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Home / Issue Archive / 2008 / March #3 / New Era in Drilling

№ 3 (March 2008)

New Era in Drilling

Oil&Gas Eurasia attended the presentation of the ZJ50DBS drilling rig in Novi Urengoi in February and talked with Yuri Livchitz, president of North Expedition Holding, and vice-president of Honghua Co. Ltd Ren Jie. Here they share their impressions and plans


By Yagmur Kurbanov

Oil&Gas Eurasia: Why did you choose Honghua as a partner for your joint venture?
Livchits: Honghua uses technologies of National Oilwell Varco, the world leader in drilling rig manufacture. Upon our request, Honghua is enthusiastically producing rigs for Northern Expedition. By doing this, the Chinese company demonstrates the high priority level they consider our partnership to be.   

OGE: Lately, there’s been a concern growing as regards support of the Russian oil engineering industry. Don’t you think it’s more worthwhile trying to set up rig manufacture in Russia calling on the Chinese experience?  
Livchits: Currently, we are in the middle of discussion with our prospective strategic partners, big financial organizations, with a view to launch production of up to 50 drilling rigs a year starting in 2010, making use of the most modern technologies.  

OGE: What technologies and component parts are being used in the new rigs?
Livchits: Outside of Chinese drilling rig and pumps, we utilize Caterpillar motors, electrical equipment from General Electric, top drive system from National Oilwell Varco. The whole unit is rigged up, tested and delivered from China. As a result, the price of such a rig depends, in the first place, on the kitting up that a contractor is looking for. A rig like this, with a complete set of equipment, including containers, is worth more than $20 million.   

OGE: What are your plans as to utilization of the new drilling rigs?  
Livchits: We plan operating in Venezuela, Libya, Bolivia, Ecuador, Angola and other countries. And for every country outfitting of a rig will vary depending on geographical and climate conditions.

OGE: What do you think, how much time will it take to substantially renew the existing stock of drilling rigs in Russia that are used up?
Livchits: For today, Russia's rig fleet is 90 percent worn out. I believe that new rigs must be supplied to the Russian market as soon as possible. And it’s our plan, within the next three to four years, to put in operation 220 rigs in all major regions of oil and gas production.  

OGE: How do you do the training of personnel for new rigs?
Livchits: Any rig without personnel is nothing but scrap metal. That’s why we have our training centers working for a few years now. Our personnel undergo training every three months, especially where new equipment is involved. We mainly count on our “old timers” but, nevertheless, we are considering collaboration with Russian universities. We are negotiating now over the opening of a faculty of drilling in Tyumen. Also, we are in cooperation with Gubkin University in Moscow.   


OGE: How long has Honghua been working with Izhdril? And why Izhdril?
Ren Jie: We first met in 2003 during an exchange between Russia and China. Certainly, we were considering other Russian companies as well. Then, we made our choice and it was Izhdril because we believe the company is a fast developing, reliable one, and one with a good reputation in the Russian oil and gas industry. In the beginning, we were selling them our equipment. After two years of partnership we founded a joint venture in the city of Izhevsk.

OGE: Has it been long since Honghua first started to manufacture drilling rigs and whose experience has been used?
Ren Jie: Our company has been producing drilling rigs for the last 14 years. We have qualified specialists working in oilfields and on sites throughout China. They are fully aware which rigs are required and any rig can be supplied and installed, complete with all outfitting following customer’s request. With the experience of foreign manufacturers, for example, such as National Oilwell Varco, we managed to get our own reliable first class technologies.

OGE: How much do you price your rig at?
Ren Jie:  It all depends on outfitting and customer’s requirements, but, roughly, over USD 10 mln. Next, the customer installs some extra equipment by himself, for example, boiler and cleaning systems.  

OGE.:  How long does it take to do the installation of your rig?   
Ren Jie: Our drilling rigs are highly competitive as compared to their European and American analogs: they are cheaper, in the first place, the quality being at the same level as that of leading world producers. Rig up time in each case depends, factors like electrical power availability, accommodation units, weather conditions, etc. – all that should be taken into account; but, most commonly, complete installation takes between 15 to 30 days.

OGE: How is training of Russian personnel done to enable them operate the new rigs?   
Ren Jie:  When concluding a contract, we make sure a provision is included specifying the number of teams and time they must arrive from Russia for training and practical work experience at our rigs in China. Besides, our specialists go to locations during installation phase for exchange of expertise and to train the workers to operate the rig.

OGE: How much time is needed to build your new rig?
Ren Jie: It takes approximately 6 to 8 months to manufacture our rigs. As far as I know, it will take more than a year to build one in Russia.  At the same time, the scale of rig manufacture in Russia is small and insufficient for the market.  

OGE: Does your company have any experience in making offshore drilling platforms?
Ren Jie: Our company has experience in this area. We have already supplied one module for carrying out repair works on offshore projects, for instance, on the Chinese coast of the Pacific. In the future, we plan to increase production for offshore projects. Very soon our company is planning to issue a number of shares on Hong Kong Stock Exchange. That will allow us to get additional funds for new projects, such as building a production facility for offshore drilling platform manufacture in Shanghai in the next five years, with the initial production rate of about five platforms a year.
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