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Interview

with Vitaly Grodsinsky, General Director, Ramos

02.03.2010 / Energyboardroom

In Soviet times, Russia was known throughout the world for the quality of its construction projects. How do you assess Russia’s reputation for construction today?

Today, Russia is still renowned for the quality of its construction, although I must admit that the reputation is perhaps not as good as it once was. 160,000 people were employed at the Ministry of Construction in Soviet times, working across our vast country on many varied projects. During this period of our county’s history, many innovations were made and implemented for the first time. At the Yamburg oilfield for example, a thousand 200mm tubes were implemented, designed to cope with the permafrost. In 1987, I was invited to head an international conference dedicated to this innovation.

One of the most interesting aspects of the construction innovation that took place in the Soviet Union was that the time between creating new technologies and implementing them was incredibly short – often as little as a matter of weeks. This helped to forge the Russian reputation as an advanced country in terms of construction. Perestroika brought with it sweeping changes, and during this time, many of the positive aspects of the Soviet attitude were forgotten, including this level of innovation in construction. Ramos is going to great lengths to try and recall this spirit of invention.

How much of a challenge is it to regain the level of reputation and knowledge that Russians once had?

Although the popular conception is that Russia is not as good in the construction sector as it used to be, the company is working hard to dispel these myths. Ramos has participated in the past in cooperations with international companies such as Sibelco, which have always been fruitful. Whilst working on the construction of the Ramenskoye mining plant with Sibelco, their president made a bet with me. He wagered that Ramos would not be able to construct the plant within the terms of the contract, and I bet that rather, it would be Sibelco, who would be late providing equipment to the project. Of course, Ramos proved itself, and I won the bet.

Ramos is a key partner of Gazprom. How do you think that relationship between the two companies has helped Ramos’ position develop within Russia?

Having worked in the oil and gas sector since 1980, one of the things most clear to me is that in order to be the partner of a company like Gazprom, companies have to prove that they are up to the task every year, and can grow and develop alongside their partners. This is an important lesson for Ramos’ 2000 employees: no matter how good your last project was, approach each new one with a clean slate. As a company, it is important to realise that what you have gained in the past will not guarantee your future. Once a company understands this, they can truly start to compete in the marketplace.

To be included in the list of Gazprom’s trusted partners, Ramos has developed its business from general construction work, to include services such as electronics, automation, specialising in technological installations, welding, and expertise in pipelines and pipeline nodes, in order to better service the company’s needs. Gazprom frequently uses Ramos a turnkey provider, handling every aspect of a construction project from start to finish. This is beneficial, both for Ramos and for Gazprom. The more contractors are involved in a project, the greater the likelihood that there will be issues between them, in terms of project management. A company like Ramos can approach any project, even large and complex, and complete it on its own, thus minimising the risk.

There are many new potential construction projects in the pipeline in Russia over the next few years. Which will be the projects where Ramos will be the best fit?

Ramos is capable of constructing any type of industrial project, even the most demanding. The company is currently engaged in the construction of a microchip manufacturing facility in Russia, which is a joint-financed venture between the Russian and German governments. This is a project that involves some of the most advanced construction processes currently being used, and quality of construction is a priority. Of course, energy is also a key sector for Ramos, and I personally have worked on projects in Yamburg, Orengoy, and Nadim, amongst many others.

Mr. Chirskov of ROSSNGS was explaining that many of the Russian oil and gas companies have construction companies integrated into their structures. How difficult is it for an independent company like Ramos to compete in the sector, and win contracts?

It is very difficult. On many of the larger projects, it is clear that the subsidiary of the company running the project will win the tender for its construction. A recent example is the Nord Stream project. Ramos participated for the construction tender, but it was eventually won by a Gazprom subsidiary. Ramos will still be involved in the construction of Nord Stream, but as a sub-contractor. In this capacity, we will still operate as a turnkey constructor, but working as a sub-contractor significantly reduces the profitability of the project from Ramos’ perspective. In many cases, the construction divisions of big oil and gas players are artificial creations that rely on companies like Ramos at the most crucial stages of their projects.

Something that is less artificial is the competition from Chinese companies in the construction sector. How do you feel about it, and what measures are you taking to stop these companies gaining Russian market share?

In the oil and gas sector, China cannot compete with Russian quality levels. A recent example was the construction of the ESPO pipeline. Transneft brought in Chinese companies to work on a section of the pipe, following a dispute with the Russian contractors. These Chinese companies welded 68km of the pipeline, and out of those 68km, about 80% needed repair. Russian companies had to come back to the project and repair the faulty sections of the pipeline.

However, there are some lessons that the Russians could stand to learn from the Chinese. I was in China for some time, and some of the construction projects currently taking place in the country are very interesting, from an engineering perspective. In general, it is projects such as compression stations and cleaning stations that are interesting, rather than the skyscrapers, which are actually relatively simple to build. I believe that once a constructor has successfully built his first cleaning station, he can truly call himself an engineer.

Ramos can also compete on a level with the world’s biggest construction companies. Although these companies might be ahead in terms of the development of new materials, it is in construction technologies where Ramos can really be proud. Over the years, the company has developed technologies and approaches that increase both efficiency and quality of our projects.

When working with Western companies on joint projects, it makes no sense to compete with one another. Rather, these opportunities should be taken in order to learn and cooperate, and develop. This is also something that the Western companies should learn as well – that by sharing new materials on projects, for example, offers both sides opportunities to learn and develop. I believe that sometimes, international companies working in Russia can be a little put off by the stereotypes associated with Russia. It is important for them to know that companies like Ramos are capable, and creative, and open.

What would you like to say as a final message to the readers of Oil & Gas Financial Journal about Ramos?

Ramos can construct everything, from plants to factories to shipyards. I am confident that the company will continue in this industrial construction in the future. The oil and gas sector is also very interesting for Ramos, and will continue to play a key role in the company’s development.

I teach the employees of Ramos that in order to be truly successful on a project, you have to be able to feel the construction site like a piece of music, and understand its rhythm. This is the key to building projects that you can be proud of – ones that you can point out to your grandchildren with satisfaction, and know that you have made a difference in the world.

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