Which is more profitable — selling pipes to Gazprom or building them?
The Rotenberg brothers are of different minds: Arkady controls Stroigasmontazh, while Boris is buying the Severny Yevropeisky Trubny Proyekt with sales of about $1.5 billion a year.
A long-time acquaintance of Prime Minister Vladimir Putin, Boris Rotenberg, 53, has been supplying Gazprom with pipes for a long time. In 2003 to 2004, he was the gas giant’s junior partner in the company Gaztaged, which had sales of about $1 billion and through which the gas firm’s pipe purchases passed.
Later, Rotenberg founded his own company — Moscow-based Trubny Metalloprokat and Trubnaya Promyshlennost, which together in 2008 posted sales of 28.9 billion rubles and profits of 4.4 billion rubles, according to the State Statistics Service.
Now, these two companies are preparing to gain control over another pipe trader — SETP, the Federal Anti-Monopoly Service said on its web site. The service approved its application to purchase a 26 percent stake in the trader. No details have been released, but a source close to SETP said Rotenberg should get control of 52 percent of the firm.
Rotenberg’s spokesman referred all questions to Ivan Shabalov, who was the main owner of SETP. (He owns 60 percent through Magistraltruboprom, according to Interfax’s SPARK database.) TMK and OMK own another 20 percent of the firm.
Shabalov confirmed that he was selling his 60 percent stake but declined to otherwise comment.
Rotenberg was connected to SETP even earlier, said a source close to the businessmen. Vedomosti was unable to confirm this, but a source close to the trader said the remaining 48 percent of the company will be shared equally among OMK, TMK and Severstal’s Izhorsky Zavod. The deal’s price has not been named.
Gazprom is the main client of SETP, Alexander Muratov, CEO of the trader, told Vedomosti. SETP has supplied steel pipes to Gazprom since 2005 and has generated significant revenues since then: Its revenues in 2008 were 45.7 billion rubles, while its profits reached 396.2 million rubles. In 2009, the figures were about the same, said a source close to the company.
SETP’s profitability (0.87 percent) is much lower than that of Rotenberg’s other traders, and half that of the contractors of his older brother, Arkady. Arkady Rotenberg controls Stroigazmontazh, which bought five contractors, subsidiaries of Gazprom, which were constructing some of the overland parts of pipelines Nord Stream and Dzhubga-Lazarevskoye-Sochi and others. In 2008, the six companies’ (including Stroigazmontazh) revenues totaled 42.9 billion rubles, while profit stood at 900 million rubles (putting its profit margin at 2.1 percent).
The Rotenbergs have a special position in Gazprom: There will be contracts for pipes and construction, employees of the gas major told Vedomosti.
In the 1960s, the brothers practiced judo in the same group as Putin, and their friendship has lasted to this day. Arkady Rotenberg is the director of the judo club Yavara-Neva, whose honorary president is Putin.
Gazprom has denied giving preferential treatment to the Rotenbergs. Spokesman Sergei Kupriyanov said Gazprom has three principles for choosing its suppliers and contractors: quality, timeframe and price.