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Kazakhstan 2016 | ENERGY & INDUSTRY | INTERVIEW

TBY talks to Rakhmet Khairullayev, President of KazPetroDrilling, on changing demands, optimizing the company, and goals for the next year.

Rakhmet Khairullayev
BIOGRAPHY
Rakhmet Khairullayev is the President of the largest oil service holding company in Kazakhstan, Kazpetrodrilling. He has spent most of his professional career within the oil industry, having held various senior positions, including Director General at MH Industry, Vice President of Finance and Economics, and Deputy Chairman of the board at JSC Caspineft—TME. He was also Director General at EuroAsia Group. He has an educational background in Economics and Mathematics, and did his Undergraduate Degree at Novosibirsk State University in Mathematics, a Master’s in Economics and Strategic Research from Kazakhstan Institute of Management, and, most recently, an MBA from the Maastricht School of Management.

KazPetroDrilling has clients among some of Kazakhstan's largest energy players, such as KazMunayGas, Tengizchevroil, and Maersk Oil. What services do you offer these companies?

KazPetroDrilling is the largest service holding company in Kazakhstan. Our main service is drilling, as we have three drilling companies within our holding company. Our drilling companies are not solely involved in drilling work; they also do hydrofracturing services for our customers on a turnkey basis. We also provide well cementing, mud, and geophysical services for companies that are drilling. Our group includes companies, such as ZhigerMunaiService. They provide other oil service products and manufacture oil equipment, such as fishing tools. Essentially, everything involved in the servicing of oil and gas extraction is covered.

What are some of the oil field services most in demand from energy companies in Kazakhstan today?

In terms of products and services, the construction of wells is most in demand. With new technologies and methods of drilling and constructing wells becoming available in Kazakhstan, it is more popular to drill horizontal, rather than vertical wells. Another challenge for Kazakh oil companies, and their service companies, is drilling in deeper fields. Currently, only large projects such as Kashagan, Tengiz, and Karachaganak are working on deep fields. However, smaller, private projects are starting the exploration process using pad drilling in deep fields of over 5,000m. It is a challenge to construct wells in these deeper fields, as complicated and expensive equipment is required. KazPetroDrilling sees potential in this area in the future. We have already assembled a 2,500 hp heavy drilling rig SL-2500 in our facility in Atyrau that can drill to 6,000m. The second area we see potential in for the future is working on existing wells to maintain or increase production for companies of all sizes, including the private, smaller oil production companies. Here, we are talking about providing services such as hydrofracturing and work-overs for existing wells. We believe many companies will increase their demand for these types of services in the near future.

How is KazPetroDrilling overcoming the challenges from a difficult year for energy markets?

Times are tough at the moment for service companies. We have to respond to current conditions, and we believe the way to do this is to optimize our efficiency and work with our clients to construct wells at lower expense. There is a lot of pressure on companies. In 3Q2015, KazMunayGas (KMG) announced that it is only drilling economic wells. There are a number of technical operational measures that can be taken for optimization, such as using new technologies to drill faster and buying the latest rigs. We are also looking to optimize KazPetroDrilling's internal processes, by using new HR and corporate programs and processes to improve efficiency and control expenditure.

What are your expectations for KazPetroDrilling in 2016?

We do not believe the market will change much in 2016, and, therefore, we will have another tough year. Our first challenge is to maintain our current position and find ways to save using technology and training. We will take this difficult period as an opportunity to reshape and improve our internal processes to meet the new challenges. Going forward, one of our strategic goals is to expand our activities into neighboring countries' markets, starting with Russia. There is competition; however, when we compare KazPetroDrilling's companies against the larger drilling companies in Russia, we are competitive. The second factor is that there are no trade borders now due to the economic union between Kazakhstan and Russia. As a first step, we have acquired a small Russian company in the BV Group that provides engineering support for horizontal well drilling.