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Press: Foreign companies may hijack Russian oilfield services

Press: Foreign companies may hijack Russian oilfield services
The drilling service sector of the Russian oil and gas market will keep growing despite fluctuations of oil prices. Islam Nazaraliev, CEO of NaftaGaz oilfield services company, expressed such opinion and pointed out that drilling companies were purchasing new equipment to get ready for it.

Moreover, in an interview to TASS, Nazarliev acknowledged that overall condition of Russian drilling rigs did not fully meet modern requirements. The majority of medium companies operate obsolete and worn out equipment.

“Last year we commissioned four new drill rigs and we continue to invest in technical upgrading. Before the end of 2020 we plan to complete full modernization of the equipment fleet and bring the average age of the drilling rigs to 5 years”, said the CEO of NaftaGaz.

According to Nazaraliev, the company already spent RUB 3.7 bln for these purposes in 2015-2017. “Meanwhile the amount of investments keeps increasing, over RUB 2.6 bln were invested in 2017. Our leasing partners help us to implement our plans”, pointed out the top manager.

Nazaraliev pointed out that if the existing prerequisites persist within a medium and long-term perspective, “foreign contractors will keep penetrating into the high-margin servicing section and finally will take the dominant position in the market owing to a more flexible global structure, investment opportunities, and access to cheap and long funding”.

“It appears to me that our country has a serious oilfield service legacy and deep traditions and it would be very dangerous and myopic to lose them. Whatever is good and convenient for small monarchies in the desert can be somewhat of a pistol to the head for our country with its role in the world. Since the collapse of the USSR many mindful people have repeatedly seen that the so called free market for some reason always “judges” to our disadvantage”, the CEO of NaftaGas warned.

“Nowadays, serious import substitution activities are being implemented in the country. For the most part it applies to localizing process equipment production. I believe that such activities shall also address the Russian companies, particularly those of the oilfield services branch, distinguished by a sustainable growth and a great potential and suffering from the lack of own investment funds”, Nazaraliev said.
“The government should develop and implement efficient programs to support such companies, namely to create privileged, simplified terms and conditions of raising and soft terms and conditions of repaying investment funds”, said the top manager, “Having in mind the existing oil prices, I believe that today is the most favourable time to start this process”.

The CEO of NaftaGaz summed up that a more active involvement of the government in resolving the issues of the industry including, but not limited to, development of fair communication lines between its entities which will inevitably result in strengthening of Russian oilfield service companies, development of new technologies and the entire industry.