Business and Power Alliance can help subsidy region out of crisis.

Among the first-rate oil and gas companies there has come NK RussNeft OAO. This became possible owing to the rapid economic development, advanced technologies and wise strategy of the company. The company’s total crude oil reserves exceed 600 million tons; its annual output has reached 14.5 million tons. The geography of RussNeft activities covers Western Siberia, Tyumen, Novosibirsk, Ulyanovsk, Penza, Samara, Bryansk and Leningrad regions, Krasnodarsky krai, Udmurtia, Komi, Belarus. Everywhere RussNeft is implementing its large-scale programs related to technical re-equipment of its enterprises and tackling social problems. The company’s industrial and economic activities in Russia’s remote areas promote recovery of their economy.

Victor Vaguin

Almost simultaneously one year and a half ago in the Ulyanovsk region there came the time of new Governor Sergey Morozov, and new oil producing company RussNeft. Basing on a cooperation agreement for two years already the regional administration and Russneft have been sparing no effort trying to help the region out of crisis, creating jobs and developing production and social infrastructure. This partnership has produced most remarkable results.
Governor Sergey Ivanovich Morozov told us about this experience:
- We welcome the initiative of RussNeft, investing money in the economy of our region. We also hope that this cooperation will henceforth strengthen and improve. In April this year a respective agreement was signed by the local administration and RussNeft President Mikhail Gutseriev. In this document special attention was paid to nature-conservative measures as well as improvement of industrial and scientific potential of the region. The scrupulous approach of RussNeft to the implementation of its commitments may provide a good example of conscientious partnership. Oil production rates keep growing year in and year out. If in 2004 the company produced 615 thousand tons of crude oil, in 2006 the plan is to hold a record of one million tons. It would have been inconceivable without significant investments into production drilling and exploration. Last year the company spent 713 million rubles to suit these ends and in the current year this figure has increased by 96 millions.  Along with the growth of oil production the public benefit of large-scale business increases. In 2004 RussNeft transferred 140 million rubles into the budget of the Ulyanovsk region. In the nearest future the company plans to expand its presence in the region by increasing the resource bases of Nafta-Ulyanovsk ZAO, Ulyanovskneft OAO and Nefterazvedka OAO (Ulyanovskneft is developing 24 oilfields, Nafta-Ulyanovsk works at nine oilfields). The three subsidiaries of RussNeft are making good use of the vesteNeft the situation here was much different, the companies were facing difficulties. Oilfields design documents lacked professional approach, oil production was done inexpertly. Actually bankruptcy was impending. Under these circumstances wonderfully worked RussNeft’s management style which consisted in drastic introduction of advanced technology backed by powerful financing. In the 2004 investment program special emphasis was laid on the necessity to control delays in developing design documents, to introduce order in the basic production process, to increase exploration efficiency and to do expert judgments related to efficiency of new drilling techniques, oil production growth and oil pools crude recovery. The policy aimed at increasing oil output is stipulated in RussNeft’s investment program for this year. All-round exploration has been done in Cherdaklinsky, Novospassky and Radischevsky districts. Design and engineering documents for the pipeline, transfer stations and Transneft acceptance station are being completed. All this ensured, anticipated oil production in the region will amount this year to 850 thousand tons. Next year Russneft investments into the region’s economy will exceed 1.24 billion rubles which will allow bringing the oil output to one million tons.  Such active strategy of attracting Russia’s capital has permitted to raise the oil economy from its knees. Specifically within eight months of this year Ulyanovskneft installed crude treatment system UPN-500 having outlaid 34 million rubles. 14 newly drilled wells at 6 oilfields were provided with oil collection and loading systems and other infrastructure facilities, a 5.5 km access road was made. In December 2004 14-km pipeline Novospasskoye-Klin was started up which was an important step forward on the way to developing an up-to-date production infrastructure at the oilfields. There are still many other things that RussNeft can do. Presently 13 more oilfields are being explored.

Quick Growth
Victor Kurochkin, General Director of OAO Ulyanovskneft
- In our region there are 48 oilfields already explored. This suggests that the region could be promising for further explorations. Crude exploration and geological studies are done by RussNeft’s subsidiaries Ulyanovskneft and Nefterazvedka and paid for by RussNeft. Since we became part of the big holding company a new stage has been opened in the development of our company. In the beginning of nineties we annually produced not more than 50-60 thousand tons of crude oil, and in 2002 the output hit 312 thousand tons, in 2004 it exceeded 615 thousand tons, and in 2005 we anticipate 850 thousand tons.  The growth is rash, indeed! We have given our word to the region administration that in 2006 we shall produce more than one million tons of crude. To accomplish this goal we have placed the work on a wide footing building and reconstructing facilities at 33 oilfields, found in 6 districts of the Ulyanovsk oblast. Here we introduce advanced technology, install up-to-date electronic equipment. In view of redoubling gross domestic product by 2010 as set by President of RF the 2005 investment program in the value of 940 million rubles has been amended towards significant increase which will automatically raise tax proceeds of all levels. Moreover there will be more support for regional social programs.
- Recovery of the oil industry, the Governor continues, gives hope that our region will overcome the crisis and take a worthy place on Russia’s map. Only a few years ago the visit of RussNeft President was looked upon with skepticism. I recall the episode when the President came to the remote Volodarskoye oilfield. The equipment there was old, utterly worn-out and hardly operational. However Mikhail Safarbekovich seemed to be pleased judging by the look in his eyes when he was closely examining the facilities making notes in his notebook. By investing money in the remote oilfields and introducing advanced technology, specifically horizontal drilling, the head of RussNeft has given them new life. Never before citizens the Ulyanovsk region had witnessed ten times growth of the working efficiency in oil industry. Today RussNeft’s subsidiaries have high production standards, perfect access roads to the wells, there is no fuss or noise during the work, everything is done in a briskly way. The wages are high. Duty teams are accommodated in well-equipped trailers having a kitchen, a shower, a bedroom and a rest room. Concern for people always prevails when accomplishing goals set by RussNeft. In addition to the high salaries the best workers are awarded with honorary titles and diplomas which are also good incentives. In other words, the holding company steady development concept implies not only technical and organizational constituents but also the long forgotten socialist competition technique adjusted to the present-day reality.

Concern for People
Sergey Vasyanin, oil production operator
– Before we used to work every day, and now there are working shifts. When our Ulyanovskneft became part of Russneft we began to buy new equipment right off, and working conditions changed. Control at the oil extraction bettered which resulted in more crude production. The Best in Profession Competition is regularly held. For taking the first place this year I was given a TV set and a medal, my name was entered into the Favor Book and now every month I receive a rise of two thousand rubles to my base pay. We feel in every way that we are needed at our work, respected and cared for. Every year workers are sent to extension courses because drilling technology is ever advancing. But the most important thing is that Russneft management has turned its attention to the working people!
- No economic agreement, points out Sergey Morozov, will work unless it is not based on social policy. By signing such agreement with the Ulyanovsk region the head of Russneft confirmed that his company would continue to participate in social and cultural programs of the region and render support in tackling the most critical social and economic issues. For instance there was a problem in our health service system: ambulance cars had worn out and needed to be replaced. Without any delays 20 ambulances provided with the latest medical equipment were handed over to local health boards personally by RussNeft President. Before the end of the next year the doctors will get 50 more ambulances from the company.

Better than Gold
Lyudmila Maximova, Head of the Novospassky district administration
- The society can be stable only when power and business work efficiently and in coordination. Honest-minded and responsible businessmen understand that good memory is better than gold. RussNeft President Mikhail Safarbekovich Gutseriev built a wonderful school in Grozny having named it after his mother. It is a worthy action of a true patriot! One might envy the teachers in Chechnya who will work in the new school. But we are not envious because the good will of Mikhail Safarbekovich won’t forget about us. The budgets of the Novospassky and five more districts of the Ulyanovsk oblast are to 60-70% replenished by taxes paid by RussNeft. Moreover additional means are allotted to schools and kindergartens, labor veterans and invalids. For the five months of this year we have received 500 thousand rubles of grant-in-aid!
- Foreground tasks in social and charity sections of our agreement are preservation and recovery of cultural and moral traditions. Today with financial support of Russneft there has been built the Spaso-Preobrazhensky Temple and a mosque in the village of Novospasskoye. The church weakened by many years’ pursuits and abasement is not in the position of raising such temples with its own means. Owing to such patriots as Mikhail Gutseriev we redeem our fault to the religious.

Matter of Faith
Father Pavel, Minister of Novospassky Church
- The pure-minded always does good. In our village there was no church building until recently. The church people were constantly making requests with the authorities to build a church. And there was not enough money for the matter of faith. But there appeared an organization that found money, materials and equipment. It was company RussNeft. We are very thankful to it!
- Surpassing our requests, the Governor says, the holding company participates in other social projects. In 2004 RussNeft assigned more than 30 million rubles to these ends. With the company’s assistance schools and kindergartens in ten districts have been repaired and three mini boiler-houses built. Russneft allotted money for holidays of those children whose fathers had been killed in Chechnya. 

Sport is Energy
Avkhat Abdulin, director of a sports club, chief coach of football team Neftyanik
Our team was formed in 2002 out of those living in the village of Novospassky. One year later we already came first in regional competitions. Russneft financial support helped transform the team into a sports club. Presently we train children beginning from junior age. Not long ago I used to work with professional team Pakhtakor and I know that a village boy can learn to play good football. Of course, it is easier to buy a ready-made crack jack, but to train one at your own home is safer. So many people come to our matches!  Russneft allots more than three million rubles to develop our sports. It’s a good policy. A healthy person works better!
- The main thing which I am getting at, says Sergey Morozov, is that in Russia there has appeared a new model of big business. Such business has far-reaching goals and instead of hiding its capitals abroad it makes them flow in the opposite direction. Managers of RussNeft help recover the pilfered and destroyed economy of the Ulyanovsk region, voluntarily giving up part of their current profits. There are plans of long-term investments into equipment making. The policy of the company consists in making the oil dollars work not only to develop its own production but also to restore to life Russia’s factories by ordering them equipment for oil industry instead of buying it abroad. With these orders our enterprises began to change over to the manufacture of oil and gas industry equipment that meets the world’s standards. Why backing foreign engineering at the expense of robbing your own one? Russia’s big capital must serve national goals but not the interests of an individual industry or separate businessmen. This is where the company headed by Mikhail Gutseriev has surpassed the rest by far. Economic stability in Ulyanovsk region has come into view. A source of rapid replenishment is found in the person of Russneft which has become one of the biggest investors. It has given rise to fundamental change-over in the local economy. In this process must get involved enterprises of all industries. Let’s get on the move instead of resting on one's laurels. First of all I would like to bring that back home to the management of the car factory, aviation giant Aviastar and Ulyanovsk mechanical factory. Gentlemen, learn to work from the oilmen of RussNeft and you will succeed! Today everything possible has been done in the Ulyanovsk oblast to create a favorable business atmosphere for big business to work closely with the region’s administration in order to revive our domestic economy.
Ulyanovsk