with Dean Kaminsky, Vice President, Russia at Weatherford, Weatherford Russia
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?
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.
How would you define Russia’s strategic importance for Weatherford?
We see large growth opportunities in Russia. In fact, we entered the country in 1997 with one operations base on Sakhalin Island. Five years later, we established 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 working for Weatherford Russia. I think this exponential growth demonstrates the significance of Russia for global Weatherford.
Back in 2002 – when we opened the Moscow 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 acquisition of TNK-BP’s oilfield services division, adding substantially to its regional headcount and infrastructure, as well as to the global rig fleet. Other recent Weatherford acquisitions in Russia include NGKS International Corporation, a supplier of in-line pipeline inspection services and tools and. Belorusskoe UPNP & KRS, a business contributing to strengthening our position in the workover market. Through these acquisitions 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 partnerships have created a solid foundation for growth in the region.
Furthermore, Russia has the world’s largest 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 Weatherford has grown with it.
Are you currently looking at acquisitions to further grow the Russian affiliate?
We will keep on evaluating possible acquisitions, but as in any mature market the overall size and pace of acquisitions will slow down.
Currently we focus on what we have acquired, and on delivering on the back-end of that partnership promise. A perfect example of that is our acquisition of Techinformservice (TIS) in 2007, a directional drilling services provider. Weatherford brought in tools, technologies, systems such as highly reliable logging-while-drilling (LWD) and rotary-steerable systems (RSS), and provided training and specialists to help launch the introductions. As a result, TIS endorsed the Weatherford global brand and subsequently has grown by 15 times compared to 2007.
If we look at the competitive environment, what services and technologies does Weatherford provide that others do not?
Naturally, we all brag about our technologies. Weatherford in fact brought certain technologies to the market before our competitors did, such as the MotarySteerableTM System. This technology, which was awarded the Hart’s Meritorious Award for Engineering Excellence, allows steering of the well whilst constantly rotating a motor and LWD combination rather than the traditional orientating and slide process. In Russia 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 competitors over the coming years.
Also, the ZoneSelectTM fracturing completion 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 efficiently, the system limits the exposure of field personnel.
Weatherford has conducted projects in Western Siberia, Sakhalin and the Caspian Region. What is the project that best highlights your capabilities?
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 ZoneSelect completion systems in each of their horizontal wells in Siberia. Today we have a strong share of that market. Our performance 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 common safety culture, performance management and quality system across all product/service lines that we implement in Russia as well.
Mr. Dzhaparidze of Eurasia Drilling Company told us he expects the demand for hydraulic fracturing and horizontal drilling to increase in the next few years. How ready is Weatherford to address the market needs for new drilling and completion technologies?
Naturally, hydraulic fracturing treatment placed in the horizontal wellbore is a solution for further production optimization in Russia’s brownfields.
The boom in horizontal drilling has enabled us to pull-through fracturing, coiled tubing, liner hangers, thru-tubing, cased-hole completions and cementing products and services. We are already competing with local and international players on the market. We brought the first fleet for hydrofrac operations to Russia 5 years ago and have acquired extensive experience over this time. It is worth noting that we had new equipment delivered to Russia, and today the equipment we offer is one of the most up-todate on the Russian market. We are currently considering bringing additional fleets into Russia to increase our operations in this segment.
Unconventional oil is a hot topic within strategic talks about maintaining Russia’s production levels. Is Weatherford well positioned to go into this unconventional direction?
Today’s reality pushes the global industry to unconventional resources, particularly heavy oil and various shales, for lack of new conventional reservoirs. Operating on land has naturally driven us to unconventional plays, first heavy oil, then coal-bed methane gas, tight gas and now shales—whether gas, oil or hybrid.
Regarding the development of unconventional 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 producing companies operating in Western Siberia are considering going into the production of unconventional oil, for example.
Considering Weatherford’s global presence in the offshore industry and this being Russia’s final frontier, what are your perspectives on the applicability of Weatherford’s services to the future expansion of Russia’s offshore industry?
Our global footprint for offshore services positions us well in this market. So far we have conducted offshore projects 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. However, at the moment it is hard to forecast schedule times for full-scale or commercial exploration of those fields. Economical, technical and infrastructure challenges, together with environmental concerns continue to linger for the largely untapped Arctic. Nevertheless, there are great prospects and we will definitely be ready to partner up with companies developing the Arctic.