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. Last Updated: 07/27/2016

ABB, Military Plant in Gas Turbine JV

The engineering firm Asea Brown Boveri has invested in a major joint venture to produce gas turbines in Russia, betting that Russian demand for natural gas power stations will boom over the next decade.

ABB executives launched the joint venture on Monday night together with their partner, Saturn, a military factory, which until now has specialized in making engines for the SU-35 and SU-37 jets.

The new company, ABB Uniturbo, will be 80-percent ABB-owned and will produce gas turbines and turbine parts for electric power generation in Russia and abroad.

ABB has a total of 10 joint ventures in Russia, including a company manufacturing plant control systems, which it expects will employ about 3, 000 Russians by the end of this year.

Maxwell Asgari, president of ABB in Moscow, said that the market for gas turbines in Russia will inevitably grow because of Russia's vast natural gas reserves.

"Gas turbines are efficient, they are cost effective", he said. "Where you do have gas, it doesn't make sense to spend billions of dollars on nuclear reactors or fossil fuel generating stations".

He said that ABB had chosen Saturn because of its experience in producing high-performance jet engines and single-crystal turbine blades. "This is a case of one military conversion program that makes sense", he said.

Asgari said that ABB does not expect profits in the short term.

Saturn President Victor Chepkin said that the new joint venture could count on orders from the government. He said that the city of Moscow has already ordered six turbines, which will have 70-percent local content and be delivered starting in 1996.

He said that Russia had few other companies that could produce reliable gas turbines and he said that the ABB joint venture would only meet 10 percent of expected demand.

ABB financial expert Thomas Fasbender said that in order for the market to grow, Russia's artificially low electricity prices must rise.

The immediate market, Fasbender said, is in providing affordable parts and service for existing plants. "About 30 percent of boilers in Russia are over 30 or 35 years old. Here there is a service market".

Aside from raising the price of electricity, the Russian power generation industry could fund power plant renovation and construction by selling electricity to Western Europe.

But according to Igor Novozhilov, director of the Russian Fuel and Energy Ministry's electrical energy department, talks on building a large electricity transmission line through Belarus and Poland to Germany have temporarily stalled.

Novozhilov said that despite decreasing industrial production, the government expects demand for electricity in Russia to stabilize and even grow next year. Russia's total electrical consumption dropped by 7 percent in the first eight months of 1993 compared to the same period in 1992.