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CONTENTS5 RUSSIA: BUSINESS AS USUAL?

6 FOREIGN SPARRING PARTNERS

7 PAYING OFF IN THE LNG RUN

8 A NEW CONTENDER

8 REVISITING OLD TRAINING GROUNDS

8 CREON ENERGY: FASTER GAS MARKETS

10 RUSSIA’S BLUE AND BLACK BELTS

10 BETTER DRILLS

12 TMK: INTERNATIONALLY RUSSIAN

12 ROCKY IN THE EAST

13 RUSSIA’S CONSTRUCTION VISIONARIES

14 LARGEO: AN UNEXPECTED CALL

15 BUSINESS AS USUAL?

16 INTERVIEW WITH

Valery I. Graifer, Chairman of the Board – RITEK18 INTERVIEW WITH

Gennady Schmal, President - Union of Oil & Gas Producers of Russia 20 INTERVIEW WITH

Dmitry Pumpyansky, Chairman - TMK 22 INTERVIEW WITH

Albert Vladimirov, President – Gubkin University24 INTERVIEW WITH

Jacques de Boisséson, President – Total E&P Russie 26 INTERVIEW WITH

Mario Mehren, Member of the Board of Executive Directors - Wintershall28 INTERVIEW WITH

Dean Kaminski, Vice President – Weatherford Russia30 INTERVIEW WITH

Dr. Fares Kilzie, Chairman – Creon Energy32 INTERVIEW WITH

Alexander B. Bosnak, General Director - Volgaburmash

INTERVIEWS

www.energy.focusreports.net

mailto:[email protected]

FocVolg_OGFJ_1309 1 8/23/13 11:53 AM

5

FocVolg_OGFJ_1309 1 8/23/13 11:53 AM

RUSSIABusiness as usual?

We will continue to pursue a policy of openness to for-eign investment in energy, a strategic sector for Rus-sia,” President Putin told the International Economic

Forum in 2012. But what does an open strategic sector look like in Russia? The only other examples of what the Russian govern-ment sees as strategic sectors are defense, state monopolies, and the media, none of which appear particularly open.

”

55

6

56 ENERGY.FOCUSREPORTS.NET | WWW.OGFJ.COM | OIL & GAS FINANCIAL JOURNAL SEPTEMBER 2013

Investors only had to wait until the first quarter

this year for an answer. In March, a deal signed by

Rosneft reshaped the Russian oil industry and sig-

nificantly bulked up Russia’s top oil producer. Ros-

neft’s acquisition of the BP joint venture TNK-BP, in

exchange for BP gaining 20% of Rosneft’s shares,

effectively consolidated Russia’s first and third larg-

est oil producers. At $55 billion, it was the largest

deal ever signed in Russia and as a consequence,

Rosneft even knocked ExxonMobil off the podium

for the world’s largest oil producer with 4.6 million

bpd production.

For BP this deal marked a new strategic partner-

ship in Russia and presumably a fresh start after

years of turbulent internal legal battles at TNK-

BP. "We hope to help Rosneft to deliver synergies

through its acquisition of TNK-BP and to grow pro-

duction and reserves through brownfield, green-

field and unconventional opportunities as Rosneft

strengthens its position among the world's leading

global energy companies," said BP’s Chief Execu-

tive Bob Dudley.

By granting a 20% stake in Rosneft to BP, the

Russian government appeared to define openness in the strategic

energy sector as a form of foreign ownership with state control. In

a market already restricted in the number of major oil companies,

the relevance of the state to oil industry stakeholders has now risen.

Or has it? In the country, many argue that Rosneft is managed with

sound business acumen and decisive modernity, and that the TNK-BP

deal was just business as usual. Either way, Rosneft’s growth into the

undisputed oil-producing champion has begun to change the land-

scape of the Russian industry for oil and gas companies and service

providers.

FOREIGN SPARRING PARTNERSThe Russian government believes that it needs investment of more

than $280 billion to maintain oil production at the current level until

2020, and indeed, a number of high profile deals have shown that

there is interest in investing in Russia. Rosneft has been leading the

effort to attract foreign partners, signing a joint venture agreement

in 2012 with Norway’s Statoil for exploring frontier areas in the Sea

of Okhotsky and the Barents Sea as well as another JV with Japan’s

Inpex for exploration off Russia’s Pacific coast. The state giant also

concluded a joint venture with China’s CNPC for a USD5 billion East-

ern Petrochemical venture. Andrey Goltsblat, managing partner of

law firm Goltsblat BLP, confirms that Russia has become a primary

market for many large global players, who have realized that the

country offers more growth perspectives than many other markets.

Yet, according Fernando Martinez-Fresneda, Repsol’s General

Manager for Russia, investing in Russia is not a simple process. “Rep-

sol brings in its global technology and international best practices

gained in the 25 countries we operate in,” he says. “However, com-

panies in Russia operate in the way that they are accustomed to, and

as a foreign company it is not easy to tell them that sometimes they

have to change their approach in order to be more efficient.”

It took time for the Spanish company to develop its business in Rus-

sia after acquiring a 10% holding in West Siberian fields. “We have

been analyzing and screening the market for five years; some oppor-

tunities failed and others were considered too high risk,” Martinez-

Fresneda says. He believes that it was important to take the time to

do this before Repsol concluded its joint venture with Alliance Oil,

which included an agreement to take over Russian gas development

company Eurotek.

In 2012, after 20 years in the Russian market, Wintershall concluded

an asset swap with Gazprom in which the German company received

a 25% stake in blocks IV and V of the Achimov formation. In return,

Gazprom obtained shares in Wintershall’s natural gas trading and

storage business. Mario Mehren, a member of Wintershall’s Board

of Executive Directors, explains that Germany's largest crude oil and

natural gas producer and Gazprom are starting to share expertise:

“We are working on a project to bridge the way from the North Sea

to the Barents Sea, which is interesting for both parties. Gazprom

is interested in the development of shallow waters on the Russian

continental shelf. This is exactly where in the North Sea our Dutch

colleagues are incredibly experienced. In return, Wintershall will com-

pletely transfer the currently jointly operated natural gas trading and

storage business to Gazprom.”

Dimitry Bolotnik, General Manager Russia & CIS of Roxar, summed

up the situation: “Companies entering Russia should approach the

market with a long-term vision: be patient and do not expect quick

profits. Roxar is today bearing fruits of agreements concluded five

years ago. The right level of cooperation is important: Russian oil and

gas companies are looking for long-term partners.”

Mario Mehren, Member of Wintershall’s Board of Executive Directors

Fernando Martinez Fresneda, General Manager, Repsol Russia

Igor Sechin, CEO, Rosneft

��

��

��

��

��

��

��

��

FocRus_OGFJ_1309 1 8/23/13 11:44 AM

SEPTEMBER 2013 OIL & GAS FINANCIAL JOURNAL | WWW.OGFJ.COM | ENERGY.FOCUSREPORTS.COM 57

PAYING OFF IN THE LNG RUN

Total has been present in Russia since 1989. Jacques de Boisséson, appointed General Director of Total E&P Russie last year, took time to discuss with Focus Reports Total’s involvement in some of the country’s flagship projects.

Could you outline Total’s operations in Russia?

Total’s roots in Russia are in the Kharyaga field, which is located inside the Arctic Circle. Total has been operating this field since 1999 under Rus-

sia’s only Production Sharing Agreement (PSA) for an onshore project. Kharyaga was the first PSA project in Russia to become profitable for the state. The Kharyaga field consists of six reservoirs. Lukoil and their predecessors were producing at four out of six reservoirs and the two remaining reservoirs were left untouched as they were too challeng-ing. These two reservoirs are the ones at which Total is now producing, because we have the right technology.

We have a longstanding relation with Novatek, Russia’s second largest natural gas producer. Novatek has a tremendous track record and has allowed us to make rapid inroads into the Russian market. In return, we have helped them to shorten their learning curve in the in-ternational arena, in particular with relation to Yamal LNG, an interna-tional project by nature. In addition to Yamal LNG, we are partnering

with Novatek for the development of the Termokarstovoye gas and condensate field, where production is scheduled to start in 2015.

In addition, we co-own [25%] Shtokman Development AG together with Gazprom [75%]: a joint venture established for financing, opera-tion and design of Shtokman phase I. Production of the Shtokman gas condensate field will contribute significantly to our production in the future. This project is a pioneering LNG project in the Arctic as well as a major challenge worth confronting.

Where would you like to take the Russian affiliate within the coming three to five years? By 2020, Total aims for Russia to become its number one production country, representing 15% of its global hydrocarbon production. These are ambitious targets, but I believe we have what it requires to achieve them.

This number is mainly based on the success of the current develop-ment in Kharyaga, on the future production in Termokarstovoye, on the launch of Yamal LNG, and most of all on the beneficial impact from Novatek’s growth, in which we aim to increase our stake up to 19.4%. We have to be the first in class in production, but also in safety, reliabil-ity, and ethics. Not only because we committed to it, also because it is the way to get further opportunities in the business. It is the condition for growth.

Jacques de Boisséson, General Director, Total E&P Russie

7


Investors only had to wait until the first quarter

this year for an answer. In March, a deal signed by

Rosneft reshaped the Russian oil industry and sig-

nificantly bulked up Russia’s top oil producer. Ros-

neft’s acquisition of the BP joint venture TNK-BP, in

exchange for BP gaining 20% of Rosneft’s shares,

effectively consolidated Russia’s first and third larg-

est oil producers. At $55 billion, it was the largest

deal ever signed in Russia and as a consequence,

Rosneft even knocked ExxonMobil off the podium

for the world’s largest oil producer with 4.6 million

bpd production.

For BP this deal marked a new strategic partner-

ship in Russia and presumably a fresh start after

years of turbulent internal legal battles at TNK-

BP. "We hope to help Rosneft to deliver synergies

through its acquisition of TNK-BP and to grow pro-

duction and reserves through brownfield, green-

field and unconventional opportunities as Rosneft

strengthens its position among the world's leading

global energy companies," said BP’s Chief Execu-

tive Bob Dudley.

By granting a 20% stake in Rosneft to BP, the

Russian government appeared to define openness in the strategic

energy sector as a form of foreign ownership with state control. In

a market already restricted in the number of major oil companies,

the relevance of the state to oil industry stakeholders has now risen.

Or has it? In the country, many argue that Rosneft is managed with

sound business acumen and decisive modernity, and that the TNK-BP

deal was just business as usual. Either way, Rosneft’s growth into the

undisputed oil-producing champion has begun to change the land-

scape of the Russian industry for oil and gas companies and service

providers.

FOREIGN SPARRING PARTNERSThe Russian government believes that it needs investment of more

than $280 billion to maintain oil production at the current level until

2020, and indeed, a number of high profile deals have shown that

there is interest in investing in Russia. Rosneft has been leading the

effort to attract foreign partners, signing a joint venture agreement

in 2012 with Norway’s Statoil for exploring frontier areas in the Sea

of Okhotsky and the Barents Sea as well as another JV with Japan’s

Inpex for exploration off Russia’s Pacific coast. The state giant also

concluded a joint venture with China’s CNPC for a USD5 billion East-

ern Petrochemical venture. Andrey Goltsblat, managing partner of

law firm Goltsblat BLP, confirms that Russia has become a primary

market for many large global players, who have realized that the

country offers more growth perspectives than many other markets.

Yet, according Fernando Martinez-Fresneda, Repsol’s General

Manager for Russia, investing in Russia is not a simple process. “Rep-

sol brings in its global technology and international best practices

gained in the 25 countries we operate in,” he says. “However, com-

panies in Russia operate in the way that they are accustomed to, and

as a foreign company it is not easy to tell them that sometimes they

have to change their approach in order to be more efficient.”

It took time for the Spanish company to develop its business in Rus-

sia after acquiring a 10% holding in West Siberian fields. “We have

been analyzing and screening the market for five years; some oppor-

tunities failed and others were considered too high risk,” Martinez-

Fresneda says. He believes that it was important to take the time to

do this before Repsol concluded its joint venture with Alliance Oil,

which included an agreement to take over Russian gas development

company Eurotek.

In 2012, after 20 years in the Russian market, Wintershall concluded

an asset swap with Gazprom in which the German company received

a 25% stake in blocks IV and V of the Achimov formation. In return,

Gazprom obtained shares in Wintershall’s natural gas trading and

storage business. Mario Mehren, a member of Wintershall’s Board

of Executive Directors, explains that Germany's largest crude oil and

natural gas producer and Gazprom are starting to share expertise:

“We are working on a project to bridge the way from the North Sea

to the Barents Sea, which is interesting for both parties. Gazprom

is interested in the development of shallow waters on the Russian

continental shelf. This is exactly where in the North Sea our Dutch

colleagues are incredibly experienced. In return, Wintershall will com-

pletely transfer the currently jointly operated natural gas trading and

storage business to Gazprom.”

Dimitry Bolotnik, General Manager Russia & CIS of Roxar, summed

up the situation: “Companies entering Russia should approach the

market with a long-term vision: be patient and do not expect quick

profits. Roxar is today bearing fruits of agreements concluded five

years ago. The right level of cooperation is important: Russian oil and

gas companies are looking for long-term partners.”

Mario Mehren, Member of Wintershall’s Board of Executive Directors

Fernando Martinez Fresneda, General Manager, Repsol Russia

Igor Sechin, CEO, Rosneft

��

��

��

��

��

��

��

��

FocRus_OGFJ_1309 1 8/23/13 11:44 AM

SEPTEMBER 2013 OIL & GAS FINANCIAL JOURNAL | WWW.OGFJ.COM | ENERGY.FOCUSREPORTS.COM 57

PAYING OFF IN THE LNG RUN

Total has been present in Russia since 1989. Jacques de Boisséson, appointed General Director of Total E&P Russie last year, took time to discuss with Focus Reports Total’s involvement in some of the country’s flagship projects.

Could you outline Total’s operations in Russia?

Total’s roots in Russia are in the Kharyaga field, which is located inside the Arctic Circle. Total has been operating this field since 1999 under Rus-

sia’s only Production Sharing Agreement (PSA) for an onshore project. Kharyaga was the first PSA project in Russia to become profitable for the state. The Kharyaga field consists of six reservoirs. Lukoil and their predecessors were producing at four out of six reservoirs and the two remaining reservoirs were left untouched as they were too challeng-ing. These two reservoirs are the ones at which Total is now producing, because we have the right technology.

We have a longstanding relation with Novatek, Russia’s second largest natural gas producer. Novatek has a tremendous track record and has allowed us to make rapid inroads into the Russian market. In return, we have helped them to shorten their learning curve in the in-ternational arena, in particular with relation to Yamal LNG, an interna-tional project by nature. In addition to Yamal LNG, we are partnering

with Novatek for the development of the Termokarstovoye gas and condensate field, where production is scheduled to start in 2015.

In addition, we co-own [25%] Shtokman Development AG together with Gazprom [75%]: a joint venture established for financing, opera-tion and design of Shtokman phase I. Production of the Shtokman gas condensate field will contribute significantly to our production in the future. This project is a pioneering LNG project in the Arctic as well as a major challenge worth confronting.

Where would you like to take the Russian affiliate within the coming three to five years? By 2020, Total aims for Russia to become its number one production country, representing 15% of its global hydrocarbon production. These are ambitious targets, but I believe we have what it requires to achieve them.

This number is mainly based on the success of the current develop-ment in Kharyaga, on the future production in Termokarstovoye, on the launch of Yamal LNG, and most of all on the beneficial impact from Novatek’s growth, in which we aim to increase our stake up to 19.4%. We have to be the first in class in production, but also in safety, reliabil-ity, and ethics. Not only because we committed to it, also because it is the way to get further opportunities in the business. It is the condition for growth.

Jacques de Boisséson, General Director, Total E&P Russie

8


A NEW CONTENDERNever let it be said that Russians don’t have

patience. Russia’s largest independent gas pro-

ducer, Novatek, has been waiting since 2009 for a

decision from the Russian government on whether

or not it would be allowed to export LNG pro-

duced at its Yamal gas fields. Together with Total,

the company is investing $20 billion in the project,

but up until now Novatek was barred from signing export contracts

through a 2006 law granting Gazprom monopoly rights to all gas

exports.

But the situation has changed. The Russian government has

announced that LNG exports from independent companies would be

allowed as of January 1, 2014, thereby ending Gazprom’s monopoly.

Novatek CEO Leonid Michelson has been busy working on a long-

term supply contract with China National Petroleum Corp to begin

supplying the Chinese market from the planned start-up of facilities

in 2016.

However, Gazprom is not giving up the struggle for control without

a fight. Gazprom CEO Alexei Miller has stated that he plans to take

Gazprom’s share of the global LNG market to 15%, from 5% today,

focusing on the Asia-Pacific markets. Indeed on June 22 2013 Gaz-

prom signed a memorandum of understanding with a consortium of

Japanese companies for a venture called the Vladivostok-LNG proj-

ect. The Russian LNG industry is beginning to heat up.

REVISITING OLD TRAINING GROUNDSRecently released estimates of Russia’s total resources - previously

restricted information - have confirmed EIA analysis that most of

Russia’s oil reserves are located in the part of Russia where the indus-

try first started production, in West Siberia.

In June, Russia achieved a new post-Soviet record of 10.53 million

bpd production, but the production growth was not thanks to Rus-

sia’s legacy assets in West Siberia, but rather Rosneft’s ramped up

production in East Siberia. Rosneft has been focusing on its assets

in the region like the giant Vankor field, in order to supply the thirsty

Chinese market, which eventually expects one million bpd in oil

supplies.

Russia’s legacy assets in West Siberia, many of which Rosneft

gained through the acquisition of TNK-BP, including fields like Samo-

tlor and Priobskoye, are actually in decline. And the fact that a region

with fewer resources is growing its production, while a region with

more resources is in production decline, presents a long-term chal-

lenge to the industry.

Russia was once likened to a large storage tank with a tap that one

could simply turn on and off: it was almost too easy to draw on Rus-

sia’s seemingly inexhaustible oil reserves. In spite of the cold and the

challenge of permafrost, many of the greenfields in Eastern Siberia

CREON ENERGY: FASTER GAS MARKETS

Creon Energy, the only Russian advisory firm offering a full range of consulting services in upstream, midstream and downstream sec-tors, has grown to become the leading Russian advisory group in oil and gas, petrochemicals, chemicals and related industries in the countries of the former Soviet Union. The company has been looking into alternative forms of delivery for gas from the Russian market and one of Cre-on Energy’s flagship achievements has been its

participation in the LNG project in Vladivostok. “In our era, in order to be competitive, companies need to be

compact and mobile in order to move fast to markets with de-mand,” says Dr. Fares Kilzie, Chairman of Creon Energy. He believes that mobility is the most important element for Russia’s gas industry to maintain its global competitiveness.

Kilzie supports the idea of opening up the Russian export mar-ket to increased competition. “This is exactly the message that we are trying to deliver to the government ... the effect of free trade will be far better than having only one channel for the export of gas, which is Gazprom. Furthermore, any monopoly tends to become fat and lazy due to lack of competition. By having competitors in the market, companies run their businesses faster and with better efficiency.”

Fig. 1: Feasibility of Pipeline vs. LNGDepends On Distance AndConsumption Volume

Source: CREON

00

15

30

60

75

30 50 70 90

Constructionof gas pipelineis more feasible

Distance from gas pipeline to end-user, km

Gas

co

nsum

pti

on,

mln

cub

. m p

er y

ear

Autonomousgas supply ismore feasible

Leonid Michelson, CEO, Novatek

Dr Fares Kilzie, Chairman, Creon Energy

9


A NEW CONTENDERNever let it be said that Russians don’t have

patience. Russia’s largest independent gas pro-

ducer, Novatek, has been waiting since 2009 for a

decision from the Russian government on whether

or not it would be allowed to export LNG pro-

duced at its Yamal gas fields. Together with Total,

the company is investing $20 billion in the project,

but up until now Novatek was barred from signing export contracts

through a 2006 law granting Gazprom monopoly rights to all gas

exports.

But the situation has changed. The Russian government has

announced that LNG exports from independent companies would be

allowed as of January 1, 2014, thereby ending Gazprom’s monopoly.

Novatek CEO Leonid Michelson has been busy working on a long-

term supply contract with China National Petroleum Corp to begin

supplying the Chinese market from the planned start-up of facilities

in 2016.

However, Gazprom is not giving up the struggle for control without

a fight. Gazprom CEO Alexei Miller has stated that he plans to take

Gazprom’s share of the global LNG market to 15%, from 5% today,

focusing on the Asia-Pacific markets. Indeed on June 22 2013 Gaz-

prom signed a memorandum of understanding with a consortium of

Japanese companies for a venture called the Vladivostok-LNG proj-

ect. The Russian LNG industry is beginning to heat up.

REVISITING OLD TRAINING GROUNDSRecently released estimates of Russia’s total resources - previously

restricted information - have confirmed EIA analysis that most of

Russia’s oil reserves are located in the part of Russia where the indus-

try first started production, in West Siberia.

In June, Russia achieved a new post-Soviet record of 10.53 million

bpd production, but the production growth was not thanks to Rus-

sia’s legacy assets in West Siberia, but rather Rosneft’s ramped up

production in East Siberia. Rosneft has been focusing on its assets

in the region like the giant Vankor field, in order to supply the thirsty

Chinese market, which eventually expects one million bpd in oil

supplies.

Russia’s legacy assets in West Siberia, many of which Rosneft

gained through the acquisition of TNK-BP, including fields like Samo-

tlor and Priobskoye, are actually in decline. And the fact that a region

with fewer resources is growing its production, while a region with

more resources is in production decline, presents a long-term chal-

lenge to the industry.

Russia was once likened to a large storage tank with a tap that one

could simply turn on and off: it was almost too easy to draw on Rus-

sia’s seemingly inexhaustible oil reserves. In spite of the cold and the

challenge of permafrost, many of the greenfields in Eastern Siberia

CREON ENERGY: FASTER GAS MARKETS

Creon Energy, the only Russian advisory firm offering a full range of consulting services in upstream, midstream and downstream sec-tors, has grown to become the leading Russian advisory group in oil and gas, petrochemicals, chemicals and related industries in the countries of the former Soviet Union. The company has been looking into alternative forms of delivery for gas from the Russian market and one of Cre-on Energy’s flagship achievements has been its

participation in the LNG project in Vladivostok. “In our era, in order to be competitive, companies need to be

compact and mobile in order to move fast to markets with de-mand,” says Dr. Fares Kilzie, Chairman of Creon Energy. He believes that mobility is the most important element for Russia’s gas industry to maintain its global competitiveness.

Kilzie supports the idea of opening up the Russian export mar-ket to increased competition. “This is exactly the message that we are trying to deliver to the government ... the effect of free trade will be far better than having only one channel for the export of gas, which is Gazprom. Furthermore, any monopoly tends to become fat and lazy due to lack of competition. By having competitors in the market, companies run their businesses faster and with better efficiency.”

Fig. 1: Feasibility of Pipeline vs. LNGDepends On Distance AndConsumption Volume

Source: CREON

00

15

30

60

75

30 50 70 90

Constructionof gas pipelineis more feasible

Distance from gas pipeline to end-user, km

Gas

co

nsum

pti

on,

mln

cub

. m p

er y

ear

Autonomousgas supply ismore feasible

Leonid Michelson, CEO, Novatek

Dr Fares Kilzie, Chairman, Creon Energy

FocReps_OGFJ_1309 1 8/23/13 11:37 AM

10


BETTER DRILLSOil production and the total depth of drilled wells

have been continually increasing in Russia, generat-

ing great optimism for the country’s drilling compa-

nies. Russia’s largest oilfield drilling firm, Eurasia Drill-

ing Co. (EDC) makes up about a third of the market

and is operating in both West and East Siberia. EDC

CEO Alexander Dzhaparidze recognizes the poten-

tial, stating that while this sector has historically been

slow to invest in new technology – today 65% of Rus-

sia’s rig fleet is more than 15 years old – upstream growth is pushing

drilling contractors to upgrade their assets. EDC has invested more than

$2.3 billion in the modernization of its fleet, and therefore, “our fleet is

significantly younger than Russia’s average,” Dzhaparidze says.

Eriell became drilling market leader in Uzbekistan in 2007 before

entering the Russian market in 2008. “Although we started our opera-

tions in Central Asia working with state-owned companies such as

Uzbekneftegaz, 90% of our revenues came from our customers Lukoil

and Gazprom who are represented in that market,”

explains Eriell Board Chairman Bakhtiyor Fazilov.

“Our objective has been to enter the Russian market

through our partnerships with Russian companies.”

Fazilov goes on to explain his belief that the avail-

ability of a wide range of up-to-date drilling equip-

ment is his company’s competitive advantage in

RUSSIA'S BLUE AND BLACK BELTS

The prospect of LNG is not eliminating the huge demand for export pipeline infrastruc-ture: not only are the Chinese pushing for an expansion of the oil pipeline network out of East Siberia, but Russia is still pressing ahead with the South Stream gas pipeline to Europe. Despite declining demand from Europe in the short term, long-term demand from Europe is set to increase.

But as Vitali Parizher, Director General of Tempobur, a company specializing in the hori-

zontal drilling and construction of pipelines, explains the tech-nical requirements for constructing these pipelines are increas-ing. He points out that there are about 80 companies in Russia that provide services of horizontal directional drilling (HDD) ser-vices, but that the majority of them do not possess equipment to construct crossings longer than 700m.

Tempobur has designed and built more than 600 HDD cross-ings under the most difficult geological and weather conditions including notable projects like Nord Stream, the Baltic Pipeline System, and the construction of the underwater pipeline under the Eastern Bosphorous strait towards Russia, a highlight for Parizher.

“The uniqueness of this project for global engineering prac-tice is evident in the records it has set for horizontal drilling parameters,” Parizher explains. “The transition pipeline is un-precedented in length and depth of burial, with some of the most difficult ground conditions ... the soil is unfavorable to the HDD method: crumbling rock and semi rock with interlayers of crushed stone, boulders and other large detrital rocks.” For Parizher, this was a landmark project that expanded the enve-lope for horizontal drilling in the construction of challenging underground pipelines.

can be developed according to similar production

techniques. For Russia to generate long-term pro-

duction growth, it needs to return to West Siberian

fields, using new technologies to access more chal-

lenging reservoirs.

Some believe that the domestic industry lacks tech-

nologies to find productive areas in lower horizons

and thus technological improvement is necessary

not only in production but also in geology. Yet given Russia’s substan-

tial experience in onshore production, some Russian companies would

strongly disagree with this picture of Russian technological capabilities.

For an example of homegrown success in tapping Russia’s chal-

lenging legacy assets, one only has to look as far as Russian technol-

ogy leader RITEK, a Lukoil subsidiary. The firm creates and develops

modern high technologies to ensure the growth of reserves and pro-

duction. In 20 years, RITEK has grown from a small enterprise into an

oil company that produces more than 7 million tonnes a year, with

more than 50% of its oil reserves located in hard-to-recover areas.

“I understood that true progress would be impossible without

innovative development, particularly for an oil company with high

aspirations,” says Valery Graifer, Chairman of the Board of RITEK. “It

was clear that the era of light oil is coming to an end and RITEK

is placing its stakes on advanced innovations.” Graifer, one of the

founders of Lukoil, and also the company’s Chairman, represents in

many ways the lesser-known face of Russia: one that is both modern

and innovative.

Vitali Parizher, General Director, NGS-Tempobur

Valery Isaakovich Grayfer, Chairman of the Board, RITEK and LUKOIL

Alexander Dzhaparidze, CEO at Eurasia Drilling Company

Bakhtiyor Fazilov, Chairman of the Board at ERIELL

11


BETTER DRILLSOil production and the total depth of drilled wells

have been continually increasing in Russia, generat-

ing great optimism for the country’s drilling compa-

nies. Russia’s largest oilfield drilling firm, Eurasia Drill-

ing Co. (EDC) makes up about a third of the market

and is operating in both West and East Siberia. EDC

CEO Alexander Dzhaparidze recognizes the poten-

tial, stating that while this sector has historically been

slow to invest in new technology – today 65% of Rus-

sia’s rig fleet is more than 15 years old – upstream growth is pushing

drilling contractors to upgrade their assets. EDC has invested more than

$2.3 billion in the modernization of its fleet, and therefore, “our fleet is

significantly younger than Russia’s average,” Dzhaparidze says.

Eriell became drilling market leader in Uzbekistan in 2007 before

entering the Russian market in 2008. “Although we started our opera-

tions in Central Asia working with state-owned companies such as

Uzbekneftegaz, 90% of our revenues came from our customers Lukoil

and Gazprom who are represented in that market,”

explains Eriell Board Chairman Bakhtiyor Fazilov.

“Our objective has been to enter the Russian market

through our partnerships with Russian companies.”

Fazilov goes on to explain his belief that the avail-

ability of a wide range of up-to-date drilling equip-

ment is his company’s competitive advantage in

RUSSIA'S BLUE AND BLACK BELTS

The prospect of LNG is not eliminating the huge demand for export pipeline infrastruc-ture: not only are the Chinese pushing for an expansion of the oil pipeline network out of East Siberia, but Russia is still pressing ahead with the South Stream gas pipeline to Europe. Despite declining demand from Europe in the short term, long-term demand from Europe is set to increase.

But as Vitali Parizher, Director General of Tempobur, a company specializing in the hori-

zontal drilling and construction of pipelines, explains the tech-nical requirements for constructing these pipelines are increas-ing. He points out that there are about 80 companies in Russia that provide services of horizontal directional drilling (HDD) ser-vices, but that the majority of them do not possess equipment to construct crossings longer than 700m.

Tempobur has designed and built more than 600 HDD cross-ings under the most difficult geological and weather conditions including notable projects like Nord Stream, the Baltic Pipeline System, and the construction of the underwater pipeline under the Eastern Bosphorous strait towards Russia, a highlight for Parizher.

“The uniqueness of this project for global engineering prac-tice is evident in the records it has set for horizontal drilling parameters,” Parizher explains. “The transition pipeline is un-precedented in length and depth of burial, with some of the most difficult ground conditions ... the soil is unfavorable to the HDD method: crumbling rock and semi rock with interlayers of crushed stone, boulders and other large detrital rocks.” For Parizher, this was a landmark project that expanded the enve-lope for horizontal drilling in the construction of challenging underground pipelines.

can be developed according to similar production

techniques. For Russia to generate long-term pro-

duction growth, it needs to return to West Siberian

fields, using new technologies to access more chal-

lenging reservoirs.

Some believe that the domestic industry lacks tech-

nologies to find productive areas in lower horizons

and thus technological improvement is necessary

not only in production but also in geology. Yet given Russia’s substan-

tial experience in onshore production, some Russian companies would

strongly disagree with this picture of Russian technological capabilities.

For an example of homegrown success in tapping Russia’s chal-

lenging legacy assets, one only has to look as far as Russian technol-

ogy leader RITEK, a Lukoil subsidiary. The firm creates and develops

modern high technologies to ensure the growth of reserves and pro-

duction. In 20 years, RITEK has grown from a small enterprise into an

oil company that produces more than 7 million tonnes a year, with

more than 50% of its oil reserves located in hard-to-recover areas.

“I understood that true progress would be impossible without

innovative development, particularly for an oil company with high

aspirations,” says Valery Graifer, Chairman of the Board of RITEK. “It

was clear that the era of light oil is coming to an end and RITEK

is placing its stakes on advanced innovations.” Graifer, one of the

founders of Lukoil, and also the company’s Chairman, represents in

many ways the lesser-known face of Russia: one that is both modern

and innovative.

Vitali Parizher, General Director, NGS-Tempobur

Valery Isaakovich Grayfer, Chairman of the Board, RITEK and LUKOIL

Alexander Dzhaparidze, CEO at Eurasia Drilling Company

Bakhtiyor Fazilov, Chairman of the Board at ERIELL

��

��

��

FocEri_OGFJ_1309 1 8/23/13 11:32 AM

12


service department, creating a direct “manufacturer – customer” rela-

tionship with after-sales service. “With this tailored approach to produc-

tion, we decided not to concentrate our efforts exclusively on sales,”

says Volgaburmash General Director Alexander Bosnak. “For us, provi-

sion of engineering support services for well construction was just as

important.”

ROCKY IN THE EAST A significant share of new production in Russia is expected to come

from East Siberia, with some analysts estimating undiscovered reserves

of over 80 billion boe. These East Siberian deposits lie in an area that

covers approximately 3.3 million km2 and to find them requires a major

geological initiative.

However, for a few years, Russia's geological exploration sector has

been in decline and unable to handle such demands. In 2011, the Rus-

sian government took steps to deal with this issue: to stimulate new

efforts in seismic surveys, the government decided to establish Rusge-

ology, a holding company that incorporated 38 geological companies

from 30 different regions of the country. The intention was that the

enhanced financial and operational resources and coordinated plan-

ning could provide greater synergies in unlocking Russian hydrocarbon

the Russian oil services market. “The program for modernization of the

industry that has been implemented by the government is working in

full force for our company,” he explains. The company has won tenders

against international companies such as KCA Deutag in Russia, which

Fazilov believes is due to the 1,500 highly skilled engineers currently

working for Eriell, in combination with the most modern equipment

available.

For drilling suppliers, the growth of the Russian market also repre-

sents an opportunity, but as Director General of the Association of Drill-

ing Contractors Alexander Oganov explains, manufacturers of drilling

equipment are facing increased price pressure from foreign competi-

tion, particularly from Chinese manufacturers.

The largest and the most advanced Russian manufacturer of roller cone

bits and PDC bits is Volgaburmash. Historically, the company focused on

producing in high volumes, delivering manufactured

tools to oilfields in Western Siberia. However, over

the past 10 years the company carried out large-scale

modernization of its manufacturing plants and today,

Volgaburmash is focused on technology differentia-

tion instead of mass production.

In 2011, Volgaburmash established its own bit

TMK: INTERNATIONALLY RUSSIAN

“From the inception of the company,” says Dmitry Pumpyansky, chairman of TMK, “we were aiming at developing an international business.” This focus on creating a strong in-ternational corporate culture was one of the factors in launching the company’s IPO on the London Stock Exchange in 2006, only five years after the creation of the company, ac-cording to Pumpyansky, and also one of the factors behind their successful acquisition of

10 pipe plants in the US in 2008 from IPSCO Tubulars Inc. Since then, TMK IPSCO has expanded to include one extra production site in the US, and one in Canada. Pumpyansky believes that expansion into the US via acquisition was the smartest option, as it gave TMK “an opportunity to enter the world’s biggest oil and gas market as a domestic player.”

Pumpyansky goes on to say that the company’s move to the US was generally smooth, and today, the US and Russian technical teams work together as one integrated unit. How-ever, the sales processes in Russia and the US do differ: while in Russia, TMK is used to dealing directly with the end users, which include Transneft, Gazprom, Lukoil and Rosneft, in the US, pipe is sold through distributors. “However,” Pumpyan-sky clarifies, “we have seen similar market structure in other countries, so we adjusted quickly. The bottom line is: we are

extremely pleased with our North American operations and colleagues.”

TMK is in the global top three pipe producers today, but is valued at a 15% discount vs. top peer value, and a strategy to improve performance and profitability is being implemented across the company. With sales today in more than 80 coun-tries, TMK has made the leap that few other large Russian companies have: successfully exporting their business to be-come a global scale player with operations around the world.

Dmitry Pumpyansky, Chairman, TMK

Alexandr Bosnak, General Director, Volgaburmash

Made in Russia - TMK

SEPTEMBER 2013 OIL & GAS FINANCIAL JOURNAL | WWW.OGFJ.COM | ENERGY.FOCUSREPORTS.NET 63

resources. Rusgeology’s acting CEO Andrey Tretyakov explains that the

company was established in order to carry out subsoil geological stud-

ies and ensure recovery of mineral resources using state-of-the-art geo-

logical, geophysical and geochemical techniques. “We are striving to

create the country’s largest, highly efficient, world-class geological busi-

ness that will match the national interests of the Rus-

sian Federation. Our mission is to ensure sustainable

growth and renewal of Russia’s mineral resource base

through new territories and new geological sites.”

Tretyakov continues.

One of the largest independent oil and condensate

producers in Eastern Siberia is Irkutsk Oil Co. (INK),

which has an impressive exploration track record throughout its 13-year

history. In a period of four years, INK has discovered and contoured

www.total.com

ARCTIC LNG:

TOTAL IS READY FOR THE CHALLENGE

Total, the world’s second-largest liquefied natural gas producer,

continues to expand its LNG portfolio. Over 50 years of operations

in world-scale LNG projects, combined with 40 years of hands

on experience in extreme cold conditions, puts us in a unique position

to develop complex projects in the Arctic.

Having been in Russia for over 20 years, Total since 2011

participates in the major Russian

Arctic project of Yamal LNG.

FocTot_OGFJ_1309 1 8/23/13 11:42 AM

RUSSIA’S CONSTRUCTION VISIONARIES

The construction industry remains one of the key catalysts of eco-nomic growth in Russia. The market is expected to grow by 9% in 2013. Naturally this attracts foreign construction companies that are ready to set foot in the country. Joint Ventures could be mutu-ally beneficial in terms of receiving the best Western competences and in return providing them access to the Russian market.

According to Mikhail Polonskiy, President of Promstroi Group, a Russian EPC group, foreign companies find it difficult to enter the Russian market. Construction in Russia remains carried out in a traditional way. One of the main prob-lems in the industry is the absence of demand for efficiency. “It is common that the process of investment planning and management is con-ducted by separate contracts for engineering, procurement and construction. In our opinion, in the near future a number of projects per-

formed by EPC contractors will increase, which means that the niche for Western companies will also increase. If one has risk ap-petite, there is a good deal of work outstanding in Russia”, he says.

One of fastest growing construction com-panies in Russia, RuzGazEngineering, is cele-brating its 10th anniversary this year. The com-pany has recently discussed a proposal with the Minister of Energy, Alexander Novak, to create a scientific base and trial centre in order to test Russian and international technologies. This centre will function as an incentive for smaller companies in the industry to develop and test their technologies. “Generally, it is only large state companies that can afford and have the ambition to develop this amount of engineering patents, and not the smaller pri-

vate companies, which makes us unique” Ilshat Valiullin, President of RusGazEngineering Group of Companies says.

Another personality is Dr. Ivan I. Mazur, president of RAO Rosneftegazstroy (RNGS), a leading Russian construction company. Mazur has been working in the oil and gas sector for more than 30 years and is the founder of a new scientific branch called “engineering ecology”. With more than 200 publications, and 18 pat-ents, Mazur is leading the way for Russian en-vironmentally friendly oil and gas construction projects. In addition to RNGS’s domestic activi-ties, the company has a strong focus towards internationalization. Currently international

projects account for 30% of RNGS’s activities. The CIS, the Middle East and Africa are priority markets for the company’s activities.

Courtesy of Irkutsk Oil Company

Andrey Tretyakov, Acting CEO, Rusgeology

Mikhail Polonskiy, President, Promstroi Group

Ilshat Valiullin, President, RusGazEngineering Group of Companies

Ivan I. Mazur, President of RAO Rosneftegazstroy (RNGS)

13

SEPTEMBER 2013 OIL & GAS FINANCIAL JOURNAL | WWW.OGFJ.COM | ENERGY.FOCUSREPORTS.NET 63

resources. Rusgeology’s acting CEO Andrey Tretyakov explains that the

company was established in order to carry out subsoil geological stud-

ies and ensure recovery of mineral resources using state-of-the-art geo-

logical, geophysical and geochemical techniques. “We are striving to

create the country’s largest, highly efficient, world-class geological busi-

ness that will match the national interests of the Rus-

sian Federation. Our mission is to ensure sustainable

growth and renewal of Russia’s mineral resource base

through new territories and new geological sites.”

Tretyakov continues.

One of the largest independent oil and condensate

producers in Eastern Siberia is Irkutsk Oil Co. (INK),

which has an impressive exploration track record throughout its 13-year

history. In a period of four years, INK has discovered and contoured

www.total.com

ARCTIC LNG:

TOTAL IS READY FOR THE CHALLENGE

Total, the world’s second-largest liquefied natural gas producer,

continues to expand its LNG portfolio. Over 50 years of operations

in world-scale LNG projects, combined with 40 years of hands

on experience in extreme cold conditions, puts us in a unique position

to develop complex projects in the Arctic.

Having been in Russia for over 20 years, Total since 2011

participates in the major Russian

Arctic project of Yamal LNG.

FocTot_OGFJ_1309 1 8/23/13 11:42 AM

RUSSIA’S CONSTRUCTION VISIONARIES

The construction industry remains one of the key catalysts of eco-nomic growth in Russia. The market is expected to grow by 9% in 2013. Naturally this attracts foreign construction companies that are ready to set foot in the country. Joint Ventures could be mutu-ally beneficial in terms of receiving the best Western competences and in return providing them access to the Russian market.

According to Mikhail Polonskiy, President of Promstroi Group, a Russian EPC group, foreign companies find it difficult to enter the Russian market. Construction in Russia remains carried out in a traditional way. One of the main prob-lems in the industry is the absence of demand for efficiency. “It is common that the process of investment planning and management is con-ducted by separate contracts for engineering, procurement and construction. In our opinion, in the near future a number of projects per-

formed by EPC contractors will increase, which means that the niche for Western companies will also increase. If one has risk ap-petite, there is a good deal of work outstanding in Russia”, he says.

One of fastest growing construction com-panies in Russia, RuzGazEngineering, is cele-brating its 10th anniversary this year. The com-pany has recently discussed a proposal with the Minister of Energy, Alexander Novak, to create a scientific base and trial centre in order to test Russian and international technologies. This centre will function as an incentive for smaller companies in the industry to develop and test their technologies. “Generally, it is only large state companies that can afford and have the ambition to develop this amount of engineering patents, and not the smaller pri-

vate companies, which makes us unique” Ilshat Valiullin, President of RusGazEngineering Group of Companies says.

Another personality is Dr. Ivan I. Mazur, president of RAO Rosneftegazstroy (RNGS), a leading Russian construction company. Mazur has been working in the oil and gas sector for more than 30 years and is the founder of a new scientific branch called “engineering ecology”. With more than 200 publications, and 18 pat-ents, Mazur is leading the way for Russian en-vironmentally friendly oil and gas construction projects. In addition to RNGS’s domestic activi-ties, the company has a strong focus towards internationalization. Currently international

projects account for 30% of RNGS’s activities. The CIS, the Middle East and Africa are priority markets for the company’s activities.

Courtesy of Irkutsk Oil Company

Andrey Tretyakov, Acting CEO, Rusgeology

Mikhail Polonskiy, President, Promstroi Group

Ilshat Valiullin, President, RusGazEngineering Group of Companies

Ivan I. Mazur, President of RAO Rosneftegazstroy (RNGS)

14

64 ENERGY.FOCUSREPORTS.NET | WWW.OGFJ.COM | OIL & GAS FINANCIAL JOURNAL SEPTEMBER 2013FocLar_OGFJ_1309 1 8/23/13 11:46 AM

LARGEO - AN UNEXPECTED CALL

Exploration in the Russian Arctic faces a great lack of reliable

seismic data about the region. While an impediment to the oil

companies, it is seen as a major growth opportunity by Rus-

sia’s seismic industry.

“The Russian Arctic shelf has a huge long-term potential for

seismic companies, since the shelf has not yet been studied

in the necessary way. Indeed, I assume, that there will be a

great volume of work for at least 20 years ahead, given that

new technology is becoming available and the existing data

have to be renewed,” said Vice-president of leading Russian

geophysics company LARGEO Group of Companies Andrey

Elistratov.

Elistratov explained that when Rosneft started to make

a serious commitment to offshore exploration in 2009 most

other seismic companies were ill prepared. “A question was

raised about the international industrial level of seismic pro-

cessing in Russia,” he said, and went on to explain why out-

sourcing processing work overseas was not possible given that

“the government lays down restrictions on sending seismic

data out of the country.”

In 2008, Largeo concluded a strategic partnership agree-

ment with ION-GXT for access to advanced processing tech-

nology. In Elistratov’s view, this left the company way out in

front of the rest of the Russian seismic industry. He said, that

alliance made it possible for LARGEO to acquire new tech-

nologies and expand computer capabilities while retaining

Russian identity.

He explained that in 2008, most other Russian seismic pro-

cessing players had looked sceptically on the development of

the offshore market, while most foreign players insisted on

having a contract before investing in setting up a Russian en-

tity, something Gazprom and Rosneft would not do.

However, Elistratov sees the situation changing as seismic

companies are beginning to see potential in the offshore mar-

ket. LARGEO has gained offshore experience to operate Arc-

tic shelf projects using cutting edge technologies and com-

puter power, which gives the company a strong competitive

advantage.

��

��

��

��

��

FocTemp_OGFJ_1309 1 8/23/13 11:40 AM SEPTEMBER 2013 OIL & GAS FINANCIAL JOURNAL | WWW.OGFJ.COM | ENERGY.FOCUSREPORTS.NET 65

seven new fields. The company has recently signed an agreement with

Rusgeology to create and adopt new technologies in exploration and

production in East Siberia.

Today, INK holds 19 subsoil licenses and aims to increase its pumping

capacity to 3 million tonnes of oil per year by the end of 2013, now they

are connected to the East Siberia – Pacific Ocean (ESPO) oil pipeline.

The two companies plan to jointly develop and apply techniques for

assessment of the existing fields as well as new prospective blocks in

the region.

INK has also contracted Halliburton to optimize its drilling processes

by helping to minimize well positioning errors, as well

as optimizing their layout and the number of produc-

tion and injection wells. “East Siberia offers great

opportunities,” says INK CEO Marina Sedykh. “The

region is expected to be the main source of Russia’s

production growth over the next 10 years.”

BUSINESS AS USUAL?So, should we consider that it is just ‘business as

usual’ in Russia today? Things are certainly starting to

change in terms of the big international players look-

ing increasingly comfortable operating with Russian

partners. But for many of the cogs in the machine of

the Russian oil and gas industry, the landscape looks

remarkably similar to 20 years ago: huge reserves

are still to be exploited in Western Siberia, and more

adventurous projects like offshore Arctic exploration still seem a long way

away. According to Gennady Shmal, President of the Union of Oil and Gas

Producers, there is no rush to explore Arctic fields. The country has suf-

ficient onshore reserves. As president of Rosneft Igor Sechin puts it, “the

challenge of moving to the Arctic offshore is more ambitious than man’s

first walk in space or sending a man to the moon.” What is certain is that

it is a matter of when, not if. In the meantime, Russia simply remains the

largest hydrocardon producer in the world.

��

��

FocIrk_OGFJ_1309 1 8/23/13 11:35 AM

Marina Sedykh, CEO, INK

Gennady Shmal, President, Union of Oil and Gas Producers

EDITOR'S NOTE: Since the interview was conducted, Andrey Tretyakov was replaced by Roman Panov as CEO of Rusgeology.

15

64 ENERGY.FOCUSREPORTS.NET | WWW.OGFJ.COM | OIL & GAS FINANCIAL JOURNAL SEPTEMBER 2013FocLar_OGFJ_1309 1 8/23/13 11:46 AM

LARGEO - AN UNEXPECTED CALL

Exploration in the Russian Arctic faces a great lack of reliable

seismic data about the region. While an impediment to the oil

companies, it is seen as a major growth opportunity by Rus-

sia’s seismic industry.

“The Russian Arctic shelf has a huge long-term potential for

seismic companies, since the shelf has not yet been studied

in the necessary way. Indeed, I assume, that there will be a

great volume of work for at least 20 years ahead, given that

new technology is becoming available and the existing data

have to be renewed,” said Vice-president of leading Russian

geophysics company LARGEO Group of Companies Andrey

Elistratov.

Elistratov explained that when Rosneft started to make

a serious commitment to offshore exploration in 2009 most

other seismic companies were ill prepared. “A question was

raised about the international industrial level of seismic pro-

cessing in Russia,” he said, and went on to explain why out-

sourcing processing work overseas was not possible given that

“the government lays down restrictions on sending seismic

data out of the country.”

In 2008, Largeo concluded a strategic partnership agree-

ment with ION-GXT for access to advanced processing tech-

nology. In Elistratov’s view, this left the company way out in

front of the rest of the Russian seismic industry. He said, that

alliance made it possible for LARGEO to acquire new tech-

nologies and expand computer capabilities while retaining

Russian identity.

He explained that in 2008, most other Russian seismic pro-

cessing players had looked sceptically on the development of

the offshore market, while most foreign players insisted on

having a contract before investing in setting up a Russian en-

tity, something Gazprom and Rosneft would not do.

However, Elistratov sees the situation changing as seismic

companies are beginning to see potential in the offshore mar-

ket. LARGEO has gained offshore experience to operate Arc-

tic shelf projects using cutting edge technologies and com-

puter power, which gives the company a strong competitive

advantage.

��

��

��

��

��

FocTemp_OGFJ_1309 1 8/23/13 11:40 AM SEPTEMBER 2013 OIL & GAS FINANCIAL JOURNAL | WWW.OGFJ.COM | ENERGY.FOCUSREPORTS.NET 65

seven new fields. The company has recently signed an agreement with

Rusgeology to create and adopt new technologies in exploration and

production in East Siberia.

Today, INK holds 19 subsoil licenses and aims to increase its pumping

capacity to 3 million tonnes of oil per year by the end of 2013, now they

are connected to the East Siberia – Pacific Ocean (ESPO) oil pipeline.

The two companies plan to jointly develop and apply techniques for

assessment of the existing fields as well as new prospective blocks in

the region.

INK has also contracted Halliburton to optimize its drilling processes

by helping to minimize well positioning errors, as well

as optimizing their layout and the number of produc-

tion and injection wells. “East Siberia offers great

opportunities,” says INK CEO Marina Sedykh. “The

region is expected to be the main source of Russia’s

production growth over the next 10 years.”

BUSINESS AS USUAL?So, should we consider that it is just ‘business as

usual’ in Russia today? Things are certainly starting to

change in terms of the big international players look-

ing increasingly comfortable operating with Russian

partners. But for many of the cogs in the machine of

the Russian oil and gas industry, the landscape looks

remarkably similar to 20 years ago: huge reserves

are still to be exploited in Western Siberia, and more

adventurous projects like offshore Arctic exploration still seem a long way

away. According to Gennady Shmal, President of the Union of Oil and Gas

Producers, there is no rush to explore Arctic fields. The country has suf-

ficient onshore reserves. As president of Rosneft Igor Sechin puts it, “the

challenge of moving to the Arctic offshore is more ambitious than man’s

first walk in space or sending a man to the moon.” What is certain is that

it is a matter of when, not if. In the meantime, Russia simply remains the

largest hydrocardon producer in the world.

��

��

FocIrk_OGFJ_1309 1 8/23/13 11:35 AM

Marina Sedykh, CEO, INK

Gennady Shmal, President, Union of Oil and Gas Producers

EDITOR'S NOTE: Since the interview was conducted, Andrey Tretyakov was replaced by Roman Panov as CEO of Rusgeology.

16

INTERVIEW WITH:

Valery I. Graifer, Chairman of the Board – RITEK

Valery I. Graifer, CHAIRMAN OF THE BOARD – RITEK

Focus Reports: When we met Gennady Shmal, he spoke highly of RITEK as the only entity in Russia having the term “innovation” in its name. As the founder of the company in 1992, and a visionary of that time why did you foresee the need for new approaches to production involving innovations and high-technologies?VALERY I. GRAIFER: As you may know, produc-ing oil in Western Siberia is not an easy job. There is a lack of infrastructure, harsh cli-mate and challenging reservoirs. Western Siberia is a unique environment, thus required unique technologies to develop.

Back then I was working in Western Sibe-ria where we produced more than one million ton of oil per day and over 400 million tons of oil per year. This entity employed more than 407.000 workers in the oil industry.

In 1985 I became Deputy Minister of Oil Industry of the USSR, and I witnessed radical changes in the industry that occurred in the 1990’s.

The Russian gas industry has been consid-ered by the Russian government to be of great strategic importance, and therefore was closed to foreign participation and consoli-dated into one entity: State Gas Concern Gaz-prom. Whereas the former state-owned oil assets were parcelled into vertically-inte-grated groups and sold off to investors or for-mer managers.

Since the collapse of the Soviet Union in 1991, Russia has tried to develop a market economy and achieve consistent economic growth. However, it resulted in an economic collapse which brought down a system that

was based largely on technological prestige and bureaucratic planning.

Additionally, Russia’s petroleum output fell sharply, and has rebounded only in the last several years. Russia reached a peak of 12.5 million barrels per day in total liquids in 1988, and production had fallen to around 6 million barrels per day by the mid-1990s. In order to maintain production ten thou-sand new wells had to be drilled. Therefore, more investment was required to maintain production.

I understood that true progress would be impossible without innovative development, particularly for an oil company with high aspirations. It was clear that the era of light oil was coming to an end and RITEK placed its stakes on advanced innovations.

Today, RITEK creates and develops mod-ern high technologies to ensure growth of reserves and oil production increase, upgrad-ing existing facilities and optimizing pro-cesses. In 20 years, RITEK has grown from a small enterprise into an oil company that produces more than 7 million tons a year, and we are keeping up our stable growth rates—bearing in mind that 50% of RITEK’s oil reserves are located in hard-to-recover areas.

Currently we are operating in the Khanty-Mansi Autonomous Area, the Yamal-Nenets Autonomous Area, the Republic of Tatarstan, the Volgograd and Astrakhan regions, the Republic of Kalmykia and the Perm territory.

We have proven cost-effectiveness and high profitability when working on difficult oil reserves. To date, RITEK has successfully introduced more than 60 innovative tech-nologies to the industry, and has many pat-

Interview with: Valery I. Graifer, Chairman of the Board – RITEK

17

Valery I. Graifer, CHAIRMAN OF THE BOARD – RITEK

ents. The total market value of our intellec-tual property has exceeded 7.5 billion rubles.

Besides investing in our own R&D, we also continue to work on pilot projects to test technologies that we bring in from abroad. RITEK has used these technologies in some 100 pilot projects in 2012. The same amount of pilot projects is scheduled for the current year in collaboration with twenty Russian and foreign research institutions.

FR: Can you elaborate on the role of RITEK within the LUKOil Group?VALERY I. GRAIFER: LUKOIL, as the second big-gest vertically integrated company in Russia for production of crude oil and gas, transfers to RITEK the assets that have difficult eco-nomics and the most complex geological con-ditions.

At the end of 2010, LUKOIL-Volgograd-neftegaz merged with RITEK. Most of the fields belonging to LUKOIL-Volgogradneft-egaz are at the penultimate or last stage of development. Efficient operation of such fields is RITEK’s core strength. RITEK has acquired the status of a testing site for evalu-ating LUKOIL’s scientific-technical develop-ments.

FR: When it comes to technology develop-ment, what is the balance between interna-tional cooperation and in-house innova-tions? VALERY I. GRAIFER: I would say he balance is 50/50. Let me give you an example: we have concluded three joint ventures with Ameri-can companies to develop technologies. One of them was Axelson-Kuban to manufacture equipment and rod pumps for oil production. Once we gained the knowledge to manufac-ture the rod pumps ourselves, the Americans left. Today we produce in Russia equipment that is then exported to the foreign markets.

We have also partnered up with Schlum-berger for horizontal well drilling in north-ern West Siberia. Horizontal drilling is today

one of the priorities for RITEK, and this coop-eration has considerably enhanced oil pro-duction and improved both technical and economic performances.

Moreover, we are also cooperating with research institutes from France, America and Norway.

FR: The government recently signed on dis-counted tax duties on exports for fields with hard-to-recover oil. Around 50% of RITEK’s oil reserves are located in hard-to-recover areas. How will these changes in the tax regime impact operations?VALERY I. GRAIFER: During Soviet times, the country was seen as a tanker with a tap that one can simply turn on and off to collect oil—a simplistic approach.

The current government has called for a “decisive tax manoeuvre” to put the country’s oil-dependent public finances on a more sus-tainable footing. The changes support us to modernize production and develop new fields. The mineral extraction tax rate was lowered from January 1; the oil export duty was also reduced, and a more flexible formula was adopted for its calculation.

As a result, the tax burden on the oil sec-tor eased by about USD 14.5 billion. These measures are positive for the industry—for public as well as privately owned companies.

FR: Looking ahead, how do you see RITEK develop in the coming years within the Rus-sian oil and gas industry? VALERY I. GRAIFER: RITEK is an important company for the industry as it allows Russia to ensure a stable level of production in the future through the development of modern high technology. This is the vision on which I founded this company and it is still true today. As we continue to evolve and to pose ourselves ambitious tasks I foresee a great future for RITEK!

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INTERVIEW WITH:

Gennady Shmal, President – Union of Oil and Gas Producers of Russia

Gennady Shmal, PRESIDENT – UNION OF OIL AND GAS PRODUCERS OF RUSSIA

Focus Reports: For a long time there has not been sufficient investment in the con-struction sector. We heard from several interviewees that Russia is still behind in terms of infrastructure. What is your view on this?GENNADY SHMAL: The Russian oil industry is indeed in need of huge investment. Accord-ing to my analysis, development of the oil and gas sector requires about USD 40 bil-lion of investment annually in exploration and development. However, the actual finances are ranging from USD 20 to 30 billion. As a comparison, the oil and gas sector in the United States received signif-icantly more in 2011—around USD 200 bil-lion.

Due to several reasons, Russia has been lacking investment in its oil and gas sector. First and foremost, because of our current inadequate legislation, which requires oil and gas companies in Russia to pay between 65 and 70% of their revenues to the State. Whereas tax levied on international com-panies such as ExxonMobil, Shell or BP accounts for about 25 to 32% of their rev-enues. Such a burden impacts the financial conditions of Russian companies.

Another reason is that foreign compa-nies are quite reluctant to enter the Rus-sian market. Foreign investors see pros-pects in the Russian market, but are frightened away by Russia’s nontranspar-ent policies. Although investors remain cautious, investment projects continue to

flow. All major multinational companies are represented in the country and partic-ipate in Russian projects. For instance, Schlumberger, Halliburton and Baker Hughes account for about 25% of the Rus-sian oil field services.

Thanks to the participation of Shell and ExxonMobil, oil production on the Sakha-lin island is increasing . The Sakhalin-1 and 2 projects represent about 14 million tons of oil annually. Furthermore, Sakhalin-2 includes the first liquefied natural gas plant in Russia. The project is therefore of vital importance to Russia’s energy policy.

Lastly, foreign companies are respon-sible not only for investments but also for introducing new technologies. ExxonMobil for example has drilled the longest hori-zontal well on the Sakhalin- 1 project.

FR: Is the production of shale gas on the agenda in Russia?GENNADY SHMAL: Since we have sufficient reserves of conventional gas, shale gas pro-duction is not on the agenda for now. Fur-thermore shale gas has a range of disad-vantages: wells are comparatively shallow, well yield is lower than in conventional wells, and there is of course the environ-mental issue. I believe that in the next 20 years there won’t be production of shale gas in Russia.

Russia has however a growing interest in LNG production. It forms part of the country’s strategy of diversifying its

Interview with: Gennady Shmal, President – Union of Oil and Gas Producers of Russia

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Gennady Shmal, PRESIDENT – UNION OF OIL AND GAS PRODUCERS OF RUSSIA

domestic gas market. Increased LNG pro-duction could make it possible to offer flex-ible gas supplies to the demanding Asian market, which is seen as an alternative to Europe, where Gazprom is facing increas-ing difficulties.

FR: Gazprom has a monopoly on gas exports, but both Novatek and Rosneft are lobbying to overturn this monopoly position. What do you think will happen in the short term?GENNADY SHMAL: According to the law on gasification, only Gazprom is entitled to export gas, but the law does not stipulate anything on LNG exports specifically. Novatek has requested to be entitled to export LNG in order to export LNG from its Yamal plant that is currently under con-struction.

From my perspective, the State should make a distinction between conventional pipeline gas and LNG. That being said, Gaz-prom could proceed having a monopoly for pipeline gas while the LNG exports will be liberalized.

FR: The recent agreement between Rosneft and ExxonMobil will seek to develop fields in the Arctic with significant recoverable hydrocarbon reserves. How do you see the development of the Arctic?GENNADY SHMAL: The deal will grant Exxon-Mobil to develop vast untapped fields in the Russian Arctic Kara Sea, with signifi-cant hydrocarbon reserves. In return, Ros-neft will win a big boost to its bid to expand outside Russia and gain access to crucial Western knowhow.

The costs of shelf projects are 10 times higher compared to onshore projects. Nev-ertheless, high-cost and high-risk resources of oil available inside the Arctic Circle are both commercially exploitable and afford-able due to high oil prices. But frankly speaking, there is no rush to explore Arctic

fields since the country has enough onshore reserves.

As oil companies are now moving off-shore into deepwater and Arctic reserves, issues such as reliability and environment have to be taken into account. The dangers of deepwater drilling came into sharp focus in 2010 with the BP disaster, where million gallons of oil spilled into the Gulf of Mex-ico over a 3-month period. The Arctic Ocean is another high-risk environment, and as decisions are made on oil and gas drilling, one needs to understand and acknowledge these risks.

It is important to study the shelf because its development will include air-planes, helicopters, support ships, drilling ships, platforms, artificial islands, ice-breakers, waste streams from ships and rigs, lights and noise, extensive coastal infrastructure construction, subsea pipe-lines, geotechnical coring, and noise from underwater seismic surveys. These indus-trial activities will add significant distur-bance in an Arctic ecosystems already suf-fering terribly from global warming.

FR: Which companies would you expect to outperform the market in 2013?GENNADY SHMAL: The main companies rep-resented in the market are growing rapidly. Among the leaders there is Gazprom, which gained more profits than ExxonMobil over 2011. Rosneft is also rapidly growing due to the recent TNK-BP deal, becoming the biggest oil company. Furthermore, they have concluded agreements with Chinese companies and are now active in Venezu-ela.

Finally, I believe the most advanced company is Lukoil. With its overseas branch, it has operations in more than 40 countries around the world. And it com-prises the company RITEK—the only entity in Russia having the term “innova-tion” in its name!

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INTERVIEW WITH:

Dr. Dmitry A. Pumpyansky, Chairman - TMK

Dr. Dmitry A. Pumpyansky, CHAIRMAN, - TMK

Focus Reports: The vast majority of TMK’s business is based in Russia, a country cur-rently having 14.1% share of all the oil and gas drilling activity in the world. This makes Russia a great market for TMK. However, the market is not expected to grow dramatically in the short term. What strategies do you sense for the Russian market: expansion, or an improvement of the profit per tonne in Russia, DR. DMITRY A. PUMPYANSKY: TMK is currently Russia’s leading steel pipe producer: the company’s market share is about 27% of all steel pipe consumption in the country. In accordance with our strategy, around 75% of our total sales were made to the oil and gas industry, which shows strong demand in the areas of hydrocarbon production and transportation.

When we started TMK in 2001, the idea was to create a leader for the Russian steel pipe industry. The company soon acquired four of the seven major Russian pipe plans. Since that time, however, we have grown way beyond Russian borders to service global oil and gas industry. Today we have the widest range of pipe products in the world, from tiny stainless steel needles to 2.5m diameter water pipes. We specialize in pipes for exploration, drilling and pro-duction, as well as transportation of hydro-carbons, keeping the main focus on seam-less OCTG pipes. Our total pipe capacity is 6.5 million tonnes per year worldwide. Last year, our output was 4.22 million tonnes,

making us the biggest steel pipe producer in the world, fourth year in a row. In order to maintain the leadership, we have invested more than $3 billion USD in the modernization and renovation of our Rus-sian, American and European plants.

Today, TMK sells its products to more than 80 countries, and has production sites in seven with around half of its sales gener-ated outside of Russia. The current plan is to increase shipments of high value-added products, such as heat-treated and high-alloyed pipe, as well as to expand premium connections and other oil and gas services offering.

FR: Working in the Russian market can be extremely demanding, given the size of the market, and the additional political side of the oil and gas industry. Given this, how did you find your drive, and the time, to internationalize TMK?DR. DMITRY A. PUMPYANSKY: From the incep-tion of the company we were aiming at developing an international business. We had to change many things, including cor-porate culture. This helped us launching an IPO in 2006. In 2008, we acquired ten US pipe plants, which gave us an opportunity to enter the world’s biggest oil and gas mar-ket as a domestic player. Since then we have, developed this business further. Today, TMK IPSCO is the third largest pro-ducer of pipes for the oil and gas industry in North America, with 11 production sites

Interview with: Dr. Dmitry A. Pumpyansky, Chairman, - TMK

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Dr. Dmitry A. Pumpyansky, CHAIRMAN, - TMK

in the US and one in Canada.

FR: How was the culture shock for Ameri-cans being acquired by a “Russian com-pany”? DR. DMITRY A. PUMPYANSKY: There were no “shocks”. Having integrated our US plants into TMK system, we improved their plan-ning, supply chain and technical policy. Today, our US and Russian technical teams work together as one unit. We built our own R&D center in Houston, and eventually moved our US headquarters there. Our American colleagues tell us that they are glad to be in a company which is committed to pipe and tube for the long term. Of course, we had to learn too. For example, marketing and sales in the US have their specialty. While we discuss all technical issues, R&D and strategic planning with end users, US-based oil and gas clients, pipe is sold through distributors, which is a lot different from selling to our big clients in Russia.However, we have seen similar mar-ket structure in other countries, so we adjusted quickly. The bottom line is: we are extremely pleased with our North Ameri-can operations and colleagues.

FR: Certainly you would like to continue your international expansion and growth. Will your $3.7 billion USD debt hold you back from achieving these objectives?DR. DMITRY A. PUMPYANSKY: TMK’s debt level is something we watch very carefully. We have worked hard for the last three years with our creditors in order to improve its structure. For example, we issued three Eurobonds for almost one and a half billion dollars, which fixed income investors liked a lot. We used the proceeds to replace short-term debt and push our debt maturity into long-term. For the moment, our short-term debt stands at about 13%, with most of the debt portfolio due in 5-7 years.

In order to further reduce our debt level,

we aim to increase our efficiency across the board, while simultaneously lowering costs. We will still consider limited acquisitions where there are synergies with our existing business, such as the one we recently com-pleted in the US to form a service company OFSi, which will complement our existing business very well, adding to our global net-work of oil and gas finishing services and premium connections.

FR: Today TMK is valuated at a 15% dis-count vs. top peer value, Given your strat-egy, how long do you think it will take before TMK is perceived and valued at the same level as its top global competition?DR. DMITRY A. PUMPYANSKY: Across the com-pany, and in all our markets, we are moving our products to the right in complexity, and upwards in profitability. We are going in the right direction - in today’s difficult envi-ronment we show competitive operational results compatible with our position in global top three.

On a positive side, if investors realize TMK’s strong market position and other competitive advantages, existing discount that you mentioned could be a very good opportunity for them to make money.

FR: Given the size and scope of your busi-ness activities, it must be the case that you are stronger in some areas than in others. What would you like TMK to be better at?DR. DMITRY A. PUMPYANSKY: We would like to develop our core business, which is the seamless pipe business for the oil and gas sector, and we will concentrate on premium products and other high value-added prod-ucts. This is the strategy we aim to follow in all markets where TMK has a presence. We will also develop our oil and gas service offering, while continuing to supply our customers with the best quality product. Finally, we will continue to be in the large diameter pipe business in Russia.

22

INTERVIEW WITH:

Albert Vladimirov, President – Gubkin University

Albert Vladimirov, PRESIDENT – GUBKIN UNIVERSITY

Focus Reports: Gubkin University was cre-ated more than 80 years ago to provide the country with the necessary human resources in the oil-and-gas sector. You have been appointed in 1993; what would say have been the main milestones and achievements of the University since?ALBERT VLADIMIROV: As the President of Gub-kin University my main task is to deter-mine the direction of the Institute’s devel-opment — building the education methods to satisfy the needs of today’s oil-and-gas sector. Our objective is to train competitive professionals to meet the demand of the sector’s entire value chain.

We were founded as an independent University in 1930 when both the economy and the society were under serious strain. The 1920’s called for rapid industrialization of the economy, with particular emphasis on the development of heavy industries. For that reason, universities with a specific industry focus were formed, which led to the creation of the Moscow Institute of Oil on April 17, 1930, by order of the USSR.

The University was named in honor of a Russian geologist I. M. Gubkin, who became its first rector. Gubkin University’s history is closely linked with the development of the energy sector.

Over time, faculties such as the Faculty of Geology, the Faculty of Petroleum Engi-neering and also the Faculty of Pipeline Network Design, Construction and Opera-tion were created in response to the require-ments of the industry.

In 1991 we changed our educational

methods, aligning with the European Union countries. Nevertheless, Gubkin University remained the principal school for the whole technological process of oil-and-gas industry.

The University of Gubkin has a special advantage: it is one of few universities where the education covers the entire spec-trum of the oil and gas industry—from upstream to downstream.

To date, Gubkin has trained over 90,000 diploma engineers, candidates and doctors of science, many of whom are presently top executives of oil-and-gas companies in 114 countries around the globe.

Having started with 4 specialities, the University today offers training in 15 majors, including 26 specialties and 39 sci-entific areas of specialization.

Furthermore, a Gubkin University Diploma is acknowledged internationally in the oil-and-gas community. For that rea-son, many international students from more than 50 countries study here.

In Russia, all universities providing higher education in oil-and-gas related spe-cialties are united under one single roof of an educational-methodical union. The Dean of Gubkin University is the Chairman of that Union and ensures that all oil-and-gas related universities are aligned on edu-cational methods and programs.

FR: The University has developed a wide research capacity, which has led to the development of many new methods of exploration, production, transportation, refining and processing of hydrocarbons.

Interview with: Albert Vladimirov President – Gubkin University

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Albert Vladimirov, PRESIDENT – GUBKIN UNIVERSITY

Could you give a flagship example to our readers?ALBERT VLADIMIROV: Looking at the map of oil-and-gas fields in Russia, more than 30 fields are named after graduates of the Uni-versity. For example the Bovanenkovo field, discovered in 1971 and one of the country’s largest gas fields, was named in honor of the Soviet geologist Vadim Bovanenko, a graduate from Gubkin. Gubinsky, a town in Yamalo-Nenets is named after geolo-gist Ivan Gubkin, the founder of the Uni-versity.

The main task of the University resides in scientific research to increase oil reser-voir recovery. Annually 50 to 90 projects are patented and later implemented on an industrial scale.

As an example, our Faculty of Mechani-cal Engineering deals with development of state of the art equipment such as pumps, compressors, refinery equipment, pipe fur-naces, surface combustion furnaces, and technologies in the sphere of oil refining.

The Faculty of Automation and Com-puter Science is known for its contribution to the development of the dispatching of gas transportation system. Among alumni and professors at Gubkin University there are 38 Laureates of the Lenin’s Prize, one of the most prestigious awards presented to individuals for accomplishments related to science, literature, arts, architecture, and technology.

Gubkin University’s uniqueness lies in the wide range of its related specialities covering the full technological spectrum of the oil-and-gas industry. To train our spe-cialists we use the most advanced equip-ment and softwares. We are truly an ultra-modern educational institution.

FR: Under your rectorship, Gubkin success-fully developed and became the leader in the field of petroleum engineering educa-

tion and research of Russia. What is your strategy to maintain this position in the coming 2 to 3 years?ALBERT VLADIMIROV: There are only three or four similar universities in the world that cover the whole technological process of the oil-and-gas industry. Gubkin University is focused on the intellectual potential of the oil-and-gas business in Russia and provides the highest level of training.

In order to maintain our leading posi-tion in Russia as well as our strong inter-national reputation, we have established partnership agreements with a number of the world’s leading international universi-ties to exchange teaching techniques. Among our partners are IFP School in France, Texas Tech University, Stavanger University in Norway and China University of Petroleum.

Moreover, the university has signed agreements of cooperation with dozens of universities in Europe, US, Asia, Africa.

In addition we regularly host interna-tional conferences on various aspects of oil-and-gas engineering issues, and faculty members are participating in international events and congresses. Moreover we are members to various international associa-tions and professional societies. For many years Gubkin University has been a mem-ber of the European University Association (EUA), together with 500 prominent Euro-pean universities.

Gubkin University’s international activ-ities target closer integration within the international scientific and educational environment, improving our global image and building up the international brand of modern innovative University training world-class professionals for the oil-and-gas industries.

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INTERVIEW WITH:

Jacques de Boisséson, General Director – Total E&P Russie

Jacques de Boisséson, GENERAL DIRECTOR – TOTAL E&P RUSSIE

Focus Reports: Mr. de Boisséson, prior to arriving in Russia you spent decades working in leading positions for Total in China, Qatar, Colombia and East Africa. How has been your learning curve in Rus-sia compared to the other countries? JACQUES DE BOISSÉSON: My learning curve here was probably easier than in China where I spent the previous six years. Rus-sia is a more familiar environment to me as we are in a European context. The oil and gas industry has been established for a long time in this nation, and, although it is working along its specific lines and standards, it has a lot in common with the industry in the West.

FR: Total’s partnership with Novatek has worked out as an incredible bet as Novatek emerges as a stronger player day after day. As a foreign operator on the market, it seems that Total is about to be successful. When will the strategy be con-sidered a success?JACQUES DE BOISSÉSON: Although we have acquired our stake in Novatek in 2011, we have had a long standing relationship with them as our first business relations were established almost ten years ago.

Total and Novatek complement each other in terms of know-how. Novatek has a tremendous track record and allowed us to make rapid inroads into the Russian market; in return, we have allowed them to shorten their learning curve in the international arena, in particular with relation to Yamal LNG—an international

project by nature. That being said, our partnership with Novatek can be consid-ered a success already, and will greatly accelerate the Group’s development in Russia.

FR: What does the Yamal LNG plant rep-resent for Russia? JACQUES DE BOISSÉSON: Apart from its domestic market, Russia has concentrated in the past on pipeline gas exports to Europe. The country has further potential in two areas: exports to the East and LNG exports. Today, Russia is waking up to these two missing parts in its strategy.

Gazprom’s legal gas export monopoly is based on the fact that gas exports are solely pipeline exports to Europe. How-ever this monopoly is not adapted to today’s wider strategy for Russia; that is why these discussions are currently being held.

FR: Could you elaborate on Total’s opera-tions in Russia?JACQUES DE BOISSÉSON: In addition to Yamal LNG, we are partnering with Novatek for the development of the Termokarstovoye gas and condensate field. This is a tradi-tional “Novatek style” project, in the sense that it is the kind of fields that Novatek has successfully developed in the past and it is in the area where Novatek has been operating for a long time. We are currently in the process of drilling the wells, install-ing gas treatment facilities and construct-ing pipelines to export the gas into Gaz-prom’s network. Production of the

Interview with: Jacques de Boisséson, General Director – Total E&P Russie

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Jacques de Boisséson, GENERAL DIRECTOR – TOTAL E&P RUSSIE

Termokarstovoye field is scheduled to start in 2015.

Total’s roots in Russia are in the Khary-aga field, 60 km inside the Arctic Circle, in an area of extreme cold and a very sensi-tive tundra environment. Total has been operating this field in Russia’s Timan Pechora Basin since 1999 under the coun-try’s sole Production Sharing Agreement (PSA) for an onshore project. Kharyaga PSA was the first PSA project in Russia to become profitable for the State.

Moreover, we have an office in Mur-mansk, which deals with Shtokman, another pioneering LNG project in the Arctic. This project is a major challenge but worth confronting.

FR: Regarding the Arctic, we remain par-ticularly cautious: we are aware that an oil spill would be extremely damaging if it happened under the ice sheet. And, as an industry, do we have the necessary technologies and logistics to handle this type of accidents?JACQUES DE BOISSÉSON: By 2020, Total aims to have Russia represent 15% of its global hydrocarbon production—hence becom-ing Total’s number one production coun-try. Can you elaborate on the strategic importance of Russia for Total and how close to the target you are?

First of all, Russia is the number one oil producing country in the world, just ahead of Saudi Arabia, which is practically closed to private investment. This country is the place for a private international oil company such as Total to get access to the largest reserves and production base in the world. For this reason, we have decided a couple of years ago that we wanted to establish Russia as one of our core areas for production.

Our global target is to produce 3 mil-lion barrels of oil equivalent per day in the

latter part of the decade, and we hope to be producing in Russia 15% of this target, which equals 450.000 barrels of oil equiv-alent per day. This number is mainly based on the success of the current development in Kharyaga, on the future production in Termokarstovoye, on the launch of Yamal LNG, and most of all on the beneficial impact from Novatek’s growth.

FR: Looking ahead, what are your per-sonal ambitions for the coming three to five years for the Russian affiliate?JACQUES DE BOISSÉSON: Naturally my aim is to reach our production targets, which are ambitious but I believe we have what it requires achieving them. I am confident that Russia will become Total’s number one contributor to the global production of the Group. We have to be the first in class in production, but also in safety, reli-ability, and ethics. Not only because we committed to it, also because it is the way to get further opportunities in the busi-ness. It is the condition for growth.

Our global target is to produce 3 million barrels of oil equivalent per day in the latter part of the decade, and we hope to be producing in Russia 15% of this target.

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INTERVIEW WITH:

Mario Mehren, Member of the Board of Executive Directors - Wintershall

Mario Mehren, MEMBER OF THE BOARD OF EXECUTIVE DIRECTORS - WINTERSHALL

Focus Reports: In November 2012, Winter-shall concluded an asset swap with Gaz-prom—Wintershall receives 25% shares of the blocks IV and V in the Achimov forma-tion. In return, Gazprom will receive shares of Wintershall’s natural gas trading and storage business. How does this showcase the depth of trust between Wintershall and Gazprom?MARIO MEHREN: The asset swap has been a log-ical next step in our relationship and is con-sistent with our strategy to expand the exploration and production of crude oil and natural gas.

We are content with the developments of the Achimgaz project—a 50/50 joint ven-ture between Gazprom and Wintershall. Currently we are producing natural gas and condensate from the Achimov horizon of block IA —the first block we are developing in Western Siberia. It is an extremely chal-lenging project as the Achimov formation lies at a depth of around 4,000 meters.

These additional blocks will increase Win-tershall reserve base significantly. Block IV and V account for reserves of 2.4 billion boe.

Wintershall and Gazprom are starting to share expertise. In fact, we are bridging the way from the North Sea to the Barents Sea, which is interesting for both parties. Gaz-prom is interested in the development of shal-low waters on the Russian continental shelf. This is exactly where in the North Sea our Dutch colleagues are incredibly experienced.

In return, Wintershall will completely transfer the currently jointly operated natu-ral gas trading and storage business to Gaz-

prom. As a result, Gazprom will become more active in the natural gas trading and storage business and we will jointly expand the production at the source.

FR: Western Europe’s concern remains being too dependent on Russian gas. Wintershall owns a stake of 15% in the North Stream, and line 2 of the project began transporting gas last October. To which extent is Win-tershall building a bridge between Russia and Western European countries?MARIO MEHREN: Besides producing oil and gas, building that bridge between Russia and Western Europe is one of our main objec-tives. We consider Nord Stream to be a sym-bol for this virtual bridge as it is the first direct physical link between Russia and the European Commission.

I often hear your point about dependency on Russia. However, if you look at it closer it is an inter dependency. Russia, or more specifically Gazprom, has invested signifi-cantly in bringing up new fields on stream such as Bovanenkovo last year, and in the construction of pipeline infrastructure such as Nord Stream. The main risk of Nord Stream being commercially successful is taken by Gazprom.

Gazprom aims to have transport infra-structure in place, because they need cer-tainty that there is a market where they sell their gas, subsequently making this project economically viable.

FR: How great is the risk Gazprom is taking, as Western Europe is looking at diversify-ing its gas suppliers?

Interview with: Mario Mehren, Member of the Board of Executive Directors - Wintershall

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Mario Mehren, MEMBER OF THE BOARD OF EXECUTIVE DIRECTORS - WINTERSHALL

MARIO MEHREN: Generally, diversification is a good approach. Looking at the European gas supplies, we already have diversification, Russian gas accounts for merely 25 to 30%. Another 20% of European gas imports come from Norway which makes both countries the largest natural gas suppliers for Europe. The remaining gas derives from local pro-duction, imports from Norway and North-ern Africa as well as LNG production.

For many years Russia has been a stable pillar in Europe’s energy policy and simulta-neously holds the largest gas resources in the world. We would be ignorant as Europe-ans not to appreciate that we are in pipeline distance to those enormous resources. For that reason, I see interdependency because we, Europeans, are important for Russia as a market, and Russia is more than happy to deliver its gas to the European market.

FR: Upstream seems to be the strategic direction for Wintershall after the asset swap. What potential do you see for produc-tion of mature fields in Western Siberia?MARIO MEHREN: Wintershall in Western Sibe-ria has two primary targets: the develop-ment of the Achimov formation and our par-ticipation in the Yuzhno Russkoye joint venture.

Within the Achimov formation, we are currently in a major drilling campaign with Achimgaz. Recently we started the produc-tion of well number 15 in a program that brings us to more than a 100 wells. Develop-ing the Achimov formation with the 50-50 joint venture is a major task and will keep us busy until 2020.

Production in the Yuzhno Russkoye gas field is another interesting development for Wintershall. The commissioning of this field made Wintershall the first German company to directly produce natural gas in Western Siberia. As some reserves are difficult to recover there, we are currently processing new 3D seismic and planning for a new pilot

well in order to see whether or not it is com-mercial.

FR: What do you think are the key success factors to do business in Russia and be as successful as Wintershall has been? MARIO MEHREN: Personally, the first thing is that Wintershall invited Gazprom to invest in Germany. This has been our starting point. Thus we had a more than ten year last-ing relationship with Gazprom in natural gas trading before we started our E&P joint ventures in Russia.

We have always seen that as an equal partnership. Naturally we can bring certain technologies and competences on the table but there is a huge experience on Gazprom’s side as well. For that reason, it is important to appreciate your partner as equal. It is essential that you not simply show up and claim to know everything better, which you do not if you go to Western Siberia produc-ing under harsh conditions!

Moreover, it has been our long-term focus. Looking at Wintershall history in the country, our cooperation with Lukoil lasts more than twenty years. In addition we took the commitment to Nord Stream, which by many was seen as critical. Today most of Europe is celebrating the Nord Stream pipe-line as the project has been completed on time, within budget and is a reliable trans-portation route. This long term approach is seen and appreciated also in Russia by both our partners Gazprom and Lukoil.

FR: Looking ahead, where do you like to see Wintershall Russia in the next three to four years?MARIO MEHREN: By that time we will be almost done with the development project of block IA in Achimov, producing more than 8 bil-lion cubic meters per year plus the associated gas condensate. In addition we will be cele-brating the first gas and gas condensate of block IV and V.

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INTERVIEW WITH:

Dean Kaminski, Vice President – Weatherford Russia

Dean Kaminski, VICE PRESIDENT – WEATHERFORD RUSSIA

Focus Reports: Mr. Kaminski, you have been appointed VP for Russia in February 2013. What were the main priorities you set when taking over the reins of the affiliate two months ago? DEAN KAMINSKI: To a large extent, it is actually taking over the work my predecessors have put in place. Russia has consistently been a top growth market for Weatherford, and in the future I aim to expand our presence and capabilities to meet the ever-evolving needs of our clients in Russia.

FR: How would you define Russia’s strategic importance for Weatherford?DEAN KAMINSKI: We see large growth opportu-nities in Russia. In fact, we entered the coun-try in 1997 with one operations base on Sakhalin Island. Five years later, we estab-lished a permanent presence in Russia with the opening of our Moscow office. Today we have 30 facilities across the country and about 11,000 employees are currently work-ing for Weatherford Russia. I think this exponential growth demonstrates the sig-nificance of Russia for global Weatherford.

Back in 2002 – when we opened the Mos-cow office – we were quite small, and we used the traditional Weatherford business lines to begin growth. We expanded our presence through several acquisitions. In 2009, for instance, Weatherford finalized the acquisi-tion of TNK-BP’s oilfield services division, adding substantially to its regional head-count and infrastructure, as well as to the global rig fleet. Other recent Weatherford acquisitions in Russia include NGKS Inter-

national Corporation, a supplier of in-line pipeline inspection services and tools and. Belorusskoe UPNP & KRS, a business con-tributing to strengthening our position in the workover market. Through these acquisi-tions of local players, Weatherford benefitted from their domestic knowledge and expertise in the Russian market, and in return we were able to bring in our global brand and state-of-the-art technologies. Such mutual part-nerships have created a solid foundation for growth in the region.

Furthermore, Russia has the world’s larg-est reserves of mineral resources and today is home to the world’s largest oil producer, Rosneft. Moreover, the Russian Federation has one of the world’s fastest growing major economies. Over the years the country’s oil and gas sector has grown rapidly and Weath-erford has grown with it.

FR: Are you currently looking at acquisitions to further grow the Russian affiliate?DEAN KAMINSKI: We will keep on evaluating possible acquisitions, but as in any mature market the overall size and pace of acquisi-tions will slow down.

FR: If we look at the competitive environ-ment, what services and technologies does Weatherford provide that others do not? DEAN KAMINSKI: Naturally, we all brag about our technologies. Weatherford in fact brought certain technologies to the market before our competitors did, such as the MotarySteer-ableTM System. This technology, which was awarded the Hart’s Meritorious Award for Engineering Excellence, allows steering of

Interview with: Dean Kaminski, Vice President – Weatherford Russia

29

Dean Kaminski, VICE PRESIDENT – WEATHERFORD RUSSIA

the well whilst constantly rotating a motor and LWD combination rather than the tra-ditional orientating and slide process. In Rus-sia we are seeing massive customer interest for this service as knowledge of its capability and benefits spread and envisage it being a key differentiator between us and our com-petitors over the coming years.

Also, the ZoneSelectTM fracturing com-pletion system that maximizes production in multizone completions is in high demand in Russia. In the past 3 years, we have run more than 100 systems. The need to complete well operations as quickly as possible in severe Siberian conditions is critical. The ZoneSelect system enables the operator to conduct multi-well stimulations in batches, performing a stimulation job on one well and then quickly picking up and moving to the next well in short order. If deployed effi-ciently, the system limits the exposure of field personnel.

FR: Weatherford has conducted projects in Western Siberia, Sakhalin and the Caspian Region. What is the project that best high-lights your capabilities? DEAN KAMINSKI: We are the pioneers and have the largest experience in stage fracturing. Our relationship with LUKOIL exemplifies how we grow with clients. Weatherford won a large tender for hydraulic fracturing in 2010 and the client has since added ZoneSe-lect completion systems in each of their hor-izontal wells in Siberia. Today we have a strong share of that market. Our perfor-mance and results also led to sidetracking, directional drilling, LWD and new LUKOIL contracts in both Northern Russia and the Caspian Sea.

As a global company, we provide a com-mon safety culture, performance manage-ment and quality system across all product/service lines that we implement in Russia as well.

FR: Unconventional oil is a hot topic within strategic talks about maintaining Russia’s production levels. Is Weatherford well posi-tioned to go into this unconventional direc-tion?DEAN KAMINSKI: Today’s reality pushes the global industry to unconventional resources, particularly heavy oil and various shales, for lack of new conventional reservoirs. Operat-ing on land has naturally driven us to uncon-ventional plays, first heavy oil, then coal-bed methane gas, tight gas and now shales—whether gas, oil or hybrid.

Regarding the development of unconven-tional oil, we have several projects on tracks, but the number is limited here. Developing unconventional oil is getting more attractive in Russia now as the government proposes incentives for its production. All oil produc-ing companies operating in Western Siberia are considering going into the production of unconventional oil, for example.

FR: Considering Weatherford’s global pres-ence in the offshore industry and this being Russia’s final frontier, what are your per-spectives on the applicability of Weather-ford’s services to the future expansion of Russia’s offshore industry? DEAN KAMINSKI: Our global footprint for off-shore services positions us well in this mar-ket. So far we have conducted offshore proj-ects in Sakhalin, and with our partner LUKOIL in Kaliningrad and the Caspian Sea.

Looking ahead, we see huge potential in developing the Barents and Kara Seas. How-ever, at the moment it is hard to forecast schedule times for full-scale or commercial exploration of those fields. Economical, tech-nical and infrastructure challenges, together with environmental concerns continue to lin-ger for the largely untapped Arctic. Neverthe-less, there are great prospects and we will definitely be ready to partner up with com-panies developing the Arctic.

30

INTERVIEW WITH:

Dr. Fares Kilzie, Chairman – Creon Energy

Dr. Fares Kilzie, CHAIRMAN – CREON ENERGY

Focus Reports: Dr. Kilzie, you have an exten-sive background in the oil and gas sector, with two decades of experience in the international advisory business and you founded Creon Energy. For our readers both international and Russian, can you introduce the company and what was the rationale behind establishing Creon Energy? DR. FARES KILZIE: After the fall of the Soviet Union it was hard to understand what the demands were for Russia’s domestic mar-ket, and identifying development strategies was a huge challenge as well. The industry was contending with questions such as: where should the oil and gas go? Do we need additional gas processing plants? Creon Energy’s task was to find answers to these questions, and to propose roadmaps based on different economic scenarios. Through-out the years, we have been building up our knowledge database by establishing reliable information channels and scrutinizing investment projects, business plans and feasibility studies shared with us by our Russian and international partners involved in engineering and industrial pro-duction. Reports and forecasts on global and Russian economy have been essentially complemented by our own research and analysis.

In order to reach the full picture which would reflect the real situation from up- to downstream in Russia, we decided to understand the concept of downstream first. Therefore, we started our operations with a main focus on plastics and plastics

consumption. We studied the full produc-tion chain from resins to applications, across the growing variety of plastics grades and products applied in industrial processes, infrastructure and consumer-targeted businesses. This was followed by contemplating the markets of hydrocar-bons, monomers, agrochemicals and spe-cialty chemicals.

Today Creon Energy is the only Russian advisory firm offering the full range of con-sulting services in upstream, midstream and downstream sectors. We have grown to become the leading Russian advisory group in the oil and gas, petrochemicals, chemicals and related industries in the countries of the former Soviet Union.

FR: Is the government fostering an attrac-tive environment for the oil and gas indus-try? DR. FARES KILZIE: As much as they can but there remains a lack of competence in the government bodies responsible for deci-sion-making. To date, every single issue needs to be addressed and explained to gov-ernment officials.

Russia is a young country and compe-tence does not come in a day but companies such as Creon Energy are here to under-stand things much faster and subsequently to inform the government.

Sometimes the situation improves but not always. My disagreement lies in the fact that we do not see frequent changes in the governments’ elite. Ministers move from one to another position. A new team with new players is prerequisite for progress.

Interview with: Dr. Fares Kilzie, Chairman – Creon Energy

31

Dr. Fares Kilzie, CHAIRMAN – CREON ENERGY

FR: The gas market is being liberalized—allowing private companies to export LNG. In addition Minister Novak recently stated that LNG production must be encouraged and we see huge upcoming projects such as the Yamal LNG. What is your view on the liberalization of the gas market?DR. FARES KILZIE: Minister Novak, and Min-ister Donskoy – they are the spokesmen of the industry, which means that they defend the interests of both the business commu-nity and the government. Russia is the larg-est exporter of gas, we have the largest gas reserves worldwide but the industry is lag-ging behind in terms of LNG projects.

LNG achieves a higher reduction in vol-ume than compressed natural gas so that the energy density of LNG is greater than that of compressed natural gas or that of diesel fuel. This makes LNG cost efficient to transport over long distances where pipelines do not exist. Russia cannot retain its leading position with solely a piping sys-tem for exports of gas. In order to be com-petitive, companies need to be compact and mobile in order to move fast to markets with demand. I believe that mobility in the gas sector is the most important element for gas success. This is exactly the message that we are trying to deliver to the govern-ment.

The economic and mobility effect of free trade will be far better than having only one channel for export of gas, which is Gaz-prom. Furthermore, any monopoly tends to become fat and lazy as competition is lacking—by having competitors in the market, companies run their business faster.

Russia is a global orientated country and it needs to think about external develop-ments. Take as an example the shale gas boom in the United States. I believe that this development will impact the hydrocar-

bon business worldwide. Perhaps the United States will not be a 100% self-suffi-cient but they might be self-sufficient in refining shale gas into petro- or gas chem-icals. Access to shale gas will make Russia turn towards other destinations to exports its gas.

FR: Is Russia business as usual?DR. FARES KILZIE: For large players such as ExxonMobil, Rosneft and Gazprom it gen-erally is business as usual as the Russian elite is working with them. For small and medium sized enterprises however, it is dif-ferent as they do not have that direct con-tact.

FR: Under your leadership, Creon Energy has become a leading advisory group. What is your strategy to maintain this position in the coming 2 to 3 years?DR. FARES KILZIE: We are a market-depen-dent company – if the market will develop as it did over the last ten years, we will be developing accordingly. Frankly, the mar-ket is not developing in a way that we would like to. In certain segments of the market we have the capacity to develop somewhere between 20% and 30% per year.

At the same time, bureaucracy, corrup-tion and a lack of governmental support remain issues that need to be tackled in the country. An international company that wants to set foot on Russia’s soil needs to be supported by the authorities otherwise they will turn their back towards us.

To your readers in Russia I would say: it is time for change! If we do not change as an industry we will lose our competitive-ness in all segments.

For your international readers my mes-sage would be: catch our changes! When we change, international players should be present in order to support those changes.

32

INTERVIEW WITH:

Alexander B. Bosnak, General Director - Volgaburmash

Alexander B. Bosnak, GENERAL DIRECTOR - VOLGABURMASH

Focus Reports: This month Volgaburmash is celebrating its 65th anniversary. Could you start by telling our readers about that his-tory, and how it has shaped the company’s positioning today?ALEXANDER B. BOSNAK: Historically, Volgabur-mash produced enormous volumes, delivering the manufactured tools to the oilfields located in Western Siberia. In the 1970s however, we began to pay more attention to technology, the introduction of which required more time and financial efforts.

At present, Volgaburmash manufactures more than 1,000 standard sizes of roller cone bits for the oil and gas industry, as well as more than 80 types of mining rock bits –for the mining industry; and more than 350 PDC bit designs. The factory possesses a fleet of modern equipment and machines with numerical control, ensuring maximum accu-racy and improving the quality of our prod-ucts.

As technological characteristics are con-stantly improving, the company’s production volume has decreased, and today we evaluate our production capacity at about 30,000 drill bits per year –all conform to world standards.

Today we focus on technology differentia-tion, rather than mass production.

FR: You have been appointed Director Gen-eral last December. What were the main pri-orities you set when taking over the reins?ALEXANDER B. BOSNAK: We are increasingly mov-ing away from the production of standard products and reorienting our work on specific orders. This approach is fundamentally differ-

ent from the traditional one, in which the design was developed and run in a series, then offered to customers. Today we produce spe-cialized tools on an order basis, in accordance with the needs of our customers.

Over the years, the progressive develop-ment of our factory has almost completely moved it away from its initial strategy, used during Soviet times.

FR: In 2011 Volgaburmash established its own bit service department, creating a direct “manufacturer – customer” relationship with after-sales service. Two years later, what is the trend? ALEXANDER B. BOSNAK: With this tailored approach to production, we decided not to concentrate our efforts exclusively on sales. For us, provision of engineering support ser-vices for well construction is no less impor-tant.

Naturally, support services have always existed, but in 2011 we established the Drill Bit Services Department. The main task of the Department is to help our customers to achieve the best results: proper bit selection and constant control of drilling parameters are part of this process.

In addition, we have high skilled research groups working at oilfield sites that are not only controlling the drilling process, but also reporting on the results and quality of bits. Based on this information, we are constantly improving the quality of our products.

You mentioned a decrease in sales, however according to statistics; the drilling industry in Russia is growing at a faster pace than

Interview with: Alexander B. Bosnak, General Director - Volgaburmash

33

Alexander B. Bosnak, GENERAL DIRECTOR - VOLGABURMASH

anywhere else in the world. Drilling companies are spending between 30% and 70% more on equipment. What does this mean for Volga-burmash?ALEXANDER B. BOSNAK: The decrease of direct sales is balanced by the increased implementa-tion of our services.

By direct sales, I mean selling the drill bit as a single, end-product. For our Drill Bit Service Department, payment is only made on the basis of actual meters drilled. It allows the customer to accurately plan expenses for well construc-tion and to minimize financial risks. In par-ticular, we take on all risks related to accidents and failure of the tools, and other emergency situation. This allows the customer to eliminate storage and transportation costs.

As you mentioned correctly, the drilling industry in Russia is growing at a fast pace. In fact, since 2012 volumes of drilling activity have grown drastically and reached more than 20 million meters drilled. In most cases, the drilling is carried out by PDC drill bits and as far as technology is concerned, production of PDC bits is easier than production of roller cone bits. However, the production of PDC bits in Russia started relatively late. The simplicity of their production and the economic feasibility of their use led to increased investments in the production of this type of drilling tools. As a result, there are many small size enterprises in the market that have mastered the production of the most successful designs.

FR: Can you elaborate on Volgaburmash’ com-mitment to innovation?ALEXANDER B. BOSNAK: In order to keep up with a strong competitive environment, it is neces-sary to continuously improve technical charac-teristics of our products.

At constant volume, the need for drilling tools will decline. Accordingly, the competition escalates even more. Oil companies want to cut their spending and reduce the cost per meter drilled. They therefore choose the drill bit sup-

plier that offers the best performance at the lowest possible price.

Our objective is to make sure that Volgabur-mash’ drilling bits have similar or better tech-nical features than our competitors’, and are sold at a reasonable price. To achieve this, we have various on-going development programs, continuously improving our technology design and manufacturing capabilities. These capabil-ities have been supplemented with modern equipment purchased from leading Russian and foreign manufacturers. Moreover, we have invested heavily in new equipment and technol-ogy to increase our production capacity.

FR: What lies ahead for the internationaliza-tion strategy of Volgaburmash?ALEXANDER B. BOSNAK: Previously, the company focussed its sales activities in Russia and the CIS countries. The company had never engaged in active sales abroad before, we simply had a few distributors selling our products. In order to expand our international presence, we decided to take initiatives. The results were obvious; in the first quarter of this year, foreign sales increased by several times. Our main competitive advantage is our commitment to provide cost-effective, high-quality products while finding the optimum balance between price and performance.

FR: What are your personal ambitions for Vol-gaburmash for the next 2 to 3 years?ALEXANDER B. BOSNAK: We will strengthen our personalization of production, and strengthen the direct interaction with our customers. Our main task is to produce drill bits that suit the individual requirements of our customers. In order to achieve this, we have to take into con-sideration the characteristics and geological conditions of a specific oilfield so that our tools meet them and our customers achieve the best technical and economic indicators.

We will make every effort to improve the quality of our products and to increase the share of services we provide.

34

PAST REPORTS

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Company index

Alliance Oil ........................................ 6

Association of Drilling Contractors 12

BP ...................................................... 6

CNPC ................................................ 6

Creon Energy .................................... 8

Eriell .................................................10

Eurasia Drilling Co. .........................10

ExxonMobil ...................................... 6

Gazprom .................................... 6, 7, 8

Goltsblat BLP ................................... 6

Gubkin University ......................22, 23

Inpex ................................................. 6

IPSCO Tubulars Inc ......................... 12

Irkutsk Oil Co. ............................13, 15

Largeo ............................................. 14

Lukoil ...............................................10

Novatek ......................................... 7, 8

Promstroi Group ............................ 13

Rosneft ...................................6, 8, 15

RAO Rosneftegazstroy (RNGS) .... 13

Repsol ............................................... 6

Rusgeology .................................... 12

RuzGazEngineering ....................... 13

Tempobur ........................................10

TMK ................................................. 12

TNK BP ..........................................6, 8

Union of Oil & Gas Producers ...... 15

RITEK ...............................................10

Roxar ................................................ 6

Shtokman Development AG .......... 7

Statoil .............................................. 6

Total ............................................... 7, 8

Volgaburmash ................................ 12

Weatherford ...............................28, 29

Wintershall ....................................... 6

oil and gas russia report 2013

Documents

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