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Integra brochure
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November 28, 2010

Chris Einchcomb: If you start seicmic survey, do it with us

Oil and Gas Vertical
November 2010, ¹ 22

Geophysics branch of Integra Group is known by wide positive experience not only in Russia, but also in CIS countries, Asia, Africa and Latin America as well. A year ago the geophysics assets of the Group – OJSC “Tyumenneftegeophysika”, OJSC “Yamalgeophysika” and “Tomsk Geophysical Trust” were reorganized into one structure of OJSC Integra-Geophysics. Geophysics branch of Integra Group includes also Kazakhstan division “Azimuth Energy Services”.
And this July Integra announced the establishment of exclusive joint venture together with WesternGeco (Schlumberger division) named IG Seismic Services Limited. The process of establishment of the new company was finished in October 2010. After getting access to modern Western technologies, the JV plans to embrace more than a quarter of Russian seismic survey works market and actively participate in foreign projects, including Middle East and Central Asia.

Executive Vice-President for Geophysics of Integra Group

Editor: What purposes did Integra and WesternGeco pursue in establishing the seismic joint venture?
C.I.: Our Company strives to reach two goals: to expand our geographic footprint and to get access to new technologies.
Integra now goes beyond its traditional regions of activities which are Western Siberia and Yamal. This is our strategic goal and WesternGeco is going to help us to acquire a stable position on tne new territories, in Komi Republic and Astrakhan, in particular, where the company’s new branches have already appeared. In addition, we plan to work in offshore transition zones and Schlumberger (WesternGeco) has proper equipment and technologies for this.
With the help of JV, Integra also plans to bring up to date its data processing and interpretation business – “GeoPrime” LLC. Now, due to inclusion of WesternGeco processing center into the structure, Geoprime significantly increases its capability. In addition, we get access to OMEGA data processing software.
As to Schlumberger, it had two goals: implementation of new technologies and strengthening the competitive position of its field service. The thing is that geophysics branch of Schlumberger offered products of better quality and, accordingly, at higher price compared with other participants of Russian seismic works market. In connection with this, it was in-demand only in the limited market segment and did not produce proper financial payback. On the other hand, people in WesternGeco have been contemplating for a very long time on how to strengthen the market positions for its unique development – UniQ technology. And large Integra sales market will help the JV to do it.
We expect to benefit from the synergies, created by combining our technologies and market experience, and to strengthen our market presence in seismic survey segment.

Editor: What assets have become parts of the JV?
C.I.: From Integra’s part 35 land seismic crews were included into the JV. Our company has a well-established infrastructure – there are representations and branches in many Russian regions as well as in Kazakhstan.
WesternGeco provides from 3 to 5 operating land seismic crews and one transition zone seismic crew. In addition, the company invests about 800 CPU, OMEGA software and support service.
In the context of JV for “Geostan” (Geoprime division) in Kazakhstan it is planned to purchase the computer center (more than 300 SPU), and for at least two years, WesternGeco will provide technical support for this center in order to develop business in Kazakhstan.

Editor: What market share will the JV have?
Currently we pertain more than 20% of Russian seismic market (considering the scope of works and production possibilities), in Kazakhstan we hold leading position (more than 35% of the market). We observed the peak of market development in 2008, and then suffered decline due to the world financial crisis.

Main scope of works of the joint venture is expected to be implemented in Russia, as it was before. We hope to see a new rising in the Russian market in the near future; we’re counting on the growth of works and planning to start some active actions to increase our share in the market. We plan to maintain our leading position in Kazakhstan. Our strategy in the world market is to strengthen our footprint and systematically develop this direction.

Editor: How big is the part of your contracts that include foreign projects?
C.I.: This year 5% of all contracts fell on foreign projects. Next year we plan to increase this number.
We have experience of working with Kazakhstan, Uzbekistan, Azerbaijan, Mauritania, India, Yemen and other countries. Before that Integra rarely had foreign contracts, but today we take part in 10 tenders outside of Russia every year.
Our company started to work abroad actively since last year. We’ve won two tenders in Uzbekistan and one in Yemen. In Uzbekistan we do seismic works in Namangan project for Korean KNOC and in Southern Hissar project for Lukoil. Yemen project is implemented for Indian company.
In future we will continue to expand our participation in foreign projects that help to diversify production and involve equipment that usually stands idle during summer season in Russia. The thing is that in main regions of our activity in Russia (Western and Eastern Siberia and Komi) we can work only during winter time.
À seismic survey company needs to be mobile and it should be able to work in various countries and geological conditions, as this factor significantly increases company’s competitive position.

Editor: In what regions do you plan to develop the production and technical basis of the company? Will you start new branches?
C.I.: Now we are looking forward to active business development in Eastern Siberia. The market in that region is growing and our footprint there is not so large. Speaking about Russia, one more new region which we plan to tap into is European part of Russia where both winter and summer works are possible.
We will also maintain our footprint in Kazakhstan and then get more projects in Uzbekistan. In addition, Integra has won the project in Turkmenistan, and next year we hope to conclude a contract and start its implementation.
The entry into the world seismic market is the strategic goal for the company; therefore, we plan to increase our hold in one or two regions, most likely in the Middle East and Central Asia.

Editor: What are the plans of the JV in shelf zone?
C.I.: Our goal is to establish a world-level company in the area of land seismic survey works and transition zone seismic survey. WesternGeco invested only its Russian land seismic survey business in the JV, sea business and land business in other parts of the world were left in Schlumberger.  
Still, in the Caspian and Black Sea regions there are expected projects that combine land, sea and transition zone. Similar combined projects are possible to realize in Russian part of Arctic. Therefore, we can provide integrated services together with WesternGeco: they will work in the sea, and we will work in the land and transition zone.

Editor: What are the indexes of Integra-Geophysics at the end of current year?
C.I.: For the last two years we significantly improved our production indexes and results in HSE (Health Safety Environment). We hope to continue such tendency. In addition, one of main goals for this season is to optimize expenses. Joint venture has inherited a large number of scattered bases and production sites. Now we place emphasis on optimization of auxiliary production and optimization of functions distribution of corporative centers in Moscow, Tyumen and Almaty.

Editor: What new technologies are in use in the company? How will they be developed?
C.I.: Last year Integra accomplished a large project in Karachaganak, Kazakhstan, where the Vibroseis operations ‘slip-sweep’ technology was used for the first time, this technology permits to increase the size of acquired information by several times compared with previous technology. In standard work conditions the capacity is no more than 500 physical observations per day; and we registered, on average, more than 1700 per day. Thus, the project was completed in less than half a year, though an average project takes about two years.
In addition, our Azimuth division in Kazakhstan together with WesternGeco division completed first project in Kultuk, which was located in transition zone of the Caspian Sea. The project was accomplished before establishing of the JV. Thus, we demonstrated that the JV can operate not only in land but in transition zone and in shallow waters as well.
Next area of our movement forward includes usage of equipment for automated woodcutting, known as cutter\splitter. Such equipment diminishes risks of woodcutting works. We intend to use them to clear cut-through ways. This year we also plan to implement pilot project of wireless seismic survey technology in Russia.
I’d like to mention one more project. Two years ago one experiment was performed in Uvatsky region in Western Siberia in connection with urgent project of TNK-BP.
Traditionally, due to climate reasons, field works can be done there only during winter time, consequently, we arranged a year-around work using helicopters provided by UTair company to move land geophysical equipment. This technology was trialed and with the help of helicopters we achieved double increase of production. Now we are ready to work in Siberia during the whole year. In addition, this technology provides better environment protection than land transportation and helps to decrease significantly industrial stress upon environment during work operation.
In the next year Integra Company plans to implement pilot project using UniQ technology – unique technology of WesternGeco.
We strive to find optimal combination of Western developments and experience and knowledge of Russian experts. Geophysical equipment, vibration installations and registering systems were supplied by the leading world manufacturer – French Sercel company, American ION company, etc. Seismic survey work is an intellectual and innovative production in large part. Almost 90% of technical and engineering employees of our geophysics companies have higher education.

Editor: Some Russian experts believe that it is sufficient to get 2D seismic survey. What do you think about it?
C.I.: For the last few years the market revealed a strong shift to 3D investigations. Two years ago it was 50/50. This year the scope of 3D seismic survey will take about 80% of our annual scope of works.
There are two reasons for this tendency. The first one: oil and gas companies have to maintain oil extraction on the proper level, so, they order 3D-investigations aimed at additional field exploration. The second one: the main work is concentrated on the already exploited territories, as the crisis stopped the issue of new licenses.
We are waiting for the process of licenses issuing to start again, but yet 3D-seismic survey works will dominate.

Editor: What are the nearest tenders you are going to participate in?
C.I.: Tender process on the field works is almost finished for the winter field season. We actively participated in tenders of all large market players. Now we are waiting for the answer from Gazpromneft and Rosneft.
In the next two weeks the company will have a plan on the field works. Tender results say that we are going to have 70% of works for sure.

Editor: Some market players think that now there is an integration process of Integra and Schlumberger going on. Is it really true?
C.I.: There is a clear division between seismic companies that work on land and those that work on sea. Schlumberger decided to leave land seismic survey business in Russia, and probably will not buy it back in the near future. By establishing the JV Schlumberger still keeps control over its land business.
In Russia, where the scope of works is about 50%, volume of land seismic survey business is the largest in the world. In my opinion, that is the reason why Schlumberger decided to establish the JV here. It’s an opportunity for the company to enter both world and Russian markets.