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Integra brochure
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May 24, 2005

Russia To Be Able To Compete With The West In Oilfield Equipment and Services

Russia will be able to compete with the West in supply of oilfield equipment and services. This statement was made today by president of Integra Group Felix Lyubashevsky at VII All-Russian meeting of heads of companies of the defense and oil and gas industries.

Asked by an FK-Novosti press-correspondent what it would look like in practice, Felix Lyubashevsky said, “Russian products are cheaper and easier to service than western-made ones. To benefit from these advantages, our manufacturers and service companies need to consolidate and develop new technological, manufacturing and financial capabilities”.

Thus, Felix Lyubashevky noted that Uralmash-made drilling rigs cost $13-17 thsnd that is at least twice cheaper than similar western-made rigs. Practice suggests that drilling the same wells with locally made rigs takes two days longer, but given the price gap and maintenance opportunities, it counts for little.

Russian oilfield equipment still accounts for up to 90% of the market, and with the right approach Russian companies should not be behind western competitors after joining WTO. According to Lyubashevsky, the main obstacle to successful competition today is that the industry is dominated by small-size manufacturers or suppliers.

“Oil producers operating in Russia need strong partners able to continuously invest in development and maintain long-term business relationships with the customer”, Lyubashevsky said. “That is why businesses will have to consolidate within a few years. In some years, the market that is now estimated at $20 bn will be shared by 5-10 big holding companies comprising Russian manufacturers and service providers, with a minimum capital of $500 mln”.