安德鲁 叶利斯特拉托夫, LARGEO公司
Release Date: 2010-08-10
Andrey Elistratov, General Director of LARGEO, and Jean Januard, Chairman of the Board of Directors of LARGEO, have been interviewed by Russiaenergy.com for a Russia Special report for Oil and Gas Financial Journal to discuss LARGEO's operations, its competitive advantages and its methodology of dealing with the unique geographic and geological situation in Russia both onshore and offshore.In 2004 LARGEO became independent after a spin-off. Why was it the right time for the company for a spin-off and what market factors influenced this decision?
AE: Initially, LARGEO had three seismic ships and a data processing center – all owned by YUKOS. The following historic circumstances were reflected on LARGEO which was split into four independent companies. At that time I was related to the data processing center. After a management buy-out and attracting new investors, LARGEO became independent.
LARGEO business model is focused on data processing power to process large amounts of seismic data. How much of a challenge was it to build this capacity from 2004 to today?
AE: First of all, as LARGEO is rooted in marine data processing, it requires data processing capacity, so the company was initially focused on organizing a powerful data processing center. An independent company, LARGEO realized the need for a strong partner in order to advance with software and installation of new computers. As a result of negotiating with a few companies, LARGEO chose GXT Technologies as the most advanced in seismic data processing. The talks took 1.5 years, and finally, in 2008, we agreed to create an alliance of LARGEO and GXT – already integrated with ION - and made up a strategy of developing the alliance on the Russian market. GXT presented all the recent developments and the program for equipping the data processing center; LARGEO was responsible for organizing the infrastructure, training the staff and maintaining good contacts with oil companies which allowed getting a large contract in the Black Sea to accomplish the first step for mounting the data processing center. This is why LARGEO positions itself as a fast reacting company on the market. The company acts according to the growth of market. Moreover, as a private company, it is much more dynamic in terms of decision-taking as compared to the state companies. Currently, LARGEO, as a Russian company, has no Russian competitors and mainly competes with reps of Western companies.
How long has the alliance been looking for Russian partners back in 2008, and what attracted LARGEO in the partnership?
JJ: LARGEO had been ‘courting’ GXT before its acquisition by ION in 2004. That shows that LARGEO had shown a lot of perseverance to make it happen. The reason is that GXT had no insider’s understanding of the Russian market. When ION acquired GXT, ION wanted a local understanding of the strategy. The issue was that ION was much more focused on onshore data processing business and GXT – on marine data processing. GXT had no technology to bring into onshore data processing, so the choice was made to go along with a strong partner in marine who is also present in onshore data processing, that is why we finally opted for LARGEO, and the decision to go with LARGEO was made in summer 2007.
How would you say the alliance has developed ever since? To what extent have the companies operated together? How independent are they?
AE: LARGEO remains a Russian company with Russian owners. GXT is linked to it by the agreement for joint activities in the frame of the alliance. The alliance implies two directions: development of data processing facilities (1/2 is owned by GXT and 1/2 is on lease; afterwards it will be owned by LARGEO). GXT represents the full spectrum of software development, maintenance, training – and LARGEO provides contacts and contracts, market surveys, customer relations, infrastructure.
You have already mentioned work on the Black Sea with Rosneft as one of the flagship projects. It was the first time that 3D RSME technology was used. What kind of experience is it in terms of developing partnerships?
AE: LARGEO is the general contractor of Rosneft for the next five years till 2012. In 2005, when LARGEO had the first contract with Rosneft, this was the first step to study the Black Sea. After the announcement of the program for further study of the Black Sea, LARGEO took part in the tender and offered a modern processing using GXT’s technologies. Winning this tender allowed LARGEO join GXT technology and the contacts and install a new data processing center in Moscow: this was the first 3D survey. The results were acknowledged as very good; the next 3D survey in two years was equally given to LARGEO as the general contractor of Rosneft. The results were estimated as very good again. One of the potential investors for this block was ExxonMobil. As LARGEO proved that using American technologies in a Russian center was identical to the work that GXT would have done in Houston. Besides, as Russia imposes limits on releasing the seismic data, the result has fully complied with the requirements of the Russian legislation: the data was used in Russia but processed with the best technology. For each contract, LARGEO tries new technologies. For the latest contract with Rosneft, LARGEO has used 3D RSME technology. Good reputation with Rosneft has enabled us to extend our geography; four months ago we have received data for Sakhalin where Rosneft awarded the contract to LARGEO knowing its reputation. As a result, LARGEO came up with a new technology: azimuth regularization.
In the Russian marketplace, LARGEO does not have to compete with rather international competitors. Why companies like Rosneft will choose LARGEO over a more international competitor who is better known on the international markets?
AE: LARGEO has a powerful data processing center for studying marine data. We compete for price and technology with the Western companies in terms of mentality as the approach of the Russian companies is not as formal as that of the Western companies. LARGEO is more open to the customer and does not impose limits of what information to disclose or not to disclose, and that is sometimes the decisive factor that wins the hearts of the Russian customers.
One of the topics that our readers are keen on is how the Russian companies have looked at the recent crisis. In times of crisis for oil and gas companies, you need to be sure you’ll find oil. So, how has that affected your business’ rises and falls as a result of the economic crisis?
AE: The crisis was sudden. When it broke out, large oil companies were still continuing large programs that were not finished; in fact, the final limits did not come before a six months’ time. We had some time to react to the crisis. We had done a few actions to cut costs and also slowed down our development program. By the end of 2009 we were supposed to have a data processing center worth 6,000 CPUs while we had actually reached 2,000 CPUs. We have reacted very quickly to the market situation: we froze down the development program, cut the costs, suspended the hiring and training of the staff and also activated the search of new contracts. Oil companies cannot stop their research as they have license obligations. In our case, smaller companies played a bigger role in the regions located in the Northern and European parts of Russia, East Siberia, Volga region.
As international projects are sometimes more of a priority for Russian companies, Russian companies working abroad can compensate the losses on the domestic market.
What are the biggest challenges in working abroad and presenting the Russian market on an international level? Is it always the Russian partners on international projects?
AE: In the framework of the alliance, we have market limits: we can work without competition with GXT. So, our main field is Russia and the CIS, as well as some projects by Russ oil companies abroad. What goes separately are the countries where American companies do not operate: Venezuela, Cuba, Algeria. These are countries where LARGEO has an opportunity to work and GXT is formally obliged not to enter this market. We have quite strict agreements with GXT to avoid competition.
Lots of people agree that the Russian oil and gas sector has unique conditions. This is very important for your business. How can your experience and position deal with unique geographic and geological situation onshore and offshore?
AE: The territory of Russia is so big that it is impossible to have a company with expertise all over the country. We’re focused on the Black Sea; besides, we have a lot of projects in Volga and Samara region and good proven results for data processing and interpretation in Western Siberia. When we enter a new region, the first thing we do is to attract the local geologists with long-term experience of work with their own point of view on the geology. We start together in order to share the accumulated experience. Over several years of work, we have acquired our own experience. It is also important that the second direction – processing and interpretation - requires detailed knowledge of the region.
When you’re talking about the right mix of onshore and offshore experience… How have your wishes for coming in Russia been fulfilled in terms of the potential market?
JJ: Technology was the key criterion, meaning GXT’s positions in the West as a cutting-edge hi-end technology company, and we were looking for a partner in Russia with the same kind of image and ability to deliver. Considering the perspective of two-three years down the road with LARGEO with the new challenges that we’re facing right now in Russia… Basically, the leaders of the industry and the government of Russia is focused on the Arctic offshore and East Siberia. LARGEO has the technology to process and interpret very diverse offshore marine data and land data. One of the key LARGEO’s directions is to improve and increase the level of data processing to become well-positioned enough to move to less-surveyed regions like Central Siberia or East Siberia. Likewise, we have a very strong potential for growth in the offshore with the expertise gained within the past years in terms of new regions and new technology.
A lot of 2D data was captured during the seismic studies undertaken in the Soviet Union. What kind of opportunities does this give to LARGEO and ION in terms of improving the existing data?
AE: MAGE and SMNG are using some 2D data received a long time ago that might be outdated by now. My opinion is that this old data is still relevant and can be processed but serious studying of the Arctic requires large-scale modern surveys.
Is it hard to convince Russian companies that they need your level of technology?
AE: I agree that 3D survey is mandatory for oil companies that survey underdeveloped regions where the technological procedure is first to apply regional 2D survey, then - detailed 2D survey and only after that – 3D survey. But oil and gas companies are obliged to accomplish both 2D and 3D surveys over a short term. Some companies ignore 2D surveys and proceed straight to 3D thus reducing the terms of their license obligations.
JJ: As an observer on this market, I would like to add that Russia is a mix of two ‘old guards’ that are actually the same people with a very strong and highly qualified scientific potential. Even though Russia was closed for so long and the technology was developing autonomously, Russia is striving for new technologies because of the scientific potential and great engineers who are interested in cutting-edge technologies (in terms of exploration, drilling, data processing). Of course, they are older people by definition as they have more experience. Young people have been more focused on new technologies and very sharp stuff than the West. To give you a counterexample, the West, because of the economic reality of the last five years, is now focused on shale gas. Russia does not need shale gas at all. Nevertheless, shale gas is becoming a very strong topic in Russia because it’s technologically attractive. When we were reviewing it six months ago, we were very doubtful about offering to new shale gas technologies in Russia. Russia has always been historically focused on technology rather than marketing.
During our conversation with Ed Verona from the US-Russia Business Council, he mentioned the need to increase cooperation between the Russian and American companies. LARGEO is a very successful Russian company that is working with American technology on the Russian marketplace. How do you see the cooperation between these companies as a testament to the benefits of cooperation between international companies and Russian companies?
AE: Alliance is an unusual framework for Russia. When Western companies enter Russia, they normally open their rep offices that Russians perceive as Western companies even if they’re manned with Russian staff. The framework of our alliance has turned out to be very successful: the company complies with the Russian laws and is licensed for working with State Secrets which positions it as a fully Russian company. We decided not to invent the wheel again and have taken ready and tested solutions from Houston and transferred them to the Russian data processing center. We’re supported both in terms of administration of modern company clusters and in terms of software. During formal talks, we sometimes present ourselves as a Russian company and then, before going for negotiations with another company, change our jackets and act as a Western company. We give the client what he wants to see.
As a final message, what would you like to say about LARGEO’s hopes for future development of Russia’s oil and gas and the role you can play wearing both jackets as a Russian and Western company.
AE: We’ll keep the same position as a Russian company with modern Western technologies. Some companies In Russia are oriented on field works (both marine and onshore) with small data processing centers. There are also companies doing only data processing, with field data provided by the customers. LARGEO took a different position acting as an integrator of solutions and organizer of the field surveys as the general contractor who attracts Russian or Western subcontractors. It allows a rigid control of the filed works as we are aware that we would have to process this data at some point. On the other hand, it allows attracting modern equipment which is sometimes not available in Russia. For instance, we have entered the tender on the Black Sea as an integrator with a Norwegian and a Chinese company as subcontractors.
JJ: Regarding the technological side, the involved seismic acquisition companies do have some processing facilities in Russia. Despite that, several seismic acquisition companies have been paying close attention to the way LARGEO behaves on the market. Some companies are interested to see that on specific geological challenges that LARGEO can do.
The cooperation of LARGEO and GXT is a win-win partnership. If a company is facing new technological challenges raised by the Russian oil companies, GXT offers its R&D capacity to find a solution to better service its clients. This is the kind of flexibility that is not easy to find in another partnership.
| Company: | LARGEO公司 |
| Position: | 总监 |
| Country: | 俄罗斯 |