After recounting business in the Baltic States in his first instalment, the gasman returns with his Russian recollections as the memoirs continue.
In the beginning…
AGA had a long history in Russia; it started with sales of navigation equipment in the Finnish Bay in 1908 and at the time of the Russian revolution (1917), the company was represented with gas and equipment all the way from the Baltic Sea to the Pacific.
At that time AGA was mainly working with different types of signalling system, as well as lighthouses operated on acetylene. The production of lighthouses, welding equipment and central heating equipment continued after the revolution, but finally stopped in 1936.
Acetylene plants were built in Petrograd (St. Petersburg) and Moscow, while AGA also acquired land for acetylene plants in Nishni Novgorod and Jekatrineslav (Dnepropetrovsk in Ukraine), but due to the revolution the plants were never constructed.
Finland, for 600 years a part of Sweden and then belonging to Russia for 200 years up to the Russian revolution, always kept in contact with their neighbour in the East. The 1980’s saw a shortage of argon in Scandinavia, prompting AGA in Finland to start importing liquid argon (LAR) from a fertilizer producer in Novgorod south of St. Petersburg, as well as from Lentechgas in St. Petersburg.
As Finland has the same width of rail track as Russia, the gas could be delivered in railroad tankers direct to the AGA distribution centre in Finland, with the LAR then distributed to customers in Finland and Sweden. Finnish contractors were used to deliver equipment, plants and buildings to Russia.
The Soviet system for industrial gas supply
All major consumers had their own plans covering their demand of industrial gases; many of them also sold cylinder gases to customers in the neighbourhood. For other customers there were in total 16 merchant supply centres in Russia, the Ukraine and Belorussia (Belarus), providing liquid and cylinder gases to those customers without their own production plants.
These 16 companies reported to a General Directors office in Moscow, who also ensured that the companies provided a good service to the market and secured funds for investments. General Director (GD) Levi Makarov later became GD of the IGMA (Russian EIGA) organisation.
Customers came to the plants to pick up cylinder gases and liquid gases were distributed in small liquid tankers, though for longer distances railroad tankers of 35 to 50 tonne capacity were used. Compared to the system in Western Europe and the US for example, the system was very under-developed and provided relatively poor service for the customers.
After the Perestroika in 1989/1990, all of the 16 industrial gases companies were privatised and taken over by either company management, employees, or sold to other investors.
The prime provider for air gas technology, as well as for the manufacture of major oxygen plants, was Cryogenmash in Balashika, 25km north east of Moscow.
Cryogenmash developed and produced major air separation plants for steel plants and other air gas-consuming facilities in the whole communist bloc. Smaller plants however, were produced by Kislorodmash in Odessa, Ukraine.
Upon our first visits to Cryogenmash, the company was a very much a Soviet creation and linked to the state, delivering huge air separation plants to steel mills all over the world, where there were Soviet interests.
When Spiritus Consulting’s John Raquet and I visited Cryogenmash in August 2004, the situation had totally changed. The company had been acquired by a financial group, where some in the management were educated in the US, and it was an open, international atmosphere in the re-born company. Cryogenmash soon acquired gas companies in Russia and the Ukraine and started onsite projects in the Ural Oblast, increasingly resembling the established international gas companies.
In later, recent years Cryogenmash has been bought by the oil company Gazprom - but the gas business is kept by the financial group, a very interesting development that remains to date.
As a result of demand from its Finnish customers, Finnish AGA opened a gas depot in St. Petersburg in 1993, with the operations started as a sales outlet from AGA in Finland. Foreign entrepreneurs, especially Finish-based, were in need of similar service to those which they were accustomed to in Western Europe.
Initially, most product came from Finland though later, a cylinder filling plant was installed and product was also delivered from Moscow and other Russian sources.
High quality carbon dioxide to the food industry became an important aspect of sales but ultimately, the development in St. Petersburg was restricted due to the market domination of competitor company Lentechgas, which had been unwilling to allow foreign rivals to enter the market.
AGA KAZ in Kaliningrad, (Köningsberg)
AGA’s Kaliningrad operations also have a pre-war history, as AGA produced and sold acetylene in Köningsberg (earlier a part of Germany) from 1916 to 1945, when Soviet troops took over the region.
As Kaliningrad was an important source for air gases and acetylene to Lithuania and Latvia, it was naturally of great interest to further improve the contact with Kaliningrad Autogene Zavod.
Our first journey to Kaliningrad took place just before Christmas in 1991 as my colleague, Ariel Hoff, arranged for a small Russian car to take us from Riga, through Lithuania and into Kaliningrad - a journey which saw us venture 400km and pass through three countries along the way.
Ariel was a valuable team partner and cultured carrier, with his Soviet background and good knowledge of both the gases business and the goals of AGA.
We were welcomed by company director Vladimir Efimof and the General Director for Industrial Gas supply, Levi Makarov. We had travelled complete with bananas, whisky and other products that were rare in Russia at that time and at the great welcome party, we were served beer, vodka and all kinds of canned fish.
Back then, Kaliningrad was one of the sources for air gases and acetylene to the Baltic countries. In order to secure supply to the new markets AGA had opened in Latvia and Lithuania, the company initiated a privatisation of the Kaliningrad Autogene Zavod, which by mid 1993 saw AGA become a majority shareholder.
The company had two Russian ASUs each with 50 tonnes per day (tpd) nominal capacity and a modern acetylene plant, though the air gas production has now ceased and LOX/LIN is bought from Minsk in Belarus.
Stay tuned next month for part 2 of the Russian story, as the gasman continues to describe the gases scene in Eastern Europe and the market development of gases in Russia.