rus
OMKAnnual Report 2020
2

Strategy

2.1
Mission and values

To further improve
well-designed
solutions

OMK strives to be acknowledged as a model of effective partnership.

The company offers unique solutions, quality products in accordance with the best standards, the possibility of joint participation in large-scale projects, as well as modern service at the highest level, a more personalized approach, convenience and speed.

2.1
Mission and values

Values

Corporate traditions
Professionalism
Responsibility
Gratitude
Teamwork
Results
Respect
Plain dealing
Trust
Safety
Transparency
Entrepreneurial spirit
Fairness
Personal development
Commitment to constant improvement
Clearly defined goals
Focus on the client
Initiative and leadership
High standards
Systematic approach
Openness
Vision of the future
2.1
Mission and values
ОМК is a Russian manufacturer of high-quality steel products and integrated solutions designed to meet the most exacting consumer specifications in the fuel energy, transport, construction, and other industries.
ОМК is transforming its product sales system and developing customer service. Our new slogan “OMK: To further improve well-designed solutions” presupposes a client-focused approach that combines the large-scale capabilities of a world-class manufacturer with the flexibility of a leading metal trading company.
ОМК is a major investor in Russia and a reliable partner for national and international projects. We build new production facilities, develop innovative high-tech products, and create jobs.
Our unique corporate culture at ОМК is built on professional, social, and personal values that are shared by every member of our team.
ОМК is a socially responsible company that helps to improve living standards in the regions where we operate, and that supports infrastructure projects aimed at creating a comfortable environment as well as intellectual, cultural, and spiritual development programmes.
ОМК is a team of high-level professionals. Our people are our most important asset. We respect our country’s steelmaking traditions and continue to hone our workmanship with every passing year. The quality of our work is recognized by the international community.
2.2
Strategy implementation

New products

Pipes

OMK enterprises have launched the production of several new types of products:

  • longitudinal electric-welded galvanized pipes with a diameter of 15 to 57 mm and shaped pipes from 15x15 to 60x40 mm;
  • small-section shaped pipes for furniture structures with a wall thickness of 0.8, 1 and 1.2 mm made of cold-rolled steel;
  • small-section shaped pipes for furniture structures with a wall thickness of 0.8, 1 and 1.2 mm made of cold-rolled steel;
  • flat-oval cold-rolled pipes.

At the Vyksa plant, OMK conducted hot tests of a new electric welding pipe mill and successfully manufactured pipes with a diameter of 168 mm and a wall thickness of 7.3 mm.

With the commissioning of new equipment, the company can offer customers casing and oil and gas pipes with a diameter of 114.3 to 244.5 mm, with a wall thickness of 4.0 to 15.9 mm, including those made of promising steel grades.

OMK mastered the production of tubing with a diameter of 60–114 mm, including those of increased strength. We manufacture products from our own hot-rolled steel according to Russian and international standards, using couplings with triangular threads (NU , NKTN ), also of our own production.

2.2
Strategy implementation
Rolled products

In 2020, a special technology was developed for the production of rolled products with a thickness of 8 to 60 mm from steel from grade A to grade E40 for the construction of fishing vessels. The technology is based on high-temperature thermomechanical processing with accelerated cooling.

We have developed a technology for the production of rolled steel with high viscosity at a temperature of -40 °C. Rolled steel with a thickness of 8 to 80 mm of steel grade C355-6 was produced at the OMK plant in Vyksa.

OMK was one of the first in Russia to confirm the compliance of sheet steel with a thickness of 40.1 to 80 mm with the requirements of the European standard EN 10225 for weldability for use in the construction of floating and stationary drilling platforms, wind turbine towers, port facilities and other onshore and offshore structures, including those working in harsh climatic conditions.

2.2
Strategy implementation
Pipeline fittings, valves and modular equipment

At the OMK plant in Chelyabinsk, five technological modules were developed, manufactured and delivered for the country's first automatic gas distribution station of a new generation, Progress, which was put into operation at the Tyuryushlya facility of Gazprom Transgaz Ufa. The power-autonomous unit is equipped with an automatic diagnostic system of technological processes and operates without human intervention. The capacity of the station is 10 thousand normal cubic meters of gas per year.

Also the Chelyabinsk plant mastered production of import substitution fittings with diameters from 1/2» to 18» (from 21.3 mm to 457 mm) from stainless, alloyed and carbon steel grades according to the international standard ASME B16.9. For the manufacture of new products, we use the technology of hot broaching of pipe billets of measured length along a horn-shaped core and by the method of forging.

Another development of Chelyabinsk engineers is a device for cleaning gas in pipelines from salvo liquid inflows.

The separator-plug catcher takes out the slugs of liquid and condensate from the gas flow going along the section of the pipeline in both continuous and stratified flows. The unit prevents emergencies and the technological equipment of automated gas distribution stations, gas control points and other equipment using gas from the linear part of the gas pipeline to fail.

2.2
Strategy implementation
Railway products

At the Vyksa plant, OMK mastered production and manufactured a batch of 955 mm diameter railway wheels with a curved disc shape and fullprofile surface treatment for passenger train cars on the island of Sri Lanka.

We delivered a batch of unique high-speed railway wheels with a diameter of 860 mm to Hungary for operation on passenger train cars.

Especially for the project, a new technology for the production of wheels with increased operational characteristics was developed, which will extend the service life by an average of 20-25%.

The OMK Steel Way obtained the right to repair innovative freight train cars of model 12-196-01 and 12-196-02 and train cars on bogies of model 18-194-1 in all of its depots for five years.

Automotive springs

We expanded the line of Springer auto parts for foreign trucks, trailers and buses.

Brake discs and drums, disc brake pads, reaction and v-shaped rods, silent blocks are made of highquality materials from leading world suppliers and are adapted for Russian roads.

For the production of Ford Transit, OMK's Chusovoy plant mastered the production of single-sheet rear springs of a parabolic profile from steel grade 50HGFA (50ХГФА). The springs are distinguished by increased rigidity, they are equipped with a new type of rubber-metal hinges.

2.2
Strategy implementation
Steel constructions and
other types of products

Our Belgorod enterprise supplied an E-75 steam power boiler for the construction of a 25 MW heat recovery thermal power plant in the Leningrad Region. The new boiler was made according to the individual order of the general contractor of the project.

OMK delivered 300 tons of steel structures for the terminal under construction of the airborne complex in Gelendzhik (Krasnodar Krai). The unique structures provide for the installation of more than 1000 welded stops (stud bolts) inside each column, as well as «sliding» reinforcement clamps.

Thanks to that, the structures have increased reliability and seismic resistance, which is necessary in seismically active zones in the south of Russia.

Also, the OMK Belgorod plant has mastered production of one-piece forged valve bodies of austenitic stainless steel for nuclear power plants.

Due to the use of austenitic (corrosion-resistant chromium-nickel) steel, the new products have increased corrosion resistance and can be used in corrosive environments.

For a special air crossing under construction power line that will pass across the Pechora River in the Komi Republic, OMK manufactured high-rise tubular supports AT 73M of increased strength. The unique anti-corrosion coated alloy steel poles offer higher safety margins than standard carbon steel linear poles.

2.2
Strategy implementation

Customer service

In 2020, OMK opened its pipe, flat-rolled, and long sheet distribution network. This will bring us closer to our clients – small and medium-sized consumers in Russia’s regional markets.

The company opened sales offices and warehouses for finished products in Moscow, Nizhny Novgorod, Samara, Kazan, Ufa, Yekaterinburg, and other cities. OMK Market offers its customers a wide choice of products from both OMK plants and third-party manufacturers, including in small retail quantities and short time frames.

Online auctions are another new sales channel. On the auction.omk.ru platform, buyers gain weekly access to a wide range of the company’s products, manufactured by OMK’s Vyksa and Almetyevsk plants. In addition, at OMK’s online auctions customers can purchase non-production assets from Vyksa plant stock.

To make customer engagement more transparent, a digital personal account has been introduced. Customers can track their order status from registration to shipment, find credit information, invoices and payment terms, digital quality certificates certified by a qualified electronic signature, and archival documents.

Access to the service was set up for authorized users according to the principle used in the traditional B2C segment: via text message confirmation, which guarantees the safety and security of all customer data.

We are also expanding our services in car components. We opened 19 warehouses in five federal districts of Russia: Central, Volga, Southern, Ural and Siberian. OMK’s warehouses offer more than 4,000 types of spring products for light commercial vehicles, trucks, buses, trailers, pickups of both domestic and foreign brands, as well as specialized equipment.

In all separate divisions and sales offices, uniform product pricing has been established. We ship orders to major cities within 24 hours. We are the first in the country to offer loans to legal entities through our website, with plans in the works to offer loans to individuals as well.

2.2
Strategy implementation

OMK’s new project to automate road haulage has helped to reduce product shipment time to customers and optimize costs.

In collaboration with Transporeon, a European leader in the development of logistics management solutions, we now select transport service providers that meet all the company's requirements through the online tender platform Ticontract, where more than 35,000 carriers are registered.

This decision enabled us, in six months of last year, to double the volume of cargo transported by road – up to 30,000 deliveries (20% of the total volume of cargo transportation) – and to considerably reduce the target time to select carriers from 72 to 9 hours.

OMK Steel Way introduced new services. The company’s customers can use the online depot booking service for repair work and are guaranteed to receive the required services at a convenient time.

Customers can use the service on the company’s official website by selecting the required depot and filling in a booking form. This reduces the downtime of the train car at the depot from ten to six days.

The company is also expanding its car services in the Far East.

OMK Steel Way acquired Transvagonmash. The asset consists of four plants, three of which are located on the Trans-Siberian Railway, the world's largest railway connecting the east and west of the continent, and a strategic route for growing export cargo flows.

The plants’ production facilities enable all types of freight train cars, including innovative cars, to be repaired to the highest standard. Thanks to the one-stop-shop principle, train cars can be repaired for our customers in many regions.

2.3
Investments

In 2020, OMK implemented several major investment projects aimed at expanding production, improving the efficiency of plant operations, and introducing new products.

Image

Key investment
projects in 2020

  • Comprehensive development program for small and medium-sized pipe production
  • Construction of pipe-rolling production
  • Modernization of the OMK plant in Chelyabinsk
  • Modernization of section rolling production at the OMK plant in Chusovoy
  • Construction of two small leaf spring mills in Chusovoy
2.3
Investments

OMK’s investment program
for 2025 exceeds RUB 110 billion.

  • We are updating the production of welded pipes for the fuel and energy sector
  • We are updating the production of items for the nuclear industry for new nuclear power plants in Russia and around the world
  • We are building a new seamless pipes production facility to increase production by Russian oil workers
  • We are refining the production of springs for trucks and improving our customer service
  • We are modernizing the production of pipeline parts for nationwide projects to develop pipeline transport and energy
  • We are modernizing a railway wheels production facility to develop freight and passenger transportation
2.4
R&D

Key R&D
areas

  • Improve energy efficiency
  • Introduce new technologies into the production process
  • Develop a quality control system
  • Modernize existing facilities
  • Conduct R&D in partnership with universities and research organizations
  • Conduct R&D at our own facilities
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R&D
investments
in 2018–2020 413 RUB million
2.4
R&D
*The significant increase in the number of patents in force is due to the incorporation of the Belgorod plant into the company (26 patents). Out of 128 supported patents in force: 120 are patents in Russia and 8 are foreign patents.
Innovation proposals registered over the year
1872 2020
1801 2019
1577 2018
Patents received
13 2020
11 2019
12 2018
Patents in force
128* 2020
94 2019
84 2018
2.4
R&D

The company’s strategic priorities include several major challenges such as innovation and improvement programs.

The steel industry today has to offer highquality services that meet market demands and expectations. For OMK, innovation means, first and foremost, the opportunity to meet and satisfy current and future customer needs through simple and accessible solutions, and to expand the company into new markets in Russia and abroad.

Innovation
at OMK

  • Collaboration with leading scientific communities to ensure the high quality, originality, and simplicity of technological change
  • A tool for the development of lean production, increased efficiency
  • A mechanism for sustainable consumption with a focus on environmentally friendly practices
  • Synergy between OMK plants

OMK is focused on production processes that ensure that the company retains a strategic leading position in the Russian and global markets. The company searches for and introduces new technologies as follows: Any division, employee, equipment supplier, research institute, or university can suggest ideas for introducing new technologies in the production process. All proposals undergo a comprehensive review, and some are then accepted for implementation.

At the OMK plant in Vyksa, a project was implemented to modernize the railway wheel geometric parameter monitoring area. We installed a unique automatic equipment measuring system based on 2D laser scanners.

In 2020, long-term scientific and technical cooperation programs were concluded with leading technical universities: NUST MISIS and Bauman Moscow State Technical University. The cooperation programs feature the development and introduction of new products, including for new production facilities under construction in Vyksa, as well as the improvement of existing and development of new digital technologies.

2.4
R&D
Significant
developments
in 2020
  • The laminar sheet cooling technology in the casting and rolling complex was modified.
  • OMK developed a technology for the production of pipes from K60 strength steel with a drop weight test temperature of minus 51 °C for linear gas pipelines to be used in the development of the Semakovskoye gas field. The technology was rewarded with a medal at the Metal-Expo 2020 exhibition.
  • OMK introduced optimized color-coding technology for couplings. The solution increased the readability of the coupling markings and reduced the cost of the protective coating appliance.
  • OMK enabled tensile tests to be performed in the direction of the thickness of sheets less than 20 mm thick.

OMK has two in-house engineering and technology centers (ET Cs) in Vyksa and Ufa.

The first has been operating since 2009. It performs about half of all R&D independently. It also cooperates with leading industry research institutes and universities, including the I.P. Bardin Central Research Institute of Ferrous Metallurgy (TsNII chermet), NUST MISIS , and Bauman Moscow State Technical University. The Vyksa ET C has more than 55 patents and inventions.

The OMK ET C in Ufa was opened in 2014. It specializes in developing high-tech equipment for oil and gas fields. For example, the center’s employees have developed equipment that is unique in Russia – a new-generation gas distribution station named Progress, which is fully automated – and, together with Rosatom specialists, have equipped it with an intelligent system for diagnosing the operation of individual units and parts.

They also worked with specialists from Gazprom Neft Science and Technology Center and scientists from Moscow State Technical University to help create a compact modular unit for topping associated petroleum gas, a first for Russia.

Image

OMK holds a science and research conference for young scientists and engineers every year. In 2020, it was held online for the first time. More than 100 young scientists and engineers working at the company’s plants, as well as students, graduates, and postgraduates at specialized universities, took part in the conference. The award for the best paper with the greatest economic potential was presented to Artem Kravchenko, an ET C specialist in Vyksa, who presented a paper on the development of a technology to produce rolled sheet for supplies to the Arctic LNG 2 project.

2.4
R&D

I.D.E.A. platform

At the end of 2020, OMK launched an automated corporate system for managing employee ideas.

The platform brings together all types of initiatives, rapid improvements, A3 format ideas, efficiency proposals, quality circle management, organizational and investment project ideas, innovation, R&D, and any other unclassified ideas in one place.

Every employee has a personal account in the system that records how many ideas they have submitted and how many stickers they have been assigned for various achievements. Depending on the number of submitted ideas, the system forms a public rating of participant activity for a specific division and the company as a whole.

On the I.D.E.A. platform, employees can register initiatives in a few minutes, and then easily track their status. The system also allows employees to find colleagues who will help implement the project, or to get involved themselves in the implementation of an interesting idea.

The platform is accessible from work computers and smartphones.

2.5
Market Overview

Global market and factors

According to a report by the World Steel Association (worldsteel), global steel production in 2020 was down 0.9% compared to 2019, amounting to 1.86 billion tons. The largest decline in production was recorded in the European Union, North and South America (-8.4%).

Asia produced 1.37 billion tons, an increase of 1.5%. The EU produced 138.8 million tons, 11.8% less than in 2019. North American steel production was 101.1 million tons (down 15.5%).

The global production of steel pipes in 2020 fell by 13.4% from 2019, to about 151 million tons. In almost all sectors (energy, processing, manufacturing, etc.) there was a fall in demand for steel pipes, however demand in the construction sector remained relatively stable.

The average price of Brent oil in 2020 fell by 35.2% from 2019 to USD 41.7/bbl. The average monthly number of operating oil and gas rigs fell by 37.9% to 1,352.

After a sharp downturn in the global economy in Q2 2020, global GDP fell by 4.3% last year. According to World Bank forecasts, the global economy may grow by about 4% in 2021.

Analytical companies (EIA , Rystad Energy, etc.) reported that, due to the pandemic, global gas demand declined by about 3% to 3.91 trillion cubic meters. By 2040, 30% of growth in demand will come almost entirely from Asia and the Middle East.

Large oil and gas engineering, procurement and construction companies are increasingly shifting their strategies toward cleaner types of energy.

According to Global Data, from 2021, total global investment in the renewable energy sector will exceed investment in the development of oil and gas fields.

The greatest growth was shown by:
China
+5,2%
RUSSIA
+2,6%
Turkey
+6%
Iran
+13,4%
The strongest recession was experienced in:
India
-10,6%
Japan
-16,2%
USA
-17,2%
Germany
-10%
China’s share of global steel production increased from 53.3% in 2019 to 56.5% in 2020.
2.5
Market Overview

Domestic markets

Pipe production is key to OMK’s business. According to an assessment by the Pipe Industry Development Fund (FRTP ), the pandemic did not lead to a significant drop in demand for domestic pipes.

Russian pipe companies continued to implement their development programs. In 2020, steel pipe production in Russia, excluding LDPs, remained at almost the 2019 level (a slight increase of +1%).

In the threaded pipes for hydrocarbon production, oil and gas pipeline, and industrial pipe segments, there was an insignificant drop in consumption. The pipes for construction and housing and communal services segment, on the other hand, experienced growth, while the demand for LDP s fell.

Domestic demand for steel pipes in 2020 fell by 5% from 10.14 million tons in 2019 to 9.67 million tons in 2020. Fund experts expect a recovery in 2021.

Steel pipe exports fell to 1.4 million tons in 2020 from 2.05 million tons in 2019. LDP s accounted for most of the decline in export volumes. The volume of steel pipe imports remained at about 4% of domestic consumption.

The market capacity of water and gas pipes and shaped pipes in Russia increased by 3% and 11% respectively in 2020. Due to COVID -19 restrictions, a drop in demand was recorded in the second quarter. Plants reduced their capacity in March and April, some plants stopped production altogether, but increased production in the second half of the year.

The water and gas pipe market was boosted by the ongoing “Renovation of dilapidated housing” and “Gasification of the Russian regions” state programs. On the shaped pipes market, there was an increase in the production of construction metal structures, private housing construction, and the use of metal structures for the agricultural sector.

The oil and gas pipe market shrank due to a drop in oil production related to OPE C+ obligations.

There are four main manufacturers of railway wheels in the Russian market: Evraz, Interpipe (Ukraine), and Prommashkomplekt (Kazakhstan).

From the second half of 2020, the importation of Chinese wheels seen in 2019 and the first half of 2020 came to an end.

Consumption of springs in Russia remained at the 2019 level. The car market was supported by state programs to renew fleets and preferential loans and leasing.

Demand for spring aftermarket parts remained at the same level. Large volumes of spring products continue to be imported, especially from China, which exerts a strong downward pressure on prices. The market is expected to stagnate in 2021.

2.5
Market Overview

Foreign markets

Europe

In 2020 steel pipe production in Europe fell by 21.4% compared with 2019 to about 11 million tons, according to the German Steel Tube Association.

Pipeline projects / Impact of COVID-19
In Q1 2020, the EU identified priority oil and gas projects and approved the allocation of EUR 30 billion from the Connecting Europe Facility for the implementation of infrastructure and transport projects.

In Q3 2020, 11 European gas companies presented a plan to develop a 23,000 km hydrogen pipeline network by 2040. At the same time, 25% will be spent on the construction of new pipelines.

In 2020, the Israeli government ratified an agreement on the construction of the 1,900 km EastMed gas pipeline. The final investment decision is expected by 2022.

Despite all the support measures, the pandemic caused the loss of millions of jobs in Europe in the first three quarters of 2020. For example, in July, the Romanian manufacturer of billets and rolled

sheet Combinatul de Oteluri Speciale Targoviste announced that it was ceasing production, with the dismissal of more than 1,000 employees.

ArcelorMittal announced the closure of its Krakow steel plant in October. In Q4 2020, Thyssenkrupp planned to slash about 11,000 jobs and sell its unprofitable metallurgical business. All this was due to a drop in demand for steel products and financial difficulties resulting from the impact of the coronavirus crisis.

Protection of the local market and the plans of oil and gas companies and market participants
In the face of the pandemic and low oil demand, Shell plans to reorient its development strategy toward alternative energy sources. Over the next four years, the company plans to reduce its operating refineries from 14 to 6, and cut between 7,000 and 9,000 jobs by the end of 2022. ExxonMobil plans to cut about 1,600 jobs in Europe by the end of 2021 as a result of the reorganization of its European divisions.

The UK entered into free trade agreements with the EU , Turkey, and Ukraine. For countries that have not entered into a free trade agreement, there is a quarterly quota system.

From January 1, 2021, new Brexit-related quota changes in the EU came into force. In particular, Russia received a country quota instead of a global one for small and medium diameter welded general purpose and oil pipes.

The capital expenditure for offshore wind power in Europe in 2021 is projected to be comparable to the capital expenditure on offshore oil and gas production (USD 18.2 billion), and will even exceed it in 2022.

According to forecasts, the cost of carbon capture and storage projects in Europe in 2020–2035. will be about USD 35 billion. At the same time, about 35% of expenditure will go on pipelines and infrastructure facilities.

2.5
Market Overview
North America

The drop in sales of OCTG pipes from 44,400 tons in 2019 to 17,500 tons in 2020 in the United States was due to a drop in demand for these pipes. This resulted from a decline in oil prices, a drop in production volumes and the number of drilling rigs, as well as the impact of the COVID -19 pandemic.

After a record high of 12.2 mln bbl/d in 2019, in 2020 oil production in the United States fell by 7.4% to 11.3 mln bbl/d. Low prices and demand forced shale oil producers to cut losses.

In 2020 the average monthly number of operational oil and gas rigs in the United States dropped by 54% compared with 2019, to 433 units.

Domestic market/impact of COVID-19
In the wake of falling oil prices and the pandemic, unemployment and bankruptcies rose sharply in the US , with the worst figures since the Great Depression. For example, the American service company Diamond Offshore Drilling, which owns 14 subsidiaries, filed for bankruptcy.

The US multinational Halliburton introduced 60 days of mandatory leave for 3,500 employees in Houston in March. ConocoPhillips and Hess cut investments by 700 million (about 10%) and 800 million (about 27%) respectively in 2020.

In June, U.S. Steel decommissioned the Lorain Tubular Operations pipe plant indefinitely. Evraz planned to lay off 500 workers at the Evraz Regina spiral seam LDP plant in Canada.

At the same time, some companies are continuing to invest in new segments and industries. Cleveland-Cliffs has decided to buy ArcelorMittal's US steel assets for USD 1.4 billion, making it the largest producer of rolled sheet and iron ore pellets in North America. Chevron has invested in a startup company, Zap Energy, which is developing a modular fusion reactor, to diversify its portfolio into alternative energy sources.

Pipeline projects
Despite the uncertainty surrounding the Keystone XL pipeline, TC Energy signed contracts with Berg Pipe and Welspun Tubular in 2020 to supply LDP s.

Protection and plans for the local market
Joe Biden's victory in the presidential election will significantly affect the ongoing development of the global economy and the oil and gas industry. According to his campaign program, it is expected that sanctions against Iran, Libya, and Venezuela will be eased, and that the US will reorientate its energy industry toward renewable energy sources.

Now, steel product suppliers must indicate not only the country of origin, but also the country where the steel was smelted and rolled.

At the end of 2020, the US Department of Commerce introduced preliminary anti-dumping duties on the import of seamless line and pressure pipes from Russia and South Korea. The rate is 4.39% for Russian and 2.13% for South Korean producers. The final duties will be announced in spring 2021.

In April 2020, the Mexican government confirmed its intention to release an updated energy infrastructure plan despite the COVID -19 crisis. The government is facing the challenge of striking a balance between a favorable investment climate and strengthening the role and restoring the financial stability of the stateowned company PEMEX.

2.5
Market Overview
South America

Offshore production of hydrocarbons in South America will exceed production in North America by 2024, due to the development of promising projects off the coast of Brazil and Guyana, as well as the drop in hydrocarbon production in North America.

Pipeline projects
In September 2020, the governments of Argentina and Brazil entered into negotiations on the construction of a gas pipeline from the Vaca Muerta shale gas field in Argentina to the city of Porto Alegre in Brazil. The pipeline will be about 2,000 km in length. The estimated construction time for the project is 2022–2024.

Local producers and local market protection
In mid-2020, ArcelorMittal planned to launch a new plant to produce steel spiral LDP s from carbon steel in Brazil for a variety of industries. The estimated capacity of the plant is 50,000 tons per year.

2.5
Market Overview
Africa and Middle East

Pipeline projects
In 2020, NNP C planned to begin construction of the Ajaokuta-Kaduna-Kano gas pipeline in Nigeria, with a length of about 614 km, but the work did not begin due to a disagreement with Chinese partners.

GAS CO is planning a project to expand and maintain Egypt's gas transmission networks. Under the project, about 900 km of new pipelines will be built by the end of 2023.

The governments of Uganda and Tanzania signed an agreement on the planned construction of the East African EA COP oil pipeline in 2021–2023. The pipeline will be about 1,440 km in length.

In Q1 2020 the preliminary assessment of EP C suppliers for the construction of 1,600 km of the Iraq–Jordan pipeline was completed. However, due to the pandemic, the final selection of the contractor was postponed.

Local producers and local market protection
One of the leading pipe manufacturers in the UAE , Ajmal Steel Tubes & Pipes Industries, announced the launch of a new line for the production of welded pipes with a diameter of 21.3–508 mm, including profile. This will expand the product range and production volume from 250,000 to 350,000 tons per year.

Plans, expectations and strategies of oil and gas companies and market participants

As part of a new strategy, Chevron plans to sign agreements on exploring and developing gas fields in Egypt, Israel, and Qatar, while reducing spending on the exploration and development of shale fields in the United States.

The decrease in demand for liquefied natural gas caused by the COVID -19 pandemic has led to the cancellation of long-term contracts and a delay in deliveries from importing countries. Companies in the MENA region are projected to abandon global LNG projects or postpone capital expenditures until 2023–2025.

In December 2020, the Korean company Posco and Saudi Aramco signed a memorandum of understanding. They will explore the possibility of building a sheet metal mill in Saudi Arabia.

2.6
Risk management

Organization of risk management and internal control.

OMK’s activities involve a range of risks. The company considers risk management as one component of strategic management and internal control. The main goal of risk management is to ensure that the company can achieve its strategic and operational goals, and to maintain business continuity and guarantee the safety of assets.

The principles, goals, approaches, and methods of risk management are stipulated in the respective policy. To describe, assess, and rank risks in various fields of activity, companies use risk maps and a unified assessment and ranking methodology. On the basis of the maps, action plans are developed to minimize risks.

In 2020, we completed work to set up the company’s compliance function. The function includes the implementation of policies and procedures to ensure that the company’s activities comply with legal and regulatory requirements, the assessment of compliance risks, and the development of measures to reduce them.

Key areas of focus for 2020 and plans for 2021.

We updated the compliance risk map for all of the company’s activities. In addition to previously adopted policies and procedures, we introduced an antimonopoly policy and antimonopoly compliance regulations.

Another key risk management challenge in 2020 was to develop measures to protect information constituting commercial secrets. To work with such information, the company has implemented a secure terminal server and appropriate procedures for restricting and controlling access to it. The concept of a commercial secret was defined, and procedures for working with such secrets were standardized.

In 2021, the company management team will undergo a restructure. To increase agility and flexibility, business units will be empowered with greater decision-making authority, including risk management. The change will require an emphasis on developing a risk culture among employees.

The compliance group’s plan of action included the creation of matrices for the distribution of the powers and responsibilities of the group and management team when managing compliance risks, and training (including through e-courses) of target groups on regulations, stress tests, and open dialogues.