Siemens to bypass sanctions and work in Crimea

The company Technopromexport will buy equipment from the plant Siemens Gas Turbine Technologies LLC for two new power stations in Crimea. The plant is a joint company of Siemens AG, which owns 65 percent, and the company Power Machines OJSC. This deal may violate the EU's sanctions regime.

A government official who is familiar with the deal told Russian newspaper Vedomosti that the contract was signed in the spring of 2015, and the down payment has already been made. The plant opened on June 18 in Russia’s Leningrad region, and this will be its first contract.

One of the sources speaking with Vedomosti noted that the contract states that equipment will be procured for a new power plant in Russia’s Krasnodar region, not in Crimea. Another source said that the equipment is meant for power plants in Crimea, not Krasnodar.

Representatives from Technopormexport, Siemens Gas Turbine Technologies LLC and Siemens AG have declined to comment.

The turbines will first be sent to Taman [a city in Russia's Krasnodar region], but this is simply a formality in order to bypass sanctions, according to a source speaking with 'Vedomosti'.

Crimea cannot produce its own power to cover the whole peninsula at the moment. Some of Crimea’s power is produced by Ukraine.

After Crimea joined Russia in 2014, Russian authorities announced that the peninsula’s power needs will be met through its own power plants and Russia’s power. In order to meet this goal, two power plants will be built in Crimea. The Russian Energy Ministry stated earlier that this will cost 72 billion rubles ($1.3 billion).

Most of the international community has not recognized Crimea’s unification with Russia. After Crimea joined the Russian Federation, the USA, the EU and some of their allies imposed sanctions on both Russia and the Crimean peninsula. As a part of the sanctions regime, the EU banned technology exports to Crimea.