Written By Milos Barutciski, Darrell Peterson and Nick Bryanskiy
On February 16, 2017, Bennett Jones hosted a networking lunch with the Canada Eurasia Russia Business Association to discuss recent Canadian project experience in Russia, Kazakhstan, Ukraine and Belarus.
Attendees were a diverse group of industry players from Alberta and British Columbia, including representatives from E&P and oilfield services, power, agriculture, construction, transportation and logistics, satellite imaging and medical services. Speakers and guests discussed their direct experience with projects in these four markets, including the following key challenges and lessons learned:
- regulatory compliance and banking issues as a result of Russian sanctions;
- bureaucracy, corruption and onerous certification requirements;
- visa and permitting requirements; and
- difficulties with finding trusted partners and agents to help satisfy "local content" requirements.
These markets offer significant potential for Canadian equipment, services and technology suppliers. If market entry is done right and a reliable team with appropriate experience and skillsets is in place, Canadian companies can profitably execute projects in Russia, Kazakhstan, Ukraine and Belarus while meeting Canadian legal, ethical and technical standards, and without compromising quality or reputation.
Although the energy sector in Russia is facing challenges due to depressed oil prices and sanctions, the Russian food embargo has caused the agricultural market to expand, resulting in new projects and relationships for Enersul and Solex Thermal Science, and opportunities for other Canadian suppliers. Sprung Instant Structures shared their experience with finding a strategic business partner in Kazakhstan to work on a large scale oil and gas project.
Canada has lifted sanctions against Belarus (although export controls still remain in place and require permit applications) and Canadians are competing with Europeans for oil and gas projects in Belarus, including large bids issued by state-owned Belarusneft, which has E&P operations in Europe and overseas.
At home, the Government of Alberta is working to establish closer ties with the energy and agricultural companies in Ukraine and has funding in place to facilitate this process. Canadian companies are engaged in a variety of infrastructure projects in Ukraine, and there appears to be substantial demand for Canadian goods and services in Ukraine, for example, from large upstream E&P players such as UGV.
On February 22 and 23, 2017, the Petroleum Services Association of Canada and JWN launched the second phase of their Going Global Report, which focused largely on Russia, China and Iran, and several other high-risk/high-return markets. Milos Barutciski, the Head of Bennett Jones' International Trade Group, spoke as part of the expert panel at the launch. Milos noted that these markets present a suite of business, regulatory and compliance challenges that are manageable if addressed with the right preparation and experienced advisors. These markets offer opportunities for Canadian companies who plan ahead and invest in due diligence upfront. In the words of another speaker, Alberta companies should also understand that there is no "on/off" switch for export markets that they can just turn on until things finally improve at home.If you have any questions about the Networking Lunch or would like to discuss any of your projects or opportunities in Russia, Ukraine, Kazakhstan or Belarus, or other markets in the former Soviet Union, please contact Darrell Peterson and Nick Bryanskiy in Calgary, or Milos Barutciski in Toronto.