We Are Betting on Growth in the Russian Market

GEOTECH Holding offers innovational seismic acquisition solutions to Russian and foreign companies

GEOTECH Holding manages the assets of the largest geophysical company in the Russian Market, IG Seismic Services (IGSS), which was set up on the basis of a joint venture between Integra and Schlumberger in 2011. The companies that joined IGSS played a significant role in the development of the Russian oil and gas industry and had been operating in the country since the 1940s, which gave the company a leading position in the Russian seismic services market. The comprehensive technical upgrading at an unprecedented scale in the seismic exploration sector that took place in the post-Soviet era became an important step in the development of GEOTECH. Rustam Rakhmatulin, Vice President of GEOTECH Holding, spoke about the achievements and the new projects taken on by the company in an interview to Maria Kutuzova.

— Rustam Rashidovich, what are the key specific features of the modern Russian exploration services market you would like to mention?

— In the last several years, we have seen changes related to acknowledgement of the importance of exploration for future oil and gas projects in Russia. Earlier, exploration had been conducted employing conventional methods, rather formally and by inertia to fulfill license obligations, which resulted in mistakes in follow-up exploration and development drilling that affect the ultimate costs in the development of fields. Acquisition of the most wholistic information and minimization of possible mistakes is keyin geological exploration. It is necessary to reasonably evaluate subsoil resources, how to produce them in the best way, and how much it will cost, and it is also necessary to calculate a project's economics. In the past, exploration geologists had fewer tools in their disposal, while today engineering and science have moved forward significantly and offer many new seismic tools to oil and gas companies that can be adapted to the specific geological conditions of a particular field. It is clear that such services usually are more expensive, because they require significant resources: manpower and materials, including expensive equipment. But I think that these costs are justified and Russian oil and gas companies are beginning to understand this.

— What are the prospects for development of exploration in Russia?

— The prospects are very bright. There still hasn’t been exploration for hydrocarbons on over 80% of the country’s territory. Even in Western Siberia the amount of work to be done is huge, including revisiting already explored field that still have large, untouched areas. Earlier, all potentially prospective areas could not be surveyed: there were neither the means nor methods which would have allowed to address geological tasks in complex areas. Now we have such technologies. In addition there are other formation horizons like the Bazhenov Suite, and it is necessary to push forward in its development. Companies have already announced plans in this area. That is why exploration geologists stand to remain busy in this region for many years to come. The scale is impressive: we are talking here about dozens of thousand square kilometers. Yes, Russian companies have managed to stop the decline in oil production in Western Siberia. But to ramp it up and sustain a high level of oil recovery it is necessary to continue exploration and to apply advanced technologies in this traditional region of Russian oil and gas production. It is always necessary to continue to push the bike pedals; otherwise, we will slide back... Development conditions and the structure of fields in Eastern Siberia are different fr om those in Western Siberia: challenging geology and tectonics, tough climate conditions, rough terrain, and a complete absence of infrastructure. Exploration of new fields is very complicated. It is unlikely that we will discover fields which are similar to Samotlor. Nevertheless, we believe that Eastern Siberia has great hidden potential. There is enough work in this region for years to come. Additionally, the northern coast of Russia has not fully been explored: Taimyr and the Yamal Peninsula. No serious studies have been conducted east of Taimyr. It is clear that these areas are hard to access, infrastructure issues are being tackled slowly, but soon enough exploration geologists will reach these areas, too. And today we are speaking only about onshore areas. Evidently, Russia has to launch a large offshore exploration program, and it is also necessary to study transit zones and shallow waters. There are lots of plans and all of them should be implemented provided there are no global macroeconomic changes.

— GEOTECH Holding is a leading Russian exploration company. Could you tell us about the major achievements of the company in recent times?

— We recently disclosed our 2012 financial statements where we noted three important events. The first is the successful integration of GEOTECH and Integra, which merged their assets in 2011. It is also necessary to note another significant achievement: the signing of a long-term agreement with OJSC “GazpromNeft.” We are here in the right direction because a long-term partnership with a production company facilitates the building of trust and helps better follow work schedules. The third achievement I would like to note is the deployment of innovational high-density seismic acquisition technology using the UniQ system based on the product developed by Schlumberger, which is our partner and minority shareholder. Just recently, we implemented our first project at “GazpromNeft” fields using this technology. The customer agreed to apply this method and we managed to demonstrate that the application of UniQ is not only reasonable and justified, but it also provides excellent results.

— What other unique technologies and solutions can your company offer in the Russian market?

— I would like to note high-density seismic acquisition: when necessary, we can conduct seismic surveys using a three-component source. GEOTECH performs seismic exploration in transit zones: technically, highly challenging projects with the application of subsea equipment. Currently, we are conducting seismic exploration at the Sarmatskoye field in the Caspian Sea for LUKOIL. Our company is can deliver on such projects in any water areas, including northern seas, as wells as rivers and lakes. We have recently purchased new equipment for such surveys. This is the best equipment offered in the global market. Additionally, GEOTECH Holding is can offer to its customer special techniques for boosting productivity and intensifying seismic acquisition.

— What are your thoughts about the role of innovation in the development of an enterprise that focuses on exploration?

— A modern, focused on development, exploration company does not have the right to ignore innovation. Otherwise, it is bound to soon become an outsider. We believe that it is necessary to track all new technologies developed in our segment. Currently, there are several trends in seismic exploration: high-density, high-resolution surveying. The second trend implies the application of three-component sensors for the recording of both P-waves and S-waves and for their emission. Another trend is the application of cableless systems: self-contained sensors that are not connected to the cables of central stationary electronic systems. They record a signal and then theses sensors are delivered to the base after some time (usually once a week or once in several days) to read the information. This significantly simplifies seismic acquisition in remote areas. We try to track these innovations. We meet with suppliers of equipment, we study their advantages, and order small batches for testing. In addition, we have our own plant that produces non-explosive electromagnetic sources for the emission of seismic signals wh ere we develop a source for multi-component excitation and a "smart source" that allows to minimize the impact of the human factor. Such a source is capable of assessing when a signal is insufficient, stop operations at this spot and switch to another spot. GEOTECH Holding invests a lot in R&D. I think that this is the only possible development option for us if we want to retain our leadership position in the Russian market and become the best onshore seismic exploration company in the world in the next 5-10 years.