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Russia Rethinks Plans in Import Replacement Push

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Russia is shifting the ambitions of its crucial import-replacement strategy in response to Western efforts to isolate the country following its invasion of Ukraine. With foreign majors and leading oil-field service giants withdrawing, Moscow has shifted its goals from simply replacing Western technologies to developing entirely new ones. The success of the new approach will be a crucial factor to determine the country’s future as a top global energy exporter. Over the past six months, Russian officials and companies moved from denial to acceptance that there is little choice but to develop domestic technology options as Western sanctions expanded and intensified in areas including LNG and refining technologies. In mid-June, President Vladimir Putin said Russia’s goals needed to change from "constantly catching up" to creating the country's "own competitive technologies, products and services that can become new world standards." Despite Western sanctions stretching back to 2014, Russian energy majors still relied heavily on Western solutions and technologies. They were seen as the most sophisticated options but also as faster to deploy, cheaper and more reliable than domestic alternatives. In the short term, companies are focused on finding alternatives to technology and equipment imports from "friendly" countries, re-engineering existing equipment and exploiting sanctions loopholes. But import-substitution efforts have intensified with crucial support provided by the state to develop domestic technologies and equipment.

Topic:
Sanctions
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