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Tuesday, 15 January 2019 18:00

We are waiting for the oil-gas industry’s focus to be shifted towards the upstream sector - Head of the representative office of CETCO Featured

We are waiting for the oil-gas industry’s focus to be shifted towards the upstream sector - Head of the representative office of CETCO

Caspian Energy (CE): Mr. Krashakov, could you please tell about the activity of the company?

Artem Krashakov, Head of the representative office of CETCO in Azerbaijan: CETCO is an abbreviation of the Capital Equipment & Trading Corporation. The company started its business from supply of medical facilities as far back as the Soviet period. It was one of the American companies which brought equipment from the USA into the CIS. Today we are an authorized representative of different American producers.

As you know, in the USA, many specialized production enterprises do not engage in sales, service and distribution in order to avoid spreading themselves too thin. They want to focus on their equipment, quality of products and avoid different intermediary problems.

As experts in international trade, we have provided them such opportunity and have been operating since 1991 in the CIS as an exclusive supplier of several large enterprises such as ECKEL Manufacturing Inc. - Hydraulic Power Tongs andAccessories (tubing and casing running), and SCHRAMM which is producing  modern mobile drilling rigs. In the 90s, we also represented interests of other large companies such as Halliburton engaged in this field.

CE: Whom do you consider your competitors?

Artem Krashakov: Our competitors are those who are producing the similar equipment. We have direct competitors in Canada and USA. Of course there are many companies trying to produce the similar equipment, but they still cannot reach our indicators, though such countries as Russia and China are actively extending their presence in this segment.

As far as hydraulic tongs are concerned, this equipment is used for connecting different pipes with a required torque in order to ensure safe and reliable functioning of the drill (or other) pipe at the wells with a depth of 5,000-6,000m or deeper. No company can surpass the equipment we produce in terms of quality, specifications and indicators. We are choosing the best models of equipment which belong to the best producers, working with them, supporting them, representing them in the region where we have experience, market understanding and vision of prospects. For us, it is the CIS states where we have been working since 1991. Since 2010 we have already carried out direct shipment of our companies’ equipment to Baku for drilling contractors of SOCAR. Prior to that, other service companies had also used our equipment which had been acquired not directly in Baku but in other countries. We also consult companies and provide maintenance services because if you sell high-quality equipment, you should also ensure an appropriate maintenance service.

CE: How far have the high precision drilling technologies progressed compared to the 90s?

Artem Krashakov: High precision exploratory drilling technologies, that is a question to geologists. That is a 3D seismic survey. Now there are very good advanced search technologies based on different impulses. We can also help in use of such drilling technologies. While addressing the Baku oil-gas conference in 2018, geologists underlined high potential of the Caspian basin between depths of 7,000 and 10,000m. Our company is here to help them in this. At Umid field SOCAR specialists are now performing drilling operations independently at a depth of 6,500m which is a very serious depth. We do really hope that there will be operations performed also at Umid-2 platform at a depth below 6,500m. It is very complicated. We intend to take part in tenders if they are announced for Umid2, Umid3 and Babek fields, and offer our solutions providing technological guarantees.

In Azerbaijan, the very first equipment we supplied has been successfully operating for 8 years. Equipment of competitors works about 4 years. In general, we have machines operating for more than 20 years. Reliability margin is high, just right for complex and long-term fields.

Nowadays, exploratory drilling has become more effective. Umid project was explored perfectly well and therefore SOCAR did not waste time on preparing semisubmersible platform and fixed the platform right away.  Thus, they saved both time and funds. Most fields in Azerbaijan are nowadays ready for exploratory drilling In terms of equipment, we are offering different products. For instance, we have measurement-while-drilling equipment which withstands 250 degrees of heat, though the range usually makes 180-200 degrees. Now there is a concern about investments because nowadays big funds flow into international global downstream projects. Investments in Turkey are made into refining, transportation, pipeline projects. Now it is more topical which is why all efforts are focused in this direction. 

CE: How long has CETCO been working in the market of Azerbaijan? How do you assess the potential of the Azerbaijan market?

Artem Krashakov: We find the market potential well enough. It is necessary to work, create more opportunities for local companies, drilling contractors. They have necessary knowledge and it is necessary to provide them more investment opportunities for acquiring equipment. They have to see how many projects they have, what kind of operations have to be held, and do their long-term planning.

It is local contractors which have to be broadly involved in the work. It is drilling and development of new fields going to be of key importance in the near future. There is a big potential, but it seems like it has not been fully unleashed. All the efforts are now focused on the SGC, launch of the refinery for Petkim and opening of petrol stations in Istanbul. SOCAR is heavily investing into petrol stations in Europe, oil refineries and pipeline projects. Of course, we wish we could see much broader focus on development of fields so that to have part of own investments directed towards this area.

The crisis years of 2016-2017 have passed and we saw quite another dynamics in 2018. There has been a growth which runs in all areas. Efforts are being stepped up, the number of projects is growing, and plans abound. Therefore, we think that 2018 was crucial while 2019 will be much better. We look forward to the launch of Umid and Babek projects, development of Absheron and Gunashli fields. There are very many ongoing projects in Azerbaijan which are in need of development. We are also ready to help in onshore drilling facilities which have not run out of steam yet. There are modern drilling rigs which are very mobile and move fast. This type of equipment can also be used during surveys. It is necessary to commence new projects in 2019-2020, and according to the official statistics, the volume of drilling operations performed by SOCAR is growing.

CE: Which new drilling technologies does the company use?

Artem Krashakov: We are ready to help, provide service and a required product. We always consult with a customer and are always ready to make the most effective offer. They assign us a task while we offer a solution which is the most effective in terms of speed, quality, price and package of equipment. Here, we are interested more than any party in offering the most effective solution. We took part in tenders and competed with different producers, for instance, with new players from Ufa, Chelyabinsk, China and other companies. They were represented for the first time at the Caspian Oil and Gas exhibition held in summer 2018. But no company has managed to reach our indicators yet.

CE: In which other industries are CETCO’s products widely used?

Artem Krashakov: We are also actively engaged in the mining industry. When we all speak about oil industry, we forget that diversification is always positive. Nowadays, Azerbaijan does have a potential in the aluminum industry. It involves bauxite, alunite and the iron ore industry. The Dashkasan processing plant should be upgraded. It is a good facility with a big potential. Besides, noteworthy is the gold producing and glass industry, production of different building mixtures.

We are offering complex solutions in the mining industry. We have our own production capacities. It is a wide range of mining equipment, as well as designing of turnkey construction of plants. We do not act as contractors, we do not possess mines, but we can do turnkey construction of whole plants. We have interacted with gold producing companies in Azerbaijan, visited enterprises and made our offers. We have not been actively engaged in this field yet, but we had several research projects and now we are considering the possibility of carrying out a more active work in the mining industry as it has a very good potential.

As far as the aluminum industry is concerned, a full-fledge combination used to be applied in this area once. There was an initial production-processing in Ganja while smelting of final aluminum product was carried out in Sumgayit. This chain can be restored today. We are ready to lend broad support in the initial stage of the mining industry, in processing and production of concentrate.  In 2019 we want to become seriously involved in these projects. But for now, the potential of the mining industry is not used fully. The Caucasus is rich in natural closes and located close, but no broad-scale operations are running there now.

CE: Given the growth of oil prices, which projects will the company implement in 2019?

Artem Krashakov: I would not focus just on oil prices because it is a strategic work and all fields are developed for 6-7 years into the future. Today it costs cheaper, tomorrow its price can be higher. Production costs much cheaper. I hope that all the declared field development projects will be implemented as TANAP has been launched. TAP will be launched by 2020. STAR oil refinery has already been built and it is time to return home and work on the Caspian Sea. If the oil price does not go down below $25, it is still possible to work. It is possible to work at $30, $50 prices. If it reaches $60 - $70, that would be wonderful. I think it will be even bad to have a price $80 because we will relax again, which only hinders the work.

Every cloud has a silver lining. These crisis years (2014-2016) made everybody to count money, raise efficiency in each detail, work, staff and equipment search. Now everybody counts money and talk about efficiency.

CE: 4 years ago you said that onshore fields of Azerbaijan contain considerable residual oil reserves and their production requires using modern techniques and technologies. How are things progressing?

Artem Krashakov: Well, frankly, I would say that the situation has changed. Onshore reserves are being developed as a residual and are not a priority because the volume is too low which serves as an objective factor. There are also subjective factors - hands do not reach them.  I think the situation here has not changed. Using the same modern drilling rigs, a new approach of injection into formation, submersible pumps which work effectively, can raise oil production. Besides, it can be done with a minimum amount of funds. When we discuss a construction of the new platform for ACG, the matter concerns $5bln. When we talk about onshore drilling, it is a case of $3million. It is another scale. The operation of big offshore platforms has been recently stopped. For instance, development of Umid and Babek fields has been discussed by foreign partners for a long period. SOCAR can work on its own, but it needs an investment partner. If we take, for instance, Absheron the development of which was postponed for a long period, its potential is much higher than expected. We are always ready to help our drilling contractors and we are waiting for the focus of the oil-gas industry to shift towards upstream. We hope that activation of field development will start in 2019-2020, but high-tech equipment is needed for doing development in the same depths.

 

 

 

Thank you for the interview!

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