Russia power tech firms want state, foreign help

MOSCOW, July 30 (Reuters) - Russian machine builders want closer cooperation with foreign majors in order to access their technology, but they said the state may have to step in and encourage -- or pressure -- the foreigners to share.

By 2010, Russian electricity producers plan to spend $27 billion building hundreds of new turbines, a feat that Russian engineering firms cannot accomplish alone.

"The biggest gas turbine Russian firms can produce is 160 megawatts ... These are machines that were installed 20 years ago," said Pyotr Bezukladnikov, the head of a leading engineering firm, E4 Group.

"For the power sector this is technically a normal size, but psychologically it is seen as having aged. The rest of the world already has the next generation of machines," he added.

Siemens (SIEGn.DE), which holds a 25 percent stake in Russia's largest turbine maker, Power Machines SILM.RTS, last month gave its Russian partner construction and servicing rights for its 285 megawatt gas-fired turbine.

This kind of cooperation will be essential for Russian firms to play a role in the power sector's overhaul, which Russia is counting on so it can prevent electricity shortages crimping its economic boom.

"Cooperation with foreign companies means receiving machine construction technology that doesn't exist in the Russian supply chain," said Alexander Rantsev, head of strategic development at at Power Machines.

CALL FOR STATE PROTECTION

Because of the weakness of the Russian firms' position relative to their global peers, the state may have to intervene to give them a privileged position over foreign partners, said Timur Avdeyenko, the head of machine builder EMAlliance.

"The question of how turbines are built and installed is a question of the country's energy security," Avdeyenko said.

"Government support is needed in the sense of regulating the market. All the rest being equal, that means creating conditions that give the priority to Russian machine builders," he said.

"This will stimulate foreign producers to localise not only construction but also technology on the Russian territory," he said.

One way to accomplish this is to follow the Chinese model, in which the state insists that foreign players share their technology, said Bezukladnikov of E4 Group.

"The Chinese state has imposed tough rules for global players such as GE, Siemens, Alstom (ALSO.PA), Mitsubishi (7011.T), having them build 3-4 power installations ... and then forcing them to give the licences for those machines to China."

"This allowed (local firms) to directly build this technology in their own factories without the participation of the international producers," Bezukladnikov said.

But so far, however, the Russian government has not taken protectionist steps in this sector, so foreign companies have been building the bulk of Russia's large turbines.

This situation may get worse as Russian power producers turn away from coal-run turbines, where Russian firms are relatively competitive, and install more gas-fired machines [ID:nL07494603].

Despite the success of Power Machines in working with Siemens, Rantsev said state involvement would still be important for the success of the sector as a whole.

"Without a doubt, solving the problems at hand will require government involvement," he said. (Writing by Simon Shuster, editing by Will Waterman)