Press: The Russian drilling market will keep growing at any oil price

MOSCOW, 28 September. /TASS/. According to Islam Nazaraliev, the CEO of NaftaGaz oilfield services company, the Russian drilling market will keep growing at any oil price.

“At a closer look to the market, one may see that the oilfield service industry has great perspectives. The Russian drilling market will keep growing at any oil price. We are actively preparing ourselves for this, purchasing new equipment”, - he said to TASS.

Nazarliev pointed out that the overall condition of drilling rigs in the country did not fully meet modern requirements while the majority of companies, especially small ones, operated 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”, he pointed out.

According to Nazaraliev, the company 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”, he said.

Agreement with VTB and Sberbank

At Saint-Petersburg International Economic Forum NaftaGaz JSC and VTB Leasing signed an agreement on the intention to finance the company’s drilling equipment upgrade and modernization program for the amount of 5 billion RUB.

“We cooperate with Sberbank Leasing in implementation of our transport and special purpose vehicles program. In the field of drilling, we challenge ourselves to achieve one million meters per year by 2020 and in five years we plan to become one of the three largest independent oilfield service companies in Russia”, - the CEO added.

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”, he warned.

“Nowadays, the so called ‘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. 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. Having in mind the existing oil prices, I believe that today is the most favourable time to start this process”, he underlined.

According to Nazaraliev, 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.