Ziad Manasir, Stroygazconsulting
Release Date: 2010-07-29
Ziad Manasir, President of Stroygazconsulting, was interviewed by Russiaenergy.com for Oil & Gas Financial Journal to discuss the current development of Stroygazconsulting and its prospects for the future in the context of the booming development of oil and gas production in Russia.Stroygazconsulting won its first contracts in the oil and gas industry in the 1990s, providing housing for a project in the Orenburg region. Over the past 10 years or so the company has been involved in more strategic and technical projects of the oil and gas sector with Gazprom, one of the most strategic players in the industry. At what point did you decide to move from rather basic civil construction projects for the oil and gas industry, to more technologically based work?
The transition was going step by step. Stroygazconsulting won a tender to provide houses for oil and gas industry workers in 1994. A housing project does not simply involve the construction of houses, but also the infrastructure surrounding these buildings, such as roads. Working on the construction of these roads was natural, when our equipment was already in place at the site. After these roads were completed, we moved our equipment to the oilfield, and worked on connecting oil wells. Moving from this to pipeline construction was the next logical step, and so in this way, one type of work led naturally to the next, until the point the company has reached today. It was 8 years ago that we first started working with Gazprom, and now we have also worked with many other major players including LUKOIL, Transneft and Nord Stream, for example.
How is the company organised today?
Stroygazconsulting is organised on the basis of extremely strong vertical integration. Our head office controls the organisation and management of every construction site on a daily basis, responsible for providing all necessary materials and information as needed at each site. The company also has a very innovative method for equipment management in place, which allows the company to operate extremely efficiently. One company within the group holds all the equipment and machinery that is used by Stroygazconsulting. In order to guarantee that
no equipment stands idle, other companies within the Stroygazconsulting group lease this equipment, and so must pay for every day that
it is being rented. This is complemented by a complex salary system, which ensures that the people with the most interest in seeing the
machinery being used are the drivers and operators. The more he uses this machinery, the more he is paid.
In the past few years, Stroygazconsulting has grown a lot, but much of this growth has been organic – the challenges of integrating existing
companies into such a unique system are simply too great for mergers to be of current interest. The company has bought out a few of
its competitors in the past, however. One such company had operations in Urengoy. In such a northern location, salaries have to be very high,
but this company also paid the same to its employees in Moscow. These companies had so much to learn in terms of efficiency. There might be 1000 employees on the books, but in reality, only 500 employees on the field. In order to avoid this problem, with its high number of employees, Stroygazconsulting has a Settlement Centre, which registers costs, volumes, and salaries of every employee. As you can imagine, it is impossible to create a system like this in one day, or introduce it into an acquired company immediately. Rather, it must happen one step at a time.
Today, Stroygazconsulting has 27,000 employees. This year, you hired over 2500 new workers, in the middle of the crisis, when other companies were laying off employees. How was this growth possible?
Although in 2009, on average, only 20% of the equipment of the fleet was engaged, from a strategic point of view, it did not make sense to
fire anyone. This was only a blip in the company’s growth trend. Although many projects were put on hold in 2009, this year they are recommencing, and Stroygazconsulting’s order books are full for the year.
In the coming two to three years, several large projects will drive the growth of Stroygazconsulting. The first of these is the Sakhalin-Khavarosk-Vladivostok pipeline. Work on the Bovanenkovskoye field and the Bovanenkovo-Ukhta gas trunkline system is another major project, as well as work on the ESPO pipeline.
Construction of the Portovaya compressor station commenced in January 2010. This compressor station will be the starting point for gas supplies via the Nord Stream pipeline, and the technology used in it is unparalleled in the world. The compressor station will secure gas
transmission over the 1,200km of the Nord Stream pipeline, with no extra compression stations needed. Construction of the Nord Stream pipeline commenced at the start of April 2010. Russian President Dmitry Medvedev attended the ceremony, and Angela Merkel, the German Chancellor, gave a live video address. The project is immensely important for both countries. It is excellent to be a part of such a major project, but the most important priority for Stroygazconsulting is that all parties are satisfied with the results the company has achieved.
Technip approached Stroygazconsulting in order to enquire about their management system, for dealing with the practicalities of
operating in the Russian marketplace. Why do you think it is so hard for foreign companies to enter the construction sector
in Russia?
Like many international construction companies, Technip approached Stroygazconsulting in order to discuss working in the Russian marketplace as partners. Whilst international companies are very capable of bringing new technologies to markets like Russia, without Russian specialists, their offer is impossible to implement, due to cost considerations. It is much easier for a Russian company to make a better value tender proposal than a multinational, because the Russian company does not have to factor in the costs involved in bringing international
employees to Russia. As well as having to provide larger salaries in order to encourage these engineers and specialists to come and work in Russia, the cost of housing, visas, and other associated outlays make bringing foreign specialists to Russia very difficult. Oil and gas companies operating here would much rather come to a company that can offer a cheaper price for a tender by using Russian content.
Although competition in the home market from international companies is not a major issue at the moment, the problem of Russian engineers
leaving to work abroad is a major challenge at a time when they are able to find much better salaries abroad. This is not too much of an
issue for Stroygazconsulting. We aim to attract a younger workforce, and offer them the incentives that might attract them to an international company, such as the opportunity to work with some of the most advanced welding and construction equipment in the world, and even providing training for the use of such equipment.
Russian construction companies and Russian contractors used to be extremely strong in some parts of the world such as Algeria, and everyone is talking about the possibility of seeing Russian constructors once again going abroad and selling their technology and knowhow. What is Stroygazconsulting’s international development plan?
It is definitely a plan to invest in international markets, but the moment is not quite right yet. Our situation is strong enough on the domestic
market that the company does not yet need to look to new markets. When it does, the first markets will be those that understand the Russian language and mentality: countries like Belarus and the Ukraine. Entering markets where your mentality is not understood is a challenge. It is one that Stroygazconsulting will rise to when the time is right, but whilst the Russian order book is providing such a good amount of business, there is no need to expand.
Talking about mentality, you are not Russian born, but arrived from Jordan to the USSR many years ago. How difficult has it been to integrate yourself into the Russian way of doing business?
Russian mentality is not just about drinking vodka. It’s about perceptions and feelings, and an understanding of the environment. When I started doing business here in Russia, it was very important for me to be able to understand my colleagues. Once I understood this, doing
business in Russia came very naturally.
As a student, I spent a lot of time communicating with university staff, making friends, and immersing myself in the local environment. Every foreigner that arrives in a new country has to meet all sorts of people because that is the only way to find those you can trust and make friends with.
The attitude and views of the Russian people today have changed immensely from Soviet times. In many ways, the Russian business environment as it stands today grew up around me, at the same time that I was learning how to do business here. Being from a Westernised
country like Jordan helped me succeed at the time that Russia was just starting to find its capitalist feet.
Even today, I am constantly trying to improve myself. If a person does not do this, they cannot grow. The drive to do this comes from my enjoyment of the work that I do. Every day in this job, from early morning until late at night, there are new challenges to be faced. Facing
challenges and overcoming adversity is the key to growth, and finding strength. The satisfaction that can be gained from engaging in this process is not just about money, but also about personal pride.
You have mentioned in previous interviews that you don’t do politics. Some of our readers might want to raise their eyebrows at the idea that it is possible to work in the Russian oil and gas industry without doing politics...
In the sense that all human relationships are political to a certain extent, I might agree with you. Dealing with different contractors, for example, will show you that a certain degree of politics needs to take place in the business world in order to get by. Building relationships
with clients and contractors is vital for success in this business. After having built a relationship with someone such as Mr. Alekperov of Lukoil, it encourages me to really push my team in order to make sure that the work we are doing for Lukoil is not only done to fulfil our obligations, but that all expectations are exceeded. Other businessmen might find that a relationship such as this only encourages them to take the work more slowly, and rely on their personal relationship in a different way. These human relationships in the business world are the only time that I
would consider myself to be involved in politics, but it is completely removed from politics in the traditional sense, in which I have never been
involved, and never will be.
When our readers read about you and your company, what would be the thing you want them to remember and to know about Stroygazconsulting?
I want them to remember that Stroygazconsulting is a reliable partner. From when we started work in the 1990s, through to today, the most important thing has always been to do whatever is necessary to keep the client satisfied.
Thanks, Mr. Manasir, for talking to us!
| Company: | Stroygazconsulting |
| Position: | President |
| Country: | Russian Federation |