UGV bought Chinese drill bits at half the starting price

On January 9, Ukrgazvydobuvannya JSC (UGV) concluded agreements for the supply of various types of drilling bits with the Chinese company Wuhan Longway Petroleum Technology Co., Ltd. for UAH 82.37 million. This is reported by Nashi Groshi with reference to the tender in the Prozorro system.

The expected cost of the tender was UAH 181 million. Therefore, the system identified the Chinese offer as an "abnormally low price". In response, the Wuhan company said it was offering bits from Chinese oil and gas equipment producer Chengdu Huilingfeng Diamond Bit Co., Ltd., with which it has a long-standing partnership. The manufacturer allegedly provided a discount to help Ukraine during the war.

UGV accepted these explanations and entered into an agreement with the winner of the price auction. At the same time, the American company Ulterra drilling technologies l.p. had complaints about the decision of the Ukrainian customer.

The company stated that the Chinese bits are not an analog of the American ones, as demanded by UGV. According to Ulterra, American bits are much better, so in principle, there can be no price competition between them and Chinese ones. According to them, the Chinese company could not be allowed to trade as a producer of non-equivalent goods. The Americans filed a corresponding complaint with the tender board of the Antimonopoly Committee.

UGV replied that the quality of Chinese drill bits is really not the same as in the US. But through the Prozorro system, the customer buys "standard" and not "premium" drill bits. Therefore, in this case, UGV considers Chengdu bits to be suitable. AMCU agreed with this decision of the customer and allowed the Chinese to enter the price auction.

At the auction, Ulterra offered a 15% discount to the expected bid value, while China's Wuhan offered a 54% discount. Thus, the Chinese company won.