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Interview

with ILSHAT VALIULLIN, President, Rusgazengineering

27.03.2013 / Energyboardroom

When we interviewed you in 2010, you aimed to position RusGazEngineering halfway between expensive and high standard Western companies and cheap hard working Chinese ones while retaining Russia’s creativity. Three years later, where do we stand, what worked, what do you need to achieve?

Three years ago we established steps that we have followed and to be frank, RusGazEngineering Group has become a company that is clearer to me as paradoxical this sounds.

RusGazEngineering was consolidated into the group of specialized companies capable to independently implement the “turn-key” projects on infrastructure development of oil-and-gas facilities with any degree of complexity. The company developed considerably reaching a one billion USD turnover and signed more than 300 different contracts with clients.

This year we are celebrating the company’s 10th year anniversary, which makes it time to look at numbers and draw some conclusions.
When I started the company in 2003, I was alone and ten years later the number of employees at all companies and subdivisions is approximately 2,500 persons. In fact, we have acquired a construction company this morning which make the total number of employees 2,500 as from today.

Secondly, at RusGazEngineering we have a scientific department responsible for more than 180 patents, and based on those discoveries we produce our own equipment and apply these technological advances to our internal procedures. Uniting both the R&D and its application is an important link that we focus on. All major players and customers know us very well after 10 years in the business.

I never established an official strategy because once there is one in place we lose our flexibility, which is not the way I aim to go forward. Nevertheless, we have reached the goals we have set for ourselves and became an EPC player that is capable of performing a full range of works under EPC/EPCM contracts on a “turn-key” basis in the industry.

More importantly is that we have managed to retain our specialists within the company. Our company is characterized by dedicated employees, who are RusGazEngineering’s greatest asset and brought us many successes in the past.

Could you elaborate on today’s acquisition and how this subsidiary completes the Group?

The growth of our company is not measured by its capital. We do not acquire new subsidiaries merely to capitalize; we have other purposes. The decision to acquire this specific construction company today lies in the fact that we have been awarded a large construction project in the extreme North of Russia in the Kara Sea.

However, if necessary we are capable of creating a company from scratch as we did with LLC RusGazAvtomatika, a specialization company within the group.

We might not be the biggest company in the country but we have managed to establish a good reputation on the market, and our competitors are either afraid of us or scared of us!

With regard to your capacity and capabilities, RusGazEngineerings slogan is “Technology matters”. You mentioned that the company’s scientific department is responsible for 180 patents, however today we see that many companies are positioning themselves as technology advanced. How do you stay ahead from competition?

The main business areas of the Group of Companies are based on the vast knowledge of technologies and fundamental science, expertise and know-how, as well as close cooperation with leading scientific and research institutes.

We have demonstrated to be ahead of our Russian competitors through the number of patents our scientific department is responsible for. As far as I know, there are no other Russian engineering companies that have that many patents. Our patents and technology lie in the field of gas treatment— mainly downstream technologies.

Recently we have discussed a proposal with Minister 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 test technologies; we also invite Western and Chinese companies to test their technologies for development in the Arctic region for example.

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 private companies, which makes us unique.

Russia is considered well ahead of most other resource-rich countries in its economic development, having a long tradition of science. Especially as from the year 2000, on the wave of a new economic boom, the situation in the Russian science and technology has blossomed.

In 2010 your aim was to increase the company’s integration into international markets. What is the balance today between domestic and international projects?

Unfortunately we have not managed to achieve the goal we set three years ago; having 50% revenues from abroad. Nevertheless, we are actively participating in international markets such as Bulgaria, and the Czech Republic as well as the former republics of the Soviet Union.
An obstacle we are facing is the lack of English speaking engineers who are familiar with international standards. It is hard to find these specialists on the market and certainly limits our capability to expand our operations abroad. For that reason we have acquired a company in Europe, which has a multilingual staff and will help us increase our presence on the Western market.

What we also experience is that Western companies are not eager to cooperate with Russian companies because they are afraid of increased competition from the East.

The company has an impressive track record of clients and currently over 20 projects on track. Could you highlight the project you are the more proud of, one that best showcased RusGazEngineering capabilities?

In the last 40 years there have only been three projects in the sphere of modular strategy in Russia—one in the North, one in Sakhalin and the other in the Vankor field. We participated in the Vankor project where we built three large modules; completely designed from scratch. We did not only design these modules but also applied our unique technologies that had never been used before. In three years of working on this project we have managed to test and develop our technology as well as our management skills.

Furthermore, I am proud of our underground gas storage facility in the Czech Republic because it has been a project conducted in Europe with unique Russian technology.

If we were to come back in 2 to 3 years, where would you have taken the Group?

Similar to our last conversation, there is a strategy in place. We acknowledge that it is time to not only grow in quality and size but also to increase our efficiency.

In terms of efficiency we are behind the Western world. For that reason we have integrated a ten-step program to enable increased efficiency, better planning and higher level of service. By following the requirements of this ten-step program we aim to increase our overall efficiency by at least 30%.

Apart from this, we aim to enter new markets such as water treatment, oil and gas processing and alternative energy.

Do you have a final message for our readers?

When we entered the market it was empty, today it is packed with companies trying to grasp every opportunity they can. Nevertheless, I wish everyone including my competitors happiness and success. May they be as successful as we are!

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