Sukhrab Khadiyev, CEO of Avangard Nefteservice, told Molecule about the specifics of doing business in the oil and gas sector and innovative solutions in the field of providing services in this industry, as well as prospects for export development and entry into the developing market of the Middle East region.
Anna Zhukova was talking
Suhrab, please tell us how you came into this business?
By education, I am a specialist in geophysical methods of well exploration, and I have always been interested in tasks related to mining. After graduating from Russia’s leading oil and gas university, he began his career in international oilfield services companies and then continued working on the platform in the Sea of Okhotsk on the Sakhalin 1 project of Exxon Neftegaz. Further, he used all the accumulated experience to create and develop his own enterprise Avangard Nefteservice.
What is the specifics of your business?
We produce equipment for cementing and drilling wells and provide service services. The Avangard Nefteservice company is the flagship of a group of manufacturing and service companies. The Group also includes Avangard Engineering, Polystal, Promechanika and a number of other enterprises. The group of companies is the most organic option for business development, because part of our volumes is concentrated on production areas – mainly structures, workshops, machine tools, various technological equipment that specializes in metalworking, and the other part is allocated to service areas. We specialize in the processing of sheet metal, polymers by various methods of injection molding and metal machining, including the use of high-precision CNC machines.
The main focus in production is on well cementing equipment – these are various types of tooling, packers, step cementing couplings, as well as drilling equipment necessary for directional drilling. Subsidiaries belonging to the group provide services. Among the clients are such oil companies as Lukoil, Rosneft, Irkutsk Oil Company. We are currently negotiating and planning cooperation with Gazprom, Gazprom Neft, as well as with NOC.
Tell us about your ambitious solutions for the production of innovative equipment?
As an independent oilfield services company, we pay great attention to the introduction of technological and production innovations. In particular, recently we have been focusing in our production on the technology of directional drilling using an innovative method of fastening the casing by laser welding. The method allows for simpler and more economically feasible solutions using pipes for well construction. Savings on one iteration of the column descent for oil companies can range from $35,000 to $150,000, with a total budget for such an operation ranging from $100,000 to $400,000, depending on the design of wells and the type of pipes used.
With the use of this technology, the construction of more than 150 wells has already been completed in Russia, including in the Republic of Tatarstan. Therefore, I believe that Tatarstan is undoubtedly one of the most innovative regions of the Russian Federation, and is always ready to introduce new technologies.
In addition to production, do you use innovative approaches in management?
If we talk about management and organization of production, we have been actively participating in a national project called “Labor Productivity” for the last one and a half to two years. It involves the implementation of the best international practices in management processes. Among other things, one of the most important tools for increasing labor productivity was the introduction of lean manufacturing principles and the Japanese kaizen philosophy at enterprises. The national project encourages participants to reduce production time and waste resources. The process involves the elimination of various types of losses — from overproduction and excess inventory to excessive processing and remaking of defects.
In 2023, we successfully completed the installation stage of participation in this project, which was converted for us into a significant increase in productivity at the pilot site – about 30%. And at this stage, we continue to replicate the experience gained to all structural units of the enterprise.
Participation in this national project helps to optimize processes, look at your own business from a different angle and look for new opportunities for its development. The project team provides a large number of different theoretical materials and participates in working them out in practice. We went to production sites, launched specific optimization processes there and reviewed the entire value stream in general.
Are you talking about the process of creating product value in marketing?
Yes, but from a slightly different angle – marketers look at the product and its value from the perspective of consumer preferences when creating it or changing the qualities and functionality of the product, and we evaluate it from the point of view of production and technological processes.
Roughly speaking, you look, for example, at a flower and you like the bud itself, and everything else – thorns, leaves, branches – is superfluous. Accordingly, you buy a flower precisely for the sake of a bud. At the same time, the production process is sharpened to cut off everything superfluous. A lot of operations can be redundant, accompanied by losses and overproduction, marriage. As sculptors, we cut it off, leaving only valuables. In this context, we reviewed the entire value stream.
Does participation in state programs and your course on import substitution respond to you with the loyalty of the state? Does it increase the effectiveness of GR communications?
I think so, because we are moving in the outline that the state sets for us. Accordingly, we are fulfilling the goals set by the government. We adapt quite quickly to changing conditions, to changes in the market. And it’s always good when businesses are able to adapt quickly to external challenges. The national project assumes some kind of support. There are tools to attract financing from various funds on very good terms – at a bank rate from 1 to 3% per annum.
Among the support measures, there are also state programs for the establishment of exports and import substitution. We cooperate both with customers – we develop equipment for specific tasks of our clients, and work with state funds to attract investments to solve import substitution problems. In fact, there are more than 300 development institutions in Russia, each of which offers a wide range of business support measures. Today, there are a large number of funds that allocate grants and subsidies for various programs. For example, the Innovation Assistance Fund, Skolkovo, serious support programs from the Ministry of Industry and Trade, the Ministry of Economy and many other sources.
Avangard Nefteservice is a member of the IMG-International Mol. Group of Companies. What are your strategic plans for export development and what message can you formulate for our partners in the Middle East?
We are ready to take on turnkey well construction projects. That is, we can act as a full-fledged integrator for our potential partners in the Middle East. Our advantage is competent project management, that is, we fully take over all services and manage technological processes, carry out author’s control – supervising for compliance of completed works with the customer’s specifications. The complex of works includes logistics with the delivery of equipment and personnel to the work site, directional drilling service using our own PDC drill bits and screw downhole motors, as well as a telemetry system based on an electromagnetic and hydraulic communication channel. And finally, our unique advantage is the service for the descent of bypass columns using innovative laser welding technologies. This is the innovation that allows you to save almost twice the budgets for the corresponding operations. It should be mentioned that we are ready to supply well completion equipment, such as shank suspensions, gravel filters, electro-centrifugal pumps. Thus, we position ourselves as a full-fledged integrator within the entire chain of technological operations for the construction of oil and gas wells.
We are open to active cooperation and negotiations, and we are looking for the opportunity to locate a production plant on the territory of the Persian Gulf countries. Avangard Nefteservice Company, in the process of entering the territory of the Middle East region, plans to attract local staff to work – to create jobs and actively train employees in order to transfer experience. We are ready to share our competencies.
Do you generally follow the course of the ESG agenda? Do you practice corporate social responsibility tools in the regions where you operate?
Yes. Firstly, we create jobs and provide training in every region of our presence. The company is certified and accredited in accordance with all legal norms and labor protection requirements. We pay all compensation for harmful working conditions and motivational incentive bonuses. We have a mentoring and internship system in place at the company. That is, any new employee is trained quickly enough and begins to perform their work duties. We practice sports support measures. At the regional level, we sponsor sports events and teams. We develop corporate sports and promote a healthy lifestyle. As a follower of Islam, I always try to motivate people to take responsibility and take care of their health.
What marketing communications do you use to support export processes and expansion into foreign markets?
We actively practice exhibition activities, take part in all federal and international exhibitions, including preparing for the next event – the Islamic World Forum in Kazan.
In 2023, they participated in the exposition at the ADIPEC exhibition in Abu Dhabi, where they demonstrated innovative laser welding technology, which aroused great interest from almost all participants of the exhibition. And all visitors to our stand unanimously noted that the technology is very interesting and promising, and assessed the economic feasibility of its application. Many representatives from different countries expressed a desire to continue the dialogue on the pilot implementation of this technology in the well construction process. We are already negotiating with representatives of the oil and gas sector of Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Iran, and Iraq.
Why did you set a course specifically for the countries of the Middle East?
We place such a serious emphasis on entering the Middle East market because the region is developing dynamically and at the same time is open to the introduction of new technologies. Taking into account the geopolitical realities and the mood for localization of production processes in the Middle East, we are ready to offer our partners a quick launch of joint work and a flexible approach to logistics and providing projects with all necessary equipment.