Cover Story: Bentec to Unveil Tyumen Rig Plant

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The men at the helm of the German engineering firm and rig fabricator, Bentec, were waiting patiently in early September for the arrival in Tyumen of the last of the overhead cranes needed to complete fit-out of the company’s West Siberian manufacturing plant.
“Then we’ll fix a date for the grand opening party; our target is the end of October, beginning of November,” Norbert Gebbeken, the commercial side of Bentec’s two-man team of managing directors, told Oil&Gas Eurasia. Bentec is investing 20 million euros to construct the 11,000 square meter facility.
The fabrication plant and rig-up yard sits on 80,000 sq. meters of land, the site of the former aviation gas turbine manufacturer Tymenskie Motorostroiteli. The plot has direct access to roads and the Russian railway. In Tyumen, Bentec expects to eventually employ 300 highly-skilled specialists, as many as work at Bentec headquaters in Bad Bentheim, Germany. (See OGE June, 2006, “Bentec Bets on Russia,” on www.oilandgaseurasia.com.)
Bentec’s Tyumen plant is one of several major foreign investments into industrial infrastructure that Tyumen regional authorities have managed to attract to support West Siberia’s oil and gas service and supply sector. For Bentec, it is their major step in realizing a business strategy to double current revenue, and to realize half of the company’s global growth in coming years from its Russian business.
In recent months, Bentec has signed contracts with an (undisclosed) Russian company and with the drilling contractor SSK (Siberian Drilling Co.) to manufacture totally 11 new rigs and the option to order up to six more rigs at a later date. These orders will enable the Tyumen plant to quickly ramp up to capacity within its first year of operation, according to Gebbeken, and fellow MD Arend Loedden who handles the technology side of the business.
SSK (Siberian Service Co.) ordered four Bentec HR 4500 Cluster Slider™ rigs and another Russian company has contracted for seven rigs – four HR 5000 Cluster Slider™ and three 320-ton stationary rigs. These new orders bring the total number of rigs Bentec is currently building for the Russian market to 14. Fabrication of another order for three HR 5000 Cluster Slider™ has already begun at Bentec’s Bad Bentheim plant.
Deliveries to the field of these orders will begin in the second half of 2009 and continue through the fourth quarter of 2010. All 14 rigs are Arctic class, specially outfitted for operation in -45 C. Bentec also meets all Russian GOST certifications.
“We have a good match in the time frames of the contracts and with the start up of the facility; we’ll have work for the facility from the start,” said Loedden. “It all matches up very nicely. The ramp-up takes place over more than a year as we bring up our staff and increase activity month to month, quarter to quarter.”
Gebbeken added: “Bentec has contracts for 21 rigs (worldwide) and of those, 14 are for Russia. The demand on the Russian market is actually developing like we expected (see bar chart). It’s moving just as we anticipated when we did the business case some years ago. In our eyes there is no change in demand. The talk is always about a demand for 400 rigs, up to whatever, for the Russian market in the next five years.”
If Bentec erred in any way, it erred in being too conservative. “The original plan was for the plant to turn out 10 rigs per year,” Gebbeken told Oil&GasEurasia. “Maybe our business case was too conservative. But there is more potential in the market and that means more potential in the market for us as well.
(Editor’s Note: If you take at face value estimates that the Russian market requires a minimum of 400 rigs – some sources say 600 – over five years, and compare that to the capacity of rig fabricators, the numbers don’t add up. A typical fabrication yard produces 10 or 12 rigs a year; assuming three producers of new-build rigs, the market is still short of filling demand by 200 to 400 units.)
Gebbeken explains, however, that “this analysis overlooks the fact that when Russia talks about 400 to 600 rigs, it is talking also about the repair of existing rigs. Not all of that demand is for new build.”
As part of its overall growth strategy, Bentec is also addressing that segment of the market. It makes available Bentec branded, “Made in Germany” drawworks, mud pumps and electric drive systems. “The drawworks that we produce are mainly being mounted on our rigs but we have also sold separate stand-alone units,” Loedden said. “If a buyer wants it, they can have it. This is one of our key products which we want to sell. We have also developed 1600 HP mud pumps that we have sold to the market in Europe and in Russia.”
To facilitate marketing, Bentec has also launched a Russian-language website at www.bentec.de/ru/glavnaja/index.html, featuring products available to Russia and their technical specifications.
Back to the topic of Tyumen, Bentec’s two MDs had nothing but praise for regional officials who assisted Bentec in finding the right site for their plant and helping the company navigate the waters of obtaining permits, connecting utilities and otherwise make the process soon.
“Our relationship has been good since the beginning in Tyumen,” Gebbeken said. “We’ve gotten good support especially from the local government and last year we signed this investment agreement with them. Any challenges we had, they have helped us. We’re getting good support.”
It took Bentec only a year and half after signing an investment agreement Dec.12, 2007 with Tyumen authorities to develop the facility.
“I couldn’t imagine it would have worked that well without this relationship,” Gebbeken said. “It’s important. We have done all the work ourselves, but without this political link it would not have been possible to achieve what we have. Doing business in any country does have its challenges. There are positive things and negative things everywhere. But we wouldn’t be in Russia if we didn’t think we could get things done.”
And Bentec is betting on Russia for the long term. Political events ebb and flow but as Gebbeken put it: “In Germany and in Russia, the officials in charge of economic matters have had a very good and very long relationship with each other. I would think that there is no problem for a Germany company to do business in Russia. There are very strong and very solid relations between the two countries.
From Loedden, there was one complaint: “The most negative thing (about West Siberia) is the winter.”

Pat Davis Szymczak is Editor in Chief of Oil&Gas Eurasia.

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