German conglomerate Siemens has applied for a special investment contract to localize production of its high-capacity gas turbines in Russia. The move follows a 2017 scandal over the supply of Siemens turbines to Crimea.

Under the terms of the contract, the components of the ‘hot gas path’ and the gas turbine automatic control system will be localized in Russia until the middle of 2023, according to the Siemens press service.

The planned localization level of the SGT-2000E turbine will be at least 90 percent. The process will take place at the Siemens Gas Technology Turbines (STGT) plant, which is a joint venture between Siemens and Russia’s Power Machines.

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According to the Siemens statement, it will make significant investments in STGT and partner enterprises in order to develop know-how and increase the innovative potential of Russian companies. As a result, a full-cycle production ecosystem will be created in Russia for the production of high-capacity turbines.

The German company has already identified suppliers for the localization of the SGT5-2000E gas turbine’s ‘hot gas path’ components.

In 2017, Siemens was caught up in a scandal when its gas turbines were allegedly delivered to Crimea, which has been under EU and US sanctions following its reunification with Russia. Western companies are prohibited from doing business in the region.

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The conglomerate insisted that the four disputed turbines were initially intended for a project in the southern Russian region of Taman, not far from the Crimean Peninsula. Russian company Technopromexport stated it bought the equipment on the secondary market and modernized it at Russian facilities.

The German firm filed a lawsuit against Technopromexport, claiming the company had moved the equipment to Crimea in violation of international sanctions and bilateral agreements.

The turbines were reportedly to be installed at new power stations in Crimea. The region has suffered electricity shortages since its separation from Ukraine, as its power supply was almost fully dependent on the country.

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