September 6, 2008
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Home / Issue Archive / 2007 / October #10 / Landmark Eurasia Supplies Fully Integrated Solutions

№ 10 (October 2007)

Landmark Eurasia Supplies Fully Integrated Solutions

An Interview with Konstantin Schilin, Director General, Landmark Eurasia

Oil&Gas Eurasia: Mr. Schilin, as you celebrate Landmark’s 15th anniversary in Russia and the Caspian, what can you recall about the company’s early days?   

Konstantin Schilin: Fifteen years ago, the market was virtually uniform throughout the entire region. Post-Soviet Russia had its own culture surrounding the oil and gas business, and the entrance of Western companies was met with some skepticism.

The general belief was that Russia had some proprietary technologies but the West had more streamlined software solutions. Initially, sales were slow because customers were not quite ready to accept the Western approach, and we spent a lot of time demonstrating how the offered approach was meeting urgent needs of the day-to-day production process.

Few Western companies were in the market by then. In the early 1990’s, large companies started their outfitting. In 1994, Gazprom, then LUKOIL and Surgutneftegaz, began to incorporate the new technologies developed by Schlumberger, Landmark, CGG (CGG Veritas since 2007 –  Editor’s note.) and gained experience using the software.

At that time, Schlumberger, CGG and our company put emphasis on geology and geophysics, and the companies competed mostly within that sphere. Like Schlumberger, Landmark worked at the time with third party software in the field of hydrodynamics. For example, both companies sold Eclipse. Then the market went through dramatic changes. Service companies started integrating not only geology and geophysics, but geological and hydrodynamic modeling as well; some items connected with the drilling applications and integrated solutions started to emerge. In the CIS market the so-called “easy technologies”, like GeoGraphix, appeared in 1997–1998.

OGE: How did they emerge?

Schilin:  We saw that the Russian market was changing drastically as it transferred from the Ministry of Oil Industry to large-scale and then smaller companies. This transformation shaped the need for easy solutions and gave us some flexibility compared to our competitors in the late 1990’s, when we got a considerable market portion thanks to GeoGraphics technologies.

Today in the Caspian region and Kazakhstan we have quite a large sales volume of GeoGraphix from the many medium-size and small companies there. Getting back to the specifics of the market, I can say that the current situation in the Caspian region differs sufficiently from that of Russia.

OGE: What accounts for the difference?

Schilin: In Russia, approximately 90 percent of Landmark’s turnover comes from Russian companies such as LUKOIL, Gazprom, and Surgutneftegaz. We have a corporate agreement with BP, but to date there have only been Sakhalin-based projects. We also have projects in Sakhalin with Shell, and there is minor volume of work in Naryan-Mar with ConocoPhilips. 

In the Caspian, virtually 80 percent of our turnover is generated by Western cash flow. There’s BP in Azerbaijan, as well as Tengizshevroil, Karachaganak Petroleum Operating B. V. (KPO) and Agip KCO in Kazakhstan. 

As our key customers, they work with our products within the corporate access framework. The Kazakhstan National Databank uses Landmark’s developed PetroBank technology for its infrastructure basis; in addition, Landmark and KING (the Kazakhstan Institute for Oil and Gas) set up a joint venture called Petrodata Kazakhstan.

OGE: How has the company structure changed over the past few years?

Schilin: First of all, from being an IT company, which specialized in software development, we have grown into a supplier of fully integrated solutions for oil and gas companies. Not only can we offer the customer software tools, but we can also ensure the completion of consultancy projects. Comparing the ratio of our turnover generated by software sales to what we obtain or will obtain from consultancy services, you can see that almost 100 percent came from the software just five years ago. Today, we are talking about a 70:30 ratio. There are plans over the next two or three years to reach a 50:50 percentage ratio.
Speaking of the service and consultancy projects, I would stress that Landmark does not intend to develop them to compete with Russian service companies. Our service complements the regular consultancy services provided by Russian companies which perform traditional processing, interpreting and geological modeling.

Our technologies serve customers to whom no small or medium service companies can offer tools to run their day-to-day business. Such projects do not appear every day.
We emphasize Project Management, in which we act as an integrator or a group to fully run a project in which a number of companies may participate.

OGE: What other important fields could you mention?

Schilin: Today lots of people talk about Real Time Operating, i.e. real-time operation mode. This term refers to drilling and production. Our Russian competitors are running some projects, but they have not carried them through to the end. We have a number of such interesting projects abroad.

Another vital issue in the future of that field is that one of the world’s leading service drilling contractors – Sperry Sun – is an affiliate of Halliburton Drilling, Evaluation and Digital Solutions. Using unique drilling control technologies, as well as drilling data processing and interpretation technologies, we offer some interesting solutions to the customer.

Furthermore, we are currently the only company which fully integrates engineering applications within the framework of a uniform database.  For example, we integrate drilling and production applications with the geological and geophysical information.

Landmark also learns from its customers, whose requests and work experience have influenced the development of various products’ strategic components. For example, the testing of Nexus – a standard application for BP – revealed a number of drawbacks in the Russian market that developers had not come across while using the software in the West. Intensive team work led by Maxim Komin allowed us to solve the problems.

Today Landmark offers not only software products and centralized service, but also access to new technologies providing for real-time data collection and processing, which for the next two or three years will dominate oil and gas industry.

OGE:  What large companies are among your customers?

Schilin: These are mainly the companies using corporate access. They pay an annual fee for the right to a practically unlimited number of licenses. Such companies include Shell, BP, Eni, ConocoPhilips, Chevron, and Gazprom, to name just a few. Landmark also developed the geology and geophysical products that LUKOIL uses.

In 2007, Rosneft started using intensively Landmark’s geological and geophysical applications. Speaking about the service company market, I would like to emphasize that the two major Russian service companies, INTEGRA and BKE, use Landmark’s engineering software as a corporate standard for drilling and well completion operations.
 
OGE: What does the company’s activity include?

Schilin: Landmark Eurasia has six product lines in software and service. These include the database management, geological and geophysical applications, and reservoir simulation. They generate almost 94 percent of the company’s sales volume in the region.

Other areas, which include drilling and wells completion, production optimization, and oil and gas economics, comprised only 6 percent until last year. The market understandably experiences some saturation, and growth is slowing in some areas, but on the whole demand remains high.
Many small and medium-sized drilling contractors are switching to Landmark’s software in area of the drilling and wells completion, and I believe it will be the future of the company in this region.

In 2007, the ratio 94:6 will have become 80:20, and we would like it to be 60:40. The company management sees the Eurasian market as one of the most promising and dynamic, and I’m sure that the transition to the new technologies, which we introduce on the market today will make it possible to change the situation drastically in the IT sector of the oil and gas industry.

Copyright © 2007 Eurasia Press, Inc. (USA). All rights reserved.
Copyright © 2007 Eurasia Press (www.eurasiapress.com)