Interview with Igor A. Mnushkin, General Director: IMPORT SUBSTITUTION PROGRAMME HAS ENABLED US TO REALIZE OUR FULLEST POTENTIAL ON THE MARKET
The two-year course for import substitution in Russia following economic sanctions imposed by USA and EU still brings about a set of discussions among economists on how the improvement efforts should be enhanced. In this respect oil and gas state monopolies are increasingly turning to domestic equipment manufacturers and service providers. Imported equipment and services throughout the oil& gas industry in 2014 accounted for around 25%, two years later this rate — at Gazprom in particular — was shown to be declined by more than half.
Local companies begin to increasingly function as prime contractors and partners of state corporations in such science-intensive industry as gas processing and gas chemistry. Thus, Gazprom has already signed a construction contract with one of the major players on the import substitution market of indigenous Russian technologies — PETON Technology&Engineering Holding within the framework of which the Achimov Deposits Condensate Stabilization Unit located in Nadym-Pur-Taz region is to be constructed in Urengoy.
PETON as an EPC contractor will be engaged in civil construction and erection works using of in-house equipment.
General Director of PETON Technology Company, Igor Mnushkin, speaks with the PRIME business news agency about the company’s optimal strategies in development of domestic production and proprietary technologies, including financial resources, and the prospects for oil& gas industry in the context of import substitution.
— Western sanctions — both financial and technological — have posed the challenges to oil&gas industry on import substitution. As far as we know, the national programme in this field is supposed to be implemented in several stages up to 2020. Are you having any success in applying your proprietary solutions today and enjoying the use of equipment developed by Russian companies?
— It is obvious that fewer than all can adapt to current economic realities which dictate new terms nowadays. It is some sort of a challenge when a process of natural selection takes place: only the strongest, most proficient and experienced companies remain on the market. Forced changes in economic concepts allowed many enterprises not just to adapt to new conditions but also show achievements taking advantage of their unique experience.
Our company is currently involved with a number of projects contributing to implementation of import substitution programme. Application of Russian technologies and equipment promote the national industrial development reducing dependence of the state on foreign manufacturers. In such a science-intensive field as fuel and energy industry the in-house staffing, research and engineering, and productive competencies are of prime importance. We cooperate with different local design institutes and manufacturers thus making it possible to efficiently implement the import substitution strategy.
— Can we take it that imposition of sanctions have given the petroleum industry a new jump-start?
— Absolutely. These sanctions pose new challenges to the Russian fuel and energy industry as well as the national industry as a whole. Greater attention being directed towards national science has forced many design institutes to expand their competencies, promote proprietary technologies, involve young scientists in the works. As far as it goes, science and technology have again become prestigious to be engaged in. Not only technology is advancing, but also the project economy is improving. Economic changes ongoing in the country as a result of sanctions have caused businesses and authorities to handle finances and spend money wisely. Eventually investments have shifted from being made into foreign companies to those being made into the Russian ones. Striving for efficient and rational budgeting has made top management to be very scrupulous in their selection of contractors among local companies.
— In your opinion, do Russian technology and equipment have any advantage? What is it, if so?
— Of course! Remember our space programs, nuclear projects, missile engineering and a lot more we have not only created but still maintain global leadership in. Proprietary technologies cost less, while that their quality in many cases exceeds that of the similar foreign ones. The use of Russian components facilitates logistics significantly and reduces time to deliver equipment. What is more, the equipment is produced in compliance with requirements and standards applicable in the Russian Federation and there is no need in additional costs for their adaptation. We make active use of all these advantages during project activities.
We have invested more than three billion roubles in technology alone over the past few years. This has allowed us to develop a score of licensed technologies essential for advancing gas conversion processes in the Russian gas-chemistry sector and to become a leader in their implementation. They completely substitute their foreign analogues.
Some examples are the Amur GPP where the PETON plantwide advanced gas processing technology has been integrated with foreign cryogenic technology as well as the PETON technology of gas preparation for cryogenic processing and the LPG production technology have been implemented, all in compliance with the European standards. Another example is the Novy Urengoy facilities at which there has been implemented the PETON technology of de-ethanization gas treatment recovered from Achimov and Valanginian Deposits condensate to supply a new gas chemical facility with raw materials. In addition there’s LNG plant in the area of Portovaya Compressor Station where PETON technologies and equipment in synergy with the licensed Linde AG technology are being implemented. They have been implemented with some other facilities as well.
At the same time we are mindful of petroleum technological development which has been previously provided for by our significant financial and intellectual investments. And we carry on with their improvement. Gas chemical technologies began their rapid development too. We continually invest in intellectual inventions — not only in technologies but also in heat-mass-exchange equipment. In the nearest future we are going to allocate more than 10 billion roubles for new technologies and equipment and their integration. We have to be continuously concerned in our growth and development to engage our clients — both in Russia and abroad.
— PETON has been tracing its history in advanced technologies and large-scale projects for more than 30 years. How did it all begin?
— It all began when I was a student. At the Ufa Petroleum University my research supervisor Konstantin Bogatykh and I began our collaboration in import substitution of some innovative petroleum technologies: a group of our scientists has developed a new technology in rectification and put it into operation and has also developed the first in the Soviet Union replicable calculation (rectification) model for a computerized separation of various mixtures, and that was the model which made for an effective revamping of the refineries at work as well the facilities under construction. In the early 80s we began to intensively put the scientific research results into practice having founded an engineering division which subsequently became a main office within PETON Holding.
— When did PETON get the first large order?
— It was in the early 90s that we were contacted by the management of Salavatnefteorgsintez — concerning import substitution of a vacuum distillation unit of a large condensate primary processing unit manufactured in Germany. We have installed a vacuum column with PETON packing. It has been in operation ever since. We got large orders also from Moscow, Komsomolsk, Ukhta and other refineries.
In 1996 we started negotiations with Gazprom on replacement of column internals with a PETON packing at the Orenburg gas processing plant and in 2001 the packing was assembled and put into operation. That work at the Orenburg GPP resulted in higher throughput in gas processing from the Karachaganak field from two to seven billion cubic meters per year due to the PETON technology and equipment applied. At the Orenburg helium refinery ethane production has increased by 20% and that of LPG (Liquefied Petroleum Gas. — Ed. note) — by 50% with the products of the European quality.
We then began to cooperate with major oil and gas companies throughout Russia, including our native Bashkiria.
We have successfully implemented a number of large projects at such Bashneft plants as the Ufaneftekhim, Novoil facilities, Ufa Oil Refinery and Ufaorgsintez, which enabled these companies to bring the Nelson complexity index up to the highest one in Russia.
— Do you manage to work outside Russia?
— Yes. The company works with enterprises in Uzbekistan, Kazakhstan and Turkmenistan. We have developed and implemented Amine Sulphur Gas Sweetening Unit Upgrade Project at Uzbekneftegaz. At Shurtanneftegaz we have ensured decrease of specific energy consumption by 25% while increasing in capacity by 50% and extending of stable operating range. In Turkmenistan as required by Turkmengaz State Concern at GPP in the most massive natural gas field Sovetabad-3 the gas processing capacity has been increased from 20 to 25 billion cubic meters per year with the energy consumption cut down by 10%. In Kazakhstan a new technology of sulphur dioxide treatment has been implemented by our company to support urban needs of the city of Aktyubinsk.
— What is specifically done by your company? What is provided by your company that makes it so distinguishable among others?
— PETON is a technology holding which is engaged in engineering and construction of EPC projects in oil and gas processing and gas chemistry industries. The corporate headquarters is located in Ufa with its offices established in major cities all over Russia. Engineering capabilities of the company cover the entire production chain — from technology solution development to production and hardware supply as well as building and installation works. There is a big advantage in having our own manufacture and engineering institute available: the holding company incorporates three research institutes in Ufa, St. Petersburg and Rostov-on-Don.
PETON has implemented a total of more than 170 projects with many of them covered by our own patents: as of today we have 70 patents covering well-proven technologies that really work as well as the equipment that contributes to import substitution and high economic performance.
Apart from design works, we invest in science intensively and broaden our competencies for the purposes of complicated scientific research projects pertinent to the future. Thus far we have developed a score of licensed technologies for their implementation at complete refineries which use various sources of raw materials and provide a wide product range. These technologies and equipment are covered by more than 70 Russian patents.
— As a matter of fact, it is the only Russian EPC company in fuel and energy industry. Does it give you any benefits in the market?
— Well, of course. Acting as an EPC contractor (Engineering, Procurement and Construction is a particular form of contracting arrangement used in a construction industry where the contractor is made responsible for engineering (survey and design works) and obtaining approvals required. — Ed. note) the company ensures maximum equipment locating at the Russian plants — no less than 60% of the total volume that significantly reduces currency risks. We have been in the Russian market since 1965 and today there are fifteen hundred specialists on the stuff. Working with global licensees, we gain experience and skills which are subsequently applied to new projects within Russia. For instance, at PJSC Gazprom we are now carrying out three EPC-based projects worth over 200 billion roubles which are based on both in-house and foreign technologies.
Within the Amur GPP project our company jointly with Linde AG is performing an EPC contract for a cryogenic part. The synergy between these two companies enables us to perform the contract using our own resources 100%. We can compete with American engineering companies with confidence.
— Big monopolies in just the past few years began to entrust Russian companies with a turnkey project management. What are the risks to a client and a work performer in this respect?
— Actually cooperation with Russian general contractors gives more benefits to the ultimate customer. Successful achievement of objectives in construction and renovation of oil and gas facilities is only possible subject to formation of a single point of responsibility within EPC framework. It is a critical and considerable work which requires grave responsibility from a general contractor. But eventually it enables a client to minimize expenditures, risks and time of performance.
PETON company — as a corporate integrator on the existing large-scale EPC projects for Gazprom — ensures alignment of all the engineering solutions and suppliers’ contractual obligations for any work to be completed on schedule.
— Currently Gazprom has an ambitious project related to expansion of capacity for processing of wet gas extracted from Achimov and Valanginian deposits. Do you have plans to participate?
— Yes. What is more, I believe that our company is able to meet the challenge of processing wet gas of Nadym-Pur-Taz region. We have all relevant competencies and experience proven by Gazprom. A good example is a technology developed by our company for a similar Amur GPP project being now efficiently carried out.
Moreover, we can execute this project throughout all its stages. Today acting as a general contractor we are carrying out Gazprom projects at the same region: for instance, Achimov deposit gas condensate stabilization unit which is to ensure processing of heavy hydrocarbon feed extracted from the West Siberian fields. We hope to be of help to Gazprom in development of Novy Urengoy wet gas resources for ethylene production which is the main source for raw materials used for gas-to-chemical production.
— What is your opinion on the future of gas processing technologies in Russia?
— The future lies in monetization of gas in a gas chemical industry, in sustainable use of wet gas resources, in Russian technologies utilization and their further improvement, in import substitution of technologies and equipment we have to import so far. The future is in the facilities implemented within EPC contracts under Russian technologies.
RIA Novosti https://ria.ru/economy/20170628/1497428765.html