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with Rinat Kharisov, General Director, TNG Group

26.08.2011 / Energyboardroom

TNG Group has over 50 years of experience in the Russian market. Would you outline for the readers of OGFJ the history of the company and how a company from Tatarstan became a leader in the OFS market in Russia?

The company was registered on 6th January 1953 following an official decree on the 22nd December 1952 from the Minister of the Oil Industry. The decree also established an official geophysical trust. In those days we were quick to develop, especially if you take into account that the company was created in the course of 15 days. The company was set up to carry out geophysical research for E&P projects for the oil and gas industry. In particular, work was carried out on one of Russia’s main oil fields, Romashkino. This is the 6th largest field in the world.

We organised ourselves within a small city and many specialists and scientists from around Russia went there to work. From the very start very high standards applied to our work. Not being based in Moscow but in the province we, nonetheless, were not going to remain on the peripheries of the geophysical sector. As a result of the efforts of the first generation of specialists, a successful production company appeared. In 1955 the company started to engage in scientific research because geophysics without science is nothing at all.

Today there are two main scientific organizations within the company. One of these, based in Bugulma, develops scientific instruments for geophysics and recently we created a scientific and technical centre in Kazan in order to attract Kazan scientists to the further development of geophysics. Incidentally, an indicator of the serious relationship that “TNG-Group” has towards science and innovation is the fact that last year our company, together with the Kazan Federal University won a state prize for scientific innovations amounting to the sum of U$D 10 million.

Given these historical and contemporary links with federal organisations and the Russian state, how has the company adapted to a more commercially orientated environment over the last 20 years?

Every period has its own rules of the game. In Soviet times more attention was given to long term goals. Different geophysical companies were established within different regions including Bashneftegeofizika and Samaraneftegeofizika. TNG Group moved into the Orenburg Region and Western Siberia by the end of the Soviet Union. Personally, I was working as a seismic crew chief in Western Siberia.

Forming a commercial organisation and entering the Russian market was nothing out of the blue for us. When I became general director we worked out a 13 year business plan. This business plan had to endure two crises: the economic crisis of 1998 and that of 2008. Despite this the plan has been successfully executed with growth of 15-20% every year and even 50% sometimes.

At the heart of our strategy is bringing something new to our clients all the time to keep them interested. This represents a huge logistical challenge. From north to south Russia is 9,000 km in height and from east to west it is 60,000 km in width. TNG Group is partnered with more than 250 companies which are located in different regions, not only in Russia, but beyond her borders. The difficulty lies in maintaining these links over such a vast territory. However, last year we participated in 100 tenders and won 52 of them. Our largest clients include Tatneft, Gazprom, Rosneft, TNK-BP and Lukoil.

Having conducted work in the Sakha-Yakutia, Yamburg and other regions with prestigious Russian majors, are there any flagship projects that you view as the most important?

Any tender we win is important to us. We finish one tender and the next one comes along which seems to carry the same importance. In Chayandinskoe field in Yakutia we won a tender from Gazprom and this field holds huge potential. TNG Group has also conducted a very large-scale project in Irkutsk Oblast on the Verkhnechonskoye Field for TNK-BP covering 1,500 km2 in 3 years. Two years ago we worked in the Yamburg region on the South Russkoye field which was also a large project carried out with a German company jointly with Gazprom. This year there will be another tender for this field with the same partners. TNG Group has also just finished work on the Samotlor field owned by TNK-BP where there had been very little seismic work done previously despite it being the largest field in Russia. Recently, Gazprom announced the creation of a new company which will be called Gazprom Geologorazvedka. Many tenders will be given out through this company.

In terms of the scope of work and market share, TNG-Group has more than 400 well logging crews and we are considered number one in this field. When it comes to seismic operations, Geotech is first, TNG is third that is shared with Integra. TNG-Group may enter into competition with Schlumberger because the latter is taking a more aggressive approach in the market.

In terms of drilling we are a small specialised company and not on the level of Eurasia Drilling Company or Surgutneftegaz. However, Geotech and Integra and other companies do not have well logging equipment. Diversification of our portfolio within TNG-Group is a top priority for the company.

TNG-Group takes innovation seriously. What are the new and unique innovations that you can bring to the market?

If we talk of seismic acquisition, then Sercel dominates the global market. Until recently ION offered good instruments, but unfortunately, in the last few years they have lost their position. Russian producers have lost the competition in this sphere. Clients want only tested and well-known equipment with a strong international track record. Consequently, TNG Group is not very active in this field. We develop and manufacture only the tools for borehole seismic.

As for well logging, TNG Group stood out from the start as a leader in this field not only in the Soviet Union but even globally. We developed technologies, which received worldwide recognition. From the last of our innovations which received a high evaluation among both clients and scientific circles I would mention our infrared television and acoustic television which allow for better planning and shows problematic situations in the well. A whole complex of equipment has been developed by TNG Group for neutral and nuclear magnetic logging.

You are now taking your services internationally. What have been your international success stories?

We have just come back from negotiations in Beirut with Iraqi companies. At the moment, it is hard to say how quickly we will enter the Iraqi market. We are planning to enter this market with partners as we have previous experience in this region from the days of the Soviet Union. This experience continued after 1991 and I was personally overseeing projects in Iraq until the second day of the bombing in 2003.

In the past couple of years, TNG Group has enjoyed successful cooperation with Libyan companies where we have conducted seismic survey operations in the scope of 10,000 km2. Practically all the wells drilled on the back of this seismic exploration were successful. Unfortunately everything has now stopped and there is much equipment which has been left behind. We will hope that we can return there following the present conflict.

When talking about expansion of our business, I was once asked how our marketing worked. I replied that oil is not about marketing; oil production projects are all about the changes in high politics and the movement of large sums of money. To speak frankly, our choices of foreign markets are mainly based on trials and errors. However, given our expertise in the geological field as well as our long experience in other countries we are confident in these decisions. This is especially true in countries like Kazakhstan and Uzbekistan where specialists were very active under the Soviet Union. The mentality may be very different between Russians and Kazakhs but there is no language barrier.

The largest problem for TNG Group and its international expansion is that not many of our specialists know English well. However we are trying to work with universities sponsoring 150 students in the Kazan Federal University to remedy this situation. Now our students are obligated to study English to a deep level of understanding. This represents a large opportunity for our future business internationally.

Your operations are not just conducted in CIS countries but in India and China. How does your presence in these markets help your company?

Our presence in China is not connected with work but more for developing a greater understanding of the international markets. The country is packed with geophysicists and it is therefore hard to enter this market. However, Chinese geophysicists are very interested in our technology. We therefore collaborate in the technological field demonstrating our nuclear magnetic logging tool for example. In fact, the Chinese are considered our main rivals in the international markets. Technically we are stronger but their prices are lower.

In India, TNG created a Joint Venture with a local company. We cannot fully enter this market on our own because we do not have sufficient specialists with a good knowledge of English. Our specialists are many times more expensive than local equivalents. Despite this we have been involved in several projects in India and have won a few tenders.

TNG Group is still new to the international market although our specialists have individual experience of working internationally from the time of the Soviet Union. At the time of the Soviet Union specialists would be sent by Zarubezhneft to different countries to work. Currently, TNG Group is less focused on the international market than the domestic but our specialists are improving their capabilities to work abroad and this presents a good prospect for the future.

As the third general director of TNG- Group almost 60 years, what is the legacy that you would like to leave and what is your final perspective on the Russian industry?

Personally, I would like that the person following me does not see any bad elements in the company and that the foundations for the future development of the company are well established. For this to happen, TNG Group needs to develop strong talents in the company and within an organisation of over 7,000 people we should not have a problem identifying which people will lead the company in the future.

As for the industry, I do not see any upcoming revolution in the oil field services industry as there was at the beginning of the previous century for example. Instead, there will likely be many small developments especially in electronics with the basic principles of the industry remaining the same.

In terms of seismic development, it is more complicated. Methods will remain the same but the software packages will develop. Borehole geophysics will see the most important developments. Our tender-winning nuclear-magnetic logging will play an important role and aside from this real success will also come from nanotechnology something that is being promoted at the moment in Russia.

The future development of the oil industry will involve different methods of formation stimulation. Currently, 10-20 % of oil is produced and at the best 45 % in some of the areas. This figure could be increased for tens. Even if the oil industry of Russia is succeeded in oil recovery enhancement for 1% in the producing oil fields, then the oil production will be equal to the quantity of oil that is produced in Russia per one year.



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