Doing It Right. NOV Puts JV Horror Stories to Bed

March 13, 2014

Following a decade of futile attempts to enter the Russian market as a rig manufacturer, the U.S.-based NOV has made a breakthrough with a project to build a rig plant in Volgorechensk in the сentral Russian region of Kostroma, largely owing to the Russian government’s full support. OGE’s Pat Szymczak and Bojan Šoć recently met with NOV Kostroma LLC general director Anthony Crawford who talked at length about the $100-million project that aims to provide Russian customers not only with a wide range of top-quality rigs, but also to offer repair services and aftersales support.  

Oil&Gas Eurasia : What influenced NOV’s decision to build a rig plant in Russia? Were the high import duty rates on foreign rigs a factor in deciding to start manufacturing locally? 

Anthony Crawford : That certainly was one of several reasons and factors why we decided to build this facility in the Kostroma region. However, it was not the only one. Over the last 10 years, NOV has wanted to enter the Russian marketplace as a manufacturer of oilfield equipment. However, either the timing or the partner or the situation wasn’t right and about two years ago all of those things aligned in such a way that made it the right time. Some of the other factors that played a role in our decision were issues like spare parts availability and aftersales technical support in Russia. If you manufacture a rig in the United States, Canada or elsewhere and import it into Russia, that’s great. However, after you sell the rig and the customer begins drilling with it, if a piece of equipment breaks and you need a spare part, then you need a specialized technician and/or technical support to be able to get that piece of equipment up and running again. Most foreign oilfield equipment manufacturers don’t have a lot of spare parts on stock in Russia or much of that kind of technical support available here. Knowing that, we decided to go ahead and build a rig factory. We were listening to the market and most of our customers in Russia were saying: “We would like you to manufacture in Russia, but also to have all of your spare parts and aftersales support services available as well.” 

OGE: Will you have all of that available at your new facility?

Crawford: Yes, we will have manufacturing shops and a very large warehouse with an entire suite of NOV spare parts and equipment for most of our product lines and also a 24/7 technical support hot line in Russian and English. We will also have a very large team of technical support specialists that will be available to travel to any place in Russia or the CIS at a moment’s notice.

OGE: How is your project going at the moment, what is the current status?

Crawford: We started this process two years ago. At that time we formed a legal entity, signed an investment agreement with the Russian government and