Vitaly Khatkov: Competing on equal terms

October 30, 2012, the interview was taken by Denis Kirillov
Published in corporate Gazprom Magazine Issue 10

Vitaly Khatkov, Director General of Georesurs answers the questions posed by the corporate Gazprom Magazine.


Mr. Khatkov, at the end of 2008 Gazprom decided to consolidate its geophysical assets and set up an integrated versatile service company. Is this procedure completed?

The main issues of the geophysical business line reorganization and the respective assets consolidation on the basis of Georesurs are solved. The formation period was very successful for our company thanks to the top managers of Gazprom and the Company’s structural units, who timely provided us with the required support. So far, we have both feet firmly on the ground and ready for further development. We can now compete on equal terms with international service companies in Russia, which we could only dream of several years ago. It is especially important today, when we celebrate the 50th anniversary of the national gas industry geophysical service, our predecessor, and the 5th anniversary of Georesurs.

Georesurs is one of the largest national geophysical companies. It covers over 90 per cent of demands by Gazprom and its subsidiaries for geophysical exploration and well operations at all stages of the hydrocarbon fields and UGS facilities lifecycle. The company includes 16 branches and 18 separate subdivisions, operating in almost all Russian regions, including Yamal, Eastern Siberia and Kamchatka. In 2011 Georesurs performed operations in 191 licensed areas of Gazprom and third parties.

What has actually been done as part of reorganization?

Georesurs was established on the basis of Gazprom’s geophysical assets. Gazprom Geofizika (former Orenburggeofizika) and Gazprom Geofizika Orenburg were incorporated into the company’s structure. The consolidated company became a 100 per cent subsidiary of Gazprom. We adopted common management standards, obtained the necessary certificates and licenses. Owing to all these measures, and to the implementation of the re-equipment program adopted and approved by Gazprom, the company has expanded its activity range and global reach, and obtained the possibility to offer the clients a full range of services in production geophysics. Actually, we started to implement the turnkey projects with the resulting interpretation and data integration. This is how we stand out among many Russian geophysical companies that appeared as a result of their separation from national oil and gas companies as non-core business enterprises. Having a certain potential, they still can’t be called full-cycle companies. We give the purchaser a full and integral picture that helps make final decisions on the projects for hydrocarbon fields and underground gas storage (UGS) facilities development and operation. In addition, we have our own metrology center certified according to all modern standards. Thus, we bear responsibility for reliability of the provided information. In addition, we have commissioned the remote monitoring and 1centralized data management system. The purchaser may see the situation in a real-time mode while being many thousands kilometers away from the field. This system gathers, processes and stores information, enabling anytime access to it.

Starting from the last year we are developing the separate activity area as part of the Gazprom long-term program for GTM (geological and technical measures). This is the matter of securing technical and process safety during wells operation. We are implementing this procedure almost 100 per cent by ourselves. This year we have undertaken part of overhaul operations in wells. This is the third consecutive year when Georesurs acts as a general contractor of Gazprom’s hydraulic fracturing program. But for this project we involve subcontractors. Considering a small amount of these operations (in gas industry there are dozens of them, unlike hundreds in the oil industry) we see no need to create our own fleet for hydraulic fracturing operations.

A few years ago Gazprom geoscientists complained that the seismic sector is underdeveloped in the company. Has something changed here?

We brought seismic studies to a brand new level between 2010 and 2011 thanks mostly to implementation of the first stage of the re-equipment program. Earlier, these operations were conducted only by the Kostroma Geofizika branch company having two field crews which were able to perform only 2D seismic surveys. Today the Tomskgazgeofizika branch has another two crews focused on 3D seismic surveys and having modern equipment of French Sercel. Our company’s performance in this activity area has improved 5 and 7 times. It enabled us to start operations in the new parts of the Medvezhye gas and condensate field in the Yamal-Nenets Autonomous Area and of the Chayandinskoye oil, gas and condensate field in Yakutia, being developed by Gazprom. Besides, we obtained the possibility to expand cooperation with third parties. For instance, we carry out operations on the Rosneft, Lukoil and Russneft facilities. The third-party orders for seismic surveys make up some 30 per cent of our operations, others we receive from Gazprom. Today we cover some 40 per cent of the parent company’s needs in this sector. At the same time seismic surveys make up only 15 per cent of our profit, so we have prospects for development, considering that, generally speaking, we entered this market segment last year. Previously, almost all similar operations for Gazprom were carried out by third party companies.

Last year, Georesurs conducted seismic operations in the Kemerovo, Ryazan, Saratov, Tyumen and Orenburg Regions, in the Krasnoyarsk Territory, Udmurtia, the Komi Republic, Yakutia and in the Yamal-Nenets Autonomous Area as well. Seismic studies were carried out in 25 licensed areas of Gazprom and third party companies. 2D and 3D studies performed by the company covered 235 linear kilometers and 660 square kilometers respectively. Seismic logging operations were conducted in 38 wells. The company explored and interpreted 2D and 3D data for 1,064.5 linear kilometers and 231 square kilometers accordingly. The total costs of seismic operations made up RUB 493.7 million. The company acquired RUB 415 million from Gazprom’s enterprises.

In Russia and abroad

What is the share of the geophysical activities required by Gazprom that Georesurs implements?

Our company performs more than 90 per cent of operations in Russia. Third party involvement is minimal, it is mostly related to the application of exclusive or even exotic technologies. By the way, let’s keep in mind that we do not only perform certain work, but win orders in open tenders, competing with national and foreign service companies.

What about your activity abroad?

Our main foreign project is the Incukalns UGS in Latvia, where we carry out a full cycle of geological and engineering operations for wells renovation. We implement the project in compliance with all EU standards and requirements. To participate in this project, we competed with the leading European companies, and our victory here is very significant. We believe the experience we gained in the course of this project implementation may and must be used in the Russian UGS network.

In the Russian network only?

We consider all possible ways to enter the foreign market if they are within our capabilities and are economically sound. For instance, we are cooperating with Gazprom International in Tajikistan, Uzbekistan and Kirgizia. We supply our own-produced equipment and facilities to Kazakhstan and Latvia. We have established a joint venture with Kuwaiti GOFSCO (Gas & Oilfield Services Company), for implementation of the Far Eastern projects. Now we perform standardization and certification there. We consider that the main prospects of our activity expansion abroad are related to, first of all, adaptation of our technologies and equipment to work in a marine environment. However, it is necessary to understand that our priorities meet Gazprom’s needs in Russia.

Are you ready to start operations on Russian shelf?

We already work in this area together with Gazflot. But for the large-scale penetration into international projects, we have to comply with the DNV (Det Norske Veritas), GL (Germanischer Lloyd) standards, etc. This is the next stage of Georesurs development, which we are actively getting ready for. At the current stage, we are expected to carry on some operations on the Prirazlomnaya platform and the operations as part of the Stockman project, after a relevant decision on them is adopted. We believe there won’t be any serious problems here.

Does your company participate in the development of new, non-Cenomanian, deposits?

Of course, it does. We develop Cenomanian as well as Valanginian, Neocomian, Achimov and Turonian deposits. We also deal with coal and methane formations. Evidently, all these directions will develop actively. And we are ready to participate.

The total income of Georesurs was RUB 8.9 billion or 121.9 per cent of the plan in 2011. The company performed specialized activities that made up RUB 8.7 billion (119.6 per cent). Together with that, the volume of services for Gazprom subsidiaries exceeded 88.6 per cent.

Plans and goals

What are further plans of Georesurs?

We are planning to carry on re-equipment efforts. For now, they are taken in a stagewise manner as part of the three-year program at the expense of Gazprom’s own assets and investments. I suppose this process has to be constantly performed by any company so that it could meet market requirements. We will pay special attention to our research and production results. We already have our own achievements here. For instance, we have adopted production of a whole line of standardized special well equipment, which no one else in Russia produces. However, this agreement is also unique in the global market. The parent company appraised our success, we were rewarded with the Gazprom Science and Technology Prize in 2012. We will continue to develop this sector.

We suppose we have possibilities for further assets consolidation, in particular, we haven’t made a decision on Noyabrskneftegazgeofizika yet. Gazprom Neft is planning to sell it in the market as a non-core business. Its joining to Georesurs would strengthen our geophysical direction in the oil segment and expand our possibilities.

What goals is the company pursuing?

We are not Gazprom’s profit source. So our main task is to cover 100 per cent of the parent company’s demand for geophysical services at fair prices. The second goal is to increase the amount of services for third party customers. Today they make up no more than 15 per cent of our services, but in the future we are planning to increase the share to 30 per cent. Our experience in Latvia, participation in the projects of Rosneft, LUKOIL, Achimgaz, Severneftegazprom, Gazprom Neft shows us that we may and must develop this sector. Together with that, we will develop certain technologies, which are still considered exotic in our market, and the exclusive rights on them belong to the international service companies like Schlumberger and Halliburton. We also continue relevant studies on the new technologies for well geophysics, by the results of which the new survey methods will be introduced in the nearest future.