ROGTEC talks with Alexander Dementjev, Country Manager of PGS in Russia

Alexander Dementjev
Country Manager, Petroleum Geo-Services, Moscow

The last year has been extremely tough for the oil exploration sector globally as well as in Russia. How is business for PGS in Russia today?
Yes, indeed, all service companies have experienced a serious negative impact due to the economic crisis. Companies working with old and, hence, less effective technologies have suffered from the crisis the most because of the severe competition in this sector. PGS is positioned in the high-end sector, which effectively allows us to stay “afloat” amidst the reduction of overall demand and volume of investments in geologic exploration.

Our business in Russia last year was rather good. We successfully carried out restructuring, considerably improved financial and production figures of the PGS Khazar Joint Venture, created, in my opinion, a sustained work strategy on such a challenging market like Russia.

PGS has made some significant inroads into the Caspian region; how is your Caspian business developing?
I would describe the Caspian region as the perfect ground for the development of PGS’s business in Russia. We are learning a lot there, testing new technological ideas, strategies and implementing international management systems with allowances for national specifics. As a result, we have seen a significant increase in productivity, radical improvements in the quality and safety of operations in such a difficult region as the Caspian Sea. If you add the picture investments into the development of human resources and new multi-purpose vessels, which we are building in Astrakhan, it will become obvious why the PGS Khazar Joint Venture is ahead of our competitors and is demonstrating growth despite the crisis.

What do you feel were the key factors to PGS’ success in Kazakhstan?
First of all, it is our excelent regional knowledge, the demands of the oil and gas industry, professionalism and the vast experience of our specialists working in the Caspian Sea. Apart from PGS Khazar, there is a large PGS centre for the processing and interpretation of seismic data, which has been successfully working in Almaty for a long time. Secondly, we do everything we can so that each project would support the national industry and ensure that the majority of works are carried out by Kazakh companies. Thirdly, constant presence in the market is an important element. That is why we created a subsidiary company in Kazakhstan and that is why the PGS Khazar management often meet the authorities and the local oil and gas companies of Kazakhstan. And the last factor is how we approach our targets. We always try to exceed our clients’ expectations.

Are there practices and ways of working in the Caspian that would improve and stimulate the offshore sector in Russia?
I would like to point out the positive experience of Kazakhstan in the stimulation of international competition for the offshore market and in the control of the level of the national content in the projects, implemented by the international companies.

What is the current state of the Marine Seismic industry in Russia?  What are the major surveys currently under way?
Russian offshore oil and gas production does not exceed 3 per cent of the total volume. The intensity of the geological exploration (GE) of the shelf does not comply with the targets set by the State Energy strategy. This, without doubt, has a negative effect on the development of the Russian geophysical sector. On the other hand, stagnation of this sector is also caused by the lack of economic incentives for geophysical companies to engage in the shelf exploration independently, underdeveloped market for geological information and the inability to implement commercial multi client exploration projects in Russia. Furthermore, various legal barriers slow down the development of international offshore competition in Russia and, hence, the access to the modern technologies.

Intensification of the shelf exploration will give the country a better understanding of the important resource base and help to effectively plan a prompt step-by-step development of the shelf. This is essential for a more flexible management of global energy resources, which means a more predictable and stable market and a regulated balance between demand and supply, which in turn will mean avoiding any crisis in the future.

I’m confident that the marine geophysics industry in Russia can and must develop in partnership with international leading companies. Indeed, the Ministry of Natural Resources and Ecology estimate that investments in the offshore exploration could amount to more than 600 bn Roubles for the period until 2020. Gazprom estimate that their projected reserve growth of 43% will be achieved due to the shelf. Rosneft assert the necessity of investment in the development of the offshore projects to the tune of 30 bn US Dollars for the period until 2030. These targets cannot be achieved without a specialised geophysical fleet, modern exploration technologies and international cooperation. The right moment will be lost and the shelf will not become the country’s engine for modernisation.

What can be done to stimulate demand for offshore data?
First of all, it is necessary to support the intensification of the geological exploration on the shelf. It is necessary to develop the geological information market and secure international fair competition in this area. It is essential to allow geophysical companies to independently invest as early as possible and to implement the results on a commercial basis (multi client projects). Direct involvement of the Government in oil and gas projects, including multi client GE, could secure considerable additional budget revenues and more effective offshore development.

The use of modern technologies must be especially profitable in Russia. A favourable tax regime is essential here (GE expenses, testing of new technologies should be deducted from the tax base).

Development and implementation of clear framework of terms for investors in GE and geophysical contractors, lowering of legal and bureaucratic barriers for international companies (fleet), a review of the provisions on secrecy of geological information is required. All these measures will open the doors to the implementation of effective technologies and necessary investments. Implementation of the proposed measures as a whole will undoubtedly lead to the prompt increase of industrial energy resources, strengthen global positions of the Russian Federation and, obviously, boost the country’s attractiveness for investment.

Many different regions employ Multi Client Services to make offshore data available to prospective operators. Russia, however, has so far not embraced this form of data collection and distribution.  Why is this and should they be utilizing MCS?
I think the multi-client model does not work in Russia because of the groundless strict regime of secrecy around the geological information. Taking in to account the experience of other countries – Norway for example – shows that transparency in the resource management system and an active market of geological information provide for effective offshore development. I very much hope that the favorable conditions for implementation of multi-client GE projects will be established in Russia as soon as possible.

What advantages would MCS bring to Russia?
Multi client works convert production capacity (fleet, supercomputers, geologists, geophysicists) to intellectual property, which generates profits for geophysical companies and the state over a period of 10-15 years.

Moreover, multi-client projects significantly improve the quality of exploration and attract leading technologies. As a result, investor interest in the shelf grows and new investors are attracted, new geological prospects and ideas are generated and the Government will have a better understanding of the potential.

Other benefits will include an increase in tenders and auctions for subsurface use (license rounds), subsequent GE programs will be optimised, geological risks will be reduced the exploration cycle will speed up, all leading to reserves being brought online much quicker and more effectively. Basically, multi-client GE will help oil and gas companies to identify the most attractive licenses or the best prospects in the license portfolio.

Even if multi-client GE turns up relatively poor prospects, the results will still have commercial value; oil and gas companies buy information for a better understanding of geology of a particular region and the planning of further exploration steps.

Where would you see the company’s strongest regional growth over the next few years –  marine surveys, data processing or software sales?
Without question, in deep water seismic offshore works in the Arctic sea shelf.

What new technologies have you introduced recently?
Our company invests 70-80 mil dollars annually in the development of new technologies. I think that even our respected competitors will admit the innovative nature of our corporate culture. One of our Russian partners commented that PGS in marine geophysics is like Apple in the world of personal computers – highly innovative, exclusive and desirable.

One article is not enough in order to answer your question. I would like to give just three examples. I have already mentioned that the PGS Khazar Joint Venture is completing the construction of three new vessels in Astrakhan. The new type of vessels will effectively operate in 2 to 25 meter water depth. Having said that, the vessels can work with the bottom cable as well as with towed streamers.These vessels will certainly increase the productivity and the quality of seismic surveys in the Caspian Sea. The size of these vessels will also allow to use them in other offshore areas.

Our Ramform fleet is the pride of PGS. Last year we commissioned two new vessels to join the fleet; the Ramform Sovereign and the Ramform Sterling.

The first obvious feature of these vessels is the hull shape. At just more than 100 m in length, the vessel is not long by modern standards, but with 40 m in the beam at the stern, the hull takes on a futuristic appearance. This is strikingly different from the conventional slim hulls, and while the vessel is no slouch at 16 knots cruising speed, it cannot be classified as a high-speed vessel. About 30,000 hp of propulsion capacity makes the vessel the most powerful in the world. When collecting seismic data, the Ramform Sterling generates around 160 tons of thrust, equivalent to two Boeing 747 aircraft at takeoff.

Onboard the vessel you see many innovations which are designed to maintain the productivity of the vessel. Many of these are only possible due to the space, volume and power of this unique vessel.

The latest Ramforms have significantly higher acquisition and transit speed, 25 percent longer endurance, and 60 percent higher production capacity compared to the previous Ramform class vessels. The vessels are equipped to tow up to 22 acoustic streamers – more than twice the capacity of most conventional vessels. The 400 tons of highly sensitive electronic equipment is deployed over an area equivalent to 830 soccer pitches. This translates to higher productivity in operations, which is advantageous to customer. The volume also allows for extreme fuel capacity of about 6,000 metric tons, offering extreme survey endurance. As an illustration of what this means in practice, the vessel would be able to sail twice around the planet without having to stop to refuel.

For crew changes, the vessel has the world’s first roll-compensated helideck, allowing safe helicopter landings in conditions where landings would normally be too hazardous to attempt.

On the equipment side, there are also several features that can be expected to find their way onto other new seismic vessels in the future. For instance, the sources are equipped with devices that enable the sources to be steered rather than simply towed passively behind the vessel. Sophisticated software interfaced to the vessel’s seismic navigation system allows the source arrays to steer predetermined tracks to repeat the source positions of previous surveys. This is of great benefit for advanced 4-D surveying. The range of technologies employed is the new benchmark for 3D, 4D and wide azimuth acquisition – in terms of productivity, efficiency, safety and data quality.

Another example of the revolutionary technology is the dual-sensor towed streamer GeoStreamer® developed by PGS. The design of this streamer utilizes two types of sensors: pressure and velocity.

This new technology gives opportunity to significantly improve the quality and efficiency of seismic surveying in comparison with the conventional streamers where only the hydrophones are used.

The analysis of the data acquired with GeoStreamer® demonstrates 4-5 times increase at the low side of the spectrum, double increase of the high frequencies (before any processing for the purpose of signal amplification) and also an increase of signal to noise ratio for all frequencies and depths.

As a result we achieve deeper penetration or imaging of deep sub-basalt and sub-salt targets while providing higher resolution of e.g. stratigraphic traps images. GeoStreamer® towing depth is now about 15 – 25 m. It can take advantage of the fact that the noise effects of weather-induced surface waves decrease significantly. And increased “insulation” of the streamer from the effects of bad weather increases the operational weather window and enhances productivity.

What would you like to have achieved with PGS in Russia and the Caspian in the next 12 months?
We work in Russia and other former USSR countries in accordance with a certain strategy, the targets of which are quite ambitious, but realistic. I believe that in the next 12 months our joint venture will not only strengthen its position and expand its presence in the Caspian region, but also will be ready to enter the international market outside the boundaries of the Caspian.

We also hope that in 12 months time the organisational decisions will be found and the necessary conditions will be created for the deployment of the most efficient seismic vessels in the world, along with other PGS technologies, for effective geological exploration in the Russian Arctic sea shelf. First and foremostly, this is for the benefit of Russia. Our country deserves this.