Russia’s oil and gas sector poses an excellent opportunity for Western Australian companies, although language and cultural issues remain a challenge, according to Austrade senior trade commissioner to Moscow, Dan Tebbutt.
Russia’s oil and gas sector poses an excellent opportunity for Western Australian companies, although language and cultural issues remain a challenge, according to Austrade senior trade commissioner to Moscow, Dan Tebbutt.
Speaking at a business forum earlier this week, Mr Tebbutt said contract opportunities in the Russian oil and gas sector would be worth $US12 billion this year, based on a report released by Austrade last month.
Mr Tebbutt said businesses in the oil and gas services industry, such as security monitoring and technology companies, would find opportunities in Russia. He said occupational health and safety was a particularly strong growth industry.
“This is an area where Australian companies have been successful and certainly where we think a lot of Australian companies will have potential,” Mr Tebbutt told the forum.
Mr Tebbutt said the Russian government had a clear preference for state-owned companies to be the majority partners in large-scale projects.
“It’s very clear that there has been a strengthening of the role of the state in the development of large strategic fields,” he said.
However, Mr Tebbutt said Australian companies needed to realise there were plenty of opportunities outside the largest oil fields.
“Deloitte has identified 400 small to medium operators looking for international partners,” he said.
While Russia was endeavouring to improve its processes, Mr Tebbutt said a technology lag remained an issue for international companies.
“A lot of the oil and gas industry is still using fairly antiquated practices and productivity levels are still quite low compared to Western norms,” he said.
The Austrade report identified a number of trends in Russia’s oil and gas sector, including the use of more open and competitive tendering processes by local companies.
It found international companies were also increasingly moving into distribution, by either partly or fully acquiring companies in Russia and Kazakhstan.
The report also found Russian companies were looking for greater local competition in the services industry, to provide greater depth and choice.
Nedlands-based software firm Micromine Pty Ltd has been active in Russia since 2001.
The company’s global consulting business manager, Dmitry Purtel, said there were several barriers to doing business in Russia, including the country’s transition to capitalism, language and cultural issues, and a general resistance to change.
Mr Purtel said that while Russia was enduring a period of rapid change, issues around personal property and wealth remained.
He said Western standards of employment were yet to be adopted, and concepts of cash flow were alien to many companies.
Mr Purtel said there also remained a perception that Western Europe had ambitions of geographic expansion.
The Austrade report found Russia’s oil and gas services market was due to reach about $US12 billion this calendar year.
Kazakhstan has also been identified as a key market for Australian service providers, with $US51 billion to be invested in development of oil and gas reserves by 2015.
