actual prices. This is obviously retarded. Inflation has to have a proper definition and not just what any clown pulls out of their ass.
Transition price changes are not "inflation", they are an adjustment process. Only once we have equilibration into the capitalist regime do we have a
a meaningful point of comparison that can be used to determine inflation.

It also makes no sense that Russia's inflation would be driven by investment. Inflation is related to shortages (excess demand) and under-investment.
So on its face the current CBR policy is outright sabotage of Russia's economy. Indeed, Russian clowns cannot let a boom be a boom.