Regulatory Overview of Oil Country Tubular Goods

Part
01
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Part
01

Tenaris OCTG Regulations and Compliances

Tenaris's headquarter is in the United States. Information on federal regulations and compliance as they relate to entry into the OCTG market is not publicly or readily available. For this reason, this research presents helpful insights into regulations and compliance that could affect this industry.

Helpful findings

  • According to research, "the EPA regulates air emissions from refineries and fuel distribution systems, including pipelines, trucks, and fuel dispensing facilities or service stations"
  • The Federal choices regarding particular constraints on drilling and production on federal land are based on the National Environmental Policy Act (1970).23. The Act obliges federal agencies to evaluate the environmental influence of "major federal actions, mainly by producing Environmental Impact Statements or Environmental Assessments"
  • The operation of natural gas pipelines that gives long-distance transmission and local customer distribution is regulated by the federal Department of Transportation (DOT)’s Pipeline and Hazardous Materials Safety Administration.
  • The Federal Energy Regulatory Commission (FERC)33 regulates the transportation of oil through interstate oil pipelines but does not oversee pipeline operations"
  • According to FERC "Pipelines must receive authorization from FERC before abandoning facilities or other FERC-authorised services. Abandonment is not limited to instances where facilities are no longer in use; rather, the abandonment of facilities by sale also triggers the prior authorization requirement."
  • According to FERC "Pipeline companies must provide non-discriminatory access for similarly situated shippers; pipelines are prohibited from: showing any undue preference to any shipper; subjecting any shipper to undue prejudice; or maintaining any unreasonable difference in rates, charges, services or facilities, or in any other respect, between localities or classes of service."

Research strategy

We commenced our research by first reviewing through Tenari's official website and LinkedIn profile to locate their headquarters. The team was able to locate Tenari's headquarters through this search.

Next, in order to provide an overview of the federal regulations and compliance for the US as related to entry into the OCTG market, we first familiarized ourselves with the meaning of OCTG. We found that OCTG is defined as the tubes which were used in oil and gas production. For example, oil pipes, drill pipe, casing, and tubing. The team then reviewed press-releases for any details regarding the federal regulations and compliance for the US as related to entry into the OCTG market. This search only brought details regarding the global market size of OCTG but nothing specific to regulation and compliance regarding entry to the market in the United States.

We then searched the US Trade government website for details correlating to the federal regulations and compliance in the OCTG market. Unfortunately, this yielded no results. The team also searched for white papers on these regulations. We found regulations on the US oil sector as a whole but nothing specific to OCTG was available.

The team decided to broaden the research approach by searching for federal regulations and compliance on oil pipelines, drill pipe, casing, and tubing. We found that the body that regulates oil pipelines in the US is called FERC. We have been able to find some information from FERC regarding the terms and conditions of services offered by interstate pipelines and also information on shipments but nothing relating to entry into the pipeline market. No source provides data specific to the OCTG market, let alone specific to new entrants to the US OCTG market. We hypothesize that this is because OCTG is a niche of a sector of an industry and, therefore, has not received international attention. Consequently, we have attempted to extract useful information from reports on the broader industry, requiring some judgment calls on our part. We therefore, advise contacting the relevant ministries (also provided in this brief) for more information.


Part
02
of nineteen
Part
02

Vallourec OCTG Regulations and Compliances

Vallourec's headquarter is in France. Information on federal regulations and compliance as they relate to entry into the OCTG market is not publicly or readily available. For this reason, this research present helpful insights into regulations and compliance that could affect this industry.

Headquarter Country

Helpful Findings

  • In 2019, Vallourec has won a $900 million contract with ADNOC.
  • This contract is based on the supply of tubing and casing for the next five years.
  • Some laws that may affect OCTG include:
    • "Law No. 2011-835 dated 13 July 2011 prohibits the exploration and exploitation of liquid and gaseous hydrocarbon mines by hydraulic fracturing."
    • "Law No. 2017-1839 of 30 December 2017 ending research and exploitation of hydrocarbons demonstrated the intention of government to accelerate a transition towards a decarbonized economy. No new authorization can now be granted to extract hydrocarbons and no existing licenses will be renewed beyond 2040."
  • Regulations set by the European Union affect France. In 2018 and 2019, a new legal framework was set up: "Clean energy for all Europeans." The different member states will need to heed to these new regulations.
  • On 25th January 2019, France set energy policies for 5-year periods: 2019-2023 and 2024-2028 periods. This energy project was labeled PPE, "Programmation pluriannuelle de l'énergie."

Research Strategy

Our thorough research of various sources was unable to identify France's federal regulations and compliance as they relate to entry into the OCTG (Oil country tubular goods) market. The strategies attempted are described below.

Our first strategy was to analyze the websites for companies in this market: Vallourec. We thoroughly analyzed press-releases, documents, the annual and quarterly reports, and any additional affiliated documents. Our thorough analysis revealed information on various deals that they acquired in the recent past. This information was not adequate to present the regulations in France.

Our second strategy was to search through industry reports. We searched through publicly available data but only came across information that was behind paywalls. One example is the "Oil Country Tubular Goods (OCTG) Market Forecast 2019-2029," which provided insights into various countries and their markets.

Our third strategy was to search through media sites that would publish any general information on the regulations and compliance of France for this market. Our research only provided insights into oil and gas regulations, but non that address the OCTG. Additionally, we searched for information through sites that provide company profiles. We searched through sites such as Crunchbase and found general information.
Part
03
of nineteen
Part
03

TMK OCTG Regulations and Compliances

TMK is headquartered at 40/2a Pokrovka Street, Moscow, 105062, Russia. We have detailed the available information about the regulatory environment surrounding Russia's OCTG market below. However, the amount of information available in public, layman's sources is extremely limited and sporadic, as explained in our research strategy section. We hypothesize that the regulations involved are both complicated and shifting due to technological advances and, therefore, advise contacting the relevant ministries (also provided in this brief) for more information.

Relevant Regulations in Industry Sources

  • A recent report by ICLG on Russia's Oil and Gas Regulation lists several regulatory acts that impact the Oil and Gas sector of the Russian Energy Industry. The list is non-exhaustive, and only a few seem relevant to the OCTG market. We will quote verbatim rather than risk misinterpretation:
    • "Civil Code of the Russian Federation (Part II), governing relations among subjects of law with respect to oil and gas agreements (para. 6, Chapter 30)."
    • "RF Federal Law No. 135-FZ dated 26.07.2006 'On the Protection of Competition' determines the organizational and legal foundations for the protection of competition ..."
    • "RF Law No. 2395-1 dated 21.02.1992 'On Subsoil' governs relations arising in the area of ... the use of the waste generated in the extraction of mineral deposits ..."
    • "RF Federal Law No. 225-FZ dated 30.12.1995 'On Production Sharing Agreements' ... establishes the legal foundations of relations arising in the process of the making of Russian and foreign investments in the surveying, exploration and extraction of raw materials ..."
    • "RF Federal Law No. 116-FZ dated 21.07.1997 'On the Industrial Safety of Hazardous Production Facilities' determines the ... safe operation of hazardous production facilities and is aimed at preventing accidents ..."
  • A recent report by the International Energy Agency (IEA) on Russia's energy market (which we have downloaded and made available here), noted several recent regulatory changes affecting the "Russian supply and service market, including TMK." Rather than risk misinterpretation, we will again quote verbatim (p. 129):
    • "Traditional Western Siberian vertical drilling required standard American Petroleum Institute (API) tubing costing in a range of USD 1000/tonne (USD/t) and requiring 300 tonnes (t) per well."
    • "Wells required for Bazhenov plays need to be resistant to higher pressure and corrosion and require premium tubes costing around USD 3000/t when 400 t to 450 t are required per well."
    • "Finally, offshore drilling requires premium tubes costing about USD 3000/t to USD 4000/t and needs about 1000 t per well — that tube cost is around ten times higher per well compared with a traditional, simple vertical well — this number may be slightly lower in Russia’s offshore Arctic that has shallow waters."
  • Notably, IEA's page on Russia has few examples of Russia's oil industry being in the news, none of which give any insight into more recent regulatory changes.

Relevant Regulatory Ministries


Research Strategy

Due to the relative paucity of our findings, we believe it would be beneficial to detail our research strategy. We began with TMK's homepage, not only to locate its headquarters and therefore the focus of our research (in this case, Russia's regulatory regime for OCTG), but also searching the site for any information regarding the regulations faced by the company. This included TMK's public financial statements, particularly its annual reports, as these often contain information about anticipated or recent regulatory changes under the company's "risks." In this case, this provided only a single lead in repeated references to Russia's Ministry of Industry and Trade.

We followed that lead to the Russian government homepage and, through that, the Ministry of Industry and Trade's website. Neither provided public access to any relevant laws and regulations for the OCTG market in their English-language pages and attempts to find additional data on the Russian-language pages via Google translate also proved fruitless. The only partially-relevant public data found was the transcript of a 2014 meeting considering "Transneft’s development, retooling and reconstruction programme until 2020." The meeting was very high-level and provided no additional insights, seeming more focused on tariffs than anything else.

Since our attempts to obtain the needed information "from the horse's mouth" had proven fruitless, we expanded our research to include several publicly-available reports on the Russian Energy Industry and its various segments. These provided the bulk of our findings above. However, there are two caveats.

First, no source provides data specific to the OCTG market, let alone specific to new entrants to Russia's OCTG market. We hypothesize that this is because OCTG is a niche of a sector of an industry and, therefore, has not received international attention. Consequently, we have attempted to extract useful information from reports on the broader industry, requiring some judgment calls on our part.

Second, no source attempts to be comprehensive in its treatment of this subject and, for the most part, simply list some representative laws and regulations and relevant ministries. We hypothesize that this may indicate a complicated regulatory environment, one which several of our sources indicate is in a state of change due to the influx of new technologies and environmental concerns.
Part
04
of nineteen
Part
04

U.S. Steel Tubular OCTG Regulations and Compliances

US Steel Tubular is headquartered in the US, a country that enforces several regulations and compliance standards which could impact new entrants to the local OCTG market

Overview of Findings

  • US Steel Tubular is headquartered in the US at 460 Wildwood Forest Drive, Suite 300S in Spring, TX.
  • Although the preponderance of US federal legislation and regulatory oversight for the larger oil and gas industry does not appear to be relevant to the OCTG market, recent statues enacted by the Bureau of Safety and Environmental Enforcement (BSEE) may have implications for entry into this market in America.
  • Specifically, following the Deepwater Horizon blowout and oil spill in 2010, the BSEE implemented new requirements for well design, testing, maintenance and other safety precautions.
  • Among these rules, the Oil and Gas Production Safety Systems Rule of 2018 and BSEE Well Control Rule of 2019 appear to be potentially relevant to entry into the US OCTG market.
  • Most notably, the Oil and Gas Production Safety Systems Rule imposed (1) new requirements for the thorough design testing and documentation of oil and gas industry devices to ensure appropriate functionality in the "most extreme conditions," (2) requirements for piping and their schematics and (3) additional inspection requirements for tube-type heaters.
  • Additionally, the BSEE Well Control Rule added (1) requirements for coiled tubing and snubbing and (2) established the use of an independent third party to certify some BOP systems and components.
  • These regulations and compliance standards would likely require a new entrant into the US OCTG market to undergo additional review and inspection of their products in advance of a sale, and would also subject these same products to further scrutiny after their installation.
  • Meanwhile, the BSEE regulations are currently under review by the White House, with the goal to "reduce unnecessary regulatory burdens" while maintaining existing safety standards.

Research Strategy

An extensive review of credible sources highlighted a limited set of US regulations and compliance standards that relate to entry into the OCTG (Oil country tubular goods) market. The strategies attempted are described below.
Our first strategy was to analyze the website of US Steel Tubular to ascertain what federal regulations or compliance standards the company most discusses or mentions. We combined sophisticated search techniques with a more manual review of press releases, documents and annual and quarterly reports. Unfortunately, our thorough analysis revealed only general statements about US Steel Tubular's internal compliance standards, including the company's compliance with certifications such as ISO 9001. This information was not relevant to any potential regulations imposed by US Steel Tubular's home country of the US.

Our second strategy was to search through US OTCG industry reports and articles. Those resources which were publicly available generally highlighted supply and demand trends, while any discussion of federal oversight and industry impacts generally focused on recent US tariffs. Additional resources that might have provided more detail regarding US OTCG regulations were protected by a paywall and were not publicly available.
Our third strategy was to review media sites that published any general information regarding US regulations and compliance standards for the larger oil and gas industry. The goal was to manually review these regulations and ultimately triangulate those which might be applicable to the OCTG market for the country. Through this analysis, we determined that the majority of legislation and regulatory bodies covering the US oil and gas industry were not relevant to the OCTG market. However, recent regulations by the Bureau of Safety and Environmental Enforcement appear to have implications for entry into the US OCTG market, and were provided for review as helpful.
Part
05
of nineteen
Part
05

Voest Alpine A.G. OCTG Regulations and Compliances

The Voestalpine Group, the holding company of Voestalpine Tubulars GmbH & Co KG, is headquartered in Linz, Austria while Voestalpine Tubulars GmbH & Co KG is headquartered in Kindberg, Austria. The main regulations affecting the Austrian OCTG market include worldwide product standards for OCTG products, the Austrian Trade Act, and climate regulations.

Headquarters

  • The Voestalpine Group is headquartered in Linz, Austria.
  • In 2001, Voest-Alpine Stahl A.G. was restructured into voestalpine AG, with four divisions—Steel, Motion (renamed Automotive later on), Railway Systems, and Profilform.
  • Voestalpine Tubulars GmbH & Co KG, the Voestalpine oil country tubular goods division, is headquartered in Kindberg, Austria.

OCTG Market Regulations

  • Worldwide standards for the OCTG market include API 5CT — Specification for Casing and Tubing, API 5DP — Specification for Drill Pipe and ISO 11960:2004-Petroleum and natural gas industries-Steel pipes for use as casing tubing for wells. These standards dictate the qualities of OCTG products worldwide.
  • Voestalpine manufacturers OCTG for use in American markets and thus must meet the manufacturing standards set by the American Petroleum Institute (API).
  • Two laws specifically affecting the Voestalpine group are the Austrian Trade Act (“Gewerbeordnung”) and E-Commerce Act.
  • The Austrian Trade Act requires "proof of qualification (certificate of competence) and a managing director under trade law who possess such qualifications for the corresponding trade."
  • Climate regulations, including the United Nations global climate accord (Paris Agreement), affect the OCTG industry since they dictate carbon emission levels.
  • US tariffs on steel could affect the OCTG industry, by making it harder for manufacturers to export their products to US markets.

Research Strategy

In order to identify regulations regarding entry into the Austrian OCTG market, the research team first reviewed market reports and other articles for overall regulations affecting the OCTG market, with the hopes of then narrowing it down to those affecting entry into the OCTG market in Austria. However, most regulations found were worldwide regulations, or specific to North America.

Next we attempted to review articles specifically related to entry into the OCTG market, with the hopes of identifying regulations specific to Austria from these reports. However, while many articles stated "barriers to entry", we could not find any specific breakdown of what these barriers to entry were, other than high cost of production.

Then, we looked for mentions of regulations in connection with Voestalpine, in the hopes of there identifying regulations that would affect market entry. Through this strategy, we identified climate regulations, which would affect entry into the market due to the increased cost of production that lower carbon emissions entails.

Finally, we expanded the scope and looked for regulations in Austria that could affect parts of the OCTG industry, like regulations on steel. From this strategy, we identified steel tariffs from the US that could affect the OCTG industry.
Part
06
of nineteen
Part
06

Evraz Group S.A OCTG Regulations and Compliances

Evraz is headquartered at 121353, Moscow, Belovezhskaya Street, 4, Block B, in Russia. We have detailed the available information about the regulatory environment surrounding Russia's OCTG market below. However, the amount of information available in public, layman's sources is extremely limited and sporadic, as explained in our research strategy section. We hypothesize that the regulations involved are both complicated and shifting due to technological advances and, therefore, advise contacting the relevant ministries (also provided in this brief) for more information.

Relevant Regulations in Industry Sources

  • A recent report by ICLG on Russia's Oil and Gas Regulation lists several regulatory acts that impact the Oil and Gas sector of the Russian Energy Industry. The list is non-exhaustive, and only a few seem relevant to the OCTG market. We will quote verbatim rather than risk misinterpretation:
    • "Civil Code of the Russian Federation (Part II), governing relations among subjects of law with respect to oil and gas agreements (para. 6, Chapter 30)."
    • "RF Federal Law No. 135-FZ dated 26.07.2006 'On the Protection of Competition' determines the organizational and legal foundations for the protection of competition ..."
    • "RF Law No. 2395-1 dated 21.02.1992 'On Subsoil' governs relations arising in the area of ... the use of the waste generated in the extraction of mineral deposits ..."
    • "RF Federal Law No. 225-FZ dated 30.12.1995 'On Production Sharing Agreements' ... establishes the legal foundations of relations arising in the process of the making of Russian and foreign investments in the surveying, exploration and extraction of raw materials ..."
    • "RF Federal Law No. 116-FZ dated 21.07.1997 'On the Industrial Safety of Hazardous Production Facilities' determines the ... safe operation of hazardous production facilities and is aimed at preventing accidents ..."
  • A recent report by the International Energy Agency (IEA) on Russia's energy market (which we have downloaded and made available here), noted several recent regulatory changes affecting the "Russian supply and service market, including TMK," a competitor to Evraz which is detailed in other briefs. Rather than risk misinterpretation, we will again quote verbatim (p. 129):
    • "Traditional Western Siberian vertical drilling required standard American Petroleum Institute (API) tubing costing in a range of USD 1000/tonne (USD/t) and requiring 300 tonnes (t) per well."
    • "Wells required for Bazhenov plays need to be resistant to higher pressure and corrosion and require premium tubes costing around USD 3000/t when 400 t to 450 t are required per well."
    • "Finally, offshore drilling requires premium tubes costing about USD 3000/t to USD 4000/t and needs about 1000 t per well — that tube cost is around ten times higher per well compared with a traditional, simple vertical well — this number may be slightly lower in Russia’s offshore Arctic that has shallow waters."
  • Notably, IEA's page on Russia has few examples of Russia's oil industry being in the news, none of which give any insight into more recent regulatory changes.
  • A reference to the development of new GHG (greenhouse gas) emission regulation in Evraz's annual report led us to check on the status of this regulation; it is currently still pending, but the draft amendment aims at fulfilling Russia's pledge to "reduce emissions by at least 25% from 1990 levels by 2020 and 25-30% from 1990 levels by 2030." Though not active yet, any OCTG company will want to keep tabs on these possible new regulations.

Relevant Regulatory Ministries

Research Strategy

Due to the relative paucity of our findings, we believe it would be beneficial to detail our research strategy. We began with Evraz's homepage, not only to locate its headquarters and therefore the focus of our research (in this case, Russia's regulatory regime for OCTG), but also searching the site for any information regarding the regulations faced by the company. This included Evraz's public financial statements, particularly its annual reports, as these often contain information about anticipated or recent regulatory changes under the company's "risks." This provided some references, such as, "The risk of compliance with trade, antimonopoly and anti-dumping regulations, as well as sanctions regimes" (p. 19). However, nearly all references were to regulations among Russia's trading partners (e.g., the EU) or else simply referenced regulations in a general sense. The exception, which referred to a pending regulatory change, is discussed in our findings above.

We had, in a prior brief, found references to Russia's Ministry of Industry and Trade in an annual report. Again, we followed that lead to the Russian government homepage and, through that, the Ministry of Industry and Trade's website. Neither provided public access to any relevant laws and regulations for the OCTG market in their English-language pages and attempts to find additional data on the Russian-language pages via Google translate also proved fruitless. The only partially-relevant public data found was the transcript of a 2014 meeting considering "Transneft’s development, retooling and reconstruction programme until 2020." The meeting was very high-level and provided no additional insights, seeming more focused on tariffs than anything else.
Since our attempts to obtain the needed information "from the horse's mouth" had proven fruitless, we expanded our research to include several publicly-available reports on the Russian Energy Industry and its various segments. These provided the bulk of our findings above. However, there are two caveats.
First, no source provides data specific to the OCTG market, let alone specific to new entrants to Russia's OCTG market. We hypothesize that this is because OCTG is a niche of a sector of an industry and, therefore, has not received international attention. Consequently, we have attempted to extract useful information from reports on the broader industry, requiring some judgment calls on our part.
Second, no source attempts to be comprehensive in its treatment of this subject and, for the most part, simply list some representative laws and regulations and relevant ministries. We hypothesize that this may indicate a complicated regulatory environment, one which several of our sources indicate is in a state of change due to the influx of new technologies and environmental concerns.

As a final note on our strategy, due to having researched Russia's regulations in the OCTG market in a previous brief, much of our research involved retracing steps to look for previously overlooked information or references that might lead us to undiscovered sources. We also conducted a fresh round of broad-based research in an attempt to bring more to the table. While some new secondary sources were located, they ultimately did not provide any new information and, in nearly all cases, tracing back their primary sources simply brought us back to the reports found in our previous brief. Consequently, there is considerable overlap in the two briefs.
Part
07
of nineteen
Part
07

Tenaris OCTG Manufacturing and Safety Standards

As Tenaris is headquartered in Houston, Texas, following is an overview of manufacturing and safety standards surrounding the OCTG (oil country tubular goods) in the United States. The verbiage of standards found, and included herein, are copied verbatim from their original sources due to the specific nature of testing and regulations.

ISO and API Standards

According to Production Technology, the following are American Petroleum Institute (API) and International Organization of Standardization (ISO) "standards for Tubulars (Casings, Tubings, Threads, Drill Pipe, Line Pipe)":
  • API RP 5A3/ISO 13678:2010 — Recommended Practice on Thread Compounds for Casing, Tubing, Line Pipe, and Drill Stem Elements (includes Errata 1 dated April 2011): provides requirements, recommendations, and methods for the testing of thread compounds intended for use on threaded casing, tubing, and line pipe connections and for thread compounds intended for use on rotary shouldered connections. The tests outlined are used to evaluate the critical performance properties and physical and chemical characteristics of thread compounds under laboratory conditions.
  • API RP 5A5/ISO 15463:2003 — Field Inspection of New Casing, Tubing, and Plain-End Drill Pipe (includes Errata 1 dated December 2009) specifies requirements and gives recommendations for field inspection and testing of oil country tubular goods (OCTG). This International Standard covers the practices and technology commonly used in field inspection; however, certain practices may also be suitable for mill inspections. Covers the qualification of inspection personnel, a description of inspection methods and apparatus calibration and standardization procedures for various inspection methods. The evaluation of imperfections and marking of inspected OCTG are included. Applicable to field inspection of OCTG and is not applicable for use as a basis for acceptance or rejection.
  • Spec 5B — Specification for Threading, Gauging, and Thread Inspection of Casing, Tubing, and Line Pipe Threads covers dimensions and marking requirements for API Master thread gauges. Additional product threads and thread gauges, as well as instruments and methods for the inspection of threads for line pipe, round thread casing, buttress casing, and extreme-line casing connections, are included. It is applicable when so stipulated in the API standard governing the product. The inspection procedures for measurements of taper, lead, height, and angle of thread are applicable to threads having 111/2 or less turns per in. (111/2 or less turns per 25.4 mm). All thread dimensions shown without tolerances are related to the basis for connection design and are not subject to measurement to determine acceptance or rejection of product.
  • API RP 5C1 — Recommended Practice for Care and Use of Casing and Tubing covers use, transportation, storage, handling, and reconditioning of casing and tubing.
  • API BULL 5C2 — Bulletin on Performance Properties of Casing, Tubing, and Drill Pipe — This bulletin is not intended as a design manual. Its purpose is to provide minimum performance properties on which the design of casing, tubing, and drill pipe strings may be based. The performance properties as given herein cover the grades, sizes, and weights of casing, tubing, and drill pipe as given in API Specification 5CT. Formulas and procedures for calculating the values are given in Bulletin 5C3. Formulas and calculations appearing in the 13th and preceding editions of Bull 5C2 were transferred in 1971 to Bull 5C3: Bulletin on Formulas and Calculations for Casing, Tubing, Drill Pipe, and Line Pipe Properties.
  • API BULL 5C3 — Bulletin on Formulas and Calculations for Casing, Tubing, Drill Pipe, and Line Pipe Properties — The purpose of this bulletin is to show the formulas used in the calculation of the various pipe properties given in API standards, including background information regarding their development and use. This bulletin is under the jurisdiction of the Committee on Standardization of Tubular Goods.
  • API TR 5C3/ISO 10400:2007 — Technical Report on Equations and Calculations for Casing, Tubing, and Line Pipe used as Casing or Tubing; and Performance Properties Tables for Casing and Tubing (includes Addendum 1 dated October 2015) illustrates the equations and templates necessary to calculate the various pipe properties given in International Standards, including: pipe performance properties, such as axial strength, internal pressure resistance, and collapse resistance, minimum physical properties, product assembly force (torque), product test pressures, critical product dimensions related to testing criteria, critical dimensions of testing equipment, and critical dimensions of test samples. This edition of TR 5C3 is the identical national adoption of ISO 10400:2007 and supersedes Bull 5C2 and Bull 5C3.
  • API RP 5C5/ISO 13679:2002 — Recommended Practice on Procedures for Testing Casing and Tubing Connections establishes minimum design verification testing procedures and acceptance criteria for casing and tubing connections for the oil and natural gas industries. These physical tests are part of a design verification process and provide objective evidence that the connection conforms to the manufacturer’s claimed test load envelope and limit loads.
  • API RP 5C6 — Welding Connections to Pipe is created to provide a standard industry practice for the shop or field welding of connectors to pipe. The technical content provides requirements for welding procedure qualification, welder performance qualification, materials, testing, production welding, and inspection. Additionally, suggestions for ordering are included.
  • Spec 5CRA/ISO 13680:2008 — Specification for Corrosion Resistant Alloy Seamless Tubes for Use as Casing, Tubing, and Coupling Stock (includes Errata 1 dated August 2011) specifies the technical delivery conditions for corrosion-resistant alloy seamless tubulars for casing, tubing, and coupling stock for two product specification levels. This edition of Spec 5CRA is the identical national adoption of ISO 13680:2010.
  • Spec 5CT — Specification for Casing and Tubing (includes Errata 1 dated September 2012) specifies the technical delivery conditions for steel pipes (casing, tubing, plain end casing liners, and pup joints) and accessories. This standard is applicable to the following connections in accordance with Spec 5B: short round thread casing (STC); long round thread casing (LC); buttress thread casing (BC); extreme-line casing (XC); non-upset tubing (NU); external upset tubing (EU); integral joint tubing (IJ). This standard specifies the technical delivery conditions for steel pipes (casing, tubing, and pup joints), coupling stock, coupling material, and accessory material and establishes requirements for three Product Specification Levels (PSL-1, PSL-2, PSL-3). The requirements for PSL-1 are the basis of this standard. The requirements that define different levels of standard technical requirements for PSL-2 and PSL-3, for all grades except H-40, L-80 9Cr, and C110, are contained in Annex H. This standard can also be applied to tubulars with connections not covered by API standards. This standard is not applicable to threading requirements. This standard is based on the 8th Edition of Spec 5CT.
  • Spec 5DP/ISO 11961:2008 — Specification for Drill Pipe specifies the technical delivery conditions for steel drill-pipes with upset pipe-body ends and weld-on tool joints for use in drilling and production operations in petroleum and natural gas industries for three product specification levels (PSL-1, PSL-2, and PSL-3). This International Standard covers the following grades of drill-pipe: grade E drill-pipe; high-strength grades of drill-pipe, grades X, G, and S. This International Standard can also be used for drill-pipe with tool joints not specified by ISO or API standards. This International Standard is based on Spec 5D and Spec 7. This edition of Spec 5DP is the identical national adoption of ISO 11961:2008. This specification contains the API Monogram Annex as part of the U.S. national adoption.
  • ISO 11960:2014 — Steel pipes for use as casing or tubing for wells
  • ISO 13679:2002 — Procedures for testing casing and tubing connections

Additional and/or Replaced Standards

The API produces a catalog of "nearly 200 key industry standards". The complete catalog can be viewed via this link and several of the regulations specific to OCTG products have been included below. Per the API, "these standards cover all aspects of the oil and gas industry, including process safety, refinery and chemical plant operations and equipment, offshore drilling, hydraulic fracturing and well construction, and pipeline safety on welding, and public awareness programs. API’s goal is to provide the public with access to these standards, particularly those related to safety or that have been incorporated into federal regulation". Please note that as there are hundreds of regulations and standards, it is not possible to provide an exhaustive review of each within the span of research and it is highly suggested that data from the API and ISO be reviewed in its entirety before entering the OCTG market. The full text of the standards can be viewed here and print and downloadable versions can be purchased here.
  • RP 5A5/ISO 15463:2003 Field Inspection of New Casing, Tubing, and Plain-End Drill Pipe (includes Errata 1 dated December 2009) Specifies requirements and gives recommendations for field inspection and testing of oil country tubular goods (OCTG). This International Standard covers the practices and technology commonly used in field inspection; however, certain practices may also be suitable for mill inspections. Covers the qualification of inspection personnel, a description of inspection methods and apparatus calibration and standardization procedures for various inspection methods. The evaluation of imperfections and marking of inspected OCTG are included. Applicable to field inspection of OCTG and is not applicable for use as a basis for acceptance or rejection.
  • RP 5A3/ISO 13678:2010 Recommended Practice on Thread Compounds for Casing, Tubing, Line Pipe, and Drill Stem Elements (includes Errata 1 dated April 2011) Provides requirements, recommendations, and methods for the testing of thread compounds intended for use on threaded casing, tubing, and line pipe connections and for thread compounds intended for use on rotary shouldered connections. The tests outlined are used to evaluate the critical performance properties and physical and chemical characteristics of thread compounds under laboratory conditions.
  • Spec 5B Threading, Gauging, and Inspection of Casing, Tubing, and Line Pipe Threads — Covers dimensions, tolerances, and marking requirements for API threads and the gauges that control the acceptance criteria for the threads. Thread element gauges, instruments, and requirements for the inspection of threads for line pipe, round thread casing, round thread tubing, and buttress casing connections are included.
  • RP 5B1 Gauging and Inspection of Casing, Tubing and Line Pipe Threads (includes Addendum 1 dated September 2004) Covers threading, gauging, gauging practice, and inspection of threads for casing, tubing, and line pipe made under Specs 5CT, 5DP, and 5L. Also covers gauge specifications and certification for casing, tubing, and line pipe gauges.
  • Spec 5CT Specification for Casing and Tubing (includes Errata 1 dated September 2012 and Errata 2 dated October 2016) Specifies the technical delivery conditions for steel pipes (casing, tubing, plain end casing liners, and pup joints) and accessories. This standard is applicable to the following connections in accordance with Spec 5B: • short round thread casing (STC); long round thread casing (LC); buttress thread casing (BC); extreme-line casing (XC); non-upset tubing (NU); external upset tubing (EU); integral joint tubing (IJ). This standard specifies the technical delivery conditions for steel pipes (casing, tubing, and pup joints), coupling stock, coupling material, and accessory material and establishes requirements for three Product Specification Levels (PSL-1, PSL-2, PSL-3). The requirements for PSL-1 are the basis of this standard. The requirements that define different levels of standard technical requirements for PSL-2 and PSL-3, for all grades except H-40, L-80 9Cr, and C110, are contained in Annex H. This standard can also be applied to tubulars with connections not covered by API standards. This standard is not applicable to threading requirements.
Part
08
of nineteen
Part
08

Vallourec Manufacturing and Safety Standards

Information on manufacturing and safety standards as they relate to entry into the OCTG market in France is not publicly or readily available. For this reason, this research presents helpful insights into manufacturing and safety standards that could affect this industry in France.

Helpful Findings

  • A wide body of manufacturing and safety standards established by the European Union may regulate entry into the OCTG market in France.
  • In addition to more generic product manufacturing and safety standards, the European Committee for Standardization (CEN) has published over 15,000 standards that reference steel tubular products.
  • Moreover, the CEN has published more than 100 standards that focus specifically on the production of steel tubes and iron and steel fittings.
  • For example, EN 10216 relates to the general production of seamless steel tubes for pressure purposes.
  • This CEN standard also includes parts 1-5, which govern the manufacture of non-alloy, stainless steel, alloy fine grain and other variants of these tubular products within this category.
  • Unfortunately, these CEN standards and their "national document references" for countries such as France do not appear to be available publicly and/or for free.
  • Notably, the sheer volume of EU standards that may relevant to the manufacture and safety of steel tubular products in the EU, as well as the fact that these standards do not appear to be generally available or free of charge, suggests that regulatory complexity and transparency may represent a substantial barrier to entry for the OCTG market in France.

Research Strategy

An extensive review of various sources was unable to identify France's manufacturing and safety standards as they relate to entry into the OCTG (Oil country tubular goods) market. The strategies attempted are described below.
Our first strategy was to search through industry reports. We searched through publicly available data but only came across information that was behind paywalls. One example is the Oil Country Tubular Goods Market Size, Share, Emerging Trends And Forecasts To 2022, which provided insights into various countries and their markets, but failed to provide free information related to manufacturing and safety standards for the industry.

Our second strategy was to analyze the website for Vallourec itself. We combined sophisticated search techniques with a more manual review of press-releases, documents and annual and quarterly reports. Unfortunately, our thorough analysis revealed only general statements about Vallourec's internal safety and manufacturing standards, including the company's compliance with certifications such as ISO 9001. This information was not relevant to any potential regulations imposed by Vallourec's home country of France.

Our third strategy was to review media sites that published any general information regarding manufacturing and safety standards within France. The goal was to manual review these manufacturing and safety standards and ultimately triangulate those which might be applicable to the OCTG market. However, our research provided information that was only tangential to the OCTG market, such as France's manufacturing standards as they relate to trade or how the country's labor standards impact manufacturing for local businesses. However, these resources notably pointed to the potential influence of EU standards on local French manufacturing standards, which informed our fourth strategy.

Finally, recognizing that France is an EU nation, and that local manufacturing and safety standards may be set at the EU level, we conducted a detailed search for OCTG manufacturing and safety standards by the EU. Although no industry-specific information was available, we identified a number of EU standards that govern the production of steel tubular products. Further, these EU-level regulations appeared to be referenced within "national document references" from countries including France. Although no detailed information related to these standards appeared to be publicly available and/or free, we believed that even basic information about these standards was relevant to the request and would provide helpful context in addressing the initial inquiry into manufacturing and safety standards that could impact entry into the OCTG market in France.
Part
09
of nineteen
Part
09

TMK Manufacturing and Safety Standards

Since there was no readily-available information on the manufacturing and safety standards in Russia relating to entry into the OCTG market, insights on TMK's certificates and licenses as well as details on the company's manufacturing and safety compliance have been provided to provide insights into the best practices by a key OCTG producer in the Russian market. Based on its website, TMK mostly adheres to international manufacturing and safety standards such as the ISO, API, and OHSAS standards. GOST R standards are the only identified Russian manufacturing and safety standards that the company conforms to.

TMK's Certificates and Licenses

  • TMK's website contains a list of the company's quality certificates and licenses. Also, OCTG products are the primary, if not the sole, products at the Sinarsky Pipe Plant, one of the production plants in TMK's Russian division.
  • Some certificates and licenses for the Sinarsky Pipe Plant were of conformity to the API regulations and several were certificates of conformity to the GOST R regulations.
  • API is an acronym for the American Petroleum Institute standards. "This standard specifies the technical delivery conditions for steel drill pipe with upset pipe body ends and welded on tool joints for use in drilling and production operations in petroleum and natural gas industries for three product specification levels (PSL-1, PSL-2, PSL-3)."
  • According to ISO, the Federal Agency on Technical Regulating and Metrology (GOST R) is Russia's "National Standards Body."
  • GOST R is the federal body for "implementing inter-industry coordination and functional regulating in the fields of standardization, metrology and conformity assessment."

TMK's Manufacturing and Safety Compliance

  • TMK states that its products comply with international manufacturing standards ("ISO 9001:2008 and API Spec Q1") and safety standards (OHSAS 18001). Both are international regulations that TMK could have adopted because it largely targets international market. There are no indications that these are related to entry into the OCTG market, but they are useful insights into the best practices by a key OCTG producer in the Russian market. Verbatim is quoted to avoid misinterpretation:
  • "The Company has adopted a decision to develop and maintain an effective Quality Management System (QMS) that corresponds to the requirements of the international standards ISO 9001:2008 and API Spec Q1, with the goal of continual improving the subsidiaries’ activities, as one of the areas of strategic development."
  • "Besides the QMS, TMK’s plants have implemented and continue to maintain in good working Health, Safety and Environmental Management systems. TMK’s products are certified to the international standards API, TUV, ASTM, DIN, European Directives and others, and have all the necessary permits for their use."
  • "To enhance its health and safety performance the Company adopted the Occupational Health and Industrial Safety Policy."
  • "The Company’s facilities are audited on an annual basis for conformity to OHSAS 18001. In 2015, all entities confirmed their compliance with this international standard."

Additional Information

  • The Russian Ministry of Industry and Trade outlines the regulations imposed before the government approves industrial production within the country. Verbatim is quoted to avoid misinterpretation:
  • "The presence of an examination certificate of the Chamber of Commerce and Industry of the Russian Federation on the conformity of manufactured industrial products with the requirements provided for in the appendix to Resolution No. 719 (hereinafter — the examination certificate of the RF CCI)."
  • "Availability of a certificate of origin of goods (products), according to which the Russian Federation is a country of origin of goods (products) issued by an authorized body (organization) of a state party to the Agreement on the Rules for determining the country of origin of goods in the Commonwealth of Independent States of November 20, 2009, in the absence of manufactured industrial products in the annex to resolution No. 719 (hereinafter — ST-1)."
  • "The appendix to Resolution No. 719 contains requirements for industrial products presented with a view to classifying them as products manufactured in the Russian Federation. To date, requirements have been established for more than 600 products."

RESEARCH STRATEGY

TMK is located in Russia. Our research for the manufacturing and safety standards in Russia relating to entry into the OCTG market began by searching through the public domain for any information on the subject. We hoped that media or industry reports would have insights on the subject. We could only find reports by market research resources on the overall OCTG market. There were also some reports on the state of the OCTG market, but nothing on the manufacturing and safety standards in Russia. Probably, the information is not readily available because OCTG is a niche within an industry.

In our initial strategy, we realized that TMK's business is under the Ministry of Industry and Trade of the Russian Federation. The research team then explored the ministry's website in search of any relevant information on the subject. We noted that the portals only provided some insights of the support accorded to the "oil and gas engineering" segment and the regulations imposed before the government approves industrial production within the country. However, there was nothing specific to the OCTG market.

Third, we leveraged the company's official website in the hope that they had provided any insights on the principles. TMK only notes that its products comply with international manufacturing ("ISO 9001:2008 and API Spec Q1") and safety (OHSAS 18001) standards. While the website lists its OCTG products, the company does not provide any relevant insights specific to manufacturing and safety standards. We also looked at TMK's 2018 annual report and it provided similar information to what we found on the website.

We also tried triangulating the information. We noticed that TMK's website contains a list of the company's quality certificates. We also established that OCTG products are the primary products at the Sinarsky Pipe Plant, one of the production plants in TMK's Russian division. The research team's opinion was that the quality and safety certificates required by the Synarsky plant would be among those required by any OCTG manufacturing company. Most of the certificates and licenses were in Russian and could not be translated since they could not be copied. Some certificates were of conformity to the API regulations and several were certificates of conformity to the GOST R regulations. Since there was no readily-available information on the manufacturing and safety standards in Russia relating to entry into the OCTG market, we have provided all the garnered insights from our research.
Part
10
of nineteen
Part
10

U.S. Steel Tubular Manufacturing and Safety Standards

As US Steel is headquartered in Pittsburgh, Pennsylvania, following is an overview of manufacturing and safety standards surrounding the OCTG (oil country tubular goods) in the United States. Of note, US Steel's Tubular Products arm has been "serving the energy industry since 1901 as North America's largest fully-integrated tubular products manufacturer". The verbiage of standards found, and included herein, are copied verbatim from their original sources due to the specific nature of testing and regulations.

Manufacturing

As US Steel is an industry leader in OCTG products, their testing and safety standards can logically be used as the necessary road map for entry to the market. The "high standards of the American Petroleum Institute (API) are among the many important industry standards that U. S. Steel Tubular Products must meet. Our tubular products are frequently used in harsh environments where corrosion is an ongoing issue. By using API testing standards as a design requirement, we formulate steel chemistry and metallurgy to handle the most demanding field conditions. Tests of steel samples fall into two categories: destructive (DT) and nondestructive (NDT)."

Destructive Testing (DT) "pushes specimens to the point of failure by subjecting them to the forces of axial load, collapse, impact, and environmental corrosion and cracking" and Non-Destructive Testing (NDT) "uses noninvasive techniques such as visual observation, electromagnetic tests and ultrasonic inspection to ensure the integrity and reliability of (our) tubular products." These methods are used regularly to test the following:
  • Tensile strength - the maximum stress or load the material can withstand before fracturing.
  • Hardness — the material’s resistance to deformation, particularly penetration by a harder surface.
  • Hardenability — the ability of the steel to harden during rapid cooling (quenching).
  • Ductility — the measure of the ability of the steel to deform plastically without fracturing.
  • Fracture Toughness — the ability of a material containing a crack to resist fracture.

Certifications

US Steel lists multiple certifications that their products receive, thus, it can be logically assumed that these same certifications would need to be sought by anyone else entering the market. Full text of each of these certifications can be purchased directly from the American Petroleum Institute (API) and the International Organization of Standardization (ISO).

Safety and Inspection

The API produces a catalog of "nearly 200 key industry standards". The complete catalog can be viewed via this link and several of the regulations specific to OCTG products have been included below. Per the API, "these standards cover all aspects of the oil and gas industry, including process safety, refinery and chemical plant operations and equipment, offshore drilling, hydraulic fracturing and well construction, and pipeline safety on welding, and public awareness programs. API’s goal is to provide the public with access to these standards, particularly those related to safety or that have been incorporated into federal regulation". Please note that as there are hundreds of regulations and standards, it is not possible to provide an exhaustive review of each within the span of research and it is highly suggested that data from the API and ISO be reviewed in its entirety before entering the OCTG market. The full text of the standards can be viewed here and print and downloadable versions can be purchased here.
  • RP 5A5/ISO 15463:2003 Field Inspection of New Casing, Tubing, and Plain-End Drill Pipe (includes Errata 1 dated December 2009) Specifies requirements and gives recommendations for field inspection and testing of oil country tubular goods (OCTG). This International Standard covers the practices and technology commonly used in field inspection; however, certain practices may also be suitable for mill inspections. Covers the qualification of inspection personnel, a description of inspection methods and apparatus calibration and standardization procedures for various inspection methods. The evaluation of imperfections and marking of inspected OCTG are included. Applicable to field inspection of OCTG and is not applicable for use as a basis for acceptance or rejection.
  • RP 5A3/ISO 13678:2010 Recommended Practice on Thread Compounds for Casing, Tubing, Line Pipe, and Drill Stem Elements (includes Errata 1 dated April 2011) Provides requirements, recommendations, and methods for the testing of thread compounds intended for use on threaded casing, tubing, and line pipe connections and for thread compounds intended for use on rotary shouldered connections. The tests outlined are used to evaluate the critical performance properties and physical and chemical characteristics of thread compounds under laboratory conditions.
  • Spec 5B Threading, Gauging, and Inspection of Casing, Tubing, and Line Pipe Threads — Covers dimensions, tolerances, and marking requirements for API threads and the gauges that control the acceptance criteria for the threads. Thread element gauges, instruments, and requirements for the inspection of threads for line pipe, round thread casing, round thread tubing, and buttress casing connections are included
  • RP 5B1 Gauging and Inspection of Casing, Tubing and Line Pipe Threads (includes Addendum 1 dated September 2004) Covers threading, gauging, gauging practice, and inspection of threads for casing, tubing, and line pipe made under Specs 5CT, 5DP, and 5L. Also covers gauge specifications and certification for casing, tubing, and line pipe gauges.
  • Spec 5CT Specification for Casing and Tubing (includes Errata 1 dated September 2012 and Errata 2 dated October 2016) Specifies the technical delivery conditions for steel pipes (casing, tubing, plain end casing liners, and pup joints) and accessories. This standard is applicable to the following connections in accordance with Spec 5B: • short round thread casing (STC); • long round thread casing (LC); • buttress thread casing (BC); extreme-line casing (XC); non-upset tubing (NU); external upset tubing (EU); integral joint tubing (IJ). This standard specifies the technical delivery conditions for steel pipes (casing, tubing, and pup joints), coupling stock, coupling material, and accessory material and establishes requirements for three Product Specification Levels (PSL-1, PSL-2, PSL-3). The requirements for PSL-1 are the basis of this standard. The requirements that define different levels of standard technical requirements for PSL-2 and PSL-3, for all grades except H-40, L-80 9Cr, and C110, are contained in Annex H. This standard can also be applied to tubulars with connections not covered by API standards. This standard is not applicable to threading requirements.
Part
11
of nineteen
Part
11

Voest Alpine A.G. Manufacturing and Safety Standards

Safety and manufacturing standards for the OCTG industry in Austria, where Voestalpine is headquartered, include safety standard ISO 45001 and American Petroleum Institute manufacturing standards. EU CEN standards also apply. All standards would limit entry into the OCTG market due to the limited availability of information on the standards.

Helpful Findings

  • Voestalpine adheres to international safety standard ISO 45001, which replaced OHSAS 18001. However, the ISO standard is voluntary, and could not be freely accessed.
  • Voestalpine follows American Petroleum Institute (API) standards for the manufacture of their OCTG products. However, these standards are not freely available.
  • The Voestalpine Tubulars GmbH & Co KG division has the following certifications: ISO 55001 asset management, ISO 50001 energy, ISO 14001 environment, the OHSAS 18001 Safety (which was replaced by the ISO 45001), and API Q1 Certification. However, these certifications are not freely available.
  • EU countries are required to follow CEN standards, including ISO 15463:2003, which "specifies requirements and gives recommendations for field inspection and testing of oil country tubular goods (OCTG)."
  • Other CEN standards that do not specifically mention the OCTG industry, but instead regulate "Seamless steel tubes for pressure purposes", may also apply, like that of EN 10216-2:2013+A1:2019. This standard "specifies the technical delivery conditions in two test categories for seamless tubes of circular cross section, with specified elevated temperature properties, made of non-alloy and alloy steel."

Research Strategy

Standards specific to safety and manufacturing for the OCTG industry in Austria that would directly affect market entry were unavailable. However, we were able to identify some standards that we assume would affect entry to the market by utilizing the following research strategies.

In order to determine Austrian manufacturing and safety standards for the OCTG market, the research team began by reviewing articles and documents specific to the Voestalpine Group, in hopes that the company would provide information on the standards they uphold. From this search, we identified some safety standards that Voestalpine Group adheres to, as well as the manufacturing standards they follow. While we found multiple standards and certifications, they are not freely available, limiting the information we could provide about them.

Next, we expanded our review to identify manufacturing standards and safety standards for OCTG products in Austria, not specific to the Voestalpine company. However, nothing was uncovered by this search that was not linked to Voestalpine and thus already identified.

We then expanded to review EU safety and manufacturing regulations that may affect the OCTG industry, as Austria is an EU member. This strategy identified regulations such as ISO 15463:2003, which "specifies requirements and gives recommendations for field inspection and testing of oil country tubular goods (OCTG)." However, the full regulation was not freely available. This was the only EU regulation found that specifically mentioned the OCTG industry.
Part
12
of nineteen
Part
12

Evraz Group S.A Manufacturing and Safety Standards

Russia's manufacturing and safety standards have been published by their Federal Agency for Technical Regulations and Metrology (Rosstandart). However, these standards are published only in Russian in scanned documents which standard translation tools cannot interpret. Therefore, we have attempted to discern the regulatory regime that Evraz is subject to via other sources, including their own safety procedures. Though the results were scattershot at best, we have included them in our findings below with the appropriate caveats.

Manufacturing and Safety Regulations

  • According to Export.gov, "Russia has a unique system of standards, which uses a combination of various international standards, but relies mostly on product testing as a key element of the product approval process. Russia does not have an association agreement with the EU or the United States and does not recognize internationally recognized certificates, ... [which] can often be part of an application file submitted to the relevant Russian government agencies, but additional tests would have to be carried out in Russia."
  • Russia's primary standards body is the Federal Agency for Technical Regulations and Metrology (Rosstandart), which created the country's GOST-R standards.
    • Rosstandart does subscribe to certain international standards, including the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC).
  • A complete list of equipment safety standards from Rosstandart can be found on this page, with the most pertinent information to the OCTG market being in the "Oilfield, exploration and drilling equipment" section, approximately a fifth of the way down the page.
    • The linked documents are all scans of original regulations in Russian and, therefore, could not be readily translated using conventional tools. Consequently, we went to other sources in the hopes of locating additional information.

Recent Regulatory Updates Pertinent to OCTG

  • A recent report by the International Energy Agency (IEA) on Russia's energy market, noted several recent regulatory changes affecting the manufacturing of OCTG equipment used in specific cases and environments. Rather than risk misinterpretation, we will again quote verbatim (p. 129):
    • "Traditional Western Siberian vertical drilling required standard American Petroleum Institute (API) tubing costing in a range of USD 1000/tonne (USD/t) and requiring 300 tonnes (t) per well."
    • "Wells required for Bazhenov plays need to be resistant to higher pressure and corrosion and require premium tubes costing around USD 3000/t when 400 t to 450 t are required per well."
    • "Finally, offshore drilling requires premium tubes costing about USD 3000/t to USD 4000/t and needs about 1000 t per well — that tube cost is around ten times higher per well compared with a traditional, simple vertical well — this number may be slightly lower in Russia’s offshore Arctic that has shallow waters."

Determining Domestic vs. Imported Manufactured Goods

  • The Russian Ministry of Industry and Trade outlines the regulations imposed before the government approves industrial production within the country. We have quoted the relevant sections verbatim to avoid misinterpretation:
    • "The presence of an examination certificate of the Chamber of Commerce and Industry of the Russian Federation on the conformity of manufactured industrial products with the requirements provided for in the appendix to Resolution No. 719 (hereinafter — the examination certificate of the RF CCI)."
    • "Availability of a certificate of origin of goods (products), according to which the Russian Federation is a country of origin of goods (products) issued by an authorized body (organization) of a state party to the Agreement on the Rules for determining the country of origin of goods in the Commonwealth of Independent States of November 20, 2009, in the absence of manufactured industrial products in the annex to resolution No. 719 (hereinafter — ST-1)."
    • "The appendix to Resolution No. 719 contains requirements for industrial products presented with a view to classifying them as products manufactured in the Russian Federation. To date, requirements have been established for more than 600 products."

Evraz's Safety Standards

Note: Evraz's standards, taken as they are from the company's public-facing website and annual reports, are long on the kind of generalities that stakeholders would want assurance on but very short on specific standards. The "Health, Safety, and Environmental Policy" is a perfect example of this high-level approach to presentation. Specific examples, such as the "dos" and "don'ts" in Evraz's employee guide, seem more common sense than regulatory; for example (quoting verbatim):


With that in mind, below is a representative sample of the company's statements with as many specifics as could be gleaned.

  • To quote Evraz's annual report, "EVRAZ places a top priority on continuously improving its health, safety and environment (HSE) management throughout its operations. This includes implementing process upgrades and introducing tiered management and control systems."
  • Evraz adopted its HSE Policy in March 2011 and updated it in 2016. Its policy's primary purposes, where safety is concerns, are "identifying potential environmental pollutants and risks to employees’ health and safety through the entire production cycle."
    • This includes having critical data sharing and internal audits throughout the company to continually improve processes.
    • We are uncertain of the full details of the update or if it was made in response to any regulatory pressure.
  • In 2018, Evraz introduced standard incident reporting rules throughout the company, with reports reviewed by the HSE Management Committee. All personnel receive monthly reports "containing data on any injuries and incidents ... as well as updated HSE KPI metrics on the lost-time injury frequency rate, fatalities and cardinal rule violations." We are, again, uncertain whether the timing is significant; e.g., if it was in response to new government regulations.
  • All personnel are regularly trained on current safety protocols and tested to ensure that they retain the information learned. Safety equipment is issued to mitigate risks that cannot be eliminated.
  • Similarly, commissions certify engineers and other technical specialists "on their knowledge of safety rules, emergency responses, and annually on HSE as a whole."

A Caveat

  • Evraz "holds a certificate of compliance with international standards for occupational health and safety," making it impossible within the scope of a single Wonder research brief to match specific procedures to specific regulatory regimens (see our research strategy below), if indeed the necessary information is in the public domain at all.

Part
13
of nineteen
Part
13

OCTG Market Entry Barriers

Seven barriers to entry in the OCTG market based on regulatory/compliance and/or safety/manufacturing standards are (1) increasing requirements from gas and oil companies, (2) the numerous, different standards that must be met, (3) the testing of tubes, (4) the heightened safety standards and corresponding, increased costs involved in manufacturing seamless OCTG, (5) the purposeful design of manufacturing facilities to meet or exceed regulations, (6) mandatory "inspection[s] of OCTG systems", and (7) environmental safety concerns.

OCTG Market — Barriers to Entry

  • A barrier to entry in the OCTG market (involving regulatory/compliance and safety/manufacturing standards) is "the oil and gas companies’ ever-increasing requirements related to the quality of well construction material."
  • Another barrier to entry in the OCTG market involving regulatory/compliance and safety/manufacturing is the numerous, different standards that must be met for such, some of which include ISO, 5CT, API 5L, and EN (among others). This is especially true for "[p]roducers of heavy wall OCTG tube." Among OCTG parts, casings "have the strictest API requirements."
  • Environmental safety concerns are a barrier to entry in the OCTG market. As a result of those concerns, premium OCTG products will likely increase in demand to the benefit of key players in the market, yet to the detriment of other competitors (thus rendering environmental safety concerns a barrier to entry in the market).
  • Another barrier to entry is that "[t]he oil and gas industry is requiring that tubes used for any critical applications be tested to increased quality level."
  • Seamless OCTG is often used in situations where tensile strength and heightened safety standards are required/involved. As a result of those heightened standards, a barrier to entry is created in that the costs of "manufactur[ing] seamless OCTG is higher by up to 15x than a mill to manufacture welded products."
  • A barrier to entry in the OCTG market involving regulatory/compliance and safety/manufacturing standards involves the purposeful design of manufacturing facilities to meet or exceed regulations imposed by federal and state governments. As an example, a new manufacturing facility being built involved the use "of control technologies, such as Selective Catalytic Reducers (SCR), that will substantially reduce its emissions footprint."
  • A barrier to entry in the OCTG market based on regulatory/compliance and safety standards involves mandatory "inspection[s] of OCTG systems" which are often conducted by "a third-party services provider." Such inspections are critically important due to the serious concerns about the environment and safety resulting from drilling operations.

Research Strategy

To identify barriers to entry in the OCTG market based on regulatory/compliance and/or safety/manufacturing standards, we conducted numerous, broad searches for articles about issues that OCTG producers face involving those specific categories. Most of the sources we consulted and cited to in our research were industry sources such as MSI Pipe Protection Technologies and Magnetic Analysis Corp, among others. Lastly, our research findings are global in scope.
Part
14
of nineteen
Part
14

Tenaris OCTG Entry Barriers

The barriers, challenges, and/or pain points that Tenaris has experienced as a seller in the OCTG market center on downturns in oil and gas prices, increases in raw material, energy, and other costs, intense competition, unfairly traded OCTG imports, legal proceedings, and environmental and tax regulations.

Downturns in Oil and Gas Prices

  • Tenaris, being a steel pipe manufacturer whose products are used mostly by the oil and gas industry, is highly susceptible to changes in international oil and gas prices.
  • Oil and gas prices, which are influenced by oil and gas supply and demand, geopolitical events, and global economic conditions, have proven to be volatile.
  • For example, between June 2014 and February 2016, crude oil prices dropped from more than $100 per barrel to below $30 per barrel. The prices increased to approximately $80 per barrel in the third quarter of 2018 before dropping by 40% in the following quarter.
  • Decreases in oil and gas prices result in fewer exploration and production activities and, consequently, lower demand for steel pipe products. Tenaris has laid off hundreds of workers because of the activity slowdown in the oil and gas industry.
  • Rising oil prices and "political and economic instability" were identified as two of the factors that hinder growth in the global OCTG market.

Increases in Costs

  • Tenaris requires large quantities of energy and steelmaking raw materials such as steel coils and steel plates to manufacture seamless and welded steel pipe products. Increases in energy, raw material, and other costs can therefore hurt the company's profitability and result in increased production costs and layoffs.
  • Energy, raw material, and other costs are largely influenced by governmental regulations, volatile supply and demand conditions, and limited energy availability. In Mexico, for example, the drop in natural gas production and transportation capacity has resulted in an increase in natural gas importation, which, in turn, has resulted in higher natural gas transportation costs and steel pipe production costs.
  • SeekingAlpha notes that, as a result of increased costs and tariffs, Tenaris may experience a decrease in its profit margin.

Intense Competition

  • Tenaris expects that competition in the OCTG market will remain intense considering the slowdown in complex projects requiring steel pipe products. It also expects that companies in the market will continue to compete on the basis of price, service, quality, and technology.
  • In response to this intense competition, the company has started increasing its production capacity for both standard and specialized grades of steel pipe products.
  • The company recognizes that it must have an effective competitive differentiation strategy. It admits as well that this intense competition may significantly impact its pricing.
  • Tenaris identifies Vallorec S.A., Nippon Steel & Sumitomo Metal Corporation (NSSMC), JFE Holdings, PAO TMK, Tianjin Pipe, and Tubos Reunidos as some of its key competitors.

Unfairly Traded Steel Pipe Imports

  • The amount of unfairly traded steel imports remains a concern despite the imposition of anti-dumping duties.
  • Tenaris notes that even though the United States and Canada have already enforced anti-dumping duties on steel pipe imports from a number of countries, including South Korea, and the United States has also imposed quotas and tariffs apart from these anti-dumping duties, unfairly traded imports from South Korea remain high.
  • Tenaris considers unfairly traded steel pipe imports a pain point because they translate to lost business opportunities.

Legal Proceedings

Environmental and Tax Regulations

  • Tenaris is increasingly finding environmental and tax regulations to be complex, exacting, and costly to comply with.
  • Since regulations differ from one place to another, the company must keep up with a significant number of laws, requirements, and regulations on the local, provincial, and national levels.
  • Environmental regulations resulting from the shift from fossil fuels to clean energy can adversely impact the demand for steel pipe products and the future of the company. Environmental issues were identified as one of the factors that hinder growth in the global OCTG market.
  • The tariff war between countries also poses a short-term risk to Tenaris. Updates to tax regulations prompt Tenaris to review its organizational structure on a regular basis.
Part
15
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Part
15

Vallourec OCTG Entry Barriers

Five barriers to entry, challenges, or pain points that Vallourec has experienced as a seller in the oil country tubular goods (OCTG) market are (1) decreased customer demand due to inventory stockpiled in advance of tariffs being imposed, (2) a policy change from the U.S. government involving "Section 232 exclusions", (3) delayed sanctions from oil companies, (4) decreased prices for oil and gas, and (5) the company's need to restructure in order to increase profitability and reduce costs.

Vallourec OCTG — Barriers to Entry, Challenges, & Pain Points

1. Decreased Customer Demand Due to Accumulating Inventory in Advance of Tariffs

  • In March 2018, a tariff was imposed by the U.S. government for foreign steel.
  • Due to such, OCTG customers stockpiled such OCTG before those tariffs went into effect.
  • As a result, Vallourec experienced a decrease in customer demand for OCTG in the fourth quarter of 2018 compared to both the prior quarter and the fourth quarter in the prior year (2017), as customers had plenty of OCTG supply already stockpiled and thus didn't need to buy more.

2. Change in U.S. Government Policy Involving Exclusions for Section 232

  • In 2018, the U.S. enacted an "order allowing buyers to receive Section 232 exclusions on material from countries that are subject to quotas."
  • That order created a situation for greater volumes of OCTG to be imported from Brazil, Argentina, and South Korea.
  • A Jeffries' analyst said that Vallourec would likely be adversely impacted by the imposition of that new order.

3. Delay in Sanctions By Oil Companies

  • The delay of oil companies imposing "sanction[s on] new offshore oil projects" was a challenge that Vallourec faced as a seller in the OCTG market.
  • Vallourec SA's Chairman, Philippe Crouzet, explained in a 2017 article that the delay in the imposition of sanctions by oil companies slowed "the recovery of the international OCTG market" including for Vallourec.

4. Decreased Prices for Gas & Oil

  • In 2016, decreased prices for gas and oil significantly, adversely impacted Vallourec's U.S. revenue.
  • In 2016, Vallourec lost $231 million in revenue. The company described 2016 as "a very challenging environment."
  • As a result of the lower prices for gas and oil, the prices of Vallourec's OCTG pipe were also lowered.
  • The same issue of lower energy prices also adversely impacted the company in 2015, as it had to temporarily close its mill in Youngstown, Ohio, "for three weeks in March and April [2015]" for that very reason.

5. Necessary Company Restructuring to Increase Profitability and Reduce Costs

  • Edouard Guinotte, "Vallourec’s senior vice president for Middle East and Asia," provided the following statement in a 2019 article that illustrates a challenge the company experienced as a seller in the OCTG market: "Vallourec has undertaken a significant transformation plan over the past few years to reduce costs and improve profitability. This has involved restructuring our industrial footprint to offer competitive supply from China and Brazil while maintaining premium capacity from Europe. In 2016, we finalized the acquisition of a rolling mill in China, now called Vallourec Tianda, and we are progressively integrating this new capacity into our network."
  • Guinotte further explained that Vallourec also rationalized its assets in Brazil in order "to supply tubes at competitive costs to local and export markets."

Research Strategy

We began our research about identifying barriers to entry, challenges, and/or pain points that Vallourec has experienced as a seller in the OCTG market by reviewing articles from a range of sources on those very topics. Some of the sources we consulted and cited to in our research were Pipeline Oil and Gas Magazine, Cost Insights, and Business Journal Daily. We focused our research on barriers, challenges, and pain points specific to the company's OCTG operations, as was requested. Together, this research process identified five barriers, challenges, and pain points the company has experienced as a seller in the OCTG market.
Part
16
of nineteen
Part
16

TMK OCTG Entry Barriers

The barriers to entry, challenges, and/or pain points that TMK has experienced as a seller in the OCTG market revolve around the decreases in oil and gas prices, the increases in raw material costs, the intense market competition, the shortage in skilled labor, the challenging North American and European markets, and the high inflation rate in Russia.

Decreases in Oil and Gas Prices

  • TMK is very much dependent on the oil and gas industry, with 78% of its tubular product sales in 2018 coming from said industry.
  • Demand for TMK's products is directly linked to the extent of activity in (a) oil and gas well drilling, completion, and rework and (b) oil and gas pipeline construction. The extent of activity in these areas, in turn, is driven by oil and gas prices, which have proven to be volatile or unstable.
  • A slowdown in the oil and gas industry and drops in oil and gas prices translate to a decline in the demand for OCTG.
  • TMK notes that OCTG prices are under pressure due to the volatility of oil prices. There remains a slowdown in the OCTG market because of the volatile oil prices, the high pipe inventories, and the reduced drilling activity. There was news of TMK laying off workers and postponing the initial public offering (IPO) of its United States subsidiary IPSCO because of the downturn.
  • TMK's sales, revenue, and adjusted EBITDA all decreased between the second quarter and third quarter of 2019, and TMK largely attributes these decreases to the unfavorable pricing environment in Europe and America.

Increases in Raw Material Costs

  • Raw material and energy price hikes are a challenge for TMK because of their potential negative impact on TMK's profit margin. TMK can either pass the increase in costs to customers or lower its profit margin.
  • In 2018, TMK suffered increases in scrap metal, coil, and energy costs. Costs of scrap metal, coil, electricity, and gas in Russia where TMK is headquartered increased by 19%, 16%, 5%, and 3%, respectively.

Intense Competition

  • TMK finds the global OCTG market highly competitive.
  • In Russia and the Commonwealth of Independent States (CIS), TMK competes with OMK, ChTPZ, Chinese pipe manufacturers, and Ukrainian pipe manufacturers.
  • Outside these two markets, TMK competes with manufacturers of high-end pipe products, such as Tenaris, Sumitomo, Voestalpine, Vallourec, and Chinese pipe manufacturers.
  • The competitive environment and the fact that TMK depends on only a small pool of customers present a challenge. TMK has to expand its customer base because relying on this small pool of customers is risky. Any deterioration in TMK's relationship with its customers could be detrimental.

Shortage in Skilled Labor

  • There is a shortage of skilled labor in the OCTG market, and there continues to be an intense competition for talent.
  • TMK observes that labor costs are on an upward trend, with costs continually but moderately increasing in Eastern Europe, the CIS, and the United States.

Challenging North American and European Markets

  • TMK reports that both the North American and European markets are challenging.
  • The North American and European markets remain challenging because of the volatility of oil, gas, and steel prices, the drop in drilling activity, and the shift in focus of operators to capital discipline.
  • TMK expects that, as a result of these markets being challenging, prices and demand for its products in these markets will continue to be lower than ideal.

High Inflation Rate in Russia

  • TMK, being a company that is based in Russia, has to contend with the growing inflation rate in the country.
  • According to the company, despite the Russian government's efforts to keep inflation in check, the inflation rate in the country grew from 2.5% in 2017 to 4.3% in 2018. The inflation rate in the United States, in comparison, was only 1.9%.
  • Increases in inflation rate adversely affect TMK's financial position because they lead to increased costs and decreased operating margins.

Research Strategy

Even though there is no article or report in the public domain that readily lists the desired information, and information on the subject is limited, we were able to identify the barriers to entry, challenges, and/or pain points that TMK has experienced as a seller in the OCTG market by examining both the disclosures (e.g., press releases, annual reports, investor presentations, and quarterly results) and press coverage of TMK. We were unable to find reviews or interviews that provide insights about the challenges TMK faces as an OCTG seller.
Part
17
of nineteen
Part
17

U.S. Steel Tubular OCTG Entry Barriers

Five barriers to entry, challenges, and pain points that U.S. Steel has experienced as a seller in the oil country tubular goods (OCTG) market are (1) low oil prices, (2) "unfairly traded [OCTG] products" from multiple countries, (3) increasing imports of OCTG into the United States market, (4) fewer drilling rigs operating in the United States market, and (5) a major decrease in sales and operating loss incurred in 2015.

U.S. Steel — Barriers to Entry, Challenges, & Pain Points as a Seller in the OCTG Market

1. Low Oil Prices

  • Low oil prices have presented a significant challenge for U.S. Steel as a seller in the OCTG market.
  • That's because when oil prices fall, demand for U.S. Steel's OCTG products also declines.
  • The demand for OCTG products is critical for U.S. Steel because those products "account for a large margin in steel companies' businesses."
  • In 2015, the company halted operations at two of its facilities where OCTG products were being made as a result of low prices for oil.

2. Unfair Trade

  • A challenge and pain point that U.S. Steel has experienced as a seller in the OCTG market involves "unfairly traded [OCTG] products" from nine different countries.
  • The issue of unfair trade was so severe that U.S. Steel became "a petitioner in . . . [a trade] case" adjudicated by the International Trade Commission (ITC) brought "against nine countries." The CEO and President of U.S. Steel, Mario Longhi, testified in the matter and stated that the company "remain[s] confident that this esteemed body [the ITC] will find that domestic Oil Country Tubular Goods (OCTG) producers have been materially harmed as a result of unfairly traded products."

3. Increasing Imports

  • An increase in imports of OCTG products into the United States market is a challenge and pain point that U.S. Steel has experienced as a seller in the OCTG market.
  • Imports of OCTG increased by over "86% year-over-year . . . in January 2017."
  • Since U.S. Steel is the top producer of OCTG in the United States market, more OCTG imports into the country hurt its bottom line.
  • The issue of increasing imports of OCTG products posed a serious challenge for U.S. Steel in the fourth quarter of 2016, as the company's CEO said the following about its tubular segment at the time: "We believe we have hit bottom for sure."

4. Fewer Drilling Rigs in Operation

  • Fewer drilling rigs operating within the United States has been a challenge and pain point that U.S. Steel has experienced as a seller in the OCTG market.
  • That issue was magnified for the company in 2016, which led it to halt operations at its Lone Star mill at the time. For reference of the extent of the issue in 2016, a February 2019 article stated that the total number of drilling rigs in the United States "has held above 1,000 since April 2018, more than double the lows seen in 2016."
  • The issue of fewer drilling rigs resurfaced in February 2019, when the number of drilling rigs in operation within the United States fell to "1,045 after averaging 1,073 in the fourth quarter of 2018."

5. Major Sales & Operating Loss in 2015

  • Another challenge that U.S. Steel has experienced as a seller in the OCTG market was a a major decrease in sales and operating loss that it incurred in 2015.
  • U.S. Steel's tubular division is usually its most-profitable segment, but in 2019, said segment incurred a 68% decline in sales and a $179 million operating loss.

Research Strategy

We identified barriers to entry, challenges, and pain points that U.S. Steel has experienced as a seller in the OCTG market by conducting broad searches for articles about such issues involving the company. Some of the sources that we referenced during our research were U.S. Steel's website, Market Realist, and Forbes, among others. In reviewing the information in those articles, we specifically focused on issues that impacted the company as a seller in the OCTG market.
Part
18
of nineteen
Part
18

Voest Alpine A.G. OCTG Entry Barrier

Voest Alpine A.G.'s challenges in the OCTG market include rising tariffs, the economic decline in Mexico, and divergent trends in oil and natural gas industry.

1. 232 protectionist tariff

  • According to the company's 2018/2019 annual report, Voest Alpine's challenge in the OCTG market in the last year was the Section 232 protectionist tariff.
  • In the report, it is stated that the US oil and natural gas industry saw good demand for oil even amidst fluctuating crude oil prices, however, Voest Alpine was able to yield a small margin profit from this due to the imposition of Section 232 protectionist tariffs.
  • The Section 232 protectionist tariff was issued by President Trump in 2018 and it imposed tariffs for steel and aluminum imports from Canada and Mexico. However, in May 2019 United States announced an agreement with both countries to remove the Section 232 tariffs.
  • According to the company's annual report, "because of the Section 232 tariffs that the United States imposed on national security grounds, the positive, volume driven market environment for OCTG is not reflected in the segment’s results for the past business year."

2. Economic developments in Mexico

  • Economic development in Canada and Mexico during 2018 and 2019 saw a decline after the unilateral termination by the United States of the North American Free Trade Agreement (NAFTA), which resulted in the onset of tariff discussions.
  • While Canada’s economic environment stayed relatively stable, Mexico's economy was severely slowed down, including the OCTG market.
  • According to the company's annual report, Voest Alpine's business suffered due to NAFTA's termination, which resulted in lesser profit margins but did not experience any other challenges.

3. Divergent trends in oil and natural gas industry as well as the mechanical engineering sector

  • Voest Alpine stated that because of divergent trends in oil and natural gas industry as well as the mechanical engineering sector, the company is unable to find a stable balance regarding pricing in the OCTG industry worldwide.
  • According to market reports, in the past five years, the oil and gas industry experienced low and volatile oil prices that have had a negative influence on the entire oil and gas industry, including OCTG. This included corporate strategies, operational performance, financial results, innovation, and the ability to hire talent.
  • The oil market is dependent on three key countries — Saudi Arabia, Russia, and the US. The rise in geopolitical tensions as well as the rising concerns about a worldwide economic slowdown are giving the market additional reasons to appear shaky.
  • The volatility in oil and gas prices affects the companies in the oil and gas industry directly, with the whole industry seeing only 2.7% return on capital in 2016, a figure that jumped to 6.9% in 2018.

4. Dependendance on oil and gas companies

  • According to McKinsey, OCTG companies follow a boom-to-bust cycle which was a big challenge from 2015 to 2018.
  • In its 2015 report, McKinsey analysts stated that the "industry is under relentless pressure from years of excess steelmaking capacity, which includes imports and domestics alike, and was exacerbated by commodity volatility and patchy economic growth. For players in the OCTG space, the next couple of years likely will be an uncomfortable waiting game. Those that can survive the market gyrations will be the winners. Until then, we probably will see a number of consolidations, some closures, and far less operational capacity."
  • While Voest Alpine, according to its 2017/2018 report, emerged victorious from this turmoil period, it suffered three years of decreased operational activity, strenuous relationships with oil companies, and very small or almost no profit margins.

5. Brexit

  • According to the company's 2019 press release, the "global trade conflicts and/or the Brexit are likely to increase further" and will affect the company negatively in the way of providing further economic uncertainty as well as reducing profit margins due to the possibility of newly imposed tariffs by the EU towards the UK and vice versa.
Part
19
of nineteen
Part
19

Evraz Group S.A OCTG Entry Barriers

Five barriers to entry, challenges, or pain points that Evraz Group S.A has experienced as a seller in the oil country tubular goods (OCTG) market are fluctuating prices, government regulations, competition, business interruptions, and fluctuating demand.

Fluctuating Prices

  • Evraz Group S.A has experienced fluctuating steel prices on numerous occasions. For instance, the company reported a decline in its 2019 half-yearly earnings owing to low prices for its steel products such as OCTG.
  • The company’s consolidated earnings totaled $1.482 billion, which represented a 22.2% decline from $1.906 billion made the previous year. Steel prices dropped by 12% a tonne, a situation escalated by high inventory levels and production.
  • Evraz Group steel segment’s revenue dropped by 6.0% in the same period. The decline was attributed to lower revenues generated from steel products due to unfavorable market conditions.
  • Fluctuating prices for OCTG have a direct impact on the company’s profitability. However, Evraz Group is able to offset the bad performances using other performance variables. For instance, the impact of steel prices decline experienced in the first half of 2019 was offset by higher sales volume.

Government Regulations

  • Evraz Group S.A has faced numerous government regulations in form of tariffs as a seller in the OCTG market. For example in 2018, the company had to contend with Section 232 tariffs enacted by the United States targeting steel products. The company also had to deal with U.S preliminary anti-dumping duties on imports of large diameters welded pipe coming from Canada following a trade war between the two countries.
  • As a seller of OCTG, Evraz Group has learned to mitigate risks emanating from the external environment by exploring new market opportunities. The focus is mainly on venturing into new markets and expanding shares of value-added products.

Competition

  • Evraz Group S.A competes with other key players in the OCTG sector. The stiff competition has nurtured an excessive supply of OCTG on the global market. The steel products segment is the most affected as competitors introduce new facilities.
  • Being exposed to competition from other major sellers of OCTG has pushed Evraz Group S.A to expand its product portfolio and venture to new geographic markets. It has also undertaken quality improvement initiatives to enhance customer loyalty.

Business Interruptions

  • Business interruptions are a major pain point for Evraz Group S.A. The interruptions are caused by various factors such as severe weather conditions, capital repairs, and blast furnaces. Adverse weather conditions mainly affect supply logistics.
  • Business disruptions lead to a fall in production and general output of all products including OCTG. For instance, in the first quarter of 2018, Evraz Group’s consolidated crude steel output dropped by 5.5% following disruptions occasioned by severe weather conditions. Total sales for steel products declined by 5.7% while sales for semi-finished products decreased by 16.6%.
  • In 2019, a scheduled maintenance disrupted operations leading to an output decline in the third quarter of 2019. The impact was mainly felt in the company’s U.S and Canadian mills. As a result, crude steel output decreased by 3.4%, which also affected OCTG output.
  • As a seller of OCTG, Evraz Group has learned to develop effective disaster recovery procedures that are reviewed regularly. The company understands that long-term interruptions may affect its competitive advantage and its reputation.

Fluctuating Demand

  • Demand for OCTG is spurred by the rise in demand for energy as well as the need for exploration activities and investments. Thus, demand for the products is bound to fluctuate from time to time. Evraz Group has had to contend with fluctuating demand in some of its key global markets.
  • For instance, in 2018, Evraz Group experienced a decline in demand for some of its OCTG because of low investment inflows. In the same year, the country also hosted the 2018 FIFA World Cup, an event that led to a suspension of construction works.
  • Following fluctuating demands, Evraz Group has learned to expand the share of its value-added products. It has also learned to take advantage of improved demand in areas experiencing enhanced investment flows. For example, the new pipelines planned to be developed in Western Canada are a major investment opportunity for OCTG.



Sources
Sources

From Part 01
Quotes
  • "Tenaris began with the formation of Siderca in Argentina in 1948. Following an expansion of our operations in Argentina during the 1980"
Quotes
  • "Headquarters: Houston, Texas"
Quotes
  • "The Bureau of Land Management (BLM) has jurisdiction over almost all leasing, exploration, development, and production of oil and gas on federal and Native American lands. BLM rules and standards for drilling and production19 require all operations on federal land to comply with state and local regulations and protect life, property, and environmental quality. As of 2018, some federal drilling and production regulations enacted, revised, or proposed since 2008 are being re-evaluated or rescinded by the current Administration."
  • "Federal decisions about specific constraints on drilling and production on federal land (onshore and offshore) are based on the National Environmental Policy Act (1970).23 This act requires federal agencies to assess the environmental impact of major federal actions, mainly by producing Environmental Impact Statements or Environmental Assessments"
  • "The federal Department of Transportation (DOT)’s Pipeline and Hazardous Materials Safety Administration regulates the operation of natural gas pipelines that provide long-distance transmission and local customer distribution,30 as well as underground natural gas storage"
  • " The EPA regulates air emissions from refineries and fuel distribution systems, including pipelines, trucks, and fuel dispensing facilities or service stations"
  • "The Federal Energy Regulatory Commission (FERC)33 regulates the transportation of oil through interstate oil pipelines but does not oversee pipeline operations"
Quotes
  • "In the United States, interstate transportation and storage of natural gas are almost entirely regulated by the Federal Energy Regulatory Commission (FERC) FERC also regulates certain transportation transactions by interstate and intrastate pipelines under the Natural Gas Policy Act of 1978. Sales transactions not subject to FERC’s jurisdiction include first sales and sales of imported natural gas (including imported liquefied natural gas (LNG)), which may fall under state laws and regulations."
  • "FERC also regulates the rates offered by interstate pipeline companies and, through its regulations, the terms and conditions of services offered by interstate pipelines. In addition, FERC imposes specific requirements on interstate pipelines and their shippers to promote open and non-discriminatory access and transparency. Pipelines must receive authorisation from FERC before abandoning facilities or other FERC-authorised services. Abandonment is not limited to instances where facilities are no longer in use; rather, the abandonment of facilities by sale also triggers the prior authorisation requirement."
  • "Pipeline companies must provide non-discriminatory access for similarly situated shippers; pipelines are prohibited from: showing any undue preference to any shipper; subjecting any shipper to undue prejudice; or maintaining any unreasonable difference in rates, charges, services or facilities, or in any other respect, between localities or classes of service."
Quotes
  • "Before starting out of the hole with drill pipe, you must properly condition the drilling fluid. You must circulate a volume of drilling fluid equal to the annular volume with the drill pipe just off-bottom. "
Quotes
  • "Regulating Oil Pipelines The Commission's responsibilities include: Regulation of rates and practices of oil pipeline companies engaged in interstate transportation; Establishment of equal service conditions to provide shippers with equal access to pipeline transportation; and Establishment of reasonable rates for transporting petroleum and petroleum products by pipeline. "
Quotes
  • "Oil Country Tubular Goods (OCTG) are defined as the tubes which are used in oil and gas production. These include drill pipe, casing, and tubing. OCTGs are used both onshore and offshore that is on the land and in the ocean."
Quotes
  • "OCTG Pipe and tube products used in petroleum industry, such as drill pipe, pipe casings, oil pipes. "