Leasing: Prospects Looking Forward

April 25, 2010

   At the same time the leasing, yet, is another source of innovative development for machine-building industry, manufacturing oil and gas extraction equipment.
On the one hand, such assertions are fully backed up by the new experiences of Novomet Servis. In 2009, for instance, the company won a tender to service the oil wells of Tomskneft VNK, a Rosneft subsidiary. One of the main conditions to ensure the project works is the provision of oil and gas extraction equipment on leasing terms. As equipment installed earlier failed, it was replaced with complete Novomet unit sets, specially customized for operations in the conditions found at Tomskneft VNK. Such units have the required standard of design reliability and additional equipment to face harder operational conditions. The company has accomplished a large scope of work using its service facilities to implement overall service maintenance, created specialized service departments that select and prepare the installations for stable production operation. The Novomet technology for maintenance and operation of ESP has been applied.   

   As a result, the client obtained a considerable reduction of failures for this type of equipment. The average level of failures with provision of maintenance service by Novomet Servis is 77 per month, while before it averaged 101 per month. If we look back at the five last months of our operation then the number of failures is even lower – 65 per month. The reduction of failures in its turn has increased the mean time between failure by 29 percent during nine months of our involvement. What matters is that the extension of time between overhauls is ahead of schedule under the contract obligations – a fact that has a beneficial impact for us as well. That is, as we have said repeatedly before, leasing makes longer operations of ESP profitable for both the client and the contractor, motivating the contractor to work more efficiently and offer more reliable and efficient equipment, promoting innovative development of domestic machine-building industry.

   However, in the past year the company faced a number of situations that make one ponder on the prospects for leasing in Russia. Having achieved a considerable increase in operational capacity for a number of projects, instead of getting bonus payments as practiced in all the civilized world, in Russia in one case we were requested by the client to exclude the price of leasing of equipment for a day from the price of rental for a day and in another situation the client suspended payments under the contract.

   In both cases the clients gave the same explanations for the request, stating that due to extended non-failure operation time, the supplied equipment had produced a return on investment and there was no reason to pay for its use anymore. It is evident to us that such an approach ruins the idea of equipment leasing in Russia at the root. It is not only a question of leasing but the idea of highly reliable Russian-made equipment that is able to